Cable companies slim down offerings with “skinny” bundles

Dec 15, 2014

Major internet and cable television providers like Verizon, Comcast and AT&T have responded to the influx of “cable-cutters” by introducing streamlined content bundles, according to The Motley Fool.

With more Americans cutting back on cable television while naturally increasing time spent online, this recent evolution of the cable bundle seems natural. The move is also an attempt to court millennials, a demographic with growing pocketbooks and market influence, who have embraced the cable-cutting trend most readily.

Not all members of the broadcasting community are confident that mini-bundles are the ideal future for cable television, but the internet is pushing the industry in a new direction whether its members are ready or not.

Fewer channels, fewer costs

“Skinny” or “mini” bundles offer a mix of broadband internet, a smattering of channels and few extras, perfect for consumers more interested in streaming content than watching television on the couch. The Philadelphia Inquirer noted that one such package, FiOS from Verizon, offers internet (50 Mbps), the customer’s choice of Showtime or HBO, access to their local channels and a complimentary year of Netflix.

HBO has recently announced a stand-alone streaming channel of its own, but the company promised that the streaming service will complement the television experienced instead of replacing it – if this holds true, then cord cutters will have even more options for accessing their favorite content.

Rival Comcast offers a similar line-up in Internet Plus, which provides internet (25 Mbps), 10 channels, access to Streampix and an HBO subscription. Comcast has expanded its reach to college campuses as well, signing deals with colleges to make Xfinity available in dorm rooms. The company hopes to make positive relationships with millennials early on with hopes that they will fall back to more traditional television viewing habits as they grow older.

Consumer trends continue to lean in cable cutting’s direction

Recent data released by PricewaterhouseCoopers showed that are savvy in making moves to market to the cord-cutting audience. The number of cable TV subscribers aged 18-35 has dropped 6 percent between 2013 and 2014.

Over the same period of time, Netflix saw a 25 percent increase in subscriptions, indicating a shift in how the next generation of consumers expect to pay for content. Furthermore, results from the PricewaterhouseCoopers survey indicated a 55 percent increase in binge-viewing among consumers of all ages. Viewers aged 18-24 lead this trend, but the practice of watching several back-to-back episodes is pervasive across the general population.

Not all of the data from the survey suggested that over-the-top services like Netflix and Pay-TV need compete directly – over 60 percent of cable subscribers also pay for Netflix. Unexpectedly, the fastest-growing group of new Netflix customers among cable subscribers are adults aged 50-59.

Broadcasters considering a break-up with TV

Another factor driving the rise of skinny bundles is the growing number of television broadcasters who are considering ditching the cable platform and streaming their content to the consumer over broadband. Industry leaders like Charter CEO Tom Rutledge call the trend, lead by HBO and CBS, akin to “playing with fire” by unnecessarily contracting the television market, according to Multichannel news. At the recent UBS Global Media & Communications conference, Rutledge praised the skinny bundle as a more economically viable alternative for reaching out to cable-cutters.

The issue may be moot if customers find that a la carte cable is more of a burden on their budget than a blessing. Purchasing cable channels in a package provides big savings to customers, so paying for each separately may quickly add up to a price higher than the average cable bill, according to NASDAQ.