What Cord Cutting? Cable Sector Hiked TV Prices 40% In Last Five Years
from the blind-deaf-and-dumb dept
We've noted time and time again that the cable and broadcast industry could compete with cord cutting by lowering prices, it just chooses not to. Even with last quarter seeing the biggest quarterly defection by paying subscribers ever recorded, time and time again you'll see sector sycophants proclaim that cord cutting either doesn't exist, or has been violently over-hyped and isn't worth taking seriously. In fact, most sector executives still believe that the shift away from traditional cable will magically end once Millennials start procreating (protip: it won't).As such, they've continued to raise cable TV rates at an absurd rate in the belief that they can keep milking the legacy cable TV cash cow in perpetuity. And while broadcasters certainly take the lion's share of the blame for raising the cost of programming, you'd be hard pressed to find a cable TV provider that isn't making things worse by also saddling consumers with misleading fees for nothing and soaring cable box, modem, and other hardware rental costs.
The end result is users paying 40% more for cable TV than they did just five years ago. In fact the average cable bill is now $103.10 per month, an increase of 4% in the past year. And while the cable sector is quick to proclaim that this just reflects the "increased value" of cable TV, the reality is that most cable ops are trimming back overall channels to try and offset the bloated, soaring cost of sports programming.
While it remains true that the vast majority still subscribe to cable TV and cord cutting is a slow trickling phenomenon, last quarter saw 800,000 pay TV customers leave for cheaper pastures. And things are actually a little worse than that when you remember that cable TV subscriber totals aren't scaling with a rebounded housing market. In other words, millions of people are not reconnecting cable after they move:
"About 82% of households that use a TV currently subscribe to a pay-TV service. This is down from where it was five years ago, and similar to the penetration level eleven years ago," said Bruce Leichtman, president and principal analyst for Leichtman Research Group, Inc. "The rates of those exiting the category, or intending to leave, are actually similar to recent years. The decline in penetration is also due to a lack of those who are coming into the category, and the industry not keeping pace with movers and related rental housing growth."A different study this week predicted that TV providers could lose nearly $1 billion in revenue as another 800,000 customers cut the cord over the next 12 months:
The study, which is based on an online survey of 1,119 U.S. customers, estimates that pay-TV providers lose about $1,248 per cord-cutter annually. That’s because the average cord-cutter saves $104 a month—about 56% of their bill--from dropping cable TV...“The consumer is discovering they don’t need the mean, evil cable company to get the content that they want, and they can get it for a better deal,” said Steve Beck, managing partner at cg42. A $1 billion loss of revenue is small for the entire pay TV industry, but it is a warning sign.And it's a warning sign that's going to continue to be ignored by the cable and broadcasting industry. It's abundantly clear that beyond lip service to "innovation," the cable sector doesn't plan to do the one thing that would stop cord cutting dead in its tracks: lower rates. Instead, knowing full well they hold a monopoly over the broadband last mile, they've decided to raise rates on broadband via usage caps and overage fees. Should customers continue to cut the cord, skyrocketing broadband usage surcharges will simply let them grab their expected pound of flesh in a different way.
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Filed Under: cable, cord cutting, price hikes
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Not just cable providers.
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Re: Not just cable providers.
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That is what they tried to pull on me. A double speed increase, but when i pressed for details they finally relented and let me know that their amazing price was only for three months and required one of their most expensive TV packages. If I signed on it would have been a high sticker shock.
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People ain't dealing with their shit anymore.
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It annoys me when profits not gained are described loses.
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It's like that small bleeding that won't stop and slowly increases everyday. Once they realize it's bad it will be in full blown hemorrhaging and too late to fix. Which is why broadband is in serious risk since the same content producers/deliverers are the same company. If the Govt doesn't act the future will be dark to the internet users in the US.
It's about time ISPs are forbidden from offering anything other than connectivity.
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Make all infrastructure common-carrier.
Disallow "limits" on any of the common-carrier infrastructure, including cell towers.
Mandate "minimum" data rate plans, rather than "up-to" data rate plans.
Advertised rate is the absolute minimum you will get, 60 * 60 * 24 x 7 * 365.25 a year. Prorate when outages occur.
No overages allowed, ever.
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The only way to break this abuse is to forcibly separate the DUMB PIPES from the content providers and delivery.
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Like HD NBC channels is only available with a comcast cable subscription, all streaming and non-network NBC is forced to 240i. Or something as despicable.
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And the Death Spiral Begins...
(target revenue / # subscribers) = monthly bill
will reach a point where no remaining subscribers can afford it. That will be fun to watch.
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Oh, wait. You're saying it's undefined? Well, then executives can still define it as success!
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As the cost of service increases, they lose subscribers, which increases the cost of service, which loses subscribers, et cetera ad nauseam. It's a self-reinforcing cycle, and if they don't do something about it right now (such as accepting lower revenue rates, or improving customer experience) they have no chance of avoiding the forthcoming point of criticality which starts the runaway chain-reaction.
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i used HBO Go for game of thrones and cancelled it 15 minutes after the season ended. I use netflix and amazon prime for everything else along with an HD antenna..
the cable companies can go to hell
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Textbook
How does a monopoly respond to new technology? Legislate against it.
The only reason for a monopoly is if a service would not be provided by the market due to the high cost. That is not the case today, so why does cable television/broadband remain a monopoly in most US markets?
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Better than cord cutting!
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My favorite encounter with this was with an alarm company (or was it pest control? I forget). They promised a similar price fix and no ETF if I broke the contract within a month (we were in a cellular dead zone and they could not guarantee their alarm system would actually work until it was installed and tested). So I told him to write it on the contract. He said he could not, but he had a separate official looking paper he wrote on. I told him to reference that in the contract and sign the separate document. He would not he said it was just as binding, even if he didn't sign it because that is what he promised. I showed him the entire agreement clause. He shrugged and left. I went with a different company.
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tiny, little caveat:
double means what they want it to mean
internet means what they want it to mean
speed means what they want it to mean
and, of course, my means what they want it to mean
other than that, it means what you think it does.
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Not just cost savings
Neither of them knew what a commercial was, so they yelled at each other for changing the channel... then my wife and I tried our best to explain what was going on, but they kids just wouldn't accept it (they even, thought we we're trying to trick them into watching something else)
Then they kids realized that they couldn't pause whatever they were watching ("Daaaaaaaad! the remote is broken!").
But the part they hated the most was not being able to start whatever show they wanted when they wanted. They didn't want to watch any of the 'On-Demand' shows offered by Xfinity, they wanted something else...
So, even if Cable TV in my area cost half of what I was paying for Netflix + Hulu(and Add-ons) and Crunchroll, we wouldn't want it.
Sorry Cable, even if you take cost out of the equation, you still don't compete.
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Everything they watch is youtube or netflix.
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MIssed problem
The price increases represent almost exclusively increased fees paid to the various services and channels they provide. Huge increases in costs for everything from CNN to over the air channels is a huge issue.
it's pretty easy to figure out: The cable companies haven't grown their bottom lines by 40% (or more, as in theory any increase for a profitable company would go directly to the bottom line). Rather, they end up paying out the increases.
Cable companies are actually a bit of the victim in this situation - and they pass that pain on to consumers. It's not the cable companies milking the golden cow to death, it's the content providers making it too expensive for people to buy the content.
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even Andrew Orlowski thinks Cable is dying
Wow, do I wish that site offered an Orlowski filter.
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