“‘We’ve become less of a TV company than we were previously,”said Glenn Britt, Time Warner Cable CEO recently, adding that the company’s focus has shifted more toward its role as a provider of infrastructure for the delivery of media. Time Warner also has been emphasizing “single play” purchases of broadband access, where it has over the last decade been emphasizing triple play offers.Time Warner shifts
There are several angles worth noting. First, Time Warner said that roughly half the “broadband only” sales were to business customers, not consumers. That is one important overall shift. Though consumers once were most of the customers, these days business customers have become important.
The other angle is an apparently-growing shift in demand, lead by younger customers. It is harder to sell triple-play accounts to younger consumers for a couple of reasons. First, they use mobiles for voice and therefore do not want landline voice service.
Second, they tend not to buy video entertainment service as much as older consumers. “What I see is video avoidance. We have a lot more customers during that same period who have HSD only (high speed data), but it’s not from people cutting the cord, it’s new customers starting out with just HSD,” said Cable One CEO Tom Might.
That’s one side of the vice that is starting to pinch video sales. Demand for traditional video services among younger consumers is shifting. The other side of the vice is less demand from customers who had bought cable TV, but are starting first to downgrade levels of service, and in some cases to abandon service altogether.
Cable companies have lost a collective eight million basic video subscribers since 2001. SNL Kagan estimates that cable customers will fall below 53 million in 2021, down from 58.9 million in 2011. Broadband drives cable growth
Telco executives also have faced a decline in their former core service as well, for more than a decade. The lesson one might draw is that, given enough time, industries can adapt to changing demand.
What seems rather clear at the moment is that a succession of changes likely will be required, over time, in both the former “telco” and “cable” industries. One might argue that the nature of the challenges will change, though.
Up to this point, contestants have “traded market share,” in part, and created a couple big new businesses (wireless and broadband access). Over the next several decades, telcos and cable companies will have to venture further afield.