Cable groups test cheaper TV bundles on millenials

May 01, 2015

Denver Post

To combat the decline of cable TV subscribers, several companies, including Comcast, have gone “skinny” by adding new, cheaper bundles with fewer channels.

But the cable industry needs to go further, advised a group of millennials and University of Denver business students who participated in a Rocky Mountain Cable Association event Friday.

Armed with worrisome statistics — such as 1 in 4 millennials don’t, or won’t, pay for TV — the students pitched new TV business models that offered consumers a choice of channels, a lower price and the flexibility to watch anywhere they want.

“If you don’t offer what they want, they’ll go somewhere else,” said Tayler Canjar, a first-year, master’s of business administration student whose team pitched the “Made for Me” bundle offering 17 channels — five of which would be handpicked by the customer — for $17 a month.

The rise of skinny bundles has been the latest way for companies to retain customers who want to cut the cord but still need an Internet plan. But as some critics have pointed out, skinny bundles tend to be teaser rates, leaving consumers with the annoying chore of calling their cable provider each year to negotiate a lower rate. And with skinny bundles, consumers still don’t get to pick the channels they really want.

The student teams, which were competing for a $4,500 reward and internships in the annual “Cable Apprentice” competition, focused on flexibility, channel customization and consistency in monthly prices. But mostly, they focused on millennials.

These are the 80 million Americans born between 1980 and about 2000. They are forecast to spend $200 billion annually by 2017. While about 19.2 million of them aren’t paying for TV, many still pay for online video via Netflix, Hulu or Amazon Prime.

“The reality is that millennials are so busy these days with work and school, we don’t have enough time to watch TV,” said Emily Mitnick, who is in the professional MBA program at the Daniels College of Business. “If the cable companies want this market, they’re going to have to change and adapt to the market.”

Adapt means giving consumers a choice and being flexible, the teams concluded. While no one suggested offering channels a la carte — in which consumers pick and pay for only those they want — one team’s base plan included no live TV. For $35, the fictional “X-Light” bundle offered fast Internet, Netflix and video on demand. Extra tiers of channels would be $4 to $8.

“It looks like you’re giving TV away for free,” said Gary Schanman, a judge for the event and Charter Communications’ senior vice president for video products.

The pitches seemed heavily influenced by Sling TV, the new Internet TV service that Dish Network launched in February. At $20 a month, Sling customers get a base of about 20 channels and can add extra $5 tiers that focus on kids, news, sports and other niches. There is no contract and the first week is free.

In the end, a trio who called themselves “The Archers” won the competition. Their pitch: a bundle of 16 set channels and a choice of one feature channel pack for $35. Extra channel packs — such as kids or sports — would cost $8 apiece. Premium channels would be more. Video would be streamed via apps online to mobile devices. Customers who add Internet and HBO would pay around $90 a month.

“The group that won,” said Deana Myers, a senior analyst with SNL Kagan who served as a judge, “it was a more realistic package.”