Covid-19 Just Triggered The Worst Quarter Ever For Cable TV 'Cord Cutting'

from the the-check-is-coming-due dept

2019 saw a record number of consumers ditch traditional cable television. 2020 was already poised to be even worse, and that was before a pandemic came to town. With the pandemic not only sidelining live sports (one of the last reasons many subscribe to traditional cable in the first place), while putting a strain on many folks' wallets, cord cutting has now started to truly take off. Wall Street analyst Craig Moffett, who a decade ago suggested such cable TV defectors were irrelevant, has long since changed his tune.

In his latest research note to investors, he laid out the reality for traditional cable TV providers, and it's really not pretty. It's particularly ugly for satellite TV providers like Dish Network and DirecTV:

"Traditional Pay TV subscriptions fell by a record 1.8M in Q1, the worst quarterly result on record, bringing the annual rate of decline to 7.6%, also a record. Things were particularly bad for satellite TV, where subscriptions plunged by over 1.0M for the third quarter in a row, bringing the annual rate of decline to a worst-ever 14.3% (the number would be worse still if we were to include lost bars, restaurants, and hotels temporarily suspended at Dish Network).

Traditional cable TV providers like Comcast fared "better," but it's still simply not pretty:

"Cable’s decline of 0.6M subscribers in the quarter, for annual growth of -4.0%, looks positively gentle by comparison. But it, too, was the worst on record. At 63% of occupied households, traditional Pay TV penetration has reached a level not previously seen since roughly 1995. There are now as many non-subscribing households (46M) as there were Pay TV subscribers in 1988."

Granted many of these companies had more than a decade to get ready to combat this very obvious trend, and instead decided to double down on all the things that drive users to the exits: high prices, endless price hikes, inflexible cable channel lineups, and terrible customer service. The idea for many broadcast and cable execs has been to milk this dying cash cow for as long as was possible before actually attempting to adapt. We've now reached the point where doing nothing simply isn't going to work.

But even the companies that made a fleeting effort to pivot to cheaper, more flexible streaming services (AT&T, Sling TV) got pummeled last quarter:

"The vMVPDs, once viewed as the last line of defense for cable networks, imploded in Q1,” Moffett writes. Collectively, he estimates they lost 341,000 subscribers in the quarter. “Sony’s PlayStation Vue service shut down at the end of January. Their ~500,000 subscribers appear to have gone ...nowhere. AT&T TV Now (formerly DirecTV Now), Sling TV, and (we believe) fuboTV all lost subscribers. Disney’s Hulu Live TV appears to have hit a wall in the wake of multiple price increases, growing by only ~100,000 subscribers in Q1, an abrupt deceleration from their recent torrid growth. Even YouTube TV, by far the fastest-growing of the lot, couldn’t pick up all the slack. Total subscriptions, including both traditional and vMVPDs, are now shrinking by 5.3% per year. Yes, that, too, is the worst ever."

There's a number of reasons for that. AT&T, for example, tried to jack up the price of its streaming video services to recoup massive debt incurred by its recent bout of mindless megamerger mania. As the streaming sector began offering users too many siloed exclusives, the confusion and cost of hunting and pecking drove many users to piracy. Many other users simply migrated to over the air antennas. And that's before you get to the fact that many younger viewers don't see the point of cable TV in any form, and prefer simply watching YouTube or Tiktok for free.

To be clear, the cable TV sector still laid claim to 83 million subscribers in the United States by the end of last year. And many of the biggest companies (like AT&T, Verizon, and Comcast) should be fine, given they can just jack up the price for broadband thanks to regional monopolies over internet service. But with the dearth of sports and consumer financial headaches likely persisting throughout 2020, downplaying or ignoring one of the biggest trends in TV history is no longer an option for some of the least liked companies in American industry.

Filed Under: cable tv, cord cutting, covid-19

Cable TV Customers Are Rightfully Pissed They're Still Paying For Cancelled Sports Programming

from the pay-a-lot,-get-a-little dept

For years, consumers have been bitching about the high cost of sports programming as it pertains to your monthly cable bill. Especially for those who don't watch sports, but are often forced to pay the sky high prices for sports programming as part of a bloated cable bundle anyway. One survey a few years ago found that 56% of consumers would ditch ESPN in a heartbeat if it meant saving the $8 per month subscribers pay for the channel. The "regional sports fees" tacked on to subscriber bills have also long been a point of contention because they're often used to help falsely advertise a lower rate.

