LAST WEEK WE SHOWED you results from a recent survey of Canadian consumers which confirmed Canadians want to be able to pick their television channels one at a time – and may even be ready to pay for the privilege.
But more lots more choice may not truly be desirable for TV programmers, distributors or viewers. Canadians often say they really want “more choice” from their subscription TV providers, but it’s more likely they just want to be charged less and treated better.
Believe it or not, uber-choice is often not all it’s cracked up to be – and it’s instructive to look beyond the TV business to prove how less can be more.
Not long ago, the grocery industry took a hard look at itself and began culling certain products from the shelves (regular shoppers may have noticed certain items vanishing over the past few years). The prevailing opinion in grocery retail had always been more choice in products was better. Turns out, according to a 2010 landmark study, that cutting down on some products and actually offering less, improved sales. Customers facing dozens of similar-seeming products had trouble choosing and in many cases chose not to make a selection at all, fleeing the stores in frustration, damaging the retailers’ bottom lines.
For example, according to this report, Wal-Mart Canada dropped a couple of lines of peanut butter from its shelves – and actually saw sales rise. Consumers, it seems, were looking for a simpler experience, wanting to choose from just a few products.
Then last month, the Ivey Business Journal (thanks to an avid reader for sending this link) released a paper looking at the bewildering choices facing banking customers. The myriad cards and accounts and various financing options were confusing for not just customers, but staff members, too.
“Complexity can be a good thing. But when it comes to servicing customers, it is generally accepted that complexity reduces satisfaction. In other words, the proliferation of products in many service-based organizations prevents them from staying true to who they are – a service company. Service vision becomes clouded and the overall strategy is no longer clear to employees or customers,” reads the report by Barry Cross and Julie Paquette.
“Modern banks simply have too many products and services for front-line staff to understand and properly explain to a customer. Furthermore, tellers are a blend of part-time and full-time employees, with a turnover ranging between 20 per cent and 50 per cent. Think about that the next time you see the row of customer service reps at your local bank. At least two have likely just emerged from training in recent months.”
The optimum number of types of credit cards the authors say a bank should offer? One. Just one! Imagine going to market in the TV business with just one programming package.
“There’s an opportunity to grow the total number of TV households in Canada by having greater packaging flexibility." – David Purdy, Rogers Communications
Clearly, providing choice for Canadian consumers is not as simple and straightforward as a federal government sound bite might make it seem. (It should be noted that Videotron, Shaw and EastLink have moved ahead in letting its customers choose some channels individually. However, the lists of channels available for individual purchase from Shaw and EastLink is limited and do not include the more popular specialty brands such as TSN, Sportsnet, W or HGTV)
However, as Rogers SVP video content David Purdy knows all too well, his company must become more flexible and must offer more options to its customers – but getting it right is a daunting, complicated challenge most of the industry has not yet met. As we’ve reported, Rogers tested some more flexible packaging options back in 2011 in London, Ont., to mixed results.
“The appeal wasn’t universal,” he told Cartt.ca in an interview. Rogers offered customers in that region not true pick-and-pay/a-la-carte, but the ability to build their own packages of 15, 20 and 30 channels. However, “Once you got past the pick 20, most people just opted for the pre-existing value packs.”
Purdy has been one of the leaders publicly pushing for more flexible packaging, especially for the popular services, because he believes it can re-ignite growth in the business. “There’s an opportunity to grow the total number of TV households in Canada by having greater packaging flexibility and I think there’s also an opportunity to grow the overall amount of television that people subscribe to by offering a pick 15 or pick 20 type of service that can be bolted onto a skinnier basic television service,” he explained. “Some customers are taking digital basic but would love to add 15 or 20 channels on top of that.”
More flexible packaging “would expand both the number of people subscribing to television and what they pay on a monthly basis would go up as well.”
Part of the existing problem, though, is the selection of TV theme packages and discounts can be confusing already for both customers and call centre reps of all distributors – so when offering even more flexible options “we will need to do a great job of merchandising it and making it easier for customers,” added Purdy.
He likened it to the car business – where customers can custom-order a car if they want to wait and pay more – but for the most part will still choose one of the few pre-set options packages. “People want the right to create their own special unique, TV package but in execution, they’ll probably say ‘I’m a sports lover and I like movies, what would you recommend?’” and then opt for pre-set packages, he explained.
“It’s almost a point of principle rather than execution.”
What the industry must do, and soon, is meet the demands of those graduating university with no desire for the TV subscription their parents have. “They want to be able to create more tailored packaging and they want binge-viewing opportunities… an all you can eat subscription video on demand system is very important to them,” said Purdy.
“It may be something the government has to help us out a little bit in terms of driving these negotiations." – Purdy
“We also heard loud and clear it’s very challenging for a Mandarin or Cantonese or Hindi or Urdu-speaking household to create the right package with the existing construct. You have to take so many channels in advance of ordering the actual multicultural services that you want, it’s a real challenge both economically and from a value-for-money perspective.
“We have to do better for millennials and in the multicultural space… The faster we can move, the better, in terms of creating packages, bundles and services that appeal to youth and young adults. That’s the really fascinating business challenge and opportunity: How do we get university students interested in subscribing to television entertainment services again?”
However, with legacy broadcasters wanting – and needing – to protect their bottom lines and meet their various regulatory obligations, negotiations to loosen the packaging reins for the popular specialties is still slow going, Purdy said. “It may be something the government has to help us out a little bit in terms of driving these negotiations, (but) the fact there was a small decline in the numbers of households paying for television last year has gotten everyone’s attention… some people have to see the empirical data, or feel the pain, in order to move, but they want to know that this will be good for their businesses… that it will be additive, not dilutive,” he continued.
“If you’re a network that for the last 20 years has had a very consistent revenue stream that has been very predictable, you can imagine how unsettling this is for you.”
