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By John P. Ourand
Paul Maxwell has been using these pages recently to rail against the disincentive of buy-through tiers?where cable operators force subscribers to buy basic and/or expanded basic packages in order to have access to certain premium program tiers.
You know what? He's right.
In fact, the MSOs that are pushing buy-through conditions on some of their tiers already have learned this lesson the hard way, when they virtually ceded the ethnic market to DBS?due in large part to cable's affinity for buy-through.
Satellite had an advantage by being first out of the gate, launching ethnic tiers five years ago. But DirecTV and EchoStar packages didn't make their subscribers buy America's Top 50 in order to get the programming they really wanted. Cable's ethnic programming launches embraced these buy-through commitments.
To nobody's surprise, satellite took the lion's share of ethnic subscribers.
The good news for cable is that operators learned their lesson. As Simon Applebaum reports in this issue, MSOs realized that they had to eliminate buy-throughs and develop better programming tiers to stay competitive with DBS operators in the ethnic markets.
While nobody's sharing specific numbers yet, consensus from both cable and satellite providers is that cable's moving forward and starting to take away some of DBS' ethnic subscribers. Now that buy-through provisions on ethnic tiers have been eliminated, ethnic subs will recognize that cable has a better platform.
Think ethnic programming on a regularly updated VOD system would be a marketable feature? DBS can't do it. How about the add-on attractions of IP telephony and high-speed data? DBS can't do those, either. Now that the disincentive of buy-through conditions don't apply to ethnic tiers, ethnic marketers are telling cable to focus on these advanced services.
Cable operators have seen the light when it comes to buy-throughs with ethnic tiers. Wouldn't it make sense, then, to eliminate buy-throughs on all the other tiers as well?
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