Time Warner’s leverage during the CBS fight, which included a 31-day blackout of CBS programming for its subscribers, probably was stronger then that it ever will be again. Some 92 million households see the programmers’ content via cable and satellite television subscriptions. CBS needs pay TV subscribers to build ad revenues and audiences that will watch even more episodes on Internet outlets like Amazon.com (AMZN) and Netflix (NFLX). That’s why CBS didn’t get everything it wanted from Time Warner when the dust settled.
But Time Warner, like all cable companies, needs programming even more. Without popular content, it can’t continue to sell cable subscriptions. NFL games, “Under the Dome,” “Big Bang Theory” — some of the most popular programs on air now – are provided by CBS through channels that include Showtime, TMZ and Smithsonian. That’s why Time Warner mostly caved to CBS demands, reportedly roughly doubling the fee-per-subscriber it paid CBS. It’s also a reason that Time Warner shareholders were more shaken up by the blackout than CBS shareholders.
NYSE:TWC data by YCharts
The results of this incident don’t bode well for traditional pay television outlets like Time Warner, Directv (DTV), Comcast (CMCSA), DISH Network (DISH), and Charter Communications (CHTR), who will almost certainly see their bargaining power erode further in the future. Even before the Time Warner/CBS brawl, these program buyers were acknowledging in regulatory filings that negotiations over programming fees are likely to get more difficult and disruptive in the future.
It’s hard to exaggerate the problem this presents for cable and satellite companies and their shareholders. Winning the fee wars – or at least minimizing their damage — is one of the most important jobs cable executives do to keep shareholders happy. Programming fees represent the single biggest expense for most traditional pay television companies. If Time Warner, one of the largest cable companies in the country, couldn’t wrestle CBS down very far, its competitors won’t likely fare well either. Rising programming costs is one reason the industry’s costs have been growing.
TWC Cost of Goods Sold TTM data by YCharts
Programming companies like CBS and Walt Disney (DIS) have the advantage of a growing market for their content outside of cable and satellite TV. Apple (AAPL), Google (GOOG) and Intel (INTC) all scramble to get into TV series streaming over the Internet along with Netflix, Amazon and Hulu.com. While TV series streaming isn’t a huge market yet, it’s certainly where the growth is. Netflix has trouble with rising content fees too, but its revenues are running up fast enough to keep the share price rising quickly.
NFLX Revenue TTM data by YCharts
Cable and satellite TV subscriptions, on the other hand, have been falling off steadily since about 2006. They’re down some 769,000 subscribers in the second quarter alone, according to a report in The Hollywood Reporter Wednesday.
A more devastating blow may come later from HBO. Traditionally, cable and satellite companies could rely on HBO to trap customers for them, as HBO has steadfastly refused to stream its programs for viewers that do not subscribe to traditional pay TV. However, HBO reportedly is in negotiations with Apple and Google. For the first time, viewers may be able to bypass those cable and satellite bills to watch “Boardwalk Empire,” “Game of Thrones,” and HBO’s other wildly popular content.
For now, the markets are viewing the Time Warner/CBS settlement as a reprieve for the cable and satellite companies. Cable shares, in particular, remain popular because of the fast growing businesses they are building in selling Internet connections.
NYSE:TWC data by YCharts
Internet services have a long way to go before they replace traditional pay TV. But a transition is on the way, and the programmers see it coming. For cable and satellite investors, the situation is disturbingly reminiscent of another industry that found itself split between new technology and old. Telecom companies like Verizon (VZ) and AT&T (NYSE:T) found their traditional landline subscribers falling off more than a decade ago. They still struggle from the drag of those divisions even while their mobile technology divisions go great guns. As their meager share price gains over the years show, one declining old school business can dampen the joy of investing in a company for a very long time.
Dee Gill, a senior contributing editor at YCharts, is a former foreign correspondent for AP-Dow Jones News in London, where she covered the U.K. equities market and economic indicators. She has written for The New York Times, The Wall Street Journal, The Economist and Time magazine. She can be reached at email@example.com. Read the RIABiz profile of YCharts. You can also request a demonstration of YCharts Platinum.
Majority users still watch SD, even on HDTVs
Ken Simpson is one of those “the best camera is the one you have in your hand” kind of guys. What gives Ken Simpson the street cred to rag on REDHeads and their obsession with ultra high definition (UHD) resolution? Well, Ken has the dubious distinction of being lauded as the director of the first film shot on the iPhone. But that isn’t really what gives his argument heft. It’s the research he provides to say what Philip Bloom and Ryan Walters have been saying all along. That 4K is a want, not a need.
I’ve noticed a bizarre trend recently, of filmmakers shooting 4k for webseries. For the web! As if it something before was holding them back. – Ken Simpson
For the full story go here:
I don’t see how the broadband providers don’t kill this deal in it’s sleep. They will start putting caps and added cost to heavy internet users. Unless the FCC gets involved (maybe legal, who knows) the cable providers can’t let their competition clog their networks with more OTT programing.
This could get ugly…real quick.
Sony’s PlayStation, which is in tens of millions of homes, is the backbone of a TV plan.
By BRIAN STELTER
Published: August 15, 2013
In a deal that may signal the start of a new era of competition for entrenched cable and satellite providers, Viacom has tentatively agreed to let its popular cable channels — like Nickelodeon and MTV — be carried by an Internet TV service that Sony is creating.
The agreement is believed to be the first of its kind between a major programmer and any of the technology giants that are trying to disrupt traditional modes of TV delivery. If other programmers follow suit, Sony’s as-yet-unnamed service would let paying subscribers receive live cable channels the same way they use on-demand libraries like Netflix or Hulu. Intel and Google are working on similar services, but try to make it more user-friendly, perhaps the way Netflix does with personalization features and a fancy interface.
Most households today have only a few choices for television service: whatever cable company serves their local area, be it Comcast, Time Warner Cable or others, and two satellite providers, DirecTV and Dish Network. In some parts of the country, television through Verizon or AT&T is also available. Analysts say cable delivered through the Internet could give households many more choices — if the new services give customers more for their money and if cable incumbents don’t smother the services.
To even have a chance, companies like Sony and Intel need the permission of programmers, and that’s why the Viacom deal is considered a breakthrough. Although Viacom and Sony declined to comment on Thursday, a person directly involved in the negotiations confirmed a Wall Street Journal report about the agreement. The person insisted on anonymity because the companies were not prepared to comment on the record.
Having the news spread was advantageous for Sony, though, because having Viacom on board — even just on a preliminary basis — will most likely help the company complete other carriage deals. The company has also contacted other top programmers, like the Walt Disney Company and Time Warner.
That Viacom — which has more than 20 channels, including big ones like Comedy Central and small ones like Centric — was the first to agree to support Sony’s fledgling service is not necessarily surprising, since the company has a reputation for contentious relationships with cable and satellite companies. Last year, Viacom channels were blacked out in DirecTV households for nine days. Sumner Redstone controls both Viacom and the CBS Corporation, which is blacked out in three million Time Warner Cable households because of a contract dispute.
Time Warner Cable, and to a lesser extent other TV providers, has thrown up roadblocks for new entrants by inserting language into some carriage contracts that discourages programmers from selling its channels to Internet TV services. The existing providers say they just want to ensure that the upstarts don’t get better terms, like broader video-on-demand rights or cheaper rates for channels.
Most likely, Sony will pay higher rates — one of the downsides of being new and untested. Any deals between programmers and the Sonys of the world will keep the TV bundle intact, despite occasional public agitation for an “a la carte” option.
“I don’t think the classic pay TV subscription bundle model of television is going away anytime soon — it’s a pretty compelling and cost-efficient smorgasbord,” particularly for older Americans, said Tim Hanlon, a former media agency executive who now runs the Vertere Group. “But all bets are off with the under-40 set — the growing group of folks who just want their video content when and where they want it, preferably without the messy commitment part,” he added.
Sony is well-positioned to reach younger Americans because its PlayStation video game console is already hooked up to TV sets in tens of millions of homes. The company has said almost nothing about its intentions, but it has been interested in selling a bundle of channels at least since 2011. Its TV service could also be made available in the future via smartphones, tablet computers and other devices.
Sony hopes to start selling the service in the fourth quarter of 2013 or the first quarter of 2014, said a media company executive briefed on the plans for it.
If Sony’s service (or another one like it) gets off the ground, incumbents like Comcast, Time Warner Cable and Verizon are also likely to sell their own versions, furthering this new type of competition. What no one knows — but everyone in the industry wonders — is whether these Internet cable services will steal market share; entice people who do not currently pay for any channel bundle to sign up; or fail to sign up customers at all.
The overall number of American households paying for television has remained remarkably steady in recent years, though there are some slight signs of fraying around the edges. Mr. Hanlon said he sensed that as younger viewers were getting better at “cobbling together their own workarounds to all-or-nothing content packages,” the “smart programmers are starting to carefully position themselves to take advantage, just in case the classic carriage model starts to break.”
