Cable TV–Why Isn’t the Customer Always Right?

Millions of people have dropped cable and satellite TV in the last few years.  Some have done it to save money during a recession, and others because they are tired of ever increasing cable bills, or being forced to buy TV channels the don’t watch.  Recent news reports say the average American is paying $100 a month for TV, that it will be $123 by 2015, and $200 a month by 2020.

Even the people who continue to subscribe to cable and satellite services complain about too many channels, bad service and growing bills.  When will the pay TV industry wake up and think, “Hey, the customer is always right!”  A friend of mine got mad when his cable company charged him $50 to fix his cable service he was paying over $100 a month to use – shouldn’t something you buy be in working order?  He wasn’t ready to quit cable completely, so he took his service down to the $29.95 basic rate.  He’s still mad and thinks of giving up cable completely.

I gave up cable because I got tired of paying for a zillion channels I didn’t watch.  I wanted a la carte pricing but cable companies want to bundle their services.  If you want to know why, look at this chart I got from “Hate Paying for Cable? Here’s Why.”  You’ll probably need to click on the image to see the larger version to read it.  This is an example of what cable/satellite companies pay for each network to get all those channels they offer.

cable-sub-fees

I don’t watch sports, so I would be paying over seven dollars a month for sports channels I don’t watch.  WTF!!!  I recently tried to get U-verse to sell me just Turner Classic Movies (TCM) which this chart says this cabled company pays 26 cents a month per subscriber, but I’d have to pay AT&T $80 a month to watch the one channel I wanted.  Sure I’d get 200 other channels, but I only wanted TCM.

By the way, that chart is old.  A newer article says ESPN is $4.69 and TNT $1.16 (“How ESPN Is Making Your Monthly Cable Bill More and More Expensive”).  This is like going to Target to buy toilet paper and being forced to buy a pair of pants, a quart of motor oil, a bottle of shampoo, a comb, a gallon of Clorox, and 200 other items just to be able to leave the store with butt wipes.

But you can see why cable networks want cable companies to bundle their stations.  Take ESPN.  For each million homes forced to buy ESPN, they contribute $4.69 million per month to ESPN.  However, if we went to a la carte pricing and only 500,000 per million wanted ESPN, and ESPN wanted to make the same amount of money, then they would have to charge $8.38 a month to the people who wanted it.  Which would probably make many of those 500,000 subscribers think even more about if they really wanted ESPN.

If we have a la carte pricing, I doubt Comcast or U-verse would sell me TCM for 26 cents.  But I’d be willing to pay $10 a month for TCM, but I’m not sure how many other TCM fans would be willing to pay that much.  But for a la carte to work, instead of shaking everyone down for 26 cents a month, TCM fans would have to pony up more, maybe a lot more, or TCM would go out of business.

If we had a la carte pricing, many cable stations would go out of business.  Bundled pricing is keeping  these channels afloat.  If the goal is to have hundreds of television networks, bundling is the way to go.  But most cable customers bitterly complain about buying channels they do not want, and it’s the reason why cable bills keep growing and growing.

Cable and satellite companies need to get right by their customers.  What they need to do is provide a base service, say $19.95 that provides a  HD DVR/modem box and the local stations.  HD is standard with free over the air stations, so quit being a dick and charging extra – and it will simplify things for both the customers and you.

DVRs should be standard too.  Quit finding ways to charge extra for what should be standard, that only annoys the customer.   And don’t charge for fixing the system when it’s broke.  We’re renting a service from you, it should be reliable and high quality.  Even at $19.95 a month for the base system with just local channels, pay TV services should be able to make a profit at this level.

Then offer an onscreen menu that customer’s can control from home that shows all the channels, pay-per-view, on-demand channels and other services with the monthly costs for each.  Let them sign up with their clickers – no annoying phone calls.  I bet you can make the same profits or more by pricing the channels individually.  The only downside will be that the total channels will go from 200-300 to maybe 50-100.

Since I gave up cable TV I learned just how good 1 channel can be.  I have a home built DVR (HTPC) and what I mainly record is PBS.  It offers more top quality TV than I can watch.  If you distilled hundreds of channels, with mostly crappy content, into dozens of channels with mostly quality content, the perception of your product will vastly improve.

I think most homes will be happy with 10-20 “a la carte pay” channels.  Having fewer channels makes watching TV less stressful.  To much choice can be painful.  Their cable bill could be as high or higher than it is now, but it would reflect exactly what they wanted.

If such a system was available I’d go back to being a cable subscriber.

In the future there are other changes cable companies could make to make their customers happier.  Get rid of the cable box.  That would reduce clutter and a clicker.  Work with TV manufacturers to make smart TVs work with cable/satellite feeds and develop standards.  DVRs should be built into TVs.  A SSD drive would not take up much space.  It could be user replaceable.  Or make TVs with 128-256gb SSDs built-in, with a slot for customer’s to add an additional drive.

