There isn't a day that I turn my TV on and I don't think about cutting the cord. I've had triple play for a while now and over 100 channels, out of which I probably watch just five. Why do I need to pay for the other 95 channels?
When I called my cable provider a while back and asked about receiving two international channels, they told me that it would cost an extra $29.99, but not to worry, I can give it a try and if I don't like it I can disconnect anytime. They also said they don't have TVE in their list of channels (a television network from Spain). Then they convinced me that I should upgrade my package in order to receive more international channels and all this other wonderful content in HD. All these changes ended up costing me close to $200/month, but I was still watching the same five channels, plus the two international channels here and there.
I called back to cancel this whole new 'arrangement' and go back to my basic package, but they told me that now, my monthly payment would go up, because when I changed my service I lost the discounted price I was receiving. I complained, they escalated my case and transferred my call to some 'customer retention' division and gave me a better price, but still higher than the one I originally had… Right now, I'm still watching the same five channels… but this time, for more money.
So that's my personal TV story, and that's why I'm mad at my TV. I pay for things I don't want, and I can't get things that I want. As a soccer fan, I watched an Argentinean soccer match on my computer this past Tuesday. The image wasn't good, and the experience was not the same as watching it from my TV screen, but I was a happy camper because I was getting what I wanted free of charge. So getting what I want for free or for a reasonable price is a lot better for me than getting what I don't want in high definition on my pretty flat screen TV.
Apparently, I'm not alone. More and more people are cutting the cord at a faster pace (and satellite TV is not doing any better), and it's not just because of the economic situation. I watch this phenomenon with a distinct sense of déjà vu. It's the same thing we witnessed a few years ago when people started to cut another cord – their landlines – and moved on to their next love story, the mobile phone.
Not the Triple-Play
Cable operators have been losing video customers for a while now, but they have been counterbalancing these loses by selling more triple-play and other packages. The problem is that this strategy is not working anymore, so contrary to what we've been told for quite some time, triple- and quad-play are not holy grails for customer retention and higher ARPU.
From a consumer perspective, when you start adding all the money you need to pay over a period of time for things that you don't want, just to get a few things that you do want, then things become way too pricey. Also, customers want to feel that they are in control, but it's been a long time since customers haven't had that feeling over what they are buying and what they pay for. You get what you get, and you are supposed to be happy about receiving over 100 or 200 channels, because that's a lot of content, even if you only end up watching a few of those channels. That doesn't make for a good customer experience, does it?
I'm not saying that the current economic situation isn't a factor and I'm not blaming things only on cable operators, as content providers are also to blame for not being flexible in terms of how they sell their content to cable companies, hence limiting the operator's ability to offer more customized packages for their programming. But this is a time where everyone needs to sit fast on the table and start negotiating towards a new business model or else everyone will end up losing.
The Clock is Ticking
Cable operators and their content providers have left a lot of room for the new players, perhaps because they felt too secure. In effect, Netflix and Hulu are doing quite well, and the biggest nightmare for cable operators (and satellite TV), is that some TVs can now play Internet content, so soon enough you could go around the cable network AND the networks that develop the video content.
"If you ask me, the biggest threat is Google TV – a box that will sit between cable and TV screen – but which is also a very sophisticated search engine. If you're looking for an episode of Mad Men, you will be able to search your cable or satellite service but also go out into the Internet and find it on the Internet with a menu of choices and cost options," said Shane O'Neill, chairman of UPC in Ireland, last month ("Cable Giant Plans Gadget to Rival Apple TV and Google TV," John Kenned, Silicon Republic). "This is not just going to be a box but will be embedded in consumer devices. Sony is already embedding Google TV into its newest products. As well as this, nine OEMs (original equipment manufacturers) plan to incorporate it into their products."
According to O'Neill, "the cable industry will embrace innovation and incorporate these new innovations. There is a strong likelihood the cable industry will embed Google TV in their own set-top boxes. This, in our eyes, is not a threat but a cool new way to search for video."
I wonder whether cable operators understand what customers truly want, and I offer a quote from the same article: "What customers want is on the one hand linear TV and the full Internet. Secondly, they want their service extensible via applications – a marriage of TV with social networking; this will bring a renewable social element to TV, people may not watch TV together anymore, but certainly they want to debate and discuss what they're watching."
There are a couple of problems with this thesis. Everyone seems to think that copying Apple or Google is the way to go. But this technology won't be ready for a couple of years. Two years in the life of Apple, Google TV or Netflix is a very long time. They are trying to compete in 2012 with a business scenario from 2010. Sounds crazy, right? But that's the nature of our industry. Who knows whether what they are working on will still be relevant in two years? Whatever they are doing will require a lot more flexibility. Secondly, I still didn't hear whether they'll give us what we want and we only pay for that, or whether they'll still be providing a lot of linear TV and content that we don't want, make us pay for lots of things we don't care about, just so we can finally get the right to pay extra for what we really want to receive.
In the meantime, I still feel like I want to cut the cord. What's preventing me from doing it? Nothing other than waiting for the right train to come and then I'll jump on it right away. After all, it's my money, and I want to be in control.
By Monica Zlotogorski, Vice Chair, TM Forum's Latin American Advisory Board, and Editor, Inside Latin America