News Analysis
Can Low-Cost Packages Save Cable
TV?
By Swanni
Washington, D.C.
(January 25,
2012) -- Cable operators are
scheduled this week to begin releasing their fourth quarter
financial reports -- and if past trends continue -- they will
likely report that they are still losing video subscribers.
Due to increased competition from telco TV services, the
sluggish economy and some company bungling, cable ops from
Comcast to Time Warner Cable to Cox have reported significant
losses over the last two years. Video subscribers are either
fleeing to cable's pay TV rivals such as DIRECTV or Verizon or
they are cutting their subscription TV service entirely.
But several cable operators are now striking back with a bold
move that could keep more video customers in the fold. They are
offering low-cost programming packages designed to appeal to the
economically-strapped consumer.
For instance, Cox yesterday unveiled a 20-channel package called
'TV Economy' for $34.99 a month. The package, which is available
now in several Cox markets, includes all of the Cox basic
channels but does not include ESPN, reports Multichannel News.
(Fierce Cable writes that
TV Economy is now available
in parts of New England, Louisiana, Virginia and San Diego, with
more markets expected to be added soon.)
By stripping ESPN from the package, the cable operator is able
to offer it for a lower price. ESPN charges one of the
industry's highest carriage rates.
The idea behind TV Economy is that many consumers would like to
keep a basic cable TV service, particularly one that includes
the local channels, but can not afford a sports/basic cable
package that might cost around $60. At $34.95, consumers might
decide to stay with Cox rather than subscribing exclusively to
an online video service such as Netflix.
Time Warner Cable was the first to introduce the low-cost
package concept, unveiling its $29.99 a month TV Essentials plan
last September. Comcast later offered a $24.95 a month plan.
Nether package includes ESPN.
"Cox is now adding TV Economy
as one of our standard service offerings as part
of our continued effort to provide a variety of
options that serve our customers' needs and suit
their budgets," a Cox spokesman told
Multichannel News.
Commentary:
I think this is a smart move
by the cable operators. They have to do
something to stop the bleeding and offering an
affordable programming package in today's
economic scene makes a lot of sense. Plus, if
they can keep video subs from leaving, they
might decide to upgrade to a more expensive
package when the economy starts to improve.