This is the "norm" in more normal times. During a pandemic, sports have largely been cancelled, but consumers are still shelling out big bucks for sports programming that costs them an arm and a leg. That's resulted in a spike in complaints to NY Attorney General Letitia James, who this week announced she would be asking the nation's six biggest traditional cable providers to reduce or eliminate fees related to sports programming while there's, you know, no sports:

"At a time when so many New Yorkers have lost their jobs and are struggling, it is grossly unfair that cable and satellite television providers would continue to charge fees for services they are not even providing,” said Attorney General James. “These companies must step up and immediately propose plans to cut charges and provide much needed financial relief. This crisis has brought new economic anxiety for all New Yorkers, and I will continue to protect the wallets of working people at every turn.”

Many users pay upwards of $20 in monthly fees for sports programming that no longer exists. That's in addition to the $40 to $50 of each $100 cable bill sports programming is responsible for. But when users call to complain or ask for refunds, they're just ignored. Cable providers aren't exactly thrilled either, with Dish Network saying it wants a break from the $80 million to $100 million fees it pays ESPN for April sports broadcasts given there, well, aren't any. While many sports networks have adapted to the pandemic by airing a lot of reruns, they're not actually airing the content everybody pays an arm and a leg for.

And while cable providers may not like it, they can at least pass those costs along to the consumer, whom experts say is the real loser in the equation:

"One would think that sports network programmers would credit distributors for channels paid for when they can't deliver the content that was promised," LightShed says. Unfortunately, "distributors such as Comcast have to pay sports network programmers regardless if what content airs, and in turn, the consumer is the loser."

That said, charging for services you don't actually provide has long been the MO of the cable and broadcast sector.

Cable TV has, for more than a decade, been plagued by obnoxious feuds between broadcasters and cable providers that routinely end up with consumers losing access to content they pay for. Broadcasters repeatedly want more money for the same programming (often sports), then demand higher rates from cable providers. Cable providers balk, the two sides pout and black out content, and consumers repeatedly lose access to content they pay for. Almost never do you see refunds, and regulators usually treat these feuds as "boys will be boys" behavior between gentlemen, not worthy of intervention.

The problem is that unlike broadband, cable TV is becoming an increasingly competitive market thanks to the rise of streaming alternatives. For many, sports was one of the only reasons to still subscribe to traditional cable TV. With no sports, analysts expect the rate of cord cutting to increase. Traditional cable and broadcast executives already had an extreme allergy to competing on price and channel bundle flexibility, and without their ace in the hole and many consumers facing economic hardship, the sector is going to find charging an arm and a leg for bloated cable TV bundles a far more difficult proposition than ever.

Filed Under: cable tv, covid-19, fees, laticia james, pandemic, sports, subscriptions

Google Fiber Ditches Cable TV While Broadband Effort Remains Stuck In Neutral

from the empty-promises dept

When Google Fiber first dropped in 2010, the project was lauded as a game changer for the broadband industry. Google Fiber would, the company insisted, revolutionize everything by taking Silicon Valley money and using it to disrupt the viciously uncompetitive and anti-competitive telecom sector. Initially things worked out well; cities tripped over themselves offering all manner of perks to the company in the hopes of breaking free from the broadband duopoly logjam. And in some areas where Google Fiber was deployed, prices certainly dropped thanks to Google Fiber market pressure.

The party didn't last.

In late 2016 Alphabet executives made it clear that the company had grown bored with the high costs and slow pace of trying to disrupt the broadband market (if Google can't afford it, who can?). Employees were fired, the project was effectively mothballed, and all expansion was halted. The company bandied around a few suggestions it would pivot from fiber to wireless, but those efforts never actually materialized. While Google Fiber still offers service, the entire project now exists as a weirdly hollow brand that keeps smiling despite having been lobotomized four years ago:

Meanwhile, Google's product lineup continues to shrink. The company last week announced it would no longer offer traditional cable TV service because it was, allegedly, returning to basics:

"As we return our focus to where we started — as a gigabit Internet company — we’re also ready to challenge the status quo, to finally come right out and say it: customers today just don’t need traditional TV."

The move itself really isn't a terrible idea. As the pay TV sector gets dominated by giants (AT&T Time Warner and Comcast NBC Universal) that own both the conduit and the content, the cost of providing that content is only soaring. Many smaller cable TV providers are also getting out of the TV business to focus on broadband because margins are getting tighter. And Google isn't getting out of traditional TV entirely given it still offers live television via its YouTube TV live streaming service, which will now be upsold to Google Fiber users.

