Consumers have been clamoring for better cable TV pricing and more flexible channel options for the better part of the last decade, and for most of that time the broadcast and cable industry has been willfully — almost gleefully — ignoring them under the mistaken belief that the cable TV cash cow will live forever. With 2015 giving rise to a number of more flexible Internet video options, the conversation has heated up once again, leading to a very small number of companies (like Verizon) experimenting with modestly more flexible channel bundle packages where costly sports programming is broken out into its own tier.
However, the majority of cable TV executives remain with their heads planted squarely in the sand. When pressed on whether it would try to offer more consumer-friendly “skinny” channel bundles in response to consumer-driven industry trends, Time Warner Cable execs informed analysts recently that it would just be too confusing:
“There’s a lot of attraction in the press about skinny packages,” echoed Dinesh C. Jain, chief operating officer of Time Warner Cable. “I think a lot of the times, customers don’t want to get bogged down in a lot of choices to make on those kinds of things. There’s a lot of value in our triple-play packaging right now and it’s a simpler sale.”
Yes, you wouldn’t want to confuse the consumer by offering them something more competitive than you do now. And when calculating “value,” surely Time Warner Cable is including its excellent customer service, ranked worse than any other U.S. company in any industry? Time Warner Cable has been paying lip service to more flexible options since 2010 or before, yet they never seem to materialize. That’s in part thanks to broadcasters, whose programming rates continue to sail skyward utterly untethered from reason. But cable companies aren’t faultless; they raise rates wherever and whenever they can as well, whether that’s for DVR rentals, extra fees just to pay your bill in person, or sneaky below the line charges to covertly drive up the advertised rate.
At the cable industry’s Internet & Television Expo last week, cable executives again proclaimed they didn’t see the need for more flexible, cost-conscious cable lineups, because customers already get way more value than they can possibly handle:
“People have always had choice in what they buy in their subscription package,” declared Charter Communications CEO Tom Rutledge. “The vast majority of customers tend to take the larger bundle, and the reason is, it’s a damn good value,” said Time Warner Cable CEO Rob Marcus after allowing that “More flexibility is better.”
In other words, there’s no need to offer greater choice or value because we’re already really incredible at doing that. Except data across the board suggests that they aren’t.
A Reuters/Ipsos poll released concurrently with these execs’ comments found that 77% of U.S. adults say they’d prefer a la carte cable programming, a shift the industry has fought off for years by arguing it would kill niche channels (something that’s happening anyway) and raise rates (something that’s happening anyway). But it’s not just a la carte the cable industry has been resistant to; it’s any shift toward more compelling programming tiers. That same poll also found that 54% of consumers would like to be able to buy a core cable bundle that doesn’t include ESPN, and 47% don’t want cable news networks.
The cable and broadcast industry could work together to get out ahead of Internet video, but they’re absolutely terrified of offering any products that would cannibalize their traditional cable TV subscriber bases. They’re comforted by the fact that so many subscribers continue to pay an arm and a leg for bloated, expensive cable bundles, and believe that the giant pay TV fortress they’ve built will survive indefinitely. So like so many legacy industries, instead of meaningful, pre-emptive adaptation, the cable sector stands in the middle of the highway with a glassy eyed stare, confident in its resilience against the eighteen wheeler that bears down upon it.