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Did I miss a section in Economics? Cable companies RAISING prices on customers!

18,152 Views | 134 Replies | Last: 5 yr ago by AgLA06
IrishTxAggie
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AG
Comcast, Dish, AT&T to raise TV prices to counter cord cutting

Sooooo They're losing customers in record numbers due to the cost of traditional cable vs. cord cutting and their solution is to raise the prices on the existing customers that you do still have which will inevitably drive them to a streaming platform?? DAFUQ?!?!
John Francis Donaghy
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It's what you do when you are so totally outmatched in your segment you dont even have the will to try to compete anymore.

Cable tv will die in the next 10 years.
deadbq03
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AG
What does make sense (and they are doing it) is to jack up internet costs and/or require bundles with cable or phone. Xfinity literally will not sell you an internet service deal by itself.

I can't wait for 5G to roll out in my area so I can truly cut the cord and put ISP in the same category as cable.
IrishTxAggie
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I live in Houston and have Xfinity Internet service by itself.
ATM9000
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I realize what the numbers indicate on cord-cutters, but I question the power of streaming overtaking cable and sattelite when only like a quarter of households have fiber to home connections in the US still... migration saturation has to be on the horizon until that number improves in my opinion.
deadbq03
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AG
How long have you had it? I've asked them on multiple occasions if I could do that and they tell me no. Maybe you're grandfathered in?
IrishTxAggie
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AG
Got it in October after ATT raised my rate.
John Francis Donaghy
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ATM9000 said:

I realize what the numbers indicate on cord-cutters, but I question the power of streaming overtaking cable and sattelite when only like a quarter of households have fiber to home connections in the US still... migration saturation has to be on the horizon until that number improves in my opinion.


You dont need fiber to stream in HD. A 5 Mbps connection can stream HD video, and even 4k streaming only requires about 25 Mbps.
CapCity12thMan
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AG
fiber is not a requirement to stream at home.
Shiner Bock
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I have UVERSE tv and internet. When my most recent promo deal expired, I called, and within 10 minutes had my rate reduced $10 more than previously. All channels and high speed for $120 with tax. Worth it for us, as we use both services for entertainment daily.
ATM9000
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CapCity12thMan said:

fiber is not a requirement to stream at home.

It is for quality, uninterruptible streaming or multiple HD video streaming. I live in the middle of Houston but don't have fiber to premises still. I have a 25 mbps connection and probably half the time, if I'm streaming one thing and someone else in my family is streaming something else, the connection for both is not great, Ladk of fiber to every premises really does pose an infrastructure problem to the model and strategy of a lot of streaming services. They are somewhat new so you see the growth in saturation... the question really starts to become a capacity one at some point though, That's why I'm a little bit skeptical of the demise of cable TV anytime soon. As more and more folks cut the cord, I'm skeptical that broadband stays so cheap that streaming makes sense as a cheaper alternative to cable.
permabull
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DannyDuberstein
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This is called the "how to destroy what's left of your business faster" model. Lots of newspapers have followed it too.
TexasAg21
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Last year in Houston, I had Xfinity internet with no cable either. Had to fight for it, but got it. Only $40/month. Currently have the same deal in Denver now.
Buck Compton
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Not that I think this is a good move... but people (especially families) are going to end up paying more by cord cutting.

- Faster internet to enable 3-4 streams at a time and higher internet prices.
- Unbundled prices (if you have HBO Go, Hulu, Disney, Netflix, you're already looking at $40-50 per month).
- Watch what happens if a critical mass is reached and ESPN goes a la carte, especially if they **** down all these illegal streams. My guess is another $15-20 there. That's for a very specific subset of channels and you're approaching cable prices.

People may be okay with that. Research shows we perceive advertised bundled prices as more expensive than line item prices added together. Streaming service prices will rise within the next few years as well. In the end, you'll be paying almost as much or just as much for less content.
BenTheGoodAg
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I'm not sure I agree with any of that.

Everyone I know who has cut the cord is saving money.
Buck Compton
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They're saving right now. No arguments from me. But overall, anyone who has cut the cord already is an early adopter.

And for right now, they're either streaming ESPN illegally or sharing a log in or else not watching sports.

More and more content providers will offer their own service in the future and won't have content on Netflix, etc. (e.g., Disney). More and more companies will crack down on sharing accounts. Internet prices will rise.

Prices will necessarily be higher if you consume the same variety of content. If you don't consume the content, then more power to you, you'll save money. I know there are channels hardly anyone watches, but those aren't the focus to me.
IrishTxAggie
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You keep tossing ESPN in and I'm not sure why. Not everyone is a sports nut and viewership numbers over the past few years are declining as well. They're shedding viewers currently too because they still won't seperate sports from politics. Also, DirecTV now is ~$25/month (no contract) and offers 2 or 3 ESPN channels.
gig em 02
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Buck Compton said:

They're saving right now. No arguments from me. But overall, anyone who has cut the cord already is an early adopter.