A TV could be built to do TV, Internet, video games and music that uses one clicker plus game controllers.  One cable, from a cable/satellite/broadband company could provide all content.  And build your systems with self-diagnostic awareness so we won’t have the aggravation of feuding with your company over intermittent problems.  There should be no reason to send a cable guy to see what’s wrong.  Your system should know what’s wrong, and if it’s involves something in the house, notify us to pick a time for your guy to come by – otherwise fix the outside stuff without bothering us.

And why fight Netflix – make it part of your lineup.  Right now I have over-the-air stations I use the TV clicker to manage, and then HTPC content, which I use a wireless keyboard, and then Amazon and Netflix through a Roku box with another clicker, and watch Blu-Ray/DVDs with another box and clicker.  Plus I manage sound with a receiver and another clicker.  That’s a HUGE PAIN IN THE ASS!  The next TV I buy should have all that crap built-in, requiring only one clicker.

If Netflix, Hulu, Amazon, and other Internet TV services can work with TV manufacturers to get their content  built right into the TV, why can’t cable/satellite/broadband companies?  Sorry Roku, but it’s obvious that your 2 ounces of electronics could easily be added to a TV set.  And why not a computer and stereo receiver?  If such integration happens, and TVs are moving that way now, having an external cable box is just stupid.  I’m not an inventor but I can see which way the electronic wind is blowing.

Lastly, Hey TCM, go the Netflix/Hulu Plus route and set up your own Internet TV service.  I’d gladly pay you $9.99 a month, but you might get more subscribers at $4.99 or $7.99.

JWH – 4/15/12

6 Responses

  1. Watch for apple’s new tv to eliminate some clickers but not the problem.

  2. Jim, cable companies are monopolies, or near-monopolies, so of course they’ll do whatever makes them the most money. You might not be willing to subscribe just for TCM, but most people only want a few channels, and they pay what they must.

    If TCM went the online route, the cable companies really wouldn’t like it. And if TCM were dropped from the cable lineup, they’d lose far more than they could ever hope to gain going it alone. Maybe that won’t always be the case, but it is now.

    Besides, TCM is owned by Time Warner. How likely do you think they’ll be to rock the boat (even though Time Warner Cable is now a separate company)?

    Oh, well, it doesn’t matter much to me. I get all the videos I need from Hulu and YouTube, both free. I suspect that YouTube is what has media companies crapping their pants. They can work with Netflix and Hulu, but amateurs posting videos free must absolutely terrify them.

    • Sooner or later I think a la carte will catch on because it’s what people want. Already the big companies are working on the tier system, where you get bundles of bundles, trying to give customers more control. Unfortunately for me, TCM is two tiers up in the U-verse system.

      Actually if TCM was available as an online service it would be in addition to all its other forms. Sooner or later these companies will realize that there’s millions of customers ready to buy one at a time, while they sell to tens of millions of customers hundreds at a time. I can buy by the song, CD, digital album, or any of many subscription music services now, when I want to hear music. It’s only a delivery method for each taste.

  3. The respect that content providers have for their content and their customers can be judged by what has become the common practice of obscuring up to one third of the screen with advertising laid over the show or movie you are watching. I suppose it doesn’t matter that much anyway if you are watching on a cell phone. I may sound like an old crank, but quite a few things really were better in years past.

    I’ve noticed that Comcast is degrading their lower tier channels even as they press for higher rates. Our area recently completed the switch to digital service, eliminating the remaining analog channels (I’m talking about digital cable, not over-the-air broadcasts). The picture quality of the non-HD channels is noticeably worse than it was in the old analog days – even more so than was caused by displaying analog signals on an LCD. I assume they are compressing the hell out of these channels to save bandwidth. I also suspect this is part of a strategy to force customers into higher tiers. In any case, the result is a blurry picture with lots of digital artifacting.

    I ‘m old enough to remember what an upgrade in picture quality cable used to be over broadcast TV. Many channels were commercial-free as well. All that has gone by the board. Unfortunately, I’ve been hearing that streaming services also suffer from picture quality issues and lag. With everything in sight continuing to move toward privatization and deregulation, I don’t expect any of this to improve soon, or for our infrastructure to catch up to that in other countries. Most likely, people will become accustomed to poorer service and higher rates as those who remember otherwise die off.

  4. Great timing on the post Jim,

    My cable provider has just upgraded my TV service. Temporarily.

    They have added around 90 channels in cable digital and another 10 HD channels. They are free. For now.

    They are going to charge extra for these channels soon. EUR6/month for the digital and another EUR6/month for the HD ones (or EUR10/month for both).

    First of all what would i do with 100 new channels? Second of all the quality of digital and HD should have been standard service and not premium. It defeats the purpose of having upgraded our TVs from CRTs to Plasmas and LCDs half a decade ago.

    Content should be on demand and HD. Period. Otherwise it’s the same thing we had in the previous century. At least in my eyes.

    P.S One of these 100 channels is TCM :P

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