Digital TV May Face Great Subscriber Losses

Commentary

• by Wayne Friedman , Staff Writer, Yesterday

Are new digital TV services more subject to higher levels of “churn” than traditional pay TV? Do they lose subscribers on a month-to-month no-contract basis?


For decades, churn was a major issue for cable TV system providers, especially premium ad-free networks like HBO and Showtime. Now, with digital TV services, churn is a bigger wall to avoid -- given the ease of cancelling a subscription digital video service.

Traditional pay TV service cord-cutting remains a concern. But in theory, it can be a slightly tougher task for consumers. One may want to cancel the entire service -- or just selective parts. These are known as cord-shavers; they look to trim high-priced networks, which could include HBO or Showtime.

Customers continue to be savvy in this regard. With the conclusion of another season of HBO’s "Game of Thrones," many worry that digital video platform HBO Now could see a pullback.

Netflix may have the right marketing idea -- promoting its ever-growing original TV shows coming online through the year or fresh episodes of returning series. Promotion of all new digital TV shows on these services is key; consumers continue to buy every month.

With regard to marketing, an HBO spokesman told The Washington Post it was actually reminding subscribers not to look forward, but to look back: “Promos help remind people, so at the end of the month they feel, 'You know what, I guess we did watch stuff on the network this month.’ "
New digital video services -- Netflix, Hulu, Sling TV, DirecTV Now, and PlayStation Vue -- subscribe to one de facto consumer business practice that can lead to churn: no contracts. Users can cancel at any time. TV consumers got increasingly comfortable with that freedom.
Still, veteran TV business executives know there is a desire for consumers to have a continuing TV service -- of some sort. Especially older customers. Young TV viewers? They have no problem with change -- or stopping a service after they finish “Game of Thrones” for a season.

Years ago, TV executives worried the remote control could be trouble for their programming. Hitting a button could mean lower revenue -- advertising revenue in particular.

Now the key controls are on smartphones/digital devices. People no longer change channels; they stop entire TV ecosystems.