Video Subscription Challenges

There was a bit more dribble of customers out of the market for multi-channel video entertainment services. Most observers tend to agree that most of the lost customers are not turning to streaming video delivered over the Internet. Mostly, those lost customers are simply not buying subscription TV, from any source. As you would expect, the assumption is that departing customers are overwhelmingly those who no longer can justify buying service.

But the business has other problems. Some households headed by Millennials simply do not see a reason to buy subscription TV, even when money is not an issue. That arguably is a bigger problem. Beyond that, some would say the strategy of trying to wring ever-higher revenue out of existing customers is going to cause more desertions over time.

"It’s not enough to blame the weak economy when things get rough and folks stop paying for cable; there’s also a structural problem with the way the industry views its subscribers," argues Ryan Lawler at GigaOm. "In the quest for higher margins and customer retention, those companies are generally willing to sacrifice subscribers at the low end if it means they can get more out of their so-called higher-value customers."

The question is how long the industry can keep pushing ARPU up before it starts to shed some of its better customers — those that aren’t necessarily poor, but don’t have $150 or more a month to spend on entertainment, asks Lawler.

That's a reasonable question.

But one gets a sense that the question of "value compared to price" is getting asked even in households that do not have a problem paying $150. The issue is that even households that can afford the subscriptions are aware that online delivery is technologically possible.

Most households are well aware they don't use most of the channels they buy, but haven't had an alternative. How much longer the value-price relationship remains tolerable is a growing question.

Company	2Q Video Net Adds/Losses
Comcast	-238,000
Time Warner Cable	-130,000
Charter	-79,000
Cablevision	-23,000
Dish Network	-135,000
DirecTV	26,000
AT&T	202,000
Verizon	184,000
Total	-193,000

Why 193,000 people stopped paying for TV last quarter