Time Warner Takes on Cord Cutting

This is…shockingly sensible:

Time Warner Cable CEO Glenn Britt may be the most prominent media exec making this important point: ”Our whole (entertainment) ecosystem should try to create affordability,” he told investors today at the Morgan Stanley Technology, Media & Telecom Conference. “A lot of the people who are living paycheck to paycheck want our product, but simply can’t afford it. Many entertainment executives are in denial about this, but it’s happening.” Big Media ignores that fact at its peril: The vast majority of the industry’s profits come from cable networks — but the chief of the No. 2 cable company says that the pay TV business “is fundamentally not growing.” Programmers and networks have ignored that: “What they’re trying to do is grow by raising prices” on companies like Time Warner Cable, Britt says. That may work for a while, but “it clearly is not sustainable.” One of his strategies to deal with that is offering TV Essentials — a low-cost package of channels that doesn’t include costly sports services led by ESPN as well as popular networks such as TNT, Comedy Central, Fox News and MSNBC. “We’re clearly moving away from one size fits all,” Britt says.

It’s not the end of bundling, but it’s an important experiment, and it’ll be fascinating to see how it works out. I always think of the opportunity to buy premium cable channels without the rest of the package as the thing that would bring in new subscribers and prevent full-on cord cutting, but maybe Bravo, USA and company would be enough to keep people hanging on. I doubt that Time Warner would release a comprehensive dataset publicly, but I would love to know how many people who are planning to leave end up deciding to stay once they’re offered TV Essentials, and how many subscribers the new service brings in.

Britt also explained that the company is experimenting with a metered-useage internet subscription plan in Texas. As irritating as we super-users might find something like this—my Netflix streaming alone would send me into penury, much less the whole blogging from home thing—this is clearly the future. We already see it on phone data plans. And most cable and internet companies are offering differential pricing on speed. Tiering in both of those areas may mean that not everyone gets the same quality of service, but if it means that some people can afford access they might not otherwise have, and we’re paying overall to maintain the network we use, that’s probably a good thing. I agree with those of you have complained about the fact that the same companies provide our cable and internet, and who think it stifles pricing and plan innovation. But these are good experiments.