Tuesday, January 24, 2012

"Big Cable" Rolls Out Lower Cost "TV Economy" Packages -- Because They Must

Yesterday, it was reported that cable operator Cox Communications is rolling out a low-cost $35 monthly "TV Economy" package as one of its customer options. Comcast and Time Warner are following suit. Although these lower cost TV content packages exclude higher cost channels such as ESPN and other regional sports networks, they include many of the programming stalwarts. Bottom line -- finally "big cable" is beginning to respond (albeit slowly) to consumers' basic need NOT to pay for channels they don't want.

So, why are Cox and the others finally beginning to go this route? Because they must -- they have no other choice. Despite skeptics, cutting of the cord is becoming a reality for consumers who are increasingly getting only the shows and programs they want by other means -- the Internet, in particular. As I have written several times before, the MSOs are trying to beat back the inevitable consumer march toward other significant competitive movie and TV distribution channels a la Netflix, Amazon, Apple, Vudu, Google. Cable's long fear -- of becoming more and more simply the "dumb pipes" that deliver the video content from other distribution sources -- is in process as we speak.

But, here's the good news for cable. As consumer demand for high quality Internet-delivered premium video programming continues to accelerate, so will their need for faster and faster broadband. "Big cable" can be the provider of these fatter pipes -- and margins for broadband service provision are significantly higher than margins for distribution of motion picture and television programming.