skinny bundles step up challenge to us big cable
Last Updated : GMT 09:03:51
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Last Updated : GMT 09:03:51
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'Skinny bundles' step up challenge to US Big Cable

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Almaghrib Today, almaghrib today 'Skinny bundles' step up challenge to US Big Cable

A recent survey found that 20% of American consumers are dissatisfied with their pay TV service
Washington - AFP

For years, US cable operators got rich by offering fat "bundles" of hundreds of channels and raising prices regularly for television consumers.

Now the "skinny bundle" is disrupting that model with internet-delivered packages offering live and on-demand programs.

Google's YouTube TV is the latest to enter this market with its bundle of around 40 channels for $35 monthly, challenging slim packages from Sony's PlayStation Vue, Dish Network's Sling TV and AT&T's DirecTV Now. 

More entrants are expected including one from streaming service Hulu.

These services offer easy interfaces like those of on-demand services such as Netflix and Amazon Prime, let viewers digitally store programs in the internet "cloud," and toss in a limited selection of live channels to sate news and sports or other interests.

Skinny offerings are aimed at young viewers and "cord cutters" loath to pay $100 or more to be force-fed hundreds of channels in hefty bundles and accustomed to streaming shows they want, when they desire.

A Parks Associates survey last month found 20 percent of American consumers dissatisfied with their pay TV service, leaving the market ripe for change.

Analyst Glenn Hower at Parks said the market is in flux, with some consumers taking advantage of the easy sign-up for skinny packages, even though some cancel just as quickly.

In addition to lower prices,  he said, "you don't have to worry about sending out a technician, you don't have to worry about getting the equipment back."

BTIG Research analyst Richard Greenfield, in a research note titled "the big bundle is doomed," says he expects skinny bundles to eat away at the established pay-TV providers.

Established media companies are focusing too hard on "protecting their legacy business model" instead of giving consumers the flexibility they want, Greenfield wrote this month.

Leichtman Research Group found that the top US cable companies lost 277,000 subscribers in 2016, while internet-delivered services like Sling TV and DirecTV Now added about 845,000.

These shifts could lead to a huge upheaval in the television ecosystem, allowing more choices and lower costs for consumers in many cases, while leaving smaller, independent cable channels out in the cold. 

The skinny bundles "have made inroads in the past year," said Leichtman Research president Bruce Leichtman.

- Digital platforms rise -

Forrester Research analyst James McQuivey said Google's entry into the business is significant because "for the first time, the broadcasters are letting a powerful digital platform have the keys to its treasure room: live, first-run TV shows."

He noted that major tech firms like Amazon, Apple, Facebook, Google, and Microsoft "have tried to cozy up to TV for many years now, and all of them have been rebuffed" until now.

"The digital platforms are indeed taking over the world, this time with permission from their former adversaries," he said in a blog post.

While many consumers use on-demand options like Amazon and Netflix, they often keep cable or satellite subscriptions for live sports and local news. But live channels will make streaming options more attractive.

At the same time, popular channels such as HBO and sports programmer ESPN have been offering standalone subscriptions to allow consumers to watch without a bundle from cable or satellite.

But independent television analyst Alan Wolk argues that the major pay TV firms remain in good shape despite these challenges.

Some like AT&T already have a "skinny" offering, and others such as Comcast and Verizon are expected to enter the market to give consumers a choice.

Wolk said consumers don't appear to be flocking to skinny bundles because "they pay 30 percent less dollars but get 70 percent less content."

He added that "a lot of people think they want to cut back but when you ask them which channels they want to eliminate they have trouble cutting back to the bare minimum."

- Striking back -

Wolk noted that the large pay TV operators have an advantage because they offer broadband internet, and in some cases are the dominant provider in a region. This allows them to offer incentives which bundle internet and television.

The large operators can also squeeze out rivals by using data caps or other means to favor their own streaming service, and will not likely face regulatory impediments from doing so in the current political environment, he said.

Operators are also keeping customers with "TV everywhere" which allows subscribers to watch the same content on mobile devices or while traveling, he noted.

One impact from the shift to streaming is that providers will know more about customer habits, to be able to deliver advertising targeted to each user.

That's positive for marketing, but could be a privacy worry as tech firms build up detailed profiles on consumers.

Google in particular can refine its ad model by using data on viewing habits, analysts note.

With streaming, Wolk said, Google and others "get a ton of data about users and what they are up to, and they can cross-reference that with your browsing habits."

Source: AFP

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