Paul Wilson: Breaking Up Apparently NOT So Hard to Do With Pay TV

imagesThis week marked a watershed moment in the world of pay TV providers…

For the first time in history they have suffered a loss of 105,000 customers. U.S. cable providers make up 94% of the market, and while they have lost customers each year, this is the first, true NET loss.

That means more customers went out the back door than came in the front.

Ars Technica said, “We’re at the beginning of a major historical shift from watching TV to watching video — including TV shows and movies — on the internet or on mobile devices.”

Who’s to blame? 

Rising prices from providers, intolerable customer service, Netflix, iPads, Amazon – but maybe most of all – our lack of interest in being tied to what the programmers want us to see and the time slots they want us to see it in.

Last year started a most dramatic decline when 280,000 fewer customers were added, up from 175,000 additions in 2011. And it goes without saying; market share is declining as well. Cable providers had nearly 60% of the market three years ago, for 2013 they could end less than 50% share. All said that amounts to 5 million cable customers that are getting their viewing pleasure elsewhere in the past 5 years.

I can remember about three years ago being part of a conversation where Ali, the hip and trendy author of the local blog “Gimme Some Oven” made the comment that she was giving up cable and using Hulu exclusively.

images-1Three years ago, that was pretty forward thinking. Today it looks like the coming, new norm.

People move, they change providers, they shift between satellite and cable, but on balance, the providers could count on trading 500,000 new subscribers a year between themselves. Nothing gained and nothing lost in the market, just an exchange of customers between companies, similar to what cell providers experience.

From this day forward, they will never again see net gains.

Providers are reaching for every life preserver possible from new packages to lower pricing to more on demand offerings, but the writing is on the wall.

They have seen the enemy and it is us, the customers. 

There are two anomalies in this market share decline; the satellite providers Dish Network and DirecTV.  And traditional landline telephone companies like Verizon AT&T’s U-verse and our own, local CenturyLink’s PrismTV, formerly United Telecom/Sprint. These providers, with a few exceptions, serve customers with fewer choices in the marketplace, many are more rural customers; meaning they may be able to hold on a little longer.

Another interesting fact partly to blame in the decline, is consumers who never order new service as they move into new homes. That seems to be a demarcation in making the decision to leave cable when they leave their old house.

There’s no turning back now, it’s the official decline of an industry that always thought, arrogantly, it had a monopoly.

In some ways it goes to show you, don’t treat your customer like you are the monopoly provider so that they have no choice but to accept what you offer. That works great as long as you are the monopoly provider and they have no choice but to accept what you offer.

But the minute they do have a choice, rats on a sinking ship can’t get off as fast as an unhappy customer.

 

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8 Responses to Paul Wilson: Breaking Up Apparently NOT So Hard to Do With Pay TV

  1. Jess says:

    Do you think that in 10 years that pay tv will be said in the same breath as Blockbuster and the payphone? Having a business model of “well, where are they going to go?” is a good way to go out of business.

  2. chuck says:

    Very interesting stuff Paul.

    Anything new on the TWC – Comcast merger?

    Would that merger be a finger in the dyke?

    Don’t, just don’t…

  3. mike t. says:

    must. join. 21st century. kicking and screaming while holding a death grip on my dvr and landline. but wait, mike, there’s a little port on the back of your tv that you just plug a dongle in, go Wi-Fi and VOILA! subscribe and stream Hulu, Netflix, etc. Right there for you! easy peasy. now, do the math… what do you save? or do you spend more? and if more, what price convenience? oh the demands of it all…

  4. Libertarian says:

    Well….maybe folks are tired of paying for a service, only to have something they dont want shoved down their throats, at an over-inflated price?

    Let the customer (remember the customer? they are purpose of your business) choose what they want, and charge them accordingly.

    Economics 101…..

  5. Guy Who Says What Others Think says:

    It will be interesting to see how Google Fiber takes off, and how it affects the market. Paul…it’s always been my contention that if the providers move away from channel packages and go with ala carte programming, the biggest losers in the deal would be sports fans who watch alot of ESPN. Right now, there are a TON of people paying for ESPN and it’s networks that don’t watch it because it’s on a basic tier of programming. So they are footing the bill for all the ESPN viewers. If that’s taken away, sports fans are going to be paying for ESPN and it’s channels like it was HBO or Showtime. Your thoughts?

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