Reuters: In