For years, pay-TV operators have offered consumers Gordian Knots of programming, tiers of content tied together without regard to consumers' desires.
But a confluence of factors--a stalled economy, rising carriage fees and the growing popularity of online video--is prompting customers to look for entertainment value propositions that make more sense to them. Some 1.2 million subscribers have dropped Comcast (Nasdaq: CMCSA) and Time Warner Cable (NYSE: TWX) alone in the past 12 months.
Those subscriber defections, often to competitors like AT&T (NYSE: T) U-verse and Verizon (NYSE: VZ) FiOS and to over-the-top entertainment options like Hulu and Netflix, are prompting cable execs to look more closely at smaller bundles and even to consider à la carte programming.
"We feel that some of those expensive channels should be offered à la carte so only those people who want to watch them actually pay for them," said Jerry Kent, chief executive of Suddenlink, which has 1.3 million cable customers. Channels like ESPN costs subscribers $4 a month, the most expensive channel in the nation. For non-sports fans, that's $4 wasted every month.
"We're in an environment where programming costs are rising at well above inflation and well above what I think consumers are willing to pay," said DirecTV (Nasdaq: DTV) CEO Mike White at a recent investor conference. "I think content costs are a challenge for the entire industry."
- see this Reuters article
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