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Rather Switch than Pay?

February 4, 2010 | Author: Ibex Marketing

Brand loyalty remains an important part of many consumer markets in the U.S., but according to a new report by Strategy Analytics, subscription television service is not one of them. A recent survey found that more than 2 out of 3 cable subscribers would change providers if they were offered a 20% discount. For the smaller number of people who subscribe to television from a phone company, such as Verizon or AT&T, that number is cut in half to just 1 in 3.

Perhaps more telling is the fact that fewer than 22% of the subscribers overall felt that they were getting “value for the money”. With “100 channels and nothing on”, consumers are starting to question the return they get for their monthly subscription. The rapid growth of services such as Hulu and Netflix streaming movies is another indication of consumer dissatisfaction with the current choices.

From where I sit, one of the primary problems facing cable companies — and to a lesser degree, satellite services — is that they were established under a different set of rules and market conditions. In return for investing in running cable throughout a community, a cable company was given the right to provide the service to those homes. Now consumers are faced with a number of alternative choices, while cable costs keep rising year after year. One easy way to lower cable bills would be to offer a la carte pricing, but that will no doubt result in a huge drop in revenues because subscribers would opt out of all but a handful of favorite channels. But if cable and satellite services don’t do something soon to address the consumers’ concerns, they will will find their customers voting with their dollars and looking elsewhere for their video programming.