Of course, all of the alternatives being dreamed up in Silicon Valley and elsewhere are B.Y.O.B. — Bring Your Own Broadband. Video is data-intensive, and data caps or stiffer monthly charges for broadband imposed by companies like Comcast could inhibit the establishment of virtual cable services. In a recent interview, the departing Time Warner Cable chief Glenn Britt acknowledged as much when he was asked about Intel’s interest in TV.
“The reality is, if everybody watched TV over the Internet, and we were out of the TV business, then we would have to recover more money from the Internet service,” Mr. Britt said.
Developing this ability is a powerful tool, no matter what position you occupy in life. We can all become more effective if we set out to develop our third ear. It helps us appreciate what’s driving other people and aids in making better decisions.
But many people have trouble listening with both ears, let alone developing a third ear. There is a misconception that digital natives have not developed the capacity to communicate face to face, to be fully present in the moment in order to hear those who are trying to communicate with them. The truth is, for most of us, our ears need syringing.
What can we do to improve our capacity to listen more effectively? Here are eight practical tips:
Get Inspiration From Psychologists
We can learn a thing or two from those who are in the business of listening for a living. For example, psychologists say that people have three common ways of hiding a problem: They might tell you something important just as they are about to leave the room; they might only mention the safe parts of their story; and they might share important information indirectly. When you use your third ear, you use your gut feel to sense if any of these things are happening.
For example, you remain present with the person to the very end of the conversation, rather than start to pick up your phone or look through papers on your desk as the person is leaving. Give them their full moment with you. As well, when you listen attentively, without distraction, you are more likely to notice gaps. You can probe the gaps gently, pause and help people share what was left unsaid. Listen also for how people express themselves. Not everyone is comfortable saying it as it is. Some people’s style is to skirt around issues rather than be outspoken. Help them out. “It’s been somewhat challenging” might mean “I am angry because goals for this project keep changing.” When you listen for the sub-text, you can do your part by drawing attention to the elephant in the room. You end up having an entirely different conversation.
Spare the Advice
American journalist Ambrose Bierce said, “Advice is the smallest current coin.” There is much truth in this satire. Unsolicited advice is rarely appreciated—it’s the equivalent of showing up at someone’s house unannounced. We also give advice in the form of stories. No one is really interested in our war stories. This well-meaning behavior disrupts the listening process because it gets us to switch from hearing the person out to forcing them to hear what we have to say. Most people are usually under an obligation to politely sit and listen to advice. Stifle your need to dispense advice. Make space for people to speak, let silence do its part, and you might find that they’re more likely to share from the heart. We never know what we may miss when we rush to fill the air with our words.
Determine Your Goal For Each Relationship
We’ve all heard the usual advice for developing better listening skills through active listening: paraphrasing, summarizing, verbal and non-verbal encouragements, and asking clarifying questions, to name a few. These are all important recommendations. However, to truly develop your ability to listen with the third ear, it goes beyond that. It’s not about a mechanical “point and click” process. Being good at it requires heart. It requires a genuine desire to connect with the person as one human being to another. It’s about building a relationship, and there is no more powerful way to do this than with a genuine effort to truly hear what people are saying; to intuitively understand where they’re coming from, and what they are leaving unsaid. When this happens, it creates a strong bond that engenders trust and loyalty. There’s no doubt that listening moves us closer to each other.
One way to do this is to consider your goal for each relationship. For example, your goal for one of your team members may be to boost her confidence so that she can take on greater responsibilities. When you listen with the third ear, you have an opportunity to uncover her anxieties. It’s only by understanding where these are coming from that you can meaningfully help the person progress in her job.
Fling The Door Wide Open
Many leaders say they have an open door policy. While they mean well, in reality, often people’s perception is that the door is left ajar, and not everyone is welcome through that door. That’s because those on lower echelons don’t always feel safe walking in to bring forward issues that need airing. In his Leadership Primer, Colin Powell states, “The day soldiers stop bringing you their problems is the day you have stopped leading them. They have either lost confidence that you can help them or concluded that you don’t care.”
Think about the culture in your department or team. Is there truly open communication? Are there any tacit sacred cows that no one would dare bring up? Have you made it absolutely clear, not only from your words, but from your demeanor and style of leading, that the door is wide open for everyone, no matter the rung they occupy on the corporate ladder? Unfortunately, people’s perceptions becomes their reality. Blow the barriers to communication. Making yourself truly accessible to listen to everyone is one of the most clear messages you can send that you care.
