The past few years has seen the decline of traditional cable bundles and Pay TV services as Americans begin to adopt Internet-only media strategies. However, cable companies have not taken the loss of customers lying down. Instead, cable providers have attempted to court customers with scaled-down Internet and cable deals. The latest version of U-Verse by AT&T may usher in the new era of monthly media subscriptions.
The new AT&T U-Verse bundle is designed to appeal to cord-cutters by roping in their preferred delivery method: over-the-top streaming services. The entire bundle includes an 18 Mbps Internet connection, basic cable, HBO and Amazon Prime for a measly $39 per month, according to Forbes. The inclusion of Prime means that Internet customers will also get access to free two-day shipping on Amazon and Prime Music, as long as they pay their cable bill. Such a bundle would have been unheard of just two or three years ago, but the surge of alternate media options has forced the hand of many telecom companies.
Forbes notes that this appealing U-Verse bundle is limited to a 12 month agreement, and that the $39 collar per-month price will expire at the end of the first year. Customers will be charged a $180 cancelation fee if they attempt to jump ship before the end of their service agreement, and it is almost certain that the bundle's cost will increase once the original service agreement expires. Since cost is a major barrier against customers signing up for cable packages in the first place, it will be surprising if AT&T is capable of keeping its subscription rates up as the first year of U-Verse service expires.
The U-Verse bundle is also pertinent because it demonstrates just how desperate large cable companies are to retain business and keep customers paying for cable. While Amazon Prime is nowhere near as detrimental to the telecom industry as Netflix, the fact that AT&T has chosen to promote one of its main competitors shows just how far the market has shifted away from traditional cable bundles. In light of AT&T's plans to merge with DirecTV, the U-Verse bundle, which expires at the end of 2014, may just be stall tactic designed to retain customers prior to the merger.
Even more unique media delivery options are around the corner, so cable providers will be forced to continue adapting to the new market. However, will be harder and harder to rope consumers back into cable bundles as these new technologies catch on. Companies like HBO are strongly considering offering Internet-only versions of their service, while sports organizations are also hard at work developing ways to develop live streaming sports games into a marketable reality, according to Time. These shifts would cast cable television further into the realm of irrelevancy.
Another new threat to telecoms is the growing popularity of Web TV services. Sony and Viacom, for example, have already begun working on a Web TV platform that would combine over 100 popular cable channels on an online-only streaming service. The companies are attempting to change how TV lovers are used to consuming their favorite shows by combining popular channels with a bevy of new, intuitive viewing options.
Cable companies, pushed into a corner by an endless stream of cheaper alternatives, have resorted to mergers in order to stay profitable. However, the Federal Communications Commission has been bombarded by requests to block the merger by Comcast and Time Warner. Many critics of the model complain that the reduction in competition will lead to even higher prices for cable customers. Ultimately, such a scenario would be a boon for streaming services, because even more consumers would flock toward less expensive ways to watch television.