Better than a la carte? US pay TV providers up the ante to attract and retain customers

July 3, 2014
4 min read

Most of us have been there. Sitting in front of the TV, with hundreds of channels at your disposal, but nothing on that you want to watch.  You feel bad about having all of these channels that you don’t even watch, but don’t want to cancel your cable altogether because of the few channels that you do watch. Being able to pick your channels a la carte seems ideal, but that option still seems like a pipe dream. Yet, with more and more services like Netflix, Hulu and Apple TV filling in those gaps for consumers, we’re seeing more people taking the leap to cut the cord.  

Cord cutters can access a wide range of television content through services like Netflix, Hulu, and Amazon Prime. However, one of the deterrents to cord-cutting has been the inability to access popular HBO programming without a cable package. In fact, a 2013 JP Morgan study found that a stand-alone premium content service such as HBO Go could sway 62% of those on the fence about cord-cutting to drop their existing cable service. While a true a la carte model that includes real-time access to HBO content is still unavailable, some pay-TV providers have taken measures to address consumer desire to access HBO content without having an expensive cable package, by offering trimmed-down packages featuring HBO and HBO Go.

In November 2013, Comcast introduced XFINITY Internet Plus, a double play package featuring 25 Mbps Internet, Limited Basic TV, HBO, HBO Go, and Comcast’s TV anywhere service, Streampix. The provider featured Internet Plus at an introductory price of $39.99/month or $49.99/month (depending on the market) for the first year. Comcast marketed the bundle with a substantial omnichannel effort primarily focused on prospects. In order to attract cord cutters who obtain their television content from other streaming services, many of these ads featured a grid showcasing the advantages of Internet Plus over Hulu Plus, Netflix, and Amazon Prime.

Time Warner Cable took a slightly different approach with its basic TV and HBO offering, chiefly promoting the service to its existing Internet customers. TWC’s basic TV package with HBO and HBO Go was promoted at $29.99/month for a year, on top of the customer’s current monthly Internet costs. In statement mailers, for example, TWC asserted, “Savings and entertainment go hand in hand with Time Warner Cable,” and featured the $29.99/month TV plus HBO option.

In late 2013, Verizon was observed using its HBO offering as an incentive for existing Internet and TV customers to upgrade their Internet speed. Self-mailers observed in early 2014 invited customers to “get a lot more Internet speed” and “see the HBO shows everyone is talking about.” Recently, Verizon began offering a $50 premium content/Broadband bundle, which includes several basic cable channels, a choice between HBO and Showtime, and 18-25Mbps Internet.

Luckily for Comcast, TWC, Verizon and AT&T, consumers are not likely to find an alternative way to access current HBO content without a pay-TV subscription anytime soon. HBO CEO Richard Plepler recently asserted, “It’s just arithmetic. Right now, [HBO as part of a pay-TV subscription] is the best model.” If more providers do not begin offering a similar deal, which would increase competitive pressure to keep prices down, Comcast, TWC, Verizon, and AT&T may find that the subscribers they’ve gained with these offers continue to stick around, even after the promotional pricing period concludes. However, if these offers are truly effective in bringing on subscribers, one can expect competition for these would-be cord cutters to grow much more intense in the markets that Comcast or TWC shares with U-verse or FiOS.

For more insight into the pay tv market, click here.

Emily Disher is Mintel Comperemedia’s telecommunications thought leader, specializing in competitive trends across wireless, TV, Internet and home security industries. In her previous roles she provided competitive intelligence, analysis, and strategy for technology and telecommunications clients at public relations and advertising agencies.

Emily Groch
Emily Groch

Emily Groch is Mintel Comperemedia’s Director of Insights, Telecommunications, providing omni-channel marketing analysis and competitive insights to telecom providers.

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