Is this the end of the age of industrial media dinosaurs? In 2006 subscriptions to satellite and cable services was growing by around 2% a year and money was flowing into Comcast and Directv and the like. Now, almost a decade later, those numbers not only aren't growing, they've been dipping into the negative for over a year.
That's a powerful, if still small shift and it's accelerating at a pace that has industry insiders worried. And stock holders. It began with a Wall Street Journal piece noting the loss of subscribers related to the once untouchable ESPN. By the time Disney confirmed it stock prices for communications giants had begun their tumble. Disney's part alone lost 9% of its value in the market shaming that followed.
The first quarter of the year is typically the strongest one for subscriber based media companies. Not this year. Worse news, while over 1.2 million families were added to the nation in that period, none of them are reflected in the subscriber data, meaning the loses are on two fronts, cord-cutters and cord-nevers, or, people now in a position to begin their own cord shackled legacy who instead appear to be saying, "Thanks, but we're full."
By the second quarter of this year the industry had lost an additional 214,000 customers. In spite of this, more than a few of the companies impacted are still showing growth in profitablility. How? Glad you asked. Let's look at arguably the highest profile player in the public conscience, Directv. Here's what they have to say: "DirecTV has been increasing incremental customer lifetime value over time, reflecting a combination of price increases and careful customer selection".
That's right, they're admitting, to some extent, that they've seen it coming and that, that's why they've been incrementally accustoming the suckers to pay more. Not because they were being dragged kicking and screaming into the reality of higher prices, not because of local affiliates or particular partners demanding more money (though that happens), but to keep their margins healthy.
Meaning the main way these big players are continuing to grow in the face of subscriber shrinking will be to sell you the big candy lie. What's the big candy lie? Years ago candy sales declined a little and the cost for making a lot of it continued to inch up. The industry's response was to confuse the consumer, increase a candy by a percent that seemed impressive but was incremental in terms of actual candy involved while raising the price of the candy to cover both the size increase and the lost revenue.
Slick, no? Well, if you're still shackled to your cable/satellite provider that's what's been happening to you, why packages shift a bit and your bill keeps going up just enough so that you aren't mad enough to leave, only complain while they give you freebies and a cost of doing business shrug. Dish is one of the smarter candy companies, doling out free weekends meant to drive new numbers and mollify existing customers at a rate that makes an impression.
Suit yourself, but that 20% more chocolate they sold you for a dollar cost them five more cents to provide, by way of illustrating that you're the difference in their bottom line and thank you for playing.
Me? I left it behind months ago. Okay, by necessity once Jack hit preschool age, but with a growing boy it's easy to appreciate the extra sixty to seventy dollars a month we aren't handing a service provider. One powerful indoor HD antenna and less than twenty dollar subscription fees to Netflix and Hulu has us adjusting to life post ESPN and the dozens of channels beyond it that we never really watched.
But your candy looks swell too...if pricey. It's all about what you're willing to pay and how much you can actually swallow. Bon apetite. :chew: