Cord cutters and subscription services

HBO’s announcement that they would be offering a stand-alone subscription service demonstrates how so-called “cord cutters” (people without a traditional subscription to a cable or satellite service) are shaping the entertainment medium. Will this change how cable and satellite TV companies do business? If they do not, will they be left behind?

Some cable subscribers have complained for years that they have to buy the entire cable package for only a few channels they actually watch. If the cable company that serves your area (and there is often only one) does not carry a channel you really want, you either have to do without or look into satellite. Both customers and pundits have argued for a la carte services – allowing consumers to pick and choose which channels we want – for years.

I have heard the arguments against this many times – big channels subsidize small channels, which could not survive unless they were bundled into a package deal. But why should consumers be told that in order to get the channels they want, they have to pay for channels they do not? Why not expand the market to people who do not subscribe to cable or satellite at all, but would do so if they could just pay for what they want?

Twenty or thirty years ago, this was a fruitless discussion, but the advent of ubiquitous broadband internet is changing the market. People can watch their TV shows on Amazon Prime, Hulu Plus or Netflix. A subscription to all three is less than $30 a month, compared to $50 – $100 for a common cable TV package. All three have smartphone and tablet apps that allow subscribers to watch anywhere, whenever they want. Many of the networks’ websites have their popular shows up the next day.

Millennials and younger are more likely to be “cord cutters,” and that population will likely expand as tech-savvy generations establish their own households and subscription services expand. Will cable and satellite TV providers be forced to offer a la carte service to keep from losing too many customers? We will see.

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