Time Warner Inc, Research Paper Example

Since the early 2000s, the demand for Time Warner Cable’s television services have been diminishing. While the company was one of the leaders of its industry prior to this point in time, it is important to consider the major shift to internet television and software programs for television viewing purposes. Overall, television viewership has significantly decreased since the company’s inception in 1990. Last quarter, the company’s profit dropped by 7.2% due to the need to invest in higher programming costs. The company is worried about its current profitability because the demand for traditional television is significantly reduced. The lowest demand for Time Warner’s services was in 2009, although the demand for the company’s products have risen significantly since this point in time (Y Charts, 2015). The company has been very versatile in providing its television viewing services on an online format, allowing users to access the company’s products on any screen. Furthermore, this business was supplemented by the company’s implementation of wireless hotspots in a variety of public locations to allow Time Warner Cable subscribers to access their internet service nearly anywhere.

To ensure this firm’s continued success, it is important for them to continue implementing these accessibility platforms to allow users to access their services from any location. Many young adults now elect to not have cable in their homes, but some of this demographic would still purchase internet services and possibly online streaming services from the company. Therefore, it would be beneficial for the organization to offer a more internet-based television option that would appeal to youth. A majority of Time Warner Cable users in the 16-28 age range access these television services by using the login information that belongs to their friends and family members. The company would improve their sales if the access to these systems did not require there to be a physical cable box in the household of the subscriber. These services are starting to be considered outdates, so it is important for the company to keep up with the needs of the youth if they want to continue to be relevant.

Time Warner Cable’s prices are sufficient for the industry, as it offers plans that are as low as $14.99 per month for internet services only, and phone, internet, and television packages are offered for under $50. The company’s competitors currently offer deals for twice this price. The factors that control this price elasticity mainly include an understanding of the areas in which Time Warner is able to offer its services. Its main competitors are therefore Cablevision and Verizon, although the overlap between these two companies are only existent in certain locations. In an attempt to compete with these organizations, Time Warner will offer lower prices to customers that also have access to either one of these two options, but will offer higher prices to individuals in areas in which there is no direct competition. Therefore, it is apparent that the price elasticity varies depending upon the competition in the area, as this has an impact on the supply and demand relationship (Rinehart, 2014).

Consumers do not generally respond to the change in price because they often do not have many alternative options. Some youth prefer to not subscribe to any television options and instead subscribe to internet services only. Therefore, consumer responsiveness is not a major issue in this industry. Pricing decisions are completely dependent upon the prices of the competitors, as each company wants to offer the best possible deal to attract business.

References

Rinehart W. (2014). Comcast-Time Warner Cable: An Overview of the Relevant Markets. Retrieved from http://americanactionforum.org/insights/comcast-time-warner-cable-an-overview-of-the-relevant-markets

Y Charts. (2015). TWX. Retrieved from http://ycharts.com/companies/TWX