Cable stocks plummet as people bail on TV
Walt Disney Co reported a dip in subscribers for its cornerstone sports channel ESPN and rivals produced a mixed batch of earnings on Wednesday.
My views based on the above news and info share by stasta20h:
The subscriber base going down is a problem for cable TV and MSO operators as they will suffer a gradual fall in subscription fees paid by channel viewers and carrier charges collected from integrated content producers and broadcasters. I believe that this viewership decline will be noticed mainly in the less than 35 year old demographic which is more attuned to web for everything. Now let us not forget that VGL is both a web and TV sales player. In fact streaming of TV content also happens in the web simultaneously. So this way, even those migrating to web will have a chance to view the content. The main issue is, TV usually plays a role in branding of-VGL and acquisition of new customers where as only web based customer acquisition is not so easy in the Amazon world! So VGL should try to penetrate as many households as possible in the short-term in order create awareness about its LC website and m-commerce platform. Once they acquire a good many clients through traditional TV channel route, then brand equity may be sustained through social media, targeted digital advertising, word of mouth etc.
Declining cable TV viewership will be a threat in the short-term for VGL but if it does its act of reaching many households quickly it will gain for the long-term and I believe management is already working on that end. Also, pressure on Cable TV network earnings may in the short term make the Cable TV players to levy more carrier charges from free to air shopping channels in order to compensate for fall in subscription charges in the short-term. However over the long-term they will have no choice but to cut the carrier charges or air-time charges for VGL kind of businesses purely because cable guys will start to look as a old-medium to reach few old and senile customers!
In summary, I believe, for VGL the news that you shared should make them to seriously consider about expanding to other developed markets sooner than later, reach out to USA in full (about 25 million Homes pending) and lock in the customers now ( or at least make aware about LC)- so that when everything and everyone become digital and web-based VGL would have built a strong customer-base for web-sales!