The problem for Google is that its promise to refocus on being a "gigabit internet company" really isn't true. There hasn't been a meaningful expansion of the service outside of a few key launch markets for years, and there's plenty of frustration and annoyance among users who had been on the installation waiting list for years, only to have their installations cancelled. Even Google's promised pivot to wireless, driven in part by its acquisition of Webpass, has resulted in less actual broadband availability.

All the while, the company's PR department continues to pretend there's nothing really weird about any of this, and should you ask them about it, you'll receive ample claims that everything is continuing normally.

To be clear, Google Fiber did yeoman's work highlighting a lack of competition in the U.S. broadband market. But the project is a faint echo of its original intent, and it seems awfully likely that sometime in the next few years the entire program gets offloaded to some incumbent telecom giant for a song.

Filed Under: broadband, cable tv, competition, failure, google fiber, tv
Companies: google

Smaller Cable Companies Are Giving Up On Cable TV Altogether

from the unsustainable dept

As giants like Amazon, Apple, AT&T, and Comcast rush to dominate the TV market, smaller cable providers are suddenly finding themselves unable to compete. Pay TV margins have been tightening for years, and without the kind of scale enjoyed by companies like AT&T/DirecTV/Time Warner or Comcast/NBC Universal, smaller cable companies have warned for years how they would probably have to ditch the TV business and focus exclusively on broadband.

Some companies, like Kansas cable TV provider Rainbow Communications, are finally following through on those promises. The company sent a letter to its customers this week (hat tip, Cord Cutters News) informing them they'd be shuttering their cable TV operations, and suggesting impacted customers should probably go check out this whole streaming video thing:

"You’ve probably heard about streaming TV. Streaming is watching TV over your internet connection, and now with new applications, you can stream shows on television sets. While Rainbow will not be your TV provider moving forward, your new digital picture and sound can be delivered over our Rainbow internet service. When you combine our high-speed internet with HD-picture, the clarity will surprise you.”

It's the beginning of what's expected to be a fairly ugly shake up as the long-unsustainable pay TV sector transitions from "wink wink" competition to a new streaming video fist fight. Gone are the days where cable TV providers could neglect customer service and charge $130 a month for a bundle of 500 channels nobody actually watched. Under the new reality, margins are tight as hell, and unless you're doing double duty as a cable provider and broadcaster, you're not going to have the scale to be able to compete with massive giants with the leverage of scale.

But good news (for them)! Because U.S. broadband is so painfully uncompetitive, most of these smaller cable companies can shift entirely to broadband, where they can raise rates largely with impunity. They can also impose arbitrary and unnecessary usage caps and overage fees, letting them both jack up the cost of broadband service, and cash in on the streaming video services they're now pushing captive broadband customers to. That same lack of competition will also let them ignore the abysmal customer service the cable sector is historically known for.

In other words, most of these companies can simply pivot from overcharging you for cable TV to overcharging you for cable broadband, while saving costs on program carriage fees and traditional cable infrastructure.

Filed Under: cable tv, competition, cord cutting, over the top, streaming, tv
Companies: rainbow communications

Comcast Says It Will Respond To Cord Cutting In 2020 With...More Price Hikes

from the that's-not-how-this-works dept

Cord cutting continued to set records in 2019 despite years of cable and broadcast executives trying to claim the trend wasn't actually happening. Now that they're finally acknowledging the threat is real, many of these same executives are doubling down on the kind of behavior that brought them to this point in the first place.

For example, Comcast's Q4 earnings report released this week shows the company saw a 3.2% drop in traditional cable TV subscribers in 2019, double the 1.6% loss rate the company saw 2018. How does the company plan to tackle the customer exodus driven by ramped up streaming competition from the likes of Disney, Apple, and others in 2020? Why even more price hikes, of course:

Keep in mind, US consumers already pay some of the highest rates for fixed and mobile broadband in the developed world. These latest price hikes are occurring the same time Comcast's cable division CAPEX dropped 10.5% in 2019. You know, the exact opposite of what the Ajit Pai FCC promised when it obliterated FCC authority over telecom providers at lobbyist behest.