Put Listening On Your Learning Agenda
Some people are blessed with the gift of being good listeners. We know who they are because we feel good when we walk away from having spent time with them. The encounter with these people is usually calmer than with others because we feel heard, we feel that we didn’t have to struggle to get a word in the conversation, and we weren’t interrupted in mid-sentence. These people are soothing to the spirit. The truth is, they are a minority in a noisy world. Given our differing temperaments, it’s unrealistic to think that we can all aspire to be that way. But we can all benefit from improving in this area.
Start by doing a little soul searching to come to terms with how you truly show up. If you’re not naturally predisposed to being a good listener, make it a point to include this in your self-development as a leader, both in your personal and professional life. Listening is a learnable skill, if you truly commit to make it an imperative in your growth. Enroll in a strategic listening class, or work with a business coach who uses an experiential approach to help you practice the desired listening behaviors. The International Coach Federation has a free Coach Referral Service with a searchable directory of international, ICF credentialed coaches.
Know Your Weaknesses
Perhaps one of your weaknesses is impatience—you are harried and you want people to cut to the chase. You may feel you know what they’re going to say anyway, so you interrupt them. In this brilliant video, organizational consultant Tom Peters says that most managers are 18-second listeners. That’s how long they will listen before interrupting. Does this describe you? No one can really teach us how to change this; we have to consciously make the decision to stop these habits that are damaging to us and to others.
In Power Listening: Mastering the Most Critical Business Skill of All, Bernard T. Ferrarri identifies six types of poor listeners: the Opinionator (squelches ideas that don’t match his own; listens only to reload his rebuttal to others’ input); the Grouch (everyone else’s ideas are wrong); the Preambler (windy lead ins, self-serving, questions are simply stealth speeches); the Perseverator (talks a lot but doesn’t say much; doesn’t advance the conversation); the Answer Man/Woman (spouts solution before there is even a consensus of what the challenge might be; desperately eager to impress); and the Pretender (not really interested in what you have to say; feigns engagement; may have already made up his mind or just couldn’t care less). Be honest with yourself and recognize if you sometimes unwittingly fall into one of these categories.
Beware Of Assumptions
We all make assumptions when we listen. These can hinder our ability to fully understand what is said. Try this sobering 2-minute listening practice test to see how well you are at active listening. The results may surprise you. Train yourself to listen attentively, and don’t rush to fill in the gaps with your own interpretation. Get in the habit of pausing and asking yourself: “Is my interpretation an objective evaluation of what I heard, or am I making up my own version of what I heard?”
On some occasions, listening signals intellectual humility. It means acknowledging to ourselves and others that we don’t have all the answers, that others have as much of an opportunity to be right as we do. It’s being comfortable with being wrong. Above all, it’s approaching a conversation with a beginner’s mind: open to learning from others; deciding to temporarily abandon our need to sound authoritative; staying wide open to the possibilities of what we hear. Doing this takes us away from an ego driven state to an enlightened state. It frees our mind to be fully present, it silences the background noise in our head, and we are more predisposed to listen attentively. As Margaret J. Wheatley put it, “We have the opportunity many times a day, every day, to be the one who listens to others.” There’s a lot to gain from this.
Read more articles on leadership.
Bruna Martinuzzi is the founder of Clarion Enterprises Ltd., and the author of two books: Presenting with Credibility: Practical Tools and Techniques for Effective Presentations and The Leader as a Mensch: Become the Kind of Person Others Want to Follow.
Author, Presenting with Credibility: Practical Tools and Techniques for Effective Presentations
More proof that DVRs have entered the mainstream has emerged with fresh consumer research from Leichtman Research Group.
The research and analyst firm found that 52 per cent of households in the US that subscribe to a multi-channel video service have a Digital Video Recorder (DVR), compared to 4 per cent of TV households that do not subscribe to a multi-channel video service. In addition, 43 per cent of all households with a DVR now have DVR on more than one TV set. About 20 per cent of all TV households now have DVR on more than one TV set, an increase from 6 per cent five years ago.
The survey also found an increase in Netflix subscribers having a premium service (51 per cent of Netflix subscribers who subscribe to a multi-channel video service this year versus 43 per cent last year, and 40 per cent in 2010), and a decrease in those who would consider dropping a premium service because of Netflix (20 per cent this year versus 36 per cent last year, and 32 per cent in 2010).
