A major shift is taking place in the pay-TV industry regarding consumer demand for content.
In the past, most cable operators offered packages of between 50 to 100 channels on average, for a set monthly rate. The channels were pre-selected by the operator and came with the option of adding on premium channels like HBO.
What wound up happening, however, was channel bloat: While customers gained a large numbers of channels to peruse, studies show that they weren’t tuning into most of them on a regular basis. In fact, a recent study from Nielsen shows that while the average home receives about 189 TV channels, consumers, on average, only tune into about 17 of them.
This trend of channel bloat, of course, is nothing new. The complaint that there is “nothing on TV” has been repeated often since the advent of premium cable in the 1960s. But it didn’t become an issue for the cable television industry until broadband Internet and the streaming video revolution erupted about a decade ago.
At that point, consumers could suddenly access content on demand over a broadband Internet connection. As a result, the issue of pay TV’s set fees for large bundles of content—content undesired by the viewers—was exacerbated; it has continued to stickier as more content is made available on demand. Consumers are now accustomed to watching what they want, when they want. And they don’t want to pay for channels they don’t tune into.
Cable operators have been forced to react to this shift; as a result, an increasing number of companies are now offering “skinny” television bundles. Instead of offering tens or hundreds of channels, these bundles offer a smaller number of channels, and they are flexible, meaning that customers can pick and choose what they want to receive. A skinny bundle is typically priced below $40 per month. It’s a trend that is growing ever more popular.
“We anticipate 16 percent of the overall U.S. pay-TV base could be represented by skinny bundles in 2020,” reads a recent report by Evercore ISI. Currently, skinny bundles represent about 10 percent of the total U.S. pay-TV base.
So, if your company has not yet considered offering skinny pay-TV bundles, now’s the time to get started—before your competition gets the jump on you. Listen to what your customers want and provide flexible, cost-effective bundles that they can supplement with over-the-top content.
Of course, you don’t have to totally abandon your set monthly packages, as this could upset customers who do prefer to receive a greater number of channels. It’s simply a customer-centric strategy that will provide your customer base with more content-viewing options.