Commentary
53% Hate The Cable Company, 49% Have TVs Connected To Internet
- by P.J. Bednarski , Staff Writer @pjbtweet, June 9, 2014
Possibly somebody is making a fortune churning out reports about consumers’ dissatisfaction—more like loathing, really—with their cable service.
Here comes another one proclaiming that 53% would quit their cable provider if there was an alternative.
The new study, by a consulting group called cg42, also discovers that 72% believe things will get worse as their cable companies get larger, which, by now, is the way to size up every recent merger I can think of regardless of industry. But it seems particularly true in cable, in which the original companies were pretty irritating to begin with.
Its brand vulnerability study, as cg42 calls it (with the subhead, “the quantification of frustration”), claims “the top five U.S. cable providers are projected to lose a combined $6.9 billion in revenues over the next 12 months if existing customer frustrations are not addressed. Of the top 5 US cable providers, Comcast and Time Warner have both the highest levels of brand vulnerability and the most revenues at risk over the next 12 months.”
It is likely those cable companies won’t lose anything like that, of course, because while consumers complain about cable they don’t have many choices, which is really the major downbeat conclusion of the study. As Lily Tomlin so succinctly pointed out when she portrayed the telephone operator Ernestine, “We’re the phone company. We don’t care. We don’t have to.”
This survey notes that 73% believe cable companies are predatory and take advantage of consumers’ lack of choice, and 58% said there was really no choice but to not-grin and bear it.
Stephen Beck is the managing partner of 4-year old cg42, which has produced brand vulnerability studies before. “Our first publicly available study of brand vulnerability was conducted on the retail banking category in 2011,” he writes. “We predicted historic levels of customer defection and diagnosed the unique reasons that each of the major players would be experiencing increased attrition … Our findings have proven to be prophetic.”
But by comparison, he writes, the cable data makes “the problems we identified in the banking space seem trivial…With more consolidation on the horizon the implications of this study are clear—consumer frustration left unresolved will eventually come to the boiling point.”
The survey finds that nearly 60% of Time Warner’s have considered quitting in the last 12 months. Somebody’s got to be first; the other cable companies are just a few percentage points behind.
The study also says that, compared to banking and the hospitality business cg42 studied--categories where customers can also run very cold--nothing compares to cable. The study says
that’s because in those industries “there actually exists a level of true competition that is virtually nonexistent in the cable industry.
If the recent, overwhelmingly
negative press coverage regarding the impending Comcast/TWC merger doesn’t already remind us, the findings in this report should serve to underscore exactly how much ‘fixing’ the
category needs – and how combining two giants with critical customer experience issues is not likely to benefit consumers in the least.”
At the same time cg42 beats cable upside the head, the Leichtman Research Group has released data that claims 49% of all U.S. households have at least one television set connected to the Internet, and that nearly a quarter of those households watch connected TV at least weekly. That would be in the “eh, big deal” category with me if it wasn’t that only 38% were connected in 2012, and only 13% watched it with any regularity as recently as two years ago.
Altogether, 47% get either Netflix, Hulu Plus or Amazon Prime. It is absolutely true that 80% of all Netflix subscribers also subscribe to a cable pay service, but that percentage has also fallen.
Bottom line, over the top Internet delivery systems are something people do and like, as opposed to cable, which is something people do, and don’t like. You can see which way this is going, but maybe not. Cable is hard to like, but cable bundles and a bewildering price system makes it hard to quit.
Noting the cg42 study Erik Sherman noted for CBS’ Moneywatch, “The customer dissatisfaction numbers help put the fight over so-called net neutrality into a practical context. The cable companies want the ability to charge Internet-based companies additional amounts for higher speed access to cable customers, even though both the Internet companies and customers already pay for access to each other. One concern is that with the growth of streaming services like Netflix and Hulu, consumers could use their cable Internet access as an alternative to cable television offerings. By making delivery more cumbersome and potentially expensive, they could discourage consumers from making a switch.”
pj@mediapost.com
P.J. Bednarski has written for MediaPost since 2012 on media and marketing topics. He can be reached at pj@mediapost.com
Hatred of the cable company is nothing new, and even with the expanded availability of online video sources, the percent of consumers likely to 'cut the cord' has remained virtually unchanged during the past four years. In other words, consumers are expressing their frustration but we've yet to see a mass exodus.
Why not? For one, a truly competitive OTT TV service remains unavailable (Aereo is broadcast TV service, not a full-on cable replacement service). Second, incumbents are (finally) listening to prescriptions regarding how best to defend against such an exodus, introducing TV Everywhere services and new in-home platforms (like Comcast's X1) that make the service more sticky. As well, the effectiveness of bundling as a defensive strategy has kept many of these disgruntled subscribers from jumping ship.
Will there come a tipping point where the costs are simply too high, and the frustration levels too deep, to keep incumbent subscribers in place? It is unreasonable to reject this idea, as it is certainly possible, this despite the failure on OnCue, the capitulation of Sony (no longer thinking in terms of a replacement service, just a supplement to traditional cable TV), etc.. Unfortunately, however, it is becoming increasingly likely that the "new competitor" will just be an incumbent that offers scaled back channels tiers at lower prices, not an OTT 'new media' company.
I agree with you, Michael. Hating cable is all American. But it does seem amazing that cable seems to compound its misery. Most people are really still unaware of all the TVEverywhere-like features cable has, because cable does such a horrible job selling itself--and because people don't t want to hear one word more than they need to from their cable provider.
Turning a ship as big as cable takes time and unfortunately that keeps them behind the innovation and marketing curve (though Comcast is emerging as a notable exception to this generalization). They have to hit both cylinders at once in order to stave off the short-term "threat" presented by existing and emerging OTT services, yet this is proving difficult for them to do. It's great they are innovating, but if they are not communicating the virtues of these innovations to their subscribers the result on service downgrading/cancellation will be negligible.
Also, the finding that "53% would quit their cable provider if there was an alternative" is not new. Our research from as early as 2009 validated this thesis with similar percentages. Again, it's not that the disdain for cable operators is anything new, but the continued absence of legitimate (and competitive) alternative is keeping these intentions from being converted into real action (i.e., cutting the cord).