The biggest trend in the cable TV sector today is the attempt to keep dissatisfied customers around by offering cheaper options.
Termed "skinny bundles," these are smaller packages of popular television channels that come without all the filler of traditional cable TV.
For example, a skinny bundle might include big broadcast networks like CBS, NBC, ABC, as well as specialty channels like ESPN, MTV, or CNN. Not every service offers the same channel selection due to exclusivity rights.
Several companies have already introduced their own skinny bundles. Alphabet Inc. (NASDAQ:GOOGL)(NASDAQ:GOOG) announced YouTube TV in February, which gives a customer access to more than 40 different channels for $35 per month. Dish Network (NASDAQ:DISH) offers up to 50 different channels starting at $39.99 per month.
AT&T (NYSE:T) subsidiary DirectTV offers a service called DirectTV now, Sony (NYSE:SNE) offers Sony PlayStation Vue, and even Hulu is reportedly working on such a service. Most skinny bundles are offered at comparable prices.
The same thing is happening here in Canada. The CTRC recently mandated cable subscribers offer a basic TV package costing no more than $25 per month. Major players such as BCE (TSX:BCE)(NYSE:BCE) and Rogers Communications Inc. (TSX:RCI.B)(NYSE:RCI) have started to offer skinny bundles, but some consumers have complained they're a somewhat poor value.
How does an investor play this trend? Perhaps the best way is to embrace the cable operators themselves, since they’re able to speak directly to customers looking to cut the cord. The average U.S. family pays nearly $100 per month for cable. Downgrading to a $40 skinny bundle is a significant savings, and the cable company gets to keep the customer.
