Cablevision just dropped the Starz and Encore networks, without any drop in price to Cablevision customers. In fact, this was just one month after Cablevision had actually raised its prices. Less service for a higher price. Starz has some of our favorite shows, including, Outander, Power and Ash vs Evil Dead, all of which we have reviewed on this blog.
This move by Cablevision is typical of the way that all cable providers continue to behave as if they still have a monopoly and can treat customers any way they want. In fact, cable companies should be bending over backwards to be giving more service to customers and lowering their prices. People no longer need cable companies to get access to shows. Many people are going “unplugged “and getting access through the internet or satellite with no payments to any cable provider.
The behavior of Cablevision and other cable providers is reminiscent of the way that Blockbuster once treated its customers. Blockbuster not only charged a lot to rent movies, it also hit up their customers with ridiculous late fees. You had to physically return a video before the due date, but the system was rigged to maximize the late fees.
Most people rented movies on Saturday or Sunday, since it was hard to get to Blockbuster during the work week. However, if you rented on a Saturday, the movie was due by Wednesday. If you returned it the next Saturday, you owed as much on late fees as you had paid to rent the movie. In the early days of Blockbuster, they even charged a 50 cent “rewind fee” on tapes. (Remember the days before DVDs when you had to rewind tapes?)
While Blockbuster was squeezing their customers for every nickle, Netflix was busy reinventing the business. With Nexflix, customers could get videos at home and keep them as long as they wanted with no late fees. Blockbuster could have beaten Netflix, if Blockbuster had reacted quickly. In the early days, Blockbuster actually had many more titles available than Netflix.
Blockbuster should have eliminated late fees, and started letting people order movies online and shipping them to people’s homes. At the time, Blockbuster had the financial might, the customer base and the video library to be able to wipe out Netflix. However, Blockbuster was so intent on trying to maximize short term profits, that it ignored the anger of its customers.
Towards the end, Blockbuster finally realized the danger it was in, and did try to fight back against Netflix. Blockbuster eliminated all late fees, lowered its rental charges and began using the internet. But it was too late. Angry customers had left Blockbuster in droves and they never came back. Blockbuster went bankrupt and its outlets closed.
Will Cablevision and the other cable providers one day go the way of Blockbuster? They are certainly making the same mistakes as Blockbuster, by arrogantly ignoring competition from new technologies. Some day, perhaps sooner than expected, the idea of paying a company hundreds of dollars a month for video content will seem as as antiquated as dial up internet access.
So our message to Cablevision is simple. Ignore the best interests of you customers and soon they will ignore you. If you think you can last forever, just remember Yahoo, AOL, Tower Records and Blockbuster.
- See What’s New On the Blog.
- Read about the Rise and Fall of Tower Records.
- See our review of the Starz show Power.