On the subject of a-la-carte...

[arnoldevns]

Ugh, so many comments to reply to.

!. someone said Disney has enough money. Really? Who are you to decide that?

2. I have no problem with channels collecting subscriber fees and ad revenue. Newsapers and magazines have done that for more than a century.

3. While I am opposed to a-la-carte I don't agree with the premise that it's the worst idea ever. If cable had started with a-la-carte we would probably be better off...but it didn't. Changing now would just cause bills to skyrocket.

 

[KeithE4]

Apparently you don't need to see the Pac-12, then.

Not particularly. The major football games will be on ESPN and/or ABC, and I'm mainly a Big Ten fan anyway.

College's reliance on cable could really bite it in the ass if cord cutting, a la carte, or sports-free packages catch on.

They seem to love the cable-only business model. Turner took 3/4 of the NCAA Men's Tournament away from OTA/internet-only viewers when they went to a cable requirement for online viewing rather than charging a $4 fee. WatchESPN is cable-only - DirecTV and Dish viewers are out of luck just like OTA viewers. None of these things happen without an OK from the NCAA and/or the major conferences.

 

[landtuna]

If cable had started with a-la-carte we would probably be better off...but it didn't. Changing now would just cause bills to skyrocket.

Cable didn't begin with ala carte because the technology in those early days could not support addressable set top boxes. R-packs were used to separate the so-called premium channels (like HBO) and there were only a very few of those. When I first subscribed to cable in 1981 I got their whole package for the cost of basic because they had no way to select channels.

But satellite did. Early C-band providers had the technology to authorize individual services through phone and Internet. Most providers sold packages of the most popular channels at a discount (over individual channels) but they also offered the individual channels ala carte as well. You did save a few bucks by going with a package if your desired services were included but then came tiering where providers spread desirable channels into different tiers necessitating the purchase of multiple packages - and with that so went ala carte because providers could make much more money selling multiple packages rather than individual channels.

I do disagree with your statement that "bills would skyrocket" were ala carte to implement. There is no reason why it would. The problem we have now in most communities is lack of competition. In my town I can get only one land-based cable service. They are not the least bit willing to drop their prices to match competition. There are two satellite services but both are nearly identical in offerings and pricing so, again, minimum competition leads to higher prices. There will soon be another competitor (CenturyLink Prism, a fiber optic service) in my neighborhood but that still only makes two to choose from so I doubt they will compete much on price.

Think back to the C-band model. There were only a set number of satellites pumping out the programming but there were hundreds of resellers - each one competing with the others primarily on price as the technology was identical. As a result prices were a lot lower than they are today (even considering inflation) and package offerings were varied. You could choose from any provider located anywhere in the country. That is the fairest and most efficient model.

 

[landtuna]

Apparently you don't need to see the Pac-12, then.

Not particularly. The major football games will be on ESPN and/or ABC, and I'm mainly a Big Ten fan anyway.

I thought you said you were a college football fan. ;D

Anyway, there are a number of sources to watch college games other than ESPN/ABC and the regional cable outlets. I have just finished building a new PC for the upcoming season because my lovely wife would want to use the PC on Saturdays. It is not as convenient as turning on the big screen in the living room but it isn't that difficult either.

 

[PTBoardOp94]

I do disagree with your statement that "bills would skyrocket" were ala carte to implement. There is no reason why it would. The problem we have now in most communities is lack of competition. In my town I can get only one land-based cable service. They are not the least bit willing to drop their prices to match competition. There are two satellite services but both are nearly identical in offerings and pricing so, again, minimum competition leads to higher prices. There will soon be another competitor (CenturyLink Prism, a fiber optic service) in my neighborhood but that still only makes two to choose from so I doubt they will compete much on price.

If the system suddenly switched over to an ala carte system, I don't see any way it could not spike prices. Under the current system, ESPN makes a little more than $9 billion a year in retransmission fees.

If ESPN got 75 million subscribers in an average month, to maintain current revenue, they would need to charge $11. 75 million is a large number -- it assumes that pretty much everyone that watches ESPN at any time would pay that price every month of the year. In reality, lots of people would drop in January and re-up in August for Monday Night Football, driving the price higher.

I use ESPN because they're an easy target, but the same principle applies to everyone.

 

[Mario500]

Having the option to choose a single programming service or more would be a nice option to have along with bundling while subscribing to a cable TV or satellite TV provider. Bundling is not really a bad option either, as it would give you the chance to discover programs you may like on certain channels you may watch on a regular basis.

