Right now cable operators from New York City to San Francisco are struggling with the question of whether to increase video prices in 2016.
Of course, there is the legitimate concern of angering customers who may flock to over-the-top services instead of continuing to pay for traditional cable service. As explained in a recent Yahoo article, average monthly cable television bills soared to a record $99 in 2015, reflecting an 8 percent increase from 2010. This is a direct response to rising operational and programming costs. So many customers are already on edge with their current bills, and will be reluctant to receive rate increase notifications in the mail. Cable providers are therefore urged to tread lightly in this saturated market.
So, what is a cable operator to do? Risk alienating customers, or trudge through another year of low profits and high expenses?
Here is a solution: Instead of increasing video prices in 2015, raise the cost of your broadband service. Considering offering tiered service packages, based on individual customers’ expected monthly usage. Customers who use heavy amounts of bandwidth streaming multimedia should be charged premium rates, while those who use relatively little should pay less.
By raising your broadband prices, you can let your customers enjoy affordable cable television prices while still improving your bottom line. It’s a move that some cable operators—like Comcast—are already experimenting with in certain areas of the country. Many more providers may begin to do so as well.
There’s another benefit, too: by keeping the cost of cable low, customers will be more apt to spend money on over-the-top content, which requires fast Internet service. As a result, they’ll be looking to purchase top-tier broadband packages. So it’s a win-win—and a less risky—solution that is worth considering.
We want to know: how is your business responding to the saturated television market? Are you considering offering tiered broadband packages in 2016? Let us know your thoughts!