Another Study Shockingly Discovers That Cable TV Needs To Compete On Price

Studies

from the well,-duh dept

For the last decade the cable and broadcast industry has gone to great lengths to deny that cord cutting (dropping traditional cable for streaming alternatives, an antenna, and/or piracy) is real. First, we were told repeatedly that the phenomenon wasn’t happening at all. Next, the industry acknowledged that, sure, a handful of people were ditching cable, but it didn’t matter because the people doing so were losers living in their mom’s basement. Then, we were told that cord cutting was real, but was only a minor phenomenon that would go away once Millennials started procreating.

Of course none of these claims were true, but they helped cement a common belief among older cable and broadcast executives that the transformative shift to streaming video could be easily solved by doubling down on bad ideas. More price increases, more advertisements stuffed into every viewing minute, more hubris, and more denial. Blindness to justify the milking of a dying cash cow instead of adapting.

Shockingly it’s not working, with the third quarter seeing the same old story, as a significant number of customers decide to drop the bloated, expensive, traditional cable bundle:

A study this week by Morning Consult once again made the obvious point that if cable operators want to adapt to this new competitive threat, they absolutely must compete on package flexibility (giving users greater control over the channels they choose in their bundles) and price:

“The poll, conducted from Oct. 18-19 among a national sample of 2,201 adults, found 65 percent of respondents said that TV bundles force consumers to pay for channels they don?t want, with 73 percent of Americans saying they would prefer to choose the exact channels included in their cable or satellite TV packages.”

For most people, cost was the biggest reason for cutting the cord: 63 percent said the expense of a cable subscription was a major factor in dropping it, while 53 percent said the same for ending their satellite subscription. The second most common factor for cancellations, cited by 37 percent, was the ability to access all desired content through streaming services.

That cable needs to finally seriously compete on price isn’t a new message; it’s just that the industry doesn’t want to hear it.

That is largely because some of these companies (mostly cablecos) have an ace in the hole: a growing monopoly over broadband. Comcast, for example, has responded to the cord cutting threat by imposing usage caps and overage fees upon huge swaths of its barely-competitive broadband footprint to both a) raise prices on captive broadband customers, and b) use caps and overage fees to punish users for dropping their traditional cable TV packages. They get their pound of flesh one way or another, thanks to the sorry state of the broadband sector.

Again, there are no good choices here if you’re a cable and broadcast industry executive actually interesting in staying in the TV business, where actual competition is only just starting to heat up. Either you ignore consumer demand for a cheaper, better, and more flexible product and suddenly find yourself in a terrible hole and behind more agile competitors. Or you adapt, take an upfront financial hit, and at least get out ahead of a trend that’s been obvious for the better part of the last decade.

Filed Under: cable tv, competition, price