The days of threatening your cable company with cord cutting to get a cheaper rate are over
Remember that time you called up Comcast or Charter or AT&T? You used a few savvy phrases like “skinny bundle” and “over the top,” and you scared them into shaving 10% off your monthly bill?
Yeah, well, that probably won’t be happening anymore. Cable companies are no longer under any illusions that they can keep fickle customers from cutting the cord. Unless you’re a rabid sports fan who subsists on a steady diet of live local baseball or basketball games, don’t expect cable companies to bend over backwards to keep you.
That’s one of the key takeaways in a new report from analyst firm MoffettNathanson, which recently hosted a cord-cutting-themed summit in which it discussed the future of the pay-TV industry with major stakeholders. In their analysis, published earlier this week, Michael Nathanson and Craig Moffett said the market is rife with disruption and may have reached a “cord cutting tipping point” whereby pay-TV operators are in survival mode—doubling down on their more profitable customers and letting price-conscious ones cancel their cable subscriptions and sign up for streaming services instead.
“We heard loud and clear directly from the cable companies of their focus on growing the profitable subscriber base and moving away from offering discounts and promotions for subscribers who do not generate profits,” the analysts wrote. “Today, there is a bifurcated marketplace where many subscribers are still happy with the existing pay TV bundle, while there is also a growing cohort of customers who are more price oriented.”
It’s not exactly a new phenomenon. The industry has known for a while now that cord cutting is a rapidly accelerating trend (even just a few years back, some providers were probably still in denial), and so offering special rates to subscribers who are just going to cut the cord after the rate expires doesn’t really make any sense. In August, we wrote about how companies such as Comcast were now focused more on selling high-margin internet services. MoffettNathanson’s new report seems to suggest there is broad consensus in the industry that discounted cable rates are a losing proposition in a world where cord cutting will simply continue apace.
And it will continue. The firm estimates that a staggering 40% of the current pay-TV subscriber base is “at risk” for cutting the cord within the next five years. For many viewers, live sports remains the single sticking point. “[W]e believe that sports viewers are the most entrenched Pay TV subscribers,” the firm writes, “as such, we see the 60% of subscribers who regularly watch sports as the potential floor for the pay TV ecosystem, as long as the major sports leagues’ rights remain exclusive to the pay TV bundle.”