 

[LKellerIII]

If cable had started with a-la-carte we would probably be better off...but it didn't. Changing now would just cause bills to skyrocket.

I do disagree with your statement that "bills would skyrocket" were ala carte to implement. There is no reason why it would.

Actually, yes - there is a reason prices would skyrocket, or at least not go down. If you really are one of those stuck-in-the 80s (and before) people who just wants your regular OTA local channels, then yes - cable bills might actually go down. But I don't think these folks really know what they're missing. Most of the superior dramatic shows, and a number of cutting-edge comedies are on basic and premium cable - AMC, FX, A&E, TNT, Showtiime and HBO.

My a la carte menu would probably include - at minimum - the local affiliates, 8 or 10 basic cable channels, probably HBO (I rent the Showtime series from Netflix) and a dozen more channels I enjoy every month, but a bit less frequently. That probably comes to 40 stations minimum. At just $3 per channel monthly, I'd be paying what I pay now for a couple hundred channels. And I doubt it would be that cheap - probably more like $4 or $5 per channel..maybe $4 for some of the local affiliates, and $10 for premium cable (what it costs to add them now). If you figure an average of $5, that would be $200 per month, increasing my cable bill by 80%.

Does anybody think that if the cable and satellite companies are somehow forced into a la carte, they'll lose revenue and start charging low ball prices per station? That will happen right after the oil companies charge $1.00 less per gallon, new cars are all discounted to under $15,000, and hell freezes over.

 

[nomadcowatbk]

However, if all the predictions about streaming are true, cable and satellite will be dead in 5 or 10 years, and we'll all be happily 'a-la-carting' using our computers. My son watches most of the same cable dramas I do, using the internet for free.

ESPN, Fox, and Turner require a cable subscription in order to watch their programming online. ABC will be doing the same thing soon, if they haven't done so already.

eventually, they may start streaming for free since younger viewers are more likely to be cord cutters

 

[landtuna]

I use ESPN because they're an easy target, but the same principle applies to everyone.

Well.....no they don't. ESPN pays a huge amount of money ($1+B per year) to the NFL for the games they air. I can think of no other product anywhere in the world, excepting perhaps Formula 1, that can attract those kinds of numbers.

30 years ago we had primarily movie channels, local OTA retransmission and some limited sports services from which to choose. None of these commanded anywhere near what the NFL or regional sports packages cost today. As a result cable fees were much, much cheaper. There were a few shopping channels, a weather channel, a couple music services and perhaps a local government channel. Now we have 500+ systems which duplicate many services in both SD and HD and we have dozens of channels broadcasting identical fare (Retro, ME, TVland, etc.).

A significant number of these channels cannot survive if ala carte becomes available because they are not desired by a lot of people. So what? It is not your duty to see that I can receive a shopping channel in Hindi nor is it my duty to pay for a plethora of services nobody watches. The economic system we have in this country is not intended to be socialistic - each service should exist or perish on its own worthiness and not a universal cable "tax".

If ESPN/ABC (or any other sports broadcaster) had its revenue reduced substantially (because it lost viewers who heretofore were required to support it even though they didn't watch it) they would not be able to pay billions to the NFL. If the NFL's revenue dropped they might not be able to pay players $60M over five years (plus all the other benefits). Prices return to somewhat normal again -or- the NFL begins charging their live audiences $1,000 per seat. Either way the general population wins and people who want to watch the NFL get to do so by paying a realistic price.

 

[KeithE4]

eventually, they may start streaming for free since younger viewers are more likely to be cord cutters

They'd have to lose at least half of their subscribers before that would ever happen. Don't hold your breath.

 

[landtuna]

Actually, yes - there is a reason prices would skyrocket, or at least not go down.

The basic problem is still the lack of competition in Pay TV. Unless and until the competition I illustrated above returns there is no incentive for cable companies to become competitive. Creating an ala carte billing model won't help that condition.

But you raised an issue about premium shows on selected channels.....I discovered long ago I could cut the cord and with the money I saved (about $60/month several years ago) I could rent or buy the series I wanted to see. I would then have my own personal copy (usually with outtakes, director comments etc.). That was a much better solution than paying the cable company for a one-time showing.

 

[PTBoardOp94]

I use ESPN because they're an easy target, but the same principle applies to everyone.

Well.....no they don't. ESPN pays a huge amount of money ($1+B per year) to the NFL for the games they air. I can think of no other product anywhere in the world, excepting perhaps Formula 1, that can attract those kinds of numbers.

