Pay TV's Consumer Retention: Short-Term Or Longer?

A media package for Time Warner Cable looks familiar: A digital banner ad says “TV, phone & 100 Mbps Internet” for $89.99. And then come the small print: “Per mo. for 1 year.”

Media consumers continue to look for long-term entertainment price security. Unfortunately, they are not going to get it. A number of media companies continue to offer deals that looks for the short-term -- and that means consumers will as well.

Is this really want companies want?

It’s a free marketplace for sure. Media companies -- pay TV providers, subscription video on demand services and mobile phone companies -- can change pricing rules pretty much whenever they want.

Right now, Netflix has me at $8.99 a month. Can they change the pricing at any time? Of course. Retrospectively, I’ve been with Netflix for well over a year. Long-term guaranteed pricing wasn’t a factor, and Netflix doesn’t market itself this way.

Consumer analysts would say the rise of new, less-expensive OTT services, while having traditional pay TV providers offering these “one-year deals,” actually gives consumers an out. The Time Warner Cable ads ends with this: “No annual contracts & free installation.”



Other pay TV operators have tried a different approach. Dish Network offers two-year guarantee price deals when looking at a TV and Internet bundle for as low as $39.99 a month with “over 50 channels.” Small print says there is an early termination fee.

Many pure-play mobile phone company deals can offer contracts of varying degrees, tempting people to switch -- and pay for those early termination fees. There is, of course, value attached to those new smartphones as part of those deals. Someone’s got to foot some, if not all, of that bill.

Which brings us to current issues around pay TV providers home equipment: set-top boxes. The FCC wants to open up competition -- because revenue from set-top boxes can bring pay TV providers $21 billion a year in revenue from consumers.

And, if that changes, and consumers get a choice -- you can expect pay TV provider ads will be changing. All that will force customers to ponder a bit longer when deciding which service to buy.

And perhaps -- almost as importantly -- for how long.

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