No One Way to Reach Cord-Cutters8/08/2011 12:01 AM Eastern
As DirecTV launched in the mid-1990s
I became a traitor, a cable vet who had moved to the dark
side as the head of consumer marketing. My former colleagues
mostly remained confident: Satellite TV’s onerous
initial sign-up costs, limited multiroom services
and lack of local channels enabled cable to still
dominate the market and keep growing.
But many of us remember what happened
next — and cable operators who fail this history
lesson may well live to regret it. It took cable
companies a while to realize their numbers had
begun to stall. Customers who moved did not
return. Satellite providers finally gained local
channels and became crackerjack marketers,
eating into cable’s subscriber base by appealing
to people’s perceptions about the industry’s
weaknesses and, in many instances, by undercutting
cable on cost.
Most important, for today’s comparisons, certain market
segments took to the dish much more quickly than others.
Out-of-market sports fans, rural cable customers and tech
enthusiasts were especially early adopters.
Fast-forward about 20 years and substitute the likes of
Netflix and Hulu as well as TV sets that connect to the Internet.
Skeptics point to surveys that show “cord-cutting”
remains at a minimum. The Web-based offerings lack pay
TV’s sweep, live sports is almost nonexistent and connecting
the whole process to the TV set is just too darn cumbersome,
their argument goes.
But our industry must learn from the past and understand
which segments are most at risk. We must then develop
business and marketing strategies to respond to the
changing industry landscape.
Who are the out-of-market sports fans, the disgruntled
rural viewers, the early tech adopters of today? In late May,
my firm released a study that identifi ed a key subset of Gen
Y — the 18-to-29-year-olds we termed “at risk” — as the most
likely group to ditch pay TV for over-the-top video services
such as Netflix. Combined with the “leaners,”
those on the fence, they accounted for 60% of
Not only did we identify who were the most
likely to defect, but we learned a lot about them:
What factors go into their decision-making?
How do their lifestyles account for their entertainment
choices? These are the early adopters
of the mid-1990s, the same people who embraced
satellite TV. They own iPads, demand
great customer service and feel they are paying
too much to watch TV. If we, as an industry, fail
to address their needs, then we have learned absolutely
nothing from our past mistakes.
This is an exciting time for multichannel providers
and the industry. Soon, most TVs sold will be Internetcapable.
Consumers will have new and expanded expectations
from their video services.
The Gen-Y issues aside, the overwhelming number of
people still identify pay TV as the best and most convenient
way to receive hundreds of channels, HD, VOD and Internet.
Multichannel providers can remain in the forefront as
long as they fully understand the different expectations of
various segments of consumers and market to them accordingly,
instead of as a homogenous group.
Glen Friedman is president and CEO of consultancy Ideas
& Solutions! Inc. He formerly ran Century Cable in Los
Angeles and was VP, marketing, at Manhattan Cable TV
in New York.