Image Credit: Mike MacKenzie
So here’s a question for you. When you go home at night and want to relax, what do you do? Most people plop down and click on the television. Now this is where things start to get interesting: who provides you with your television signal. Sure, you could pull four or five channels off the air using an antenna, but if you want the really good stuff you need to subscribe to a provider. Who provides us with our television is starting to change and the Pay-TV product managers who have been providing this content are starting to come under a lot of pressure.
Pay-TV Product Managers Deal With The Loss Of Customers
Did you know that the pace at which people are abandoning traditional pay-TV packages accelerated by more than 70% last year? This happened as prices continued to rise and consumers gravitated to more affordable streaming options. Product managers at large cable and satellite companies lost about 5.5 million traditional pay-TV customers last year, a roughly 8% decline. The numbers – which exclude smaller providers that have yet to report results – are much larger than the loss of 3.2 million subscribers in the previous year. Traditional pay-TV customers are expensive for cable company product managers to keep, between installation and equipment costs and the ever-rising price of programming, which has led cable and satellite providers to raise their rates. Bad news for these product managers: analysts are predicting more American households will cut the cord this year and that is not going to look good on their product manager resume.
Cable company product managers have made peace with the idea of customers leaving if they want to. The companies will have to accept programming price increases and pass it onto consumers, accelerating the downward spiral of pay-TV. Leading cable-TV providers Comcast, Charter and Altice together lost roughly 1 million pay-TV customers in last year. Satellite providers shed even more accounts, led by AT&T’s DirecTV. The telecom giant ended last year with 3.4 million fewer satellite and fiber-optic TV connections in the U.S. Their rival Dish Network, lost more than 500,000 satellite subscribers over the same time frame.
One of the challenges that pay-TV product managers are dealing with in regards to their product development definition is that TV package rates have increased steadily over the years, due in large part to rising yearly programming expenses. Much of those cost increases stem from two areas: live news and sports channels. These two segments have helped keep customers stuck to the traditional pay-TV experience. It turns out that it’s hard to fully satisfy a sports fan with the offerings available on virtual TV-streaming services. Smaller cable companies are contending with the same challenges. These cable company product managers are seeing very little margin, which is very frustrating to them. The bundle that they offer to their customers is breaking down as a result of these massive price increases.
How Can Pay-TV Product Managers Deal With Cord Cutters?
Pay-TV provider product managers are also competing for subscribers with more streaming services. Existing platforms including Netflix, Hulu and Amazon.com were joined by Walt Disney’s Disney+ and Apple’s Apple TV+. Soon Comcast’s Peacock and AT&T’s HBO Max will make their debut. Cable giant Comcast said its average cable bill would increase 3.6% last year, compared with a 3.3% rise in the previous year. Meanwhile, Altice, which operates under the Optimum and Suddenlink brands, said cable-TV product managers increased their prices 4% to 5% recently, higher than its historical average of between 3% and 3.5%.
There is one silver lining for cable companies: they are signing up more broadband subscribers, who have a stronger positive impact on financial margins. Charter Communications, which operates the Spectrum brand, referred to its cable-TV business as being a complement for broadband customers. The company has said its cable-TV customer losses aren’t material to driving its business model. Despite their losses, pay-TV monthly average revenue per customer, on a quarterly basis, has been able to remain steady across the providers—often with small increases.
In some cases, cutting the cord is leading to higher average revenue per user in broadband. Recently, Altice said that when a customer ditches its cable-TV subscription, or switches to a lower-priced TV offering, the money being saved often goes toward a more expensive, higher-speed tier of broadband. At the same time, Comcast has pivoted away from chasing unprofitable cable-TV customers, and instead is focusing on its broadband customers and higher-end traditional TV customers. The company recently began providing Flex, its streaming device, free for its broadband-only customers. Comcast’s strategy also includes launching its own streaming platform. The company’s NBCUniversal unit will release the Peacock service to Comcast and Cox Communications customers, and then it will become available to all U.S. consumers.
What All Of This Means For You
When people watch TV, more often than not they watch some form of television that they are paying for. In the past, this meant that people would subscribe to a cable or satellite package and pay the provider a fee each month. However, in the past few years, a host of alternative providers have shown up. People have started to migrate to these alternative providers and this is starting to cause a lot of problems for the pay-TV product managers and their product manager job description.
People who currently subscribe to traditional pay-TV packages are abandoning them at a rapid rate. Pay-TV product managers understand that they can’t stop this and so they have resorted to raising their prices in order to make up for their revenue shortfall. A challenge that these product managers are facing is that the content providers are raising their prices and so the product managers have to raise their subscription fees even more to keep up. As a number of new streaming video services have started to show up, pay-TV product managers have experienced even more competition for subscribers. Pay-TV product managers have been finding a solution to their problem by signing up more broadband customers to make up for the pay-TV customers that they have been losing. In some cases, these new customers are bringing in more revenue than the pay-TV customers did.
Pay-TV product managers have to understand that their market is changing. Their customers are slowly slipping away. The attractive packages that streaming services are able to offer at a lower price are causing more and more customers to “cut the cord”. Pay-TV product managers are going to have to get creative and find ways to replace the customers that they are losing. We’ll have to keep a careful eye on them and find out if the days of being a pay-TV product manager are numbered…
– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Product Management Skills™
Question For You: How can pay-TV product managers compete with streaming services?
Click here to get automatic updates when
The Accidental Product Manager Blog is updated.P.S.: Free subscriptions to The Accidental Product Manager Newsletter are now available. It’s your product – it’s your career. Subscribe now: Click Here!
What We’ll Be Talking About Next Time
Let’s face it: being a product manager at Walmart is both the best of worlds and the worst of worlds. It’s best because Walmart is a very large company. Oh, and they have stores that are located just about everywhere. It’s also the worst because you are the company that Amazon is coming after. As Amazon’s catalog keeps growing larger and larger and people flock to their two day delivery guarantee, the Walmart product managers have been finding themselves under more and more pressure. The good news is that they think that they may have found their secret weapon. They think that they know how to do battle with the likes of Amazon.