Readers would have remember that I was talking about changing my cable tv plans to reducing the expense cost in this area. Yesterday we got wind of announcement that Starhub will be raising their cable tv service by $2 per month.
Increasing cost of content acquisition
If you go over to Starhub’s facebook page for the rate increase, you would see a lot of people blasting Starhub for doing this.
I think it’s a natural reaction. But many have failed to see that competition and pricing by content providers have make it difficult to sustain margins by pricing the same way.
- They are not adding significant number of new subscribers.
- They are paying more to fight for content
- They are paying more to fight for retention
- They are cutting margins to acquire new subscribers.
Now if you are a CEO, would you not increase the rates as per inflation to at least sustain this segment?
Lets not kid ourselves. Starhub is profit driven and they not only have to answer to customers but their shareholders.
Singtel was able to hit them left right center because Singtel is so bloody big that they can bleed their Pay TV just to kill Starhub.
More unlikely to churn due to this
I say subscribers might not churn a lot due to this. However, they will churn for the following reasons:
- No initiative to retain existing customers but only initiative to woo new customers. These people have been sticking with you through thick and thin, at least have some initiative to show support. I was looking around for better retention package but there are non.
- Substitutes such as YouTube channels, Streaming channels, Bit Torrent downloads. You don’t really need Animax or History channel really. There are so many alternatives with today’s broadband speed. Google TV like third party offering would just kill them. Here is one anime site that aggregates animes. If you search for “History Channel” in YouTube, you would see a list of great documentaries uploaded by other people. Here is a sample list.
- Not being flexible for the coming age of stream content on demand. Hey man, we are sick about owning channels we don’t watch. Subscribers have shown that they will pay for HD content and the ease of watching what they like without the need to source for it. But Starhub should be reactive to allow some flexibility there.
For folks who would like to know more about the profitability of Starhub, here are some articles to get you started.
Disclosure: Author is vested in Starhub
I run a free Singapore Dividend Stock Tracker . It contains Singapore’s top dividend stocks both blue chip and high yield stock that are great for high yield investing. Do follow my Dividend Stock Tracker which is updated nightly here.
Kyith is the Owner and Sole Writer behind Investment Moats. Readers tune in to Investment Moats to learn and build stronger, firmer wealth foundations, how to have a Passive investment strategy, know more about investing in REITs and the nuts and bolts of Active Investing.
Readers also follow Kyith to learn how to plan well for Financial Security and Financial Independence.
Kyith worked as an IT operations engineer from 2004 to 2019. Currently, he works as a Senior Solutions Specialist in Insurance Start-up Havend. All opinions on Investment Moats are his own and does not represent the views of Providend.
You can view Kyith's current portfolio here, which uses his Free Google Stock Portfolio Tracker.
His investment broker of choice is Interactive Brokers, which allows him to invest in securities from different exchanges all over the world, at very low commission rates, without custodian fees, near spot currency rates.
You can read more about Kyith here.
- My Dividend Experience Investing in UCITS iShares iBond Maturing in 2028. - April 23, 2024
- We Invest into Popular Funds When They Are Popular, Exactly When They Started Turning to Shxt. - April 22, 2024
- Meal Prep 2.0 – Cooking Your “Go-to” Meal that You Look Forward to Eating Everyday. - April 21, 2024
Susan Cook
Tuesday 26th of July 2011
Isn't it a breach of contract to change the price once a contract for a particular service has been agreed? my landlord can't demand extra rent during the course of the lease because his expenses have gone up.
Drizzt
Wednesday 27th of July 2011
hi Susan, what if in the contract it is stipulated that Starhub can raise tariffs as and when they like? if that is the case, then you can only blame the consumers for not reading these agreements carefully
Paul
Friday 1st of July 2011
My comments:
1) Initiative to retain existing customers: I beg to differ. I have been a Starhub Cable TV for many years and recently I was offered a range of goodies from free HD channels for 3 months, free upsize channels for 6 months and free speed upgrade for a yr. I just need to commit another year contract which is trivial since I do not intend to terminate my cable TV subscription anyway.
2) Alternative to cableTV. If you are motivated, you can literally watch popular series within 24 hrs of broadcast from US. I watched Glee S2, CSI:NY S07 and Fringe S03 long before they were shown on AXN or Star World. But I'm not really motivated to do so for all programs and I'm selective in which shows I give the 'within 24 hours' treatment. So I agree with Reader. Most people does not want the hassle of searching for alternatives and would be happy to pay Starhub $40-50 a month to provide such services.
3) Inflexibility in package. Overall I think the bad outweighs the good. Sure, I usually dun watch some obscure channels but I tend the suspect that if Starhub really allows you to ala carte and pick the channels you want, you really may end up paying more.
(Vested in Starhub too - between the dividends and the rewards, more than half my bills is covered .. hee :)
Drizzt
Saturday 2nd of July 2011
Hi Paul,
Yeah i agree with your points except the first 1! I never got those offers!
Dividends Warrior
Thursday 30th of June 2011
Hi Drizzt and Reader,
I agree wif both of u. More people are tech-savy nowadays, so they are able to source for their content online. Frankly, I am such a person. I dun have cable TV in my entire life. In fact, I think cable TV is a waste of money. Lol.
On the other hand, some people also want convenience. They just wanna turn on the TV and watch shows. Especially the heartland aunties/ housewives and retirees.
Anyway, Singaporeans will just complain and complain, but most of them will still subscribe.
This is just like the increase in taxi fares a few years back. Lots of people complain, but now, like no issue oredi. People are still taking taxi as per normal bcos of the CONVENIENCE.
Drizzt
Saturday 2nd of July 2011
Hi Dividends Warrior, if you have parents who are not that well verse in technology you could probably understand why we need cable tv
Reader
Thursday 30th of June 2011
Drizzt,
I don't quite agree with you. The users would complain thats a given , nobody likes a price increase, but the reasons you gave for not using Starhub does not make sense. Why?
If you are a very tech savvy person, and love sitting in front of your computer etc....sure it makes sense.
However, for the thousands of people who come home and want to relax, they will not be in the mood to search for something to view and browse through what they want to view. They just want to come home , switch on the tele and watch a movie or a show in History channel or whichever channel that interest them.
I know so many people who subscribe to movie channels because they like the quality and the ability to just switch on and watch a show..
The people you are talking about are but not a majority in my view.
Drizzt
Saturday 2nd of July 2011
Hi Reader, yes that is one of the reason but what i am stating is that alternatives exist. Perhaps my examples are not good because they requires searching and that is time cost for some people.
At the end of the day, you have to think if a service like NetFlix which brings streaming TV Shows on demand into Singapore with fibre broadband. Would that kill off cable tv? Probably not but if the culture keeps up Starhub is going to feel it.