In this data-obsessed world, what’s the rush for cable and satellite operators to cut carriage-fee deals when negotiations reach an impasse? Why not blackout a local station or cable network and use that as a market research opportunity to gather some pretty concrete evidence? There will be time to settle when the research is done.
Going dark offers distributors a chance to gather all kinds of valuable information on the mindset and behavior of their customers. Depending on what the data yields, that might lead to the cost savings the operators are seeking with the blackouts in the first place.
Cable and satellite systems have all kinds of set-top-box data giving them a sense how many customers watch particular networks and are the most likely to move their business to a competitor during a blackout.
There are two prominent blackouts now that have lasted for weeks: AMC off Dish Network countrywide and Tribune’s CW affiliate off in Cablevision homes in New York. Both Dish and Cablevision have had an ample chance to gauge the value of those to their customers.
Referencing AMC hit “The Walking Dead,” Dish Chairman Charlie Ergen said: “Our customers live on farms and ranches. They have no idea of watching zombies walking around New York City saying, 'I want my AMC.'" Now, he has a better idea whether he was right.
For the operators, best-case scenario is cancellations during a blackout are minimal. Then, they have some negotiating leverage offering a chance to drive down content payments (at least the rate of increase). Better yet, a blackout could make them realize carrying a particular outlet isn’t worth it at all -- and that determination could come for a network they’ve been carrying for years.
Worse case is a flood of calls from angry, implacable customers saying goodbye or maybe "I want my AMC." But there is a middle ground in the form of tweeners (to borrow a basketball term), customers who want to stay, but probably miss a favorite program or two. Say, “Walking Dead” or “Gossip Girl.” They provide the customer research that can top surveys and focus groups.
With so many customers having TV and broadband service or maybe a triple-play with an operator, switching is a lot harder than choosing a different brand off the grocery store shelf. That can bring cancellation fees or having to get new equipment or needing to wait for the cable guy to come and set up the wireless service. (Dish only has TV service for now.)
What does it take to keep a tweener?
Offering a significant discount on a monthly bill -- a last-gasp measure -- can hurt. But, there are many other less-burdensome ways to placate the customer. (The easiest in the case of a “Gossip Girl” fan is to say it's on the CW Web site.)
But there’s three free months of HBO or maybe an HD-DVR for a year. Perhaps use of a sports tier – or other favorite channel -- for a while at no extra charge. Customer responses are all tracked. Information on how ones in certain geographies or with certain payment histories responded offers ample data to mine.
The customer interaction – even the angry phone calls – blackouts bring can also be a revenue generator. Maybe a subscriber will keep HBO after the trial period. They might accept $10 off a month in exchange for a new binding contract that brings increases in a year.
While Dish may be able to go a long time without AMC, it won’t be able to without ABC, CBS and NBC stations in many large markets if it has no deal with the Gannett station group. But, even a blackout for a few days can offer plenty of insight into customer tolerance and psychographics, which can inform all kinds of marketing and other decisions moving forward.