And for right now, they're either streaming ESPN illegally or sharing a log in or else not watching sports.

More and more content providers will offer their own service in the future and won't have content on Netflix, etc. (e.g., Disney). More and more companies will crack down on sharing accounts. Internet prices will rise.

Prices will necessarily be higher if you consume the same variety of content. If you don't consume the content, then more power to you, you'll save money. I know there are channels hardly anyone watches, but those aren't the focus to me.


???? YouTube tv has a bunch of Espn channels for $40/month.

6 different accounts that you can access anywhere.

How do you crackdown on sharing accounts when you are already limited to the number of people that can be watching on your account at one time? Are you saying that no one else besides the initial user is allowed to watch any content on that stream?

Your comments seem to be very very outdated, are you a tv antenna salesman from the 50s?
BenTheGoodAg
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AG
Or sling for $30 a month with the ESPN package.
Buck Compton
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gig em 02 said:

Buck Compton said:

They're saving right now. No arguments from me. But overall, anyone who has cut the cord already is an early adopter.

And for right now, they're either streaming ESPN illegally or sharing a log in or else not watching sports.

More and more content providers will offer their own service in the future and won't have content on Netflix, etc. (e.g., Disney). More and more companies will crack down on sharing accounts. Internet prices will rise.

Prices will necessarily be higher if you consume the same variety of content. If you don't consume the content, then more power to you, you'll save money. I know there are channels hardly anyone watches, but those aren't the focus to me.


???? YouTube tv has a bunch of Espn channels for $40/month.

6 different accounts that you can access anywhere.

How do you crackdown on sharing accounts when you are already limited to the number of people that can be watching on your account at one time? Are you saying that no one else besides the initial user is allowed to watch any content on that stream?

Your comments seem to be very very outdated, are you a tv antenna salesman from the 50s?
Well, snark aside, I actually work with several of these companies now on market strategy and industry KPI benchmarking. Both the content producers and providers. I'll literally be at Youtube's HQ on Monday. I have "cut the cord" myself. So chill out a bit. I'm just saying these companies aren't going to voluntarily leave money on the table for content.

The amount of money you save is directly dependent on the amount of content you choose to no longer receive. That's the driver behind cord cutting. YouTube has just restricted the bundle size. But it's still a bundled provider. The only "cord cutting" there is choosing a different provider and method of delivery for fewer channels at marginally less money (compare that $40 to a bundled Uverse price of $75 that includes internet). Now, taking this specific example, YouTubeTV also offers a ton of additional functionality - unlimited DVR, easy to move to a new house without an ally, etc. which is what will drive their adoption.

You're making the mistake of projecting current pricing and use structure out into the future. YouTube TV is aggressively trying to capture market share. They're doing that by leading on price. Heck, they already hiked their prices early in 2018. Amazon will continue to raise prime price. Netflix has increased price while their selection toon has decreased. Why do you think they started producing content? So when other providers pull their own, they still offer unique value.

I'm using ESPN because we're on a sports website. Say ESPN continues to lose viewership due to cord cutting. Instead of offering it on YouTubeTV, why wouldn't they just beef up WatchESPN and make it an exclusive subscription service, similar to what their parent company Disney is doing? No longer will be offered on Netflix, etc. So if you want that content, it's another monthly fee. And many younger people who consider themselves cord cutters aren't on YouTube or sharing accounts in the same household, they're using their parents login, etc. to WatchESPN or HBO, Netflix, etc. That's where the cracking down will occur. I simply used ESPN as an example.

Look at what HBO and Showtime did for cord cutters. If you produce in-demand content, people will pay a la carte prices. I'm simply predicting that more content providers will break out and offer their own service. And that people who consume a lot of varied content will end up paying more for unbundled content - that's just economics. Plenty of people who don't watch but a few channels will save money. But services like YouTube TV aren't going to operate at a loss - it's just another bundling service that you don't have a negative brand image of. They're still negotiating group rates on your behalf, and aren't truly "cord cutting" except that it's not a traditional cable company.
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Buck Compton
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BenTheGoodAg said:

Or sling for $30 a month with the ESPN package.
Sling is what I do right now, but have been looking at other options. Sling is owned by Dish Network anyway, so it's not like I'm really "sticking it to the man" by cord cutting. I'm not saving very much money each month because of the variety of content my wife and I consume.
Seven Costanza
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While I am not a cord cutter, I do like the idea of easily being able to turn the service on/off when needed without having to deal with installation/disconnection fees, dealing with representatives on the phone, etc. If something that I'm interested in comes on Netflix, I'll turn the service on for a month and then turn it back off without much hassle. You really can't easily do that with cable.
AggieStan
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Yes. Re YouTube. $40 month. Really do t know how one can beat it.


