Tuesday, November 6, 2012

Cable Video Subs Dropping for Time Warner Cable

Whether we choose to believe that cord cutting is the reason cable operators are losing subscribers, the truth is that they are.  The high costs of a cable subscription service coupled with the cost for broadband access and hardline telephone service means that users are taking it all, dropping all services or cutting back.  And with a high cost to subscribe to cable services, the decision to drop the service when budgets are tight can be an easy one.  Especially as we rate our broadband access higher than cable. 

For Time Warner Cable, the proof in this loss of video subscribers is found in its quarterly earnings statement.  "Time Warner Cable lost 140,000 residential video subscribers, more than the 128,000 that analysts had estimated. The cable provider also added fewer Internet and voice customers than analysts projected, a sign Time Warner Cable is struggling to market the correct bundles of services to its customers, said Paul Sweeney, an analyst at Bloomberg Industries."  So while broadband and phone is showing gains, video is not.  But Time Warner Cable is not alone.  other cable operators are facing the same results.

Costs are most likely to blame.  As consumers find themselves spending more time on the webthan in front of the TV, the value proposition has changed.  And while consumers would prefer a lower cost cable bill, paying for the channels they watch, programming agreements make it difficult for cable operators to carve out lower bundles of service or offer a la carte pricing.  As Dish customers learned, if you can't watch The Walking Dead on AMC, you can watch episodes on the web.  And it is that transition that is hurting video subscriptions for all cable operators. 

We have become show watchers, not network watchers.  We barely know what network a show is carried on, especially when we DVR it or watch on demand.  We search for the show, not the network.  And as these shows are offered on Hulu, Netflix, and other platforms, we can choose the best platform value for our household to watch on.  Unfortunately, costs of service continue to rise.  And as consumers seek lower, cheaper ground to watch from, eventually, the costs to watch on these new digital platforms will rise as well, and consumers will eventually transition again. 

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