What to Think about When Negotiating Bulk Video Services for Student Living Communities (Part 1)
In previous posts, I’ve discussed how to select which bulk services to offer at your student communities, as well as the best ways to deliver these services to your residents. Now, it’s time to get down the final process—negotiating these services for your properties.
In this first of two parts, I’ll offer these five guidelines to consider when negotiating your agreements.
Include Digital Services
Until recently, most purpose-built student living developments included only analog television in the rent. Many communities didn’t provide the ability for residents to upgrade to digital cable—a shortsighted approach to be sure. Today, though, almost every new student living community purchases digital cable TV for its residents. Even in locations where residents still receive only analog channels, the underlying video package is now almost always digital.
Resident Upgrades and Premiums
In our experience, anywhere from 15 to 40 percent of residents are interested in cable TV upgrades on a per-unit basis. Not surprisingly for the student resident demographic, HDTV and digital video recorders usually top the list. Enough residents want the ability to cost-effectively upgrade, so this option should be included in any negotiation for bulk video services.
One of the most common questions regarding bulk cable TV is whether a community should include a premium package, such as HBO, in the rent. The answer is: It depends—on both the provider and the solution. Put simply, $1 per bed per month for eight high-definition HBO channels with both HBO On Demand and HBO GO is an easy “yes.” However, $2.50 per bed per month for eight standard definition HBO channels that are viewable only if a resident pays to upgrade to a set-top box is not as valuable. Carefully consider your available options before committing.
With the move to digital TV, communities must keep track of the set-top boxes that are needed to receive most bulk video programming. This doesn’t mean keeping enough inventory on hand to deploy for every living room and bedroom in the community. However, it does mean that all parties need to understand how much these boxes cost. Most direct broadcast satellite systems can provide 48 channels of analog, but a set-top box is needed to receive competitive programming beyond the basics. These boxes can cost up to $10 per month—sometimes exceeding the cost of the programming itself. This cost must be understood by both the community and the residents so that there are no surprises—and responsibility for damaged or missing boxes should be clearly understood as well.
Taxes and Fees
A common mistake that communities often make when budgeting for bulk video and data services is forgetting to account for the taxes and fees. These two items can easily add 14 percent or more to a bulk cable TV bill. Taxes and fees for direct broadcast satellite are typically lower, but can still exceed 9 percent. Don’t forget the taxes and fees when budgeting or you’ll have a rude surprise.
Next time, I’ll have five more factors to consider when negotiating for bulk video services at your student housing communities.