And the idea of still needing a "box" blows me away
John Francis Donaghy
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As long as cable companies have to maintain a separate infrastructure to deliver their content, they will be on a course for extinction. Period.

The late adopters will hold out for a while, and the cable companies will squeeze as much out of them as they can for as long as they can. Which is exactly what's happening now.
BBDP
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AG
We are on Sling .... never had cable so we are an add.
AgNColorado
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For a lot of folks like us living out in the country having satellite tv and internet are all we can get and there is no streaming anything with satellite tv. AT&T ran fiber up to within 50 yards of my house but will not connect it to the house for whatever reason even though we have called several times about it.
HeightsAg
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It's called price elasticity. Jacking up the price is commonly employed when it is fruitless to try to match the pricing structure of new market entrants.

The idea is that the incumbant has no shot to keep price sensitive customers so it does what it can to maximize revenue from price inelastic customers.

Pharmas do this a lot when its drugs go off patients. It may be counterintuitive but it has proven to work at least in the short term.
IrishTxAggie
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AG
You're implying that the existing customers are inelastic. It's quite the contrary. As more TVs begin integrating the streaming software into the units, it will create more opportunity and ability for the existing customers to move away from traditional cable. Streaming services and the audiences they reach continue to grow at a much faster rate than the cable companies can implement price increases. You will also continue to have the majors compete against each other. They're also losing content during contract disputes with the providers. I'd bet good money that their revenue will decline again in 2019 and the hemorrhaging of customers will continue.
HeightsAg
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Don't get me wrong, cable is definitely dying but if you are a cable company, how do you react? Either you can match the cord cutter prices and compete for customers but at negative profitability per customer or try to squeeze as much out of your existing, non-elastic customers as possible. They have obviously done the analysis and decided to go with the latter.

You are obviously at least somewhat technologically savvy but my 60 old parents barely know what an app is and there are sadly many people like them. The boomers are exactly who cable companies will seek to squeeze until the total cost of infrastructure cannot be recovered because the remaining size of the market is too small.

No one is permanently inelastic but a sufficient enough segment of the market can be in the short run to make this pricing technique work, which is commonly done when a product or industry die a slow, painful death. This buys cable companies a fighting chance to evolve before they become extinct.
gig em 02
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1. Every post you have made was speaking in the present, you need to specify that you are projecting into the future.

2. Every person I've ever heard y'all about "cord cutting" has used the term to refer to having some sort of online tv service.

You've got to provide more information, we can't all read your mind.
Buck Compton
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I'm not going to get into a pissing match, but basically every single post of mine said something about "in the future" or "they are going to" or "X will happen after Y happens".

Have a good Sunday.
DannyDuberstein
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I understood Buck's points and think there is a lot of merit to them. Clearly, it's a constantly changing area right now, and there is more to come. I do expect some changes with providers looking to squeeze more profit from the ala carte approach.
YouBet
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We are smack dab in the middle of revolutionary change when it comes to media consumption and no one really knows how this is going to shake out although Buck could easily end up being right. You have multiple market entrants trying to get market share now that the barriers to entry have fallen to the point that they can be hurdled.

The big content providers are going to naturally adopt their own platforms or additional fee structure to capture that revenue for themselves and has obviously already happened (HBO, Netflix, Amazon, Hulu, and YouTube) and now you have Disney which is going to remove all Marvel, Star Wars, and anything else Disney from the other platforms and put it on their own. Hell, Facebook has original content now.

We could easily end up in a new world order where your a la carte fees could surpass your current bundled price at DTV, DISH, or local cable provider depending on how much and which content you want to consume. For me personally, it could still work out to be cheaper but this assumes current pricing structures project into the future at same rates.

I've been sitting on the sidelines with DTV all this time waiting for the moment it made sense for me to jump in and try it finally seems to at this point. I'm probably going to try Hulu for free starting today since it is the cheapest service I've found that covers the content we actually watch. All I need is a service that provides me the following:
  • SEC Network
  • ESPN
  • BRAVO
  • HGTV
  • Food Network
  • Local channels
  • HBO (add-on fee)

That's all we watch and we already getting close to bundled rates. Combine Hulu with Netflix, Amazon, and Xbox Gold and I have movies covered there. I will end up adding Disney to get the streaming only Marvel and SW content (and it could end up clawing ESPN back into that fold at least for secondary content). So, costing all of that out with Hulu as my main content source I'm looking at around $90-100 per month. But, again, my content needs are few and I'm assuming current pricing. Your mileage may vary over time.

Cost breakdown per month:
  • Hulu - $40
  • Netflix - $11
  • Amazon - $8
  • Xbox Gold - $8
  • HBO - $15
  • Disney - $10 (est)
  • Hulu Enhanced Cloud DVR - $15 (may not need)
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