Customer trending for current MPVD market long-term looks bleak if cable and satellite operators do not come up with serious intervention tactics. That is the report released by ABI Research on Oct 22, 2012 as indications of continual MVPD sub loss on at least a 0.5% scale annually. This may not seem dramatic but as the report points out, the impact to revenues at risk is $16.8 Billion.
Consumer Seeking Alternatives
Consumers are looking for alternatives in Pay TV market providers as cable and satellite operator pricing is tied to expensive bundles. While this strategy worked for many years in providing customers with more programming, both wanted and unwanted, the disillusionment of both pricing and product is driving the OTT market to continued gains tearing away at fortress of traditional bundling strategies.
Both cable and satellite distributors miss the point when just offering APPS that sink to customer video accounts. This solution does offer more choice in viewing per device but fails to address the fundamental cause of subscriber defections which relates to price vs. product inflexibility.
Warning to Current MPVD’s
MVPDs are not without sufficient warning on current price bundling models. Industry experts have been predicting the (all or nothing) bundles forced on consumers would eventually collapse of its own weight. While the trend is slow and moderate, it is gaining momentum as predicted.
HBO Direct to Consumers
Rumblings from around Internet news organizations hint of a possible shift in a HBO GO distribution policy, with the launch of HBO Nordic in Scandinavia as a stand-alone HBO service by-passing cable and satellite distributors. As Reed Hastings alluded to in a recent earnings letter to shareholders, this will be a pre-cursor to HBO changing its current U.S. distribution policy. “We think it will make strategic sense eventually for HBO to go direct-to-consumer in the U.S., and become more of a competitor to Netflix.”
That would be significant in the implications of current migrations of cable-satellite consumers to purchasing HBO separately along with a Netflix (NASDAQ: NFLX) service for a (Lite Pay TV Package) speeding defections to OTT operators. Will this push traditional Pay TV market operators to change their current offerings? It is undeniable that if HBO GO introduces a stand-alone service in the U.S. the current migration to OTT from traditional cable-satellite offerings would be increased significantly. Current trends are undeniable that consumers are searching for alternatives to high-cost Pay TV bundles.
MPVD’s Need Lite Package Offering
Both cable and satellite operators must look to change their relationship with current customers, one that addresses the demand for both cheaper and liter Pay TV packages to compete effectively going forward. An offering of a program package lite priced to meet current OTT models would go a long way to stem the erosion of their customer base. However, just offering peripheral APP’s as a way to compete will not get the job done.
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