In an age when many consumers shell out more than $100 monthly just to watch cable TV, the notion of charging customers less than $90 for a package that includes not only digital cable, but high-speed data and telephone service as well, is unheard of.
But that’s exactly what Cablevision Systems Corp. began doing in June, when it kicked off a campaign for its Optimum line of services, charging new customers that ordered its bundle of digital video, cable modem and telephone services $29.95 apiece for their first year of service.
Cablevision’s bold move to market its triple play of digital cable, video and voice for less than $90, coupled with its strategy of placing all of its services under the Optimum brand umbrella, earns it Multichannel News’s 2004 Innovator Award for consumer marketing.
While some Wall Street analysts said Cablevision’s aggressive pricing was risky, company officials say the Optimum bundle strategy has paid off in terms of subscriber growth for new services. They insist the core focus of the plan is to drive sales of all three product services, not to lure consumers simply on price.
“For Cablevision the most important thing about the bundle is not the price. It’s about encouraging all of our customers to take all of our products at the same time,” said Cablevision executive vice president of consumer product management and marketing Patricia Gottesman.
Originally set to expire at the end of the summer, Cablevision’s offer of $29.95 for each service for new customers has been extended until the end of December, Gottesman said. Over the months, Cablevision has flooded its New York metropolitan area footprint with television and print ads for the bundle. Rather than market each service individually, the majority of the ads tout the triple play.
Cablevision will evaluate the pricing at the end of the year, but could continue to focus on marketing the triple play, even if the price rises.
Cablevision has also pitched existing video subscribers an Optimum double-play package since June, charging customers that subscribe to its Family Cable tier or a more expensive video package, Optimum Voice or Optimum Online $29.95 for each service.
A reduction in subscriber churn has been one of the positive results from the bundled discounts. While Cablevision hasn’t yet disclosed the churn rate for customers that take all three products, Gottesman said customers that order high-speed data and video have a churn rate that is 30% less than its basic-video losses.
Also, Cablevision chief operating officer Tom Rutledge told analysts on an earnings call last month that bundle-buying customers are paying an average $110 per month, including digital tiers.
Gottesman said the triple-play strategy has also paid dividends in terms of creating operational, sales and marketing efficiencies for the services, which subscribers can order through a single phone call, and which Cablevision field technicians can install with a single truck roll.
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