Other related findings include:
- 71 per cent of Telco video subscribers, 63 per cent of DBS subscribers, and 42 per cent of cable subscribers, have a DVR
- 81 per cent with DVR on more than one TV set rate the service 8-10 (on a 1-10 scale with 10 being excellent) – compared to 73 per cent with DVR on one TV set
- 70 per cent of all digital cable subscribers have used VOD – compared to 58 per cent in 2007, and 25 per cent in 2004
- Overall, 59 per cent of digital cable subscribers, and 64 per cent of Telco video subscribers, used on-Demand in the past month
- 68 per cent of VOD users who also have a DVR agree (8-10) that their TV service is better because they have both VOD and DVR
- 26 per cent of Netflix subscribers use Watch Instantly daily, and 59 per cent weekly
- 79 per cent of Netflix Watch Instantly users use it to watch movies and TV shows on a TV set
These findings are based on a survey of over 1,300 households throughout the United States, and are part of LRG’s study, On-Demand TV 2012: A Nationwide Study on VOD and DVRs. This is LRG’s eleventh annual study on this topic.
“The percentage of all TV households in the US with a DVR has essentially doubled over past five years, and DVR is functionality is expanding to more TV sets in the home,” said Bruce Leichtman, president and principal analyst for Leichtman Research Group. “Consumers are increasingly integrating DVR, as well as VOD and Netflix, on-Demand TV viewing into their TV viewing patterns.”
New consumer research from Leichtman Research Group (LRG) finds that 86 per cent of US households subscribe to some form of multi-channel video service. While major multi-channel video providers reported a cumulative increase of less than 1 per cent of subscribers over the past three years, penetration has slightly declined over that time as a result of a larger increase in the number of rental housing units. Multi-channel video penetration essentially peaked at 88 per cent in 2010 following the digital transition, having increased from 82 per cent in 2005.
Among TV households that do not currently subscribe to a multi-channel video service, 40 per cent subscribe to Netflix, 11 per cent to Amazon Prime, and 7 per cent to Hulu Plus – in total, 42 per cent of non-subscribers get at least one of these three over-the-top (OTT) services, and 58 per cent of non-subscribers do not get any. Overall, this results in 8 per cent of all TV households watching over-the-air (OTA) broadcast TV only (down from 10 per cent in 2010), and 6 per cent watching a combination of OTA and OTT programming. This group includes about 1 per cent of all household that do not subscribe to a multi-channel video service primarily because they can watch all that they want via the Internet or Netflix.
These findings are based on a telephone survey of 1,319 households from throughout the United States, and are part of a new LRG study, Cable, DBS & Telcos: Competing for Customers 2013. This is LRG’s eleventh annual study of the topic.
Not to steal a page from Mark Twain, but it appears the reports about the death of the Blu-ray have been greatly exaggerated.
The entertainment industry has found a way to revive previously sagging sales of Blu-ray Discs by offering digital download versions of the titles, known as electronic sell-through (EST). Combined, Blu-ray Discs and EST staged a remarkable comeback in the first half of 2013, with sales up 24 percent, according to The Digital Entertainment Group‘s “Mid-Year 2013 Home Entertainment Report.”
While overall consumer spending rose 2 percent compared to the first half of 2012, sales of Blu-ray Discs and EST rose at a much faster clip, underscoring the favorable consumer response to the convenience and ease of digital collections and the increased availability of digital content at retail. The increases in Blu-ray and EST sales offset the declines in DVD sales leaving total sell-through flat versus a year ago.
DEG’s data show:
Blu-ray Disc sales continued to grow steadily in the first half of 2013 with consumer spending up 15 percent compared to 2012. Sales of new release product on Blu-ray rose 19 percent during the first half of 2013 and catalog titles on Blu-ray were up more than 8 percent versus the first half of 2012.
Digital distribution provided additional growth in the first half of the year due to a healthy consumer reaction to EST, which led to a 50 percent increase in EST consumer spending compared to mid-year 2012. The overall consumer spend on digital product was up more than 24 percent versus a year ago.
With more than 10,000 film and TV titles available to watch on an array of devices, UltraViolet has grown to 13 million accounts. The digital viewing experience is now available to consumers through major retailers in six countries, the latest being Australia and New Zealand.
More than five million Blu-ray Disc compatible devices were sold in the first half of the year (inclusive of BD set-tops, PS3s and HTiBs). There are now more than 61 million Blu-ray compatible devices in U.S. homes.
