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
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