Friday, August 2, 2013

Cable Television Subscribers Unsubscribing

Both Time Warner Cable and DirecTv reported their quarterly earnings and each share similar news.  For Time Warner Cable, a loss of 191,000 cable subscribers in the second quarter and for DirecTv, a loss of 84,000 cable subscribers.  Where once cable customers were seen switching among cable TV providers,  from cable to dish to telco, now it may be that there is the serious threat of cord cutting.  It seems that broadband access is more important to consumers then cable; broadband connects to TV like services including Netflix, Hulu, Amazon Prime, Aereo, and You Tube.  And the recent introduction of Google's Chromecast has led to an unprecedented demand for this inexpensive little device. 

The notion of the cord cutter has a small drip from the dam may just be turning into a minor stream.  But it is that fear that has cable operators shaping the conversation to investors to say that they are focusing on the better customer with the higher average revenue returned.  Maybe for now the cheaper customer is leaving now, enabling the average revenue to rise for the remaining customer base; still, that customer loss will ultimately hurt the total revenue model. 

Subscription prices are rising as networks keep demanding increases to their license fees. And customers, upset by these high costs are preferring an a la carte model to buy only the service they wish to watch.  The iTunes model of selling singles over albums has been embraced for music and perhaps it will be embraced for TV as well. 

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