Cable companies are still pushing to add more services to their packages and retain the customers they have, but analysts say those efforts are going to be hampered by a lack of new service and the need to expand to reach more customers.
“You’re going to see consolidation,” said Robert Hagg, an analyst with Sanford C. Bernstein.
“I think there will be a lot of consolidation in the next year and two years, with some of the companies taking the new customers they see as a challenge and trying to expand.
It’s just not going to happen quickly.”
The company with the biggest head start is Charter Communications Inc. Charter’s new TV package has about 6 million subscribers, while Time Warner Cable Inc.’s package has 2.5 million.
The two companies have been working to gain more customers with services like DirecTV Now and a cable package that gives users access to HBO Go and other premium cable services.
They’ve been successful, but they’re also facing pressure from competitors who say they can offer more value for money, which has pushed the prices for those services.
The competition for subscribers has also increased as more customers are opting out of the traditional cable package and instead choosing to sign up for a standalone package, which typically costs about $50 a month.
The cable companies have argued that their services are cheaper and faster than the alternative.
The cable companies are also grappling with the impact of the Affordable Care Act, which will allow them to sell their services without having to pay for any of the new health insurance coverage that the law requires.
“It’s going to take a while for those of us who don’t use the cable network to figure out how to do that,” said John Deere Co. Chairman and CEO John Deemer.
“If you’re in a market that’s already very saturated, you may not even have the option.”
The cost of the bundle, however, may not be enough to keep cable companies from pushing for more services, according to Jefferies analyst John Gammell.
“[The companies are] still trying to make it work for all the customers, which is not the case,” he said.
Companies are also hoping that they will be able to sell services on a cheaper rate, said Hagg.
But consumers may not pay much for the new packages, and if they are not willing to pay more for their cable service, the companies will likely struggle to attract new customers, he said, noting that the cable companies do not currently offer free TV, so they would have to offer a pay-TV service to compete.
In a statement to The Wall Street Journal, Charter said the company is “working to create a single, comprehensive and competitive package that offers a range of services across all the channels available to all our customers.
Charter is committed to delivering this package to customers with more than 50 channels.
The new package will allow Charter to offer the most content and offer a comprehensive package to our customers across all channels.”
Time Warner Cable declined to comment.
Cable companies face an uncertain future.
The Affordable Care, or Obamacare, law passed in March and has made many services available to consumers.
The companies have seen a rise in customer cancellations and a rise this month in Internet-related service provider fees.