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Summary:

Young people can’t afford to pay $100 for cable, and most of us just watch 14 networks anyway: Epix CEO Mark Greenberg thinks cord cutting forces the industry to change.

Been there, done that: Ask Epix CEO Mark Greenberg about cord cutting, and he is going to tell you that it feels like deja vu to him. Consumers who ditch cable and look for other ways to get their TV fix? That’s exactly what happened in the early 1990s, when satellite TV providers like DirecTV and then Dish came out of nowhere only to acquire 20 million customers within a few years.

Here’s how Greenberg put it during a keynote at this week’s Next TV Summit in San Francisco:

“Some in the media business call this cord cutting. But three decades ago, we had a different name for this in the industry. We called it competition.”

I had a chance to sit down with Greenberg after his keynote, and he elaborated a bit more on those thoughts. Before founding the movie-focused network Epix, which is owned by three of the major studios, Greenberg worked at both HBO and Showtime, and he still vividly remembers the ascent of satellite TV.

Back in those days, cable providers pleaded with the premium cable networks not to sell their feeds to satellite, even going as far as offering them more money for exclusivity. HBO and Showtime decided to do business with satellite anyway, and consumers gained choice, HD video and cheaper options.

Young people can’t afford $100 cable bills

Greenberg seems the same forces at work right now, and calls cord cutting and the internet simply the “fourth retail option” for consumers, some of whom are willing to string their own bundles with a variety of online services. He sees this driven by cost as well as convenience. Especially since a lot of young people simply can’t afford the $100 cable bill, he argued.

“This younger group is challenged by debt from student loans, not finding any jobs,” Greenberg said. Whether these consumers would ever subscribe once they get a stable job remained very much an open question, he added. “That’s gonna be the moment of truth.”

The industry will have to adapt and innovate to win back some of those consumers. Authenticated online viewing, coined “TV Everywhere” by the industry, needs to be improved, argued Greenberg, saying that signing up for Netflix is much easier than authenticating your online TV services. “Netflix is a great success story,” he said, adding: “If (operators) had delivered on TV authentication, maybe Netflix wouldn’t be there.”

Small networks may not survive

But the offerings themselves may have to change as well. “The average consumer watches about 14 channels,” Greenberg told me. At the same time, just killing the bundle may not work either, because costs for individual networks would go up as fewer people subscribe to them. The answer could potentially lie in smaller and smarter bundles, combined with new user interfaces, integration of social networks and better content curation. One example for curation done right is Pandora, Greenberg said, quipping:

“Pandora creates a custom channel for you. TV operators don’t even let you pick a custom time for your installation.”

Some of these features could be delivered by internet-based TV services like the ones Intel and Sony are working on. Greenberg acknowledged that Epix is talking to some of the companies who are trying to take on cable with online TV subscriptions, but declined to go into details. Internet-based TV operators “will exist,” he said, and some could succeed through better personalization.

And how about the traditional players? Not everyone may be equipped to embrace change, he admitted. The operator landscape is ripe for consolidation, and smaller and more flexible bundles may make it harder for some cable networks to make the economics of carriage agreements work for them. “The smaller networks may not survive,” Greenberg said.

  1. Cable providers have saturated the market. They have no where to go but down. I hope cable providers keep their blinders down. By the time they realize cord cutting is a real threat it will be too late for them to do anything.

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    1. Pure internet providers are no better. And in many cases they are one and the same.

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  2. I like this quote from the article “The answer could potentially lie in smaller and smarter bundles, combined with new user interfaces, integration of social networks and better content curation.”

    That could help. How about “make your own bundle”?

    Nahhh, the cable guys will drive their business off a cliff before they do that.

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  3. I’m 57 years old and can’t afford the $200 a month I’m paying for Internet and cable. I just bought an HD antenna and a smart tv. And, I work for the cable industry!

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  4. We’re going to need more competition for ISPs as well, then, because the majority out there are the cable providers. Your bundles include internet these days, and it’s more expensive without cable bundled. A major shift has to happen not only to providers and the means to receive those channels, but the providers of the internet service to get the alternatives. If your cable bill is $100 with TV and internet, and internet alone is $60, you’re no better signing up for several $14 a month services to get just the channels or programs you want.

    The whole landscape and idea has to change. I do think the idea of a customized package will be the next step. Selecting the channels YOU want and eliminating those you don’t will also open up bandwidth. Let’s see what happens, though, and who recognizes this first.

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  5. Blame Honey Boo Boo!

    Cable channels went to cheaper reality programming, continually force themselves into programming bundles, then wonder why people start to choose “nothing” when presented a choice of “all or nothing” from the cable company.

    Smarter, smaller bundles would make me a customer again.

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    1. Cable providers will make sure customer bills don’t decrease by that much no matter how few channels you subscribe to.

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  6. It is a zero sum game for the MSO. Right now you are paying $100 for TV and $50 for data. If the TV bill goes to $25 the data bill will go up to $125.

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    1. MSO = Oligarchy

      Not good.

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    2. Only until people wake up. Which could be a while.

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      1. They are painfully aware of how data and cable tv are blending and therefore will rip you off to the maximum extent until they are forced by market forces to separate the two products. Stop watching TV.

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  7. Charging $70 to $100 or more for basic cable with internet should be a crime in itself (and eventually will be), but, unfotunately, it doesn’t stop there. Time Warner cable, e.g., among others, seem comfortable INTENTIONALLY not explaining to new subscribers that “on-demand” and other “products” are not available unless the customer agrees to pay even more (a “package up-grade”) PLUS a contract time extention (they keep it at the inital contract time, typically 12 months, but RESTART THE CLOCK). If you fail to honor the contract’s timespan, they punch your credit rating. It’s a really pretty disgusting business.

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  8. The man is right; many (perhaps most) people, especially young people, cannot actaully afford cable tv/internet. Obviously they just choose to pay for it. Sad. Well, if people want to keep spending so much money on cell plans, they better chop down some other “industry” they once before couldn’t imagine living without. Or, we could just print more money?

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  9. I wish we could break up this Cable/Internet mess. This conglomerate hurts the overall economy, IMHO.

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  10. Hey, I see what you mean. It’s a agreewithalli say blog.

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