Bulk Up on Bulk Amenities
Providers should renew their interest in bulk – especially higher-end bulk. It’s
a great amenity to offer in a soft market. But make sure to deliver real value.
These days, you can buy just about
anything in bulk, from paper
towels at Costco to cases of Coca
Cola at Sam’s. And the consumer habits
of buying “more for less” have spilled
into the video market as well.
More and more property owners are
buying cable TV and, in many cases,
broadband services on a bulk basis from
their service provider. They then include
the service package in with rent, adding
value to living in their community. It’s
been shown over the years that apartment
residents enjoy having these services
included in their monthly payment
to the landlord, provided they are happy
with the product.
And as we remain in a very soft (and
getting softer) apartment market, more
real estate owners are looking at our service
options as another way to improve
the attractiveness to a prospective movein.
“They are bundling our products into
their rent, and giving them to all of their
residents at a discount,” one private cable
operator said to me recently, smiling.
It’s a great idea, and one that has created
a lot of opportunities for PCOs to
expand their business in a predictable
and economical way.
“We’re seeing a lot of growth in bulk
cable right now, especially in the college
market,” says Henry Pye, Vice President
of Resident Technology Solutions
for RealPage Inc. And PCOs have been
the beneficiaries of a good portion of
this growth.
“It’s a great opportunity for operators,”
Pye continues. “It puts you in first
position to earn all of the upgrades from
the resident base.”
Property owners enjoy the “added
amenity” to their community, too. Several
large national real estate companies
have been converting to bulk basic cable
TV for all of their properties across the
US over the past few years. “It makes
good sense for us,” an owner explains. “I
can buy basic cable at a huge discount,
and it has a $50 value to my customer.
Everybody wins.”
BULK GROWS
Operators are seeing the opportunities
in bulk services right now. Dave Curtin,
COO of TVMAX in Houston, told me,
“We’ve fielded quite a few calls in the
past several months from property owners
inquiring about us providing bulk.
And it’s no longer just about expanded
basic, but our higher tiers of service, too,
with up to 250 channels and sometimes
including broadband.”
This trend is growing particularly
fast among property owners in college
towns. Every college student uses broadband,
and it’s a great amenity to incorporate
with rent. There’s no question they’ll
use it; you just need to provide enough
capacity to support each community.
My firm enjoyed a good proportion
of bulk properties. In fact, almost 10
percent of our total units passed were
receiving a bulk cable or broadband
service. Costs to serve the customer
base were low due to fewer truck rolls.
Marketing costs were lower too, and we
didn’t pay a revenue share to our client.
And there was virtually no bad debt.
I often referred to our bulk properties
as “bonds” in our investment portfolio.
They were steady performers with
consistent returns. And having 10 percent
in this asset class seems to make
great sense.
Especially now. In this era, with all
of the competition and uncertainty, this
percentage should probably be increased.
And that may not be very hard to do.
While many of the franchise cable
operators have always enjoyed providing
bulk services, these services have historically
been for “analog” cable only. This
means that residents received a 70-channel
basic package without the need for a
set-top box. But these days, the analog
offerings from the franchise guys are
increasingly going away. This forces the
property owner to require set-top boxes
for every customer – an expensive proposition.
And some owners don’t want to
do this.
But PCOs can continue to offer an
analog cable TV package without the
demands of set-tops. And we can still
provide the upgrade path for digital services
as well. This is an appealing option
for property owners, and should be a key
part of a PCOs growth plans.
Property owners are struggling now
in a soft, competitive market. They are
constantly looking for ways to keep residents
from moving out. And they want
their leasing agents to have something
special to offer that makes living with
them more affordable and attractive.
This trend is very encouraging. We
should take advantage of it, and “bulk
up” on “bulk opportunities.” BBP
--Broadband Properties Mag. |
