PayTV v. Cord cutting: If you leave me, can I come too?
- PayTV providers are keen to find ways stem the flow of so-called cord-cutters
- They can try and devise attractive bundles that might keep the cord cutters at bay
- Or they can fiddle with caps and speed tiers to make the move to internet-only less attractive
- The question is, should they use customers’ data against them?
I’ve always considered ‘cord cutting’ to be a weird way to describe the act of cancelling the restrictive and expensive PayTV component in a bundled PayTV/Broadband internet access offering in favour of a broadband-only deal.
No heavy-duty scissors are deployed, no cutting takes place. In most cases the user has simply decided that the attractions of just paying for broadband and curating their own video programming from the increasing streaming choices available across the Internet, now outweighs the convenience of the big bundle. Not to mention an end to the forced-feeding of scores of channels they’re never going to watch. There's no cutting - they're asking the provider to drop the PayTV component.
As this trend appears to be an unstoppable force as streaming services multiply and the attraction of the 'cut cord' become greater (especially to the younger demographics, less wedded to serial TV model) Pay TV providers are keen to at least stem the tide and maybe, in the fullness of time, find ways to present and price services that might allow them to fight back.
Infrastructure-owning Pay TV providers have a range of variables to play with to make the ‘cord-cutting’ less attractive. They can do deals with the most successful streaming services. We’ve seen a lot of that already with Pay TV outfits onboarding Netflix for instance. This has been seen as a win for Netflix by building its user base via the established providers, and it also means that Netflix lovers can more easily go back to the big bundle but still have Netflix along for the ride (hence the headline).
But first and foremost PayTV providers can tinker with their broadband offers: pricing, speeds, mobility, and terms and conditions of use can all be brought into play to manipulate the relative costs and to cook up reasons for users to have second thoughts before getting out the scissors.
But first providers can glean an advantage if they can understand users’ likely behaviours as the variables change and, perhaps even more important from the provider’s point of view, what the signs of imminent defection are.
An outfit called OpenVault, which described itself as providing broadband industry analytics and software-as-a-service (SaaS) technology solutions for broadband operators, has just issued a report on cord-cutting and how to cope with it.
In essence OpenVault claims much can learned about users’ likely behaviour by burrowing down into users’ network data records.
I’m not at all sure that this sort of surveillance could or should be legal in most of Europe given our data privacy and network neutrality laws. Presumably in the US, minus network neutrality of course, it’s been cleared for take-off.
But even if providers are in the clear, is it something that users, were they to know about it, would gladly accept?
Here are the main claims being made for the technology OpenVault, you can decide for yourselves. The full report is available here: https://www.telecompetitor.com/clients/openvault/Q2/LP/index.html.
OpenVault says its analysis showed that thousands of subscribers who shifted to broadband-only packages during the first half of 2019 exhibited steadily increasing broadband consumption in the months preceding the change - so the consumption difference between cord cutters and average subscribers rose from 14% six months before the event to 20% in the month immediately prior and 30% in the month that the cord was cut. In the following three months, the difference rose to nearly 70%.
This sort of info is useful if you’re determining when and how to pounce on your customers with a new offer to stay put, of course, rather than wait until they’ve decided to leave and then try to talk them into staying with the PayTV.
As you would expect the report shows significant differences between internet-only households and those who have a bundled package of pay-TV and broadband services. Among Internet-only households, average bandwidth consumption in 2Q19 was 390.42 GB, while bundled subscribers consumed, on average, 210.89 GB of data in 2Q19 – a difference of 85%, the implication being that cord cut subscribers are a burden on the rest by gobbling up more network resource. This is probably not the way to look at things.
“While Usage-Based Billing often is considered as a revenue enhancing tool, the reality is that it spurs subscribers to find harmony between their broadband speeds and their usage patterns,” said Josh Barstow, executive vice president of Corporate Strategy and Business Development for OpenVault. “As more and more subscribers exhibit cord-cutting behavior, visibility into usage behavior and sound Usage-Based Billing plans will help operators to manage increasingly busy networks and ensure subscriber satisfaction.”
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