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State of the Screens

Cable operators need to raise standalone broadband to $80 to offset cord cutting, analyst says

By February 26, 2018No Comments

The average cable company loses $32 in revenue when a subscriber drops pay-TV for broadband only.

The average cost for broadband is $49 when combined with a pay-TV package.

The price increases by 35% to $66 when sold without pay-TV.

Quote from John Hodulik — Analyst @ UBS.
“MSOs would need to raise standalone broadband pricing to $80, or more, in order to break even from a contribution perspective,”

Previously on SOTS. AT&T may be plotting to revolutionize TV advertising

Another growth opportunity is in addressable advertising.

Quote from John Stephens — CFO @ AT&T.
“Taking the viewership data, the data insights that we know that comes off our networks because we’re the delivery system. We deliver it, so we know what goes to the homes, what’s there. And on our addressable advertising, we’re getting close to $35, $40 CPMs. On our average, on our regular total advertising, it’s probably closer to $12, $13, so 3x that amount. That’s the reason for excitement. We’re getting that today, albeit as a distributor, you get 4 commercial slots an hour. As a content owner, you get 24 commercial slots an hour.”

Here is how the math works:
1) Advertiser — They are willing to pay a higher CPM $ if the effective cost to reach the target is less than carpet bombing (linear).

2) Publisher — They are willing to sell addressable media if the average CPM $ is higher (after tech/data costs) than linear.

The below example has 68% of new costs (data + ad tech) but is better for the advertiser once their target audience is less than 33% of linear viewership.

Think auto intenders, swing voters, etc.

Michael Beach

Michael Beach is the Chief Executive Officer of Cross Screen Media, a media analytics and software company that enables marketers to plan, activate, and measure CTV and linear TV at the local level. Michael is also the founder and editor of State of the Screens, a weekly newsletter focused on video advertising that is a must-read for thought leaders in the advertising industry. He has appeared in such publications as PBS Frontline, The Wall Street Journal, The New York Times, Axios, CNBC and Bloomberg, and on NPR’s Planet Money podcast.