Cable: The Time to Engage the Young is Now
Colin Dixon, Practicing Manager, Broadband Media
February 20, 2009
I read an interesting piece by Peter Shapiro on cable360.net a couple days ago entitled “What Do Young People Want From Cable.” Using Pew data as a backdrop, he reached the conclusion that the young aren’t interested in TV (since they get everything they want from the Internet) and they also weren’t interested in phone service (since they use cell phones.) He also said that even as the young age they are not likely to change, rather sticking with the services they’ve grown used to.
All of this I heartily agree with. As TDG subscribers know, we’ve been charting the use of over-the-top video for the last 3 years so I’m sure these facts are not big news for you either. However, one thing in his article did catch my eye. Toward the end of the piece Shapiro said:
“Demographic trends play out gradually so MSO business models don’t need to be revised right away in order to respond”
Now this I must take issue with. The Internet has time again proven the lie of this old saw. In the last 10 years it has completely decimated the music industry. In that same period, and not without coincidence, dial-up Internet access has all but died too. Is there a strong reason to believe that video distribution is somehow immune? The prodigious rise in Internet video consumption over the last several years would seem to suggest not.
The real problem for cable operators is that their business is built on relatively thin margins, particularly for TV service. Even a relatively small decrease in overall subscribers would be devastating to profits. Unfortunately, the picture may be even bleaker than that. With great services like Netflix eroding the business proposition of premium cable movie channels, it could be these high margin services that are the first to feel the pinch! The potential for a double whammy of falling subscribers and falling ARPU would certainly have an impact on the operator bottom line.
So, can MSOs afford to sit on their hands for a while long? I don’t think so. They need to figure out now how to re-engage with the young because the young certainly won’t come looking for them!
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