Thursday, June 5, 2014

(TV) Cable TV Providers: Under Pressure?

While it’s no secret to close observers of the trend to cut the cord of increasingly expensive Cable TV providers, the US cable still hasn’t found an answer to the growing trend of consumers deciding switch their allegiance to big cable’s direct competitors: Satellite, telecoms, and video streaming services.

Companies, especially big ones, have many pros and cons but the biggest con all big companies have is that they do have a tendency to shoot themselves in the foot. Cable TV providers as consolidated and concentrated as group of firms can get without a round anti-trust suits making the news, have made the mistake of raising prices on their subscribers as if there aren’t any alternatives out there that can provide their customers the content they love as and when they want it and for a whole lot cheaper.

The growing subscription fees offered by cable TV providers  have trigged a spree of cord cutting to the point it’s actually a cultural phenomenon, a cultural phenomenon that may cost them dear.     

According to a report in the LA Times, Cable TV providers will suffer a notable drop in household penetration as “more people are expected to embrace lower cost options, including free programming and online video services such as Hulu, Netflix and Amazon Prime Instant Video”[1].

This demand for cheaper alternatives to cable is being driven by a dual wedge of cable TV providers themselves jacking up the price for their services and people becoming increasingly cost conscious which means the new market household marker for TV subscriptions will be lost because “The high-cost of TV subscriptions has prompted families to switch -- and discouraged some younger consumers from getting their own TV subscription when they leave their parents’ homes”[2].

The big winners from this growing consumer diverge away from cable will be Satellite and telecoms giants such Direct TV and AT&T as Satellite TV providers stand to add 1.8 million customers to their already massive pool of subscribers and Telecom giants such as Verizon and AT&T are expected to pick up a massive 5.4 million subscribers in the next four years[3].

With news like this, it’s no surprise there has been a round of big mergers most notably between Comcast and Time Warner and, tellingly, between Direct TV and AT&T.

However, it’s not all bad for cable TV providers as they are well placed and currently are focused on exploiting the demand for content across a number of devices. The demand for content across a number of devices has shot up as according to a report by the New York Times “Mobile video viewing went up 57 percent over the same time last year, and overall online video was up 43 percent, representing more than 35 billion viewings”[4].

The “TV everywhere” trend has also been a great ally for cable TV providers as it has helped them maximize their advantage over their growing list of competitors: sports programming. According to the New York Times “TV Everywhere viewing rose 246 percent… driven mainly by interest in sports programming”[5].

In sum, Cable TV providers are under pressure but it’s pressure they can handle, for now at least.

[1] M. James, 2014, Cable TV predicted to lose customers to phone and satellite firms,
[2] Ibid
[3] Ibid
[4] M. Wood, 2014, TV Apps Are Soaring in Popularity, Report Says,
[5] Ibid

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