This isn't the first time Comcast has made it clear that its strategy to tackle the rise in streaming competition and fleeing users is to just double down on price hikes. Company executives have noted several times that any money they lose on television, they simply make up for on the broadband side:

"Watson added that while Comcast tries to keep customers through a variety of programming and broadband packages, but added that when a customer leaves as a result of price, the impact is actually favorable to the company. “We segment the marketplace,” Watson said, adding that when a low-end customer drops video service over price, but keeps their broadband service – at a higher monthly charge – the company makes out better.

Oddly the reason this is possible is something most analysts and trade magazines don't much like to talk about for whatever reason: Comcast's growing monopoly over broadband and its stranglehold over state and federal regulators and lawmakers.

As US telcos give up on residential broadband, they're giving giants like Comcast and Spectrum an even greater monopoly over faster broadband across massive swaths of the country. So when users in those markets cut the TV cord and move to streaming, Comcast's free to sock them with rate hikes, nonsensical fees, and bogus usage caps and overage surcharges. Because there's no competition and currently no federal regulators looking out for consumers, there's no penalty for this behavior. The telecom lobby has even tried to ban states from stepping in to fill this vacuum and protect users from monopoly harm.

While 5G is often bandied about as a free market panacea for what ails the US telecom sector (ie "we don't need to fix this problem because amazing wireless will soon arrive to save the day"), many of these same problems plague wireless as well (regulatory capture, competition eroding consolidation, regional fiber/backhaul monopolies, etc.). In short, without healthy competition or functioning regulatory oversight you shouldn't put too much stock in giants like Comcast being forced to give much of a damn anytime soon.

Filed Under: cable tv, competition, cord cutting, internet access, price hikes
Companies: comcast

New Law Finally Bans Bullshit Cable TV Fees

from the better-late-than-never dept

For a decade we've talked about how the broadband and cable industry has perfected the use of utterly bogus fees to jack up subscriber bills -- a dash of financial creativity it adopted from the banking and airline industries. Countless cable and broadband companies tack on a myriad of completely bogus fees below the line, letting them advertise one rate -- then sock you with a higher rate once your bill actually arrives. These companies will then brag repeatedly about how they haven't raised rates yet this year, when that's almost never actually the case.

Despite this gamesmanship occurring for the better part of two decades, nobody ever seems particularly interested in doing much about it. The government tends to see this as little more than creative marketing, and when efforts to rein in this bad behavior (which is really false advertising) do pop up, they tend to go nowhere, given this industry's immense lobbying power.

But something quietly shifted just before the holidays. After a longstanding campaign by Consumer Reports, The Television Viewer Protection Act of 2019 passed the House and the Senate last week buried inside a giant appropriations bill that now awaits President Trump’s signature.

The bill bans ISPs from charging you extra to rent hardware you already own (something ISPs like Frontier have been doing without penalty for a few years). It also forces cable TV providers to send an itemized list of any fees and other surcharges to new customers within 24 hours of signing up for service, and allows users shocked by the higher price to cancel service without penalty.

The bill's not perfect. Because of the act itself it largely only applies to cable TV, not broadband service where the problem is just as bad. And cable TV providers can still falsely advertise a lower rate, thanks to what appears to be some last minute lobbying magic on the part of the cable TV sector:

"Initial versions of the legislation actually had the provision as truth in advertising, so you had to advertise the entire fees,” said Jenna Leventoff, senior policy counsel at Public Knowledge, a Washington-based public-interest group. “But it’s still an improvement over what currently exists, because you have a right to cancel after signing up."

The trick now will be enforcement by a government and FCC that has routinely shown it's entirely cool with industry repeatedly ripping consumers off with bullshit fees to the tune of around $28 billion annually:

"We seriously hope the cable industry doesn't try to game its way out of complying with a very straightforward disclosure requirement: let consumers know what they will actually pay each month once all the fees are tacked on to the advertised price,” emailed Jonathan Schwantes, senior policy counsel with Consumer Reports, which lobbied for this bill. “And we hope cable operators can do so well before the six month enactment date, and not ask the FCC for an extension for doing something so simple."

Filed Under: broadband, cable tv, hidden fees, television viewer protection act, truth in advertising

Shockingly, Cable TV and Broadband Customer Satisfaction Is Still The Worst In America

from the ill-communication dept

Every few years or so, giant cable and broadband companies like Comcast will proclaim that they've finally seen the light, and will be spending time shoring up their terrible customer service. Like a few years ago, when Comcast proclaimed it had hired a "Customer Experience VP" who would finally make addressing the company's historically terrible customer service a top priority. CEO Brian Roberts also can be found at least once a year claiming that the company is going to finally address the problem by hiring better people, improving support systems, and generally revisiting the company's policies.

