Light Reading

Kissing Cousins: Broadband & Pay TV

Mari Silbey
1/17/2014
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Got broadband? Then chances are you pay for TV service too.

According to The Diffusion Group, 88% of American adults with broadband at home also subscribe to cable, telecom, or satellite TV service. The numbers are higher among older cohorts, while younger adults are notably less likely to pay for television. However, even consumers in the group with the lowest uptake numbers -- adults between ages 25 and 34 -- still purchase TV service at a rate of 81.9%.

Cable operators have watched their video subs slide for years, but consumers have largely migrated to competitive services rather than abandon pay TV for over-the-top (OTT) video altogether. The big question is whether the lower rate of subscription in younger audiences is a sign that they're less interested in pay TV or just at a stage of life where TV service is less relevant or too costly.

Whatever the reason for the age-related trends, service providers are actively working to draw in younger audiences. In addition to multi-screen video delivery, cable operators are also experimenting with new service models.

Cox Communications Inc. trialed an innovative IP video service with Fanhattan LLC 's Fan TV in 2013 and reportedly has another virtual cable service under development. Comcast Corp. (Nasdaq: CMCSA, CMCSK) and Time Warner Cable Inc. (NYSE: TWC), meanwhile, have introduced lower-cost services that combine Internet delivery with a smaller lineup of TV channels and added access to premium content from Home Box Office Inc. (HBO) . (See Cox Eyes IPTV Service .)

There is also renewed interest among service providers in pursuing the university market. Philo (formerly Tivli) -- a startup that enjoys backing from high-profile investors such as Mark Cuban -- has successfully signed up several schools for its college-specific IP video platform.

Comcast has also introduced an Xfinity on Campus service. That offering launched first at Boston's Emerson College and will reportedly take off next at Drexel University. (See also Tales of Tivli: Taking TVE to School.)

There's a theory here. Hook consumers while they're young. That may be the best way to keep subscription numbers high across a lifetime.

— Mari Silbey, special to Light Reading

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albreznick
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albreznick,
User Rank: Blogger
1/21/2014 | 6:19:12 PM
Re: Cox
That would make sense, Dan. But cable operators don't necessarily always do the sensible thing. So we shall see. BTW, who's your cable operator? Comcast?
albreznick
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albreznick,
User Rank: Blogger
1/21/2014 | 6:17:46 PM
Re: Forget Pay TV
Sounds like you've cut the cord already, Sam. So is this the death knell for the traditional pay TV model? 
sam masud
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sam masud,
User Rank: Light Sabre
1/21/2014 | 9:55:59 AM
Forget Pay TV
I suspect a key reason why a lot of people, particularly younger people, pay for "traditional" TV is because often something they'd like to watch is not available immediately as OTT TV. Other than that I cannot think of a single reason why anyone would want to pay the high rates for traditional TV and, equally important, only be able to watch a program at the time it's broadcast.
DOShea
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DOShea,
User Rank: Blogger
1/18/2014 | 3:43:06 PM
Re: Cox
If the local sports issue were to really change, I'm almost more interested in first seeing how my cable TV company tries to respond. They aren't just going to let huge numbers of us go without radically changing their approach to pricing, bundles, etc., right? Maybe they shouldn't be waiting, but they must feel they can quickly revamp their whole game if this ever happens.
albreznick
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albreznick,
User Rank: Blogger
1/17/2014 | 5:59:01 PM
Re: Cox
I agree with both of you, if that's possible. More and more folks are looking for alternatives to the cable-led status quo. But many, if not most, of us have not found it yet, at least partly because we don't want to lose our precious local sportts programming. If the sports TV equation should ever change, and it just might, then the doors will fly wide open for cord cutters and shavers.     
Phil_Britt
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Phil_Britt,
User Rank: Light Sabre
1/17/2014 | 5:31:36 PM
Re: Cox
Not actively looking, but certainly keeping eyes on Light Reading to see if workable solutions become apparent. Again, the stickler tends to be sports. I don't want to pay an extra fee to watch the Bears (some games, I felt I should have been paid) and other home teams that I get, including some games on Big Ten network that is part of cable package. 

Most other video I can get online or for a lower cost than cable. Now if soomeone comes up with a way to cobble together everything I want for a lower cost, great. I think that will eventually happen as cable keeps boosting triple play costs.

However, triple play providers aren't the only culprits in boosting fees. Programming providers keep boosting the fees they charge as well. So even alternate video providers must find some way to keep increasing their revenues to keep up with rising costs.
Carol Wilson
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Carol Wilson,
User Rank: Blogger
1/17/2014 | 5:19:53 PM
Re: Cox
Ah, but you are looking, right? And that's my point - I haven't found the perfect solution het, but we're looking and when we found something reasonable, I'm happy to cut or shave the cable cord. 
Phil_Britt
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Phil_Britt,
User Rank: Light Sabre
1/17/2014 | 5:18:36 PM
Re: Cox
I hate to see the triple play costs increasing as well, but so far have yet to find a better option due to my personal viewing habits. There are some lower cost options available, but not if I don't want to pay extra for the sports programming I get via a basic cable package. I still prefer a VOIP phone over a cell at home, but do see a point where the triple play cost will not be the best option. Just haven't hit it yet.
Carol Wilson
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Carol Wilson,
User Rank: Blogger
1/17/2014 | 4:44:26 PM
Re: Cox
Those of us in triple play bundles just see our bills go up, up, and up and as much as I dislike the change process, there is tremendous motivation to explore other options arriving in my mailbox (or email) once a month. 
KBode
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KBode,
User Rank: Light Sabre
1/17/2014 | 2:15:47 PM
Cox
Did anything ever come of that Cox effort? If I remember that was the first attempt at offering an OTA solution without tying it to traditional cable authentication, but the Orange County trial lasted only a month or something. Any chance cable could explore an OTA solution like the rumored one Verizon is working on outside of their FiOS footprint? I understand the fear is cannabalization of existing legacy TV tiers, but you'd think they could avoid that via just offering smaller bundles or something.
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