YouTube TV made an unforced error this past week: it added additional channels for current subscribers raising the price for everyone $10 a month. The new service isn’t an option; it’s required.

The new channels are: Discovery Channel, HGTV, Food Network, TLC, Investigation Discovery, Animal Planet, Travel Channel, and MotorTrend.

Now, if I want the one or more of the new channels being bundled with the current service, this might not be a problem. However, if I don’t want the any of the additional channels, I’m screwed. I’m forced to pay $10 additional each month for something that adds no value to me. This creates friction in the relationship.

Friction can mean it’s time to look for alternatives. The switching costs for streaming TV providers are minimal–at most, one month of service.

The mindset of the a la carte customerTM, is eschewing bundles like that now required by YouTube TV. More isn’t more if the consumer doesn’t want to pay $10 a month for something that doesn’t add value to their lives.

YouTube TV customers are “cord cutters” meaning they previously rejected the cost and bundling practices of cable TV providers. YouTube TV is acting like cable TV providers, behavior that helped drive cable TV customers their way.

YouTube TV has adopted a business model that will send its customers looking for alternatives. I’d wager that Sling TV can’t believe the unforced error YouTube TV has commited that will drive YouTube TV customers their way. Sling TV has a much more of an a la carte approach to selling their channel lineup.

From a BGR article, YouTube TV gets 9 new channels, raises price to $50 a month, comes this perspective:

Anyone who signed up for YouTube TV prior to March 2018, when Google reached a deal to carry Turner channels, was paying $34.99 per month for access to the live TV service. The price increased to $39.99 for new members, but everyone, no matter when they signed up, will be subjected to the higher price. This represents a 25% price increase for newer members and a 43% price increase for early adopters of the service.

Ouch! The marketplace will ultimately determine the viability of YouTube’s new pricing. I see it as D.O.A.–dead on arrival. If YouTube TV had sought the voice of the customer about this change, they would have found why it is really a non-starter.

Marketing and product management have never been a strong suit in Silicon Valley. This YouTube TV change is a perfect illustration. YouTube TV thinks it knows better. As YouTube TV will soon learn, it is the customer who knows better.

 

Thought for the week:

“A business is simply an idea to make other people’s lives better.” – Richard Branson

Copyright 2019 DaveGardner.biz

 


Dave Gardner

Dave Gardner is a management consultant, speaker, blogger and author based in Silicon Valley. He's been in the front row for the birth and evolution of Silicon Valley, the innovation capital of the world. Since 1992, Dave Gardner has focused on making the complex simple around people, process and technology. He can be reached through his website, www.DaveGardner.biz, or via phone at +1 408-475-7068.

2 Comments

Dave Gardner · April 22, 2019 at 4:27 pm

A week after my posting, Aaron Pressman writes a fine article in Fortune called Why Cord Cutters Are Favoring Cheaper Online Options Over Cable-Like Bundles available at http://fortune.com/2019/04/22/cord-cutting-ott-netflix-directv/

Aaron and I are in complete agreement about this issue.

    Tamara Taylor · April 22, 2019 at 5:20 pm

    I loved your article Dave.

    That is what happens when businesses make decisions without considering human behavior. If there are other options, they’ll lose business, just like the cable companies.

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