A Desperate Move By Cable Companies That Could Turn Ugly
Two new deals inked this week prove that momentum for streaming video services continues to build…That’s great news for consumers trying to save money by cutting the cord on cable.
But not so great for cable companies like Comcast and Time Warner who just lost a combined 1.2 million subscribers. Ouch!
Based on recent news, it looks like some cable providers are finally buckling under the pressure. Because word has it that a number of companies are preparing to make an industry-altering (albeit deceptive) change to their pricing model.
Is La Carte Prices on the Way?
News broke this week that cable providers are planning to offer a new pricing structure for subscribers: a la carte.
Essentially, this would allow consumers to choose the stations they want to watch and ditch the ones they don’t. In theory, the move would slash your cable bill considerably.
Cable providers aren’t just making the switch because their customers are rushing out the door. They’re doing it to cut their own costs.
Programming costs for cable companies have jumped between 6% and 10% annually for the past 10 years.
Consider: For a cable operator to broadcast Disney’s ESPN alone, it needs to shell out over $4 a month per subscriber, according to SNL Kagan.
Not to mention that cable and satellite providers now need to pay for “free” networks like ABC, CBS, NBC and Fox.
So giving consumers the ability to opt out of these channels allows them to keep costs down.
But if they don’t deliver on the promise, and consumers realize they won’t be saving as much as they hoped, losing 1.2 million subscribers will be just the beginning.