Cable companies are a dying breed

Tom Dougherty, CEO – Stealing Share

29 May 2012

Trends are going the wrong way but there are opportunities

The conundrum of cable companies is a failure of recognizing who the customer is, which means it is a failure of brand. The industry is in trouble because more and more consumers are switching to the Internet option, in which viewers simply watch Hulu, Netflix and combine it with Apple and Amazon to watch the latest shows and movies.

The only supposed ace in the sleeve of cable companies is breaking news and sports, and even that is becoming less exclusive as many of those can be seen on the Net as well. (You can even buy an iPad version of NFL Ticket.) At the moment, Time Warner Cable doesn’t carry the NFL Network.

“The real problem is that none of the cable companies haven given consumers an emotional reason for them to trust the provider to figure it out.”

The size of your cable bill is considered the largest issue, but I think it speaks to something deeper. It has to do with the world in which we live today. We, the consumer, are gaining more and more control. We control what music we listen to, and even when and what we watch. Having a time set for a particular TV show or, egad, a movie is becoming as extinct as listening to the radio for music.

cable companiesOne of the solutions bandied about is letting viewers choose the channels they pay for. But as reported here in an incisive column, Time Warner Cable CEO Glenn Britt said the answer of giving viewers the choice of networks instead of the 500 in your package is because there are too many networks. That is, it’s the fault of the networks that negotiate contracts that include all those less important networks and the fact that there’s so many of them.

That may be, but providing fewer networks or making different kinds of deals with networks is a pipe dream. Viewers do want choice. They just want to pick it.

There are all kinds of solutions being bantered about, with even TWC in talks with Netflix. And, while I think it would be a mistake for Netflix, it might be right for TWC, if it does it right.

There’s something to the pay for play model that intrigues me – and gets a bit at the cost and control issues. The problem with this, for at least the cable companies and the content providers, is that it’s difficult to build an audience that way. There would be little discovery, which means you might not have a “Mad Men” or a “Breaking Bad” succeeding under that model. But you might pick a channel – say, the Netflix channel – that combines the different offerings of different networks. They might even try something akin to what YouTube is developing.

The real problem is that none of the cable companies haven given consumers an emotional reason for them to trust the provider to figure it out. The “too many networks” idea of the tier system feels like more balderdash to a consumer, and may result in the anger consumers currently feel toward banks and car dealers. It doesn’t help matters when companies promote bundling, especially with home phones, when that goes directly against the idea of consumer control.

In essence, the cable companies and satellite providers are losing their importance. While the model is breaking, the first step for all of them is to reach audiences emotionally so they feel like leaving the plan is more dangerous to their own self-identification (and sense of modernity) than simply going it alone.


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