Pick-and-pay TV prices could reduce cord cutting, say experts

Prices for TV subscriptions in the coming pick-and-pay era will be one of the main factors determining how over-the-top (OTT) video services are affected, say experts, noting that competitive pricing in TV packages might curb the cord-cutting trend. Earlier this year, the CRTC announced that TV providers will have to offer skinny basic TV packages, starting in March of next year, for no more than $25 a month. This package will include public-interest, educational, some community, and local and regional channels. Emilia Zboralska, a researcher of communication and culture at Ryerson University, is among those who say the new rules might keep some people in the regulated-TV system who would have otherwise left. “ makes the experience much more like the over-the-top experience, which gives consumers more choice and flexibility. … It all depends on how much control is offered,” Zboralska said. She said current TV customers might keep their subscriptions because they will have more options with the different bundles they can create and the channels they can add individually. Zboralska said the price of the discretionary channels beyond skinny-basic packages will be a factor in whether customers cut the cord and depend on OTT. “Most analysts think that consumers will still end up with high cable bills since the cost per individual á la carte channel is expected to be relatively high,” she said in a followup email. Zboralska said in the phone interview that for consumers who have cut the cord in favour of services like those offered by Netflix Inc., "it might be a stretch for them … to go back to cable because they still want more control over shows they watch.” Emily Taylor, a senior analyst at International Data Corp., said in a phone interview that prices of individual channels are going to be a driving factor for whether the flow of TV customers to OTT services — including BCE Inc.'s CraveTV, and Rogers Communications Inc.'s and Shaw Communications Inc.'s Shomi — is stemmed. She said many consumers might get skinny-basic packages and turn to OTT services for other programming, instead of discretionary channels through their TV subscriptions. She said this could reduce the number of cord-cutters. Taylor said that "for those customers who have cancelled , it might actually bring them back to the market because they might perceive the value of a TV service subscription with a reduced price and greater choice.” She added that many consumers might stick with their OTT subscription but still purchase a sports channel since live sports are among the program options OTT services currently lack. Greg MacDonald, telecom analyst at Macquarie Capital Markets, said in a phone interview that TV-service providers will be under pressure for how they price smaller bundles or individual channels that would be added onto a skinny-basic. “I think that… will try and re-price the bundle offerings that they have so there will be smaller bundles than what there were in the past and that suggests a pressure on distribution , but I think would be willing to do that,” MacDonald said. He said they might be willing to sacrifice some of their business on the TV side "in an effort to maintain subscribers on the broadband side.” MacDonald noted the TV regulatory changes will not increase the number of cord-cutters, though "the number of cord-cutters will increase as time goes on.” Troy Crandall, a telecom analyst at 3Macs, said in a phone interview that the change might be beneficial to OTT providers because customers who have been paying more for television subscriptions might end up becoming “cord shavers,” and have both a television subscription and an OTT service. “I do think that there will be cable-shaving," Crandall said. "If you previously were paying $100, that now goes down to $25, and you’ve freed up $75 where you can increase the speed of your Internet ... to give yourself a better OTT streaming experience … and you might spend on an OTT service as well,” he said. Crandall noted that telecom companies are still trying to understand OTT services and how they fit within their existing business model. He added that most companies are not focusing their time in pushing for OTT because it has a lot of unknown territory, especially in terms of advertising revenue. — With reporting by Shruti Shekar at sshekar@thewirereport.ca and editing by Derek Abma at dabma@thewirereport.ca

Pick-and-pay TV prices could reduce cord cutting, say experts

Broadcast | October 2, 2015

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