Even almighty Google is not immune to the skyrocketing costs of video programming, with news last week that Google Fiber video rates will rise by about one third. New customers to Google’s double play of gigabit broadband and video will now pay $160 per month, up from $120.
Existing customers will see their rates rise to $140 per month for the same package, according to a report in the Kansas City Star. It’s the first rate hike for Google Fiber in that market, which first launched in 2012.
Stand-alone gigabit broadband pricing will remain at $70 per month. A lower cost 100 Mbps tier is also offered at $50 per month.
“Since we launched in 2012, we’ve needed to adjust the price of our TV plans to reflect these increased programming costs,” the Kansas City Star quotes the company.
Video providers are all too familiar with the rising costs of programming and struggle with how to pass those higher costs on to customers. Some existing operators like Cable One and Wave pass on all rate increases to end customers, realizing the negative impact that has on their subscriber counts. That strategy sees broadband as the core service offer, with video becoming less important.
Google Fiber has struggled to build a significant video customer base, which only contributes to higher rates for programming. The company is currently evaluating their broadband strategy as well, having slowed down their once aggressive overbuild strategy.
These higher cost packages certainly won’t help with new subscriber acquisition. But with Google now launching their own streaming OTT solution with YouTube TV, perhaps we’ll see future shifts away from legacy video options for the Internet conglomerate, if they plan to remain in the broadband/video service provider space at all.
A better more truthful headline for this would be that "Google Fiber's Video Content Costs force a 33% increase in Video Service price". I can speak from first hand experience it is not the service provider's rates or margins that are increasing at all. It is just the content provider's profits! How content providers can continue to discriminate against smaller Video Service Providers (Google included) by charging our customers significantly more for the same content than they charge the big providers is nothing more than Discriminatory pricing against small customers. Generally when I pay more I get more, but in the Content world I pay more and get less!
Well said Jim! Well said.