By Demitrios Kalogeropoulos
August 4, 2013
Americans are sending bigger checks to their cable companies these days. Both Comcast (NASDAQ: CMCSA ) and Time Warner Cable (NYSE: TWC ) reported last week that they’re collecting more cash from subscribers lately. And while it’s true that big cable is after bigger profits, that’s not the only reason bills are on the rise.
Here’s a look at the trend in average monthly revenue per customer for the two cable giants:
Source: Time Warner and Comcast financial filings.
It’s important to note that these figures include high-speed Internet and phone services in addition to straight-up cable programing. That said, let’s dig in to exactly why the numbers have been spiking.
Higher speeds and more services
First, people are opting to upgrade to higher Internet speeds. While Time Warner’s video revenue rose by just 3% last year, the company’s high-speed data sales leapt by 14%. The same goes for Comcast. It saw high-speed Internet revenue rise by better than 9% over each of the past two years while cable sales crept up by 1.3% and 2.5% in 2011 and 2012, respectively.
Bundling is also doing its part to raise average bills. The number of “triple play” subscribers on Time Warner’s books jumped by 12% last year as it persuaded more folks to subscribe to all three of its major services: voice, data, and cable. With additional services attached to our bills, it’s no wonder we’re paying more in total.
And content is getting more expensive for cable companies, giving them a good reason to raise prices. Time Warner’s programming costs spiked by 6.4% in 2012 thanks to a rise in sports-related broadcasting expenses. Comcast expects its content costs to jump by 10% this year. The culprit? You guessed it: sports programming.
That’s been a boon for the likes of Disney (NYSE: DIS ) , which owns ESPN. Disney reported a sharp rise in affiliate income last quarter that was driven by a 7% bounce in the prices it charges for ESPN. To some extent, cable companies have just been passing those extra costs on to consumers.
But we can’t let Big Cable off scot-free. Increased fees and plain old pricing changes have been a factor in rising cable bills as well. For example, Time Warner credits price increases and “an increase in equipment rental charges” as helping its revenue last quarter. Comcast says “rate adjustments” contributed to boosting sales toward that record $160 monthly figure last quarter.
Overall, both companies managed to book higher total revenue despite losing a small amount of cable subscribers. The loss from those cord-cutters was more than offset by sales gains from other services.
Pay-TV subscribers are a tough bunch to keep hold of.
DISH Network (NASDAQ: DISH ) lost 78,000 of them last quarter. Comcast (NASDAQ: CMCSA ) saw 159,000 vanish from its books. Time Warner Cable (NYSE: TWC ) had 191,000 of them bolt in the second quarter.
All told, about 380,000 fewer people are paying for TV video service than at the same time a year ago, according to a Moffett Research report cited by the Wall Street Journal.
Sure, many of these companies booked higher revenue, as gains in broadband and other services offset the loss of video subscribers. And while the cancellation numbers are bad, they don’t point to a quick collapse of the pay-TV model. This year’s defection figures are actually a bit lower than 2012’s. Still, pay-TV providers are in a serious bind. Programming costs are forcing them to hike prices, while online video services can keep prices low and soak up all of the subscriber growth.
These shows don’t come cheap
Content costs have been spiking all around. Comcast’s programming expenses grew by 8.1% last quarter. Thanks to more fees and the higher price of sports content, the company expects costs to rocket higher by 10% over the full year. Time Warner Cable saw its costs jump by 8.5% last quarter, as well.
The tricky part for pay-TV providers has been passing those rising expenses along to customers. They’ve been using a mix of price increases and service fees to keep their average revenue figures climbing along with their expenses. But with each tick higher, more customers decide to end their TV video service.
Choices are getting better
That decision is getting easier now that the alternatives have improved. Amazon.com‘s (NASDAQ: AMZN ) streaming service boasts 41,000 movies and TV shows available at no extra charge to Prime subscribers, as compared to the 18,000 titles it claimed a year ago. Netflix (NASDAQ: NFLX ) is spending upward of $2.5 billion annually for content, including hundreds of millions on exclusive and original shows.
Sure, these streamers are paying higher prices for their programming, too. But one major advantage they have is flexibility when it comes to choosing content. If a show or package gets too expensive, they can walk away, as Netflix did this year with its Viacom deal for MTV and Nickelodeon shows. Paying less than $10 per month, most online streaming subscribers expect to find something they want to watch — even if it isn’t exactly what was available on the service last month.
Contrast that situation with DISH Network’s latest quarter. Price increases sent the company’s per-subscriber revenue up by $3.30 to hit $81 a month, but the cancellation rate spiked along with it. Pay-TV providers can’t help but continue to price subscribers out of the lower end of the market.