But year after year, big cable and broadband companies fail to deliver. Case in point: the latest American Consumer Satisfaction Index was recently released, and ISPs and cable providers continue to see the worst customer satisfaction scores in America. These companies are so bad at what they do, they're routinely bested by even everybody's favorite punching bag: the IRS. When it comes to broadband service on a scale of 100, both Comcast and Charter (Spectrum) continue to see the worst scores in an already terrible sector:

"Internet Service Providers didn’t fare any better than cable companies with the overall industry ratings at the same 62. The only three ISPs with rankings above the average are Verizon FiOS (70), AT&T Internet (69) and Altice (63). At the bottom of the rankings are Frontier (55), MediaCom (56), and Windstream (57). The big cable companies don’t fare well as ISPs – Charter (59) and Comcast (61)."

Things are equally bad on the cable TV front, where despite the rise of competition from streaming providers, incumbent cable ops still can't seem to figure out this whole "treating customers with respect" thing. While most hated industries (airlines) rank in the 70s and more popular brands (Amazon) reach the 80s, cable TV remains struggling in the 50s and 60s:

In the TV sector, the emergence of streaming video has offered consumers some reprieve. Streaming providers like Netflix, Hulu, and Amazon routinely rate much higher in customer satisfaction because they give consumers what they've been screaming for for years: lower prices and more flexible channel bundles. Ultimately, cable operators will be forced to actually compete on price, but they're apparently waiting until countless millions of their paying customers have fled to greener pastures before actually seriously overhauling their business models. Still, competition in the TV space is rising either way.

The broadband space is less promising. With no meaningful regulatory oversight and little competition, there's really no incentive to improve customer service or offer a better product in most markets. The focus remains on growth for growth's sake (megamergers) and scale, without scaling customer service in symmetry. The end result should be fairly obvious, given the broadband sector ranks worse than a long list of widely despised sectors like the airline, banking, and insurance industries. That kind of accomplishment requires some serious, sustained elbow grease and the kind of monopoly myopia money simply can't buy.

Filed Under: broadband, cable tv, customer satisfaction
Companies: at&t, charter, comcast, frontier, spectrum, verizon, windstream

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

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

Cord Cutting Accelerates Faster Than Expected, As Cable Still Refuses To Compete On Price

from the inevitability dept

As we just got done noting, roughly 5.4 million Americans are expected to cut the TV cord this year, thanks largely to the rise in cheaper, more flexible streaming TV alternatives. And while some traditional cable TV providers have responded to this challenge by competing on price and offering their own cheaper streaming alternatives (AT&T's DirecTV Now, Dish's Sling TV), most of the cable and broadcast sector continues to double down on the very things causing this shift in the first place. Like a refusal to invest in customer service, an obsession with mindless merger mania, and seemingly endless price hikes.

Companies like Comcast have tried to stall this natural evolution by striking marketing partnerships with Netflix and including Netflix in their set top boxes, in the apparent hopes that users won't get rid of traditional cable if they're already getting Netflix as part of their monthly cable, broadband, and phone bundle. But data released this week indicates that this effort to stop cord cutting by cozying up to Netflix isn't really working, and cord cutting is accelerating at a rate notably faster than many analysts predicted:

"Even as traditional pay TV providers form partnerships with former over-the-top (OTT) rivals to retain customers, cord-cutting continues to outpace projections. According to eMarketer’s latest figures, the number of cord-cutters—adults who have ever cancelled pay TV service and continue without it—will climb 32.8% this year to 33.0 million. That’s higher than the 22.0% growth rate (27.1 million) projected in July 2017."

Comcast cozying up to Netflix isn't working because the industry continues to misread the situation. Customers are cutting the cord primarily due to the high cost of mandatory, bloated cable bundles filled with channels nobody actually watches. Comcast's solution was to include a Netflix subscription -- but only if you subscriber to Comcast's higher end TV bundles, something that certainly doesn't address the actual problem.

The report proceeds to note that users are drawn to streaming alternatives for a number of reasons, not least of which being the rise in quality original content at Netflix, Hulu and Amazon, but the lack of obnoxious, hidden surcharges and fees:

"The main factor fueling growth of on-demand streaming platforms is their original content,” eMarketer principal analyst Paul Verna said. “Consumers increasingly choose services on the strength of the programming they offer, and the platforms are stepping up with billions in spending on premium shows. Another factor driving the acceleration of cord-cutting is the availability of compelling and affordable live TV packages that are delivered via the internet without the need for installation fees or hardware."

So why aren't more cable companies competing on price? While cable companies that charge an arm and a leg for DVRs and cable boxes aren't blameless, broadcasters largely dictate programming pricing. And while that's not as big of a deal for companies like AT&T and Comcast that are broadcasters, it's an untenable situation for smaller cable ops, who already have pretty tight profit margins on pay TV due to high broadcaster rates. The same broadcasters who will, of course, be partially responsible for the steady price hikes we're also starting to see in streaming services.

But companies like Comcast refuse to compete on TV pricing for another reason: they know that a lack of competition in broadband (which is actually getting worse in many areas) means they can relentlessly jack up prices for broadband to recoup any lost revenue on the TV side of the equation. That means not only higher overall prices for broadband, but the implementation of usage caps and overage fees, unnecessary surcharges that not only make broadband more expensive, but make cutting the cord more difficult and costly as well.

Filed Under: cable tv, competition, cord cutting, tv
Companies: at&t, comcast, netflix

Survey: 5.4 Million Americans Will Cut The Cable TV Cord In 2018

from the inevitability dept

The rise of cord cutting shows no sign of slowing down. As cable providers continue to raise prices yet refuse to seriously address their dismal customer service, nasty billing fraud problems and skyrocketing prices, more users than ever are flocking to a new variety of cheaper, more flexible streaming alternatives. Some cablecos have attempted to get out ahead of this trend by offering their own competing services (AT&T's DirecTV Now, Dish Network's Sling TV), but most traditional cable providers seem intent on just doubling down on the same bad ideas that started the cord cutting trend in the first place.

The result is an obvious one. A new report indicates that more than 5.4 million cable TV subscribers are expected to cut the cord this year, resulting in a $5.5 billion loss in revenue for traditional cable TV providers like AT&T, Comcast, Charter and Verizon. That hit comes in comparison to the 4.8 million traditional pay TV subscribers lost in 2017, and the 3.8 million lost in 2016. It's all thanks to this mysterious thing known as competition:

"As the process of finding alternative paths to content gets easier and easier, people are acting on the frustrations they have with traditional providers and leaving,” the study’s lead author and cg42 managing partner Stephen Beck told MarketWatch."

Charts from the full study, which is stuck behind a $2,000 paywall, lays things out pretty clearly for companies like Comcast:

Remember of course, that this is a trend that cable and broadcaster execs spent years claiming either wasn't real, or didn't matter because things would auto-correct once Millennials started procreating. That incredible denial was in turn propped up by industry metric organizations like Nielsen, which were happy to tell industry executives precisely what they wanted to hear (that this was a trend that would be easily reversible without having to oh, actually do all that much). As the report notes, that head in the sand approach isn't really paying dividends:

"Accelerating the cord-cutting trend is a lack of brand loyalty borne out of frustration, said Beck. Survey respondents were asked to rank their top frustrations by pay-TV provider. Beck found customers were most frustrated with being unable to get what they considered competitive or “reasonable” rates, new customers getting better deals than existing ones and being “nickeled and dimed” with multiple fees and charges.

Based on the survey data and information from public filings, cg42 predicts Comcast will lose 7.2% of its 21.3 million subscribers in 2018, a potential financial loss of $1.6 billion for the company. The firm also predicts AT&T’s DirecTV will lose 4.8% of their 24 million customers and a potential $1.2 billion.

These days, most executives do tend to acknowledge the trend is real (it's pretty hard to ignore at this point), but they still aren't particularly keen on actually doing anything about it. They're stuck between a rock and a hard place: denying the trend is real and refusing to compete on price will simply accelerate defections. But buckling to demand, shoring up customer service, and offering less expensive, more flexible channel bundles will hurt revenues. That said, it still makes more sense to be ahead of a trend with a quality offering in the field, than playing catching up with streaming alternatives that have slowly built a solid brand following.

A big reason for this apathy among many industry giants is they know they have an ace in the hole: their monopoly over broadband. As TV revenues sag, providers are simply turning to price hikes, usage caps and overage fees (aka, even more arbitrary and unnecessary price hikes) in order to make cutting the cord and streaming as expensive as possible. And, thanks to napping regulators, the death of net neutrality, an apathetic, cash-compromised Congress, and a lack of real broadband competition in countless markets nationwide, not much is going to be done about it.

Filed Under: cable tv, cord cutting, internet, tv