All networks have some cost for acquiring programming. It happens that ESPN's costs are unusually high.

Let's try again, with Discovery. According to SNL Kagan in 2009, they charge $0.25 per subscriber per month, with around 100 million subscribers. That's $300 million in subscriber revenue per year.

You cut Discovery down to 10 million subscribers, and they're charging 2.50 per month for the same revenue, and that might still be a generous subscriber estimate.

$2.50 a month for "Naked and Afraid"?

 

[landtuna]

Let's try again, with Discovery. According to SNL Kagan in 2009, they charge $0.25 per subscriber per month, with around 100 million subscribers. That's $300 million in subscriber revenue per year.

You cut Discovery down to 10 million subscribers, and they're charging 2.50 per month for the same revenue, and that might still be a generous subscriber estimate.

$2.50 a month for "Naked and Afraid"?

You are making assumptions which have no basis. Why would you assume Discovery would lose 90% of its current viewer base?

Discovery used to be one of my favorite channels but then they changed into some sort of reality programming and I quit watching. I can find a lot of the original programming online (including whole shows on YouTube). I can also check out DVD's from my library with some of their programming. Much of their programming (early shows) are available on DVD.

Much the same happened to History. AMC used to have good movies but then they added commercials, cut up the movies and then began showing junk. I have a better personal collection than they do.

The only worthwhile non-sports service I would buy would be TCM but I will not pay big bucks for the other 200 channels I would never watch.

 

[nomadcowatbk]

eventually, they may start streaming for free since younger viewers are more likely to be cord cutters

They'd have to lose at least half of their subscribers before that would ever happen. Don't hold your breath.

there are many people who will never have cable, college students don't even bother to hook up to the free cable connections in dorm rooms, the super bowl had a high number of people streaming even though 99% of the population could get that OTA, eventually the only people who have cable will be sports fans and elderly people who are afraid of technology, the college conferences and the pro sports leagues may price themselves out of existence not because of a lack of interest but because of a lack young advertiser desirable viewers

 

[PirateJohnny]

Heck, I only subscribed to cable for a month about 25 years ago. I've always watched OTA and now Hulu, Netflix and purchased DVDs and Blu-rays. I'm 55 and work in the technical operations side of TV.

 

[Morgan Wick]

Actually, yes - there is a reason prices would skyrocket, or at least not go down.

The basic problem is still the lack of competition in Pay TV. Unless and until the competition I illustrated above returns there is no incentive for cable companies to become competitive. Creating an ala carte billing model won't help that condition.

What would it mean if we treated cable as a utility like telephone or electricity?

 

[umfan]

That you'd have less channels for the same money.

A-la carte won't save any money, the cable systems will simply charge a lot for the channels most in demand so the consumer pays about as much as they do now fewer channels.

I wish I could cut my bill in half by only paying for the 10 or so channels I actually use, but it's not going to happen. It's a pipe dream.

 

[Robnoxious]

Cable television is so completely unimportant and irrelevant. The youth of today don't give a rip about it and that trend isn't changing. You all can keep telling yourselves that cable is still a viable and robust industry and in addition to that I have a bridge I could sell you in New York.

Outside of live sports, Cable. Is. Dead.

I've cut the cord close to 2 decades ago and I haven't missed a trick. You can too. It's very easy.
Liberating too.

 

[Morgan Wick]

Cable television is so completely unimportant and irrelevant. The youth of today don't give a rip about it and that trend isn't changing. You all can keep telling yourselves that cable is still a viable and robust industry and in addition to that I have a bridge I could sell you in New York.

Outside of live sports, Cable. Is. Dead.

Yes, outside of live sports, and HBO, and Showtime, and AMC, and dumb reality shows, and...

 

[PTBoardOp94]

Let's try again, with Discovery. According to SNL Kagan in 2009, they charge $0.25 per subscriber per month, with around 100 million subscribers. That's $300 million in subscriber revenue per year.

You cut Discovery down to 10 million subscribers, and they're charging 2.50 per month for the same revenue, and that might still be a generous subscriber estimate.

$2.50 a month for "Naked and Afraid"?

You are making assumptions which have no basis. Why would you assume Discovery would lose 90% of its current viewer base?

Because 90% of their current subscribers don't actually watch Discovery (per Nielsen), even though essentially everyone has Discovery in their package. Under an ala carte regime, who would subscribe to Discovery and not watch it? Only people who have way more $2.50s than sense.