Money for Nothing
Imagine an industry where a business charges its customers for services that the end user doesn’t even ask for, want or ever use. To top it off, they also provide some of the worst customer service in the history of mankind. The cable industry has built a large and successful business by following those mantras and every generation went along for the ride, up until now. Millennials have taken advantage of faster internet speeds and streaming services such as Netflix and Hulu Plus to lead the charge against cable behemoths such as Comcast, Time Warner and Cablevision to change their ways or else.
Adapt or Die
With consumers nowadays demanding more for less and an array of networks finally having the balls to go at it alone, the cable industry has been turned upside down and so-called cord-cutters are shifting the landscape toward the consumer.
Standalone premium networks such as HBO and Showtime have launched their own streaming services for a reasonable monthly fee to much success. The larger networks are also slowly coming to their senses. They’ve come to grips with the idea that people only are only interested in consuming the content they care about, not having bundles shoved down their throats for an inflated cost.
Networks that have been slow to adapt are finding budgetary reasons to be concerned nowadays. ESPN for example has the largest carrier fee of any network at roughly $6.61 a month per subscriber, according to SNL Kagan. They have recently parted ways with grossly overpaid and undertalented host Keith Olbermann and reneged on moving its flagship morning show, “Mike & Mike”, out of Connecticut and into New York City. The belt tightening has begun!
The evolution of ESPN as a network and as a brand has coincided with the rise of millennials’ buying power. Although initially positive for the network, the powerful Disney-owned company has since seen a negative impact from cord-cutters and increased competition The marquee sports news show Sportscenter has also seen a dip in ratings, as more viewers have the ability to watch highlights at a moments notice via smartphones or through social media.
Cord-cutting has hurt ESPN’s bottom line as the sports network has lost 3.2 million subscribers in over a year according to Nielsen data. It has also had to pony up even more money for the right to broadcast games from leagues such as the NBA which saw its rights fees triple to roughly $1.47 billion according to the Wall Street Journal. As ESPN officially begins to watch its waist size, expect many of its on-air personalities to depart during contract negotiations, which may not be a bad thing!
Although roughly blamed for 9 out of 10 of the current problems in the United States, millennials should be praised for finally pushing the cable industry into an innovation stage. Sling TV, a subsidiary of Dish Network, was launched via the web in 2015 with millennials specifically in mind.
“We know that millennials, that this is primarily targeted for, love some of the content that’s available on cable and satellite, but they don’t like the model of two-year contracts, credit checks, commitments, installers, wires and all of that,” Sling TV CEO Roger Lynch said in an interview. Lynch followed up those comments to discuss how cable operators wouldn’t perceive Sling TV as a threat since they would still make money from selling broadband connection to customers. Sling TV, which currently offers ESPN, CNN, TBS, Cartoon Network and others all for only $20 per month, has reportedly grown to 250,000 subscribers in five months.
A company like Sling TV coming to fruition in the past would have seemed highly unlikely. Leave it to the most diverse, politically savvy and well-educated demographic to push a stale industry to finally change. It’s okay, you can thank them later.
If You Can’t Beat’em, Join‘em
Comcast, after failed negotiations to take over the cable universe via a Time Warner Cable acquisition, has come to the forefront of a la carte pricing for its television subscribers with its recently released “Stream.” The new service offers a $15 per month plan that will include shows from HBO, NBC, Fox, NBC and other major networks. The one-and-only catch is that you must currently be an Xfinity customer, which means the service will only work through a Comcast internet connection.
In a prepared statement, Comcast said “It’s unlike anything we’ve ever offered: no extra device or additional equipment required…or even a TV.” With the added bonus of being able to sign up or cancel the service via the web, we would tend to agree with them on that quote. Anything to avoid a call to the dreaded customer service department.
As more companies follow Comcast’s lead into streaming services and current industry leaders such as Netflix continue to pour money into improving content selection, customers will finally come out ahead. The long battle with your cable company seems to be coming to an end with further industry consolidation on the horizon as well. Millennials have embraced alternative platforms such as mobile and web quicker than any generation before. Easy access to content, wherever the viewer may be, is the future of television — whether it’s on the web, a smart phone or a good old fashioned flat-screen.