The Waning of the Bundle

For many years the cable companies (and telcos who sold cable TV) have relied on the power of the bundle as a way to gain and then retain customers. The bundle was one of the predominant marketing tools for such ISPs. They showed customers that there was a big savings from buying multiple products.

I can remember the first time I moved into a Comcast area about eight years ago and wanted to buy only broadband. The company strongarmed me and wouldn’t let me buy broadband without some form of a cable product, so I ended up buying the smallest cable product possible – and never even connected the settop box. The days of forced bundles are now gone, but in this case, Comcast got an extra $30 per month from me for several years, which I had to pay since the only alternative was super-slow DSL.

My consulting firm has done market surveys for twenty years, and I can remember for many years that at least 70% of customers of cable companies were buying a bundle. Most of these bundles were not forced like mine. At the peak, over 75% of homes were buying traditional cable TV, and most cable TV customers who became interested in buying broadband readily agreed to the bundle.

Buying a bundle felt like a good deal since the ISP could show you a big savings over buying the various products individually. The bundle savings was the predominant marketing story used for many years to lure existing cable customers into adding broadband. The bundle was possibly the most important reason why the cable companies captured so many DSL customers – because DSL customers in cities were not dissatisfied with speeds in the same way they became during the pandemic.

But then along came Netflix and other online video providers and cord cutting, and millions of customers started dropping cable service. That’s when the downside of bundling became apparent. The big cable companies used bundling to try to bully customers into not dropping cable TV. Let me give an example. If a customer had a $100 bundle of both broadband and cable TV and asked to break the bundle, they might have been told that their new bill was going to be $70. It didn’t matter which of the two services they dropped, the service that remained was going to cost more than half of the current billing. When customers heard this, many of them decided not to break the bundle – they weren’t going to get the savings they hoped for.

The bundle must still be a powerful tool to lure customers because the web is full of inexpensive one-year deal for bundles for new customers – likely aimed at the remaining DSL customers. . But the interest in buying traditional cable is plummeting in the same manner as telephone service did a decade ago. Last year the cable industry collectively lost nearly five million cable customers, and the rate of homes dropping cable seems to be accelerating. One has to think that a lot of those millions that dropped cable last year decided to break the bundle to do so.

By the end of this year, the national penetration rate of households buying traditional cable TV is going to drop below 50%. I don’t think anybody knows when and where the cable market will bottom out – there will likely remain loyal families for many years to come.

I have to wonder if, at some point, the cable companies will give up on the idea of bundling. The metro cable markets are going to soon be flooded by competitors – first by the cellular companies selling FWA cellular broadband, and over the next few years by a ton of new fiber competition. Those new competitors are going to be focused entirely on offering affordable broadband prices, and the bundle issue might muddy the water more than help the cable companies. It’s going to be an interesting marketing evolution to watch.

2 thoughts on “The Waning of the Bundle

    • Now that the big cable companies lost 5 million customers last year, they have gotten more realistic about the process. As recently as 2-3 years ago they would have kept you on the line for half an hour trying to talk you out of dropping cable.

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