Thursday, January 2, 2014

How to Make a Million Dollars and Be a Big Cable Corporation

One More Time
Exactly What Do I Get For My $75?

MeanMesa just finished with an on-line chat with an agent for the abusive cable television service here at Galactic HeadQuarters for Short Current Essays.  Probably the important task to be accomplished was changing the bank account accepting the automatic monthly billing.  However, while waiting for the "chat" to begin, it was impossible to notice the quick little pop-up sent by the DISH web site.

"You are number 1 in the queue for on-line chat with DISH customer service."

This innocuous little message communicated a number of things, but perhaps most importantly, it heralded the open prospect for a nice, lengthy "chat" with the cable representative.

She introduced herself and texted "How can I help you today?"

MeanMesa responded politely "Just a couple of things.  First, we need to change the account number for the automatic payment."

The account number business was handled quickly and efficiently, and once that was out of the way, the "chat" conversation moved ahead to the "other" thing.  That "other" thing requires a short background which will introduce the topic of this post.

My DISH bill, after months of being $61 dollars, had returned to the old rate of $75.  It had been $75 before, but after complaining in a phone conversation a few months ago, DISH had issued a $15/month credit which had effectively lowered it to the $61 amount.

The specific complaint in that phone call was that DISH programming sucked -- which it did, and which it still does.  Of course, this product criticism was accompanied with a robust and detailed discussion.

The $15/month credit had only lasted for a few months, but the horrible programming seemed to be quite permanent.  So naturally, MeanMesa began to "chat" away, hoping to express precisely this case of "buyer beware" disgust so persuasively that DISH would, once again, re-issue the $15/month discount.

The same comments had worked in the phone call so MeanMesa's old fingers began to hammer away, and the geezer's complaints began their "text journey" to the DISH on-line "chat" operator.

"The cable service sends 75 channels of dirty shirt preachers along with another 50 or 60 channels of consumer marketing videos selling everything from wrinkle cream to vacuum cleaners to discounted Brazilian Power Crystals.  The 1990's [or even older] movies are re-broadcast for two weeks before the next 'collection' of [Grade B] 1990's movies finally replaces them for its own dreary, repetitive 'two weeks in the spotlight.' 

The thing provides hundred's of channels, but they are simply repeated copies of the crappy ones in the first few hundred.  Why is this costing $75 -- or even $61 -- every month?"

Needless to say, all these passionate efforts came to nothing.  The "chat" operator, after suggesting that MeanMesa's service should be expanded to an even more costly alternative which "had hundreds of more channels," attempted to console this unsatisfied customer with "Well, our DISH packages are designed to meet the programming content desired by a variety of customers."

DISH customers "desire" 75 channels of sweaty preachers praying for money?

DISH customers "desire" 50 channels of pre-recorded Brazilian Power Crystal salesmen?

DISH customers "desire" to watch the same movies they watched in high school -- over and over -- for a few weeks.

DISH customers "desire" all this so much that they are happy to pay $75 a month to get it?

A New Kind of Cable Service
MeanMesa's business plan suggestion

Of course it just wouldn't be fair to post all this complaining without moving right into a possible solution.  What could be done differently?  MeanMesa's plan doesn't involve massive investment in new technology, huge increases in cost for the latest "top notch" content or even serious reductions to the profit margins of the cable providers.

MeanMesa has to consider the actual cost to a cable provider for rights to broadcast one of these channels. Presumably, that price -- for literally hundreds of them -- would be next to nothing.  This leaves purchasing rights to broadcast the channels with actual programming content [no matter how out of date] as the primary "business expense."

Likewise, we must also consider the "income potential" from the same channels.  The "wasteland five hundred," that is, the vast panopoly of paid advertisements for mop salesmen and illiterate Southerners trying to convince the world that Barack Obama is anti-Christ, must all pay something for their little spot in the sun, but the point here is -- not very much.

It is these "content channels" that DISH, for instance, advertises as the main reason to sign a cable contract with them. At least profit-wise, the tediously road weary "content channels" can host some commercials -- irritating little profit centers -- even if these have only been blindly purchased for broadcast as a "quantity commodity."

The MeanMesa Solution

The cable providers can already control what parts of their broadcast are available to specific customers based on which "package" is defined in the contract.  The problem is that by using this "packaging model" cable customers really don't have a choice, at least a reasonable choice which reflects a customer's actual interest.

No choice

There may be a "choice" about which "package" is purchased, but that "choice" rapidly begins to vaporize with respect to what content is purchased.  You are required to "get all 500 channels of everything," no matter what you actually want.

And yet, you are required to pay for itAll of it.

Why not sell cable service by the channel?

MeanMesa watches basically six or eight channels out of the hundreds on the contract.  Dividing the monthly bill, now $75, by eight channels provides a "per channel monthly cost" of around $9 each.

You might ask, what difference would this new approach make?

Well, a company such as DISH could start off by offering specific channels for $9 a month, but, right away, the second part of what's wrong with it now would be revealed.

No competition.

Just Watch and Pay. [image source]
These cable "packages" of hundreds of worthless channels interspersed with a handful of desirable ones cannot be compared by a customer making a decision by a normal "competitive" analysis.  The competitive "choice" is similar to having to make a blanket purchase of the unseen contents one of two massive garbage trucks.  You know that both trucks are full of garbage, each one containing a few items you might actually want to own.

Wouldn't it be a better purchase if you were able to simply pick out the stuff that you wanted and not have to hire someone to haul the rest back to the landfill?

Further, if there were several vendors, each offering the stuff you wanted, you could actually compare the prices each vendor was asking.  This is where the $8 per month part enters the picture.  Once a specific channel you wanted "appeared on more than just one of the sales tables," you would be able to shop for the best price.

Very predictably, there would be more and more "sales tables" in practically no time, and on the offerings on those "sales tables" would have price tags which could be compared.  Competitive price tagsFor channels you actually wanted, that is, based on your choices.

After the market "stabilized," MeanMesa could have just the eight channels for a competitive price.

How could a cable company like DISH make money from this change?

Begin with, how does a cable company like DISH make money from the way it is now?

If you happened to be the cable provider who adopted this new business plan, DISH cable's current approach would be gradually turning into an abandoned buggy whip factory.  DISH, along with the other cable providers, would find themselves in that famous old American Free enterprise "moment of terror."

Compete or die.  Give your customers a product they want.

MeanMesa is TOTALLY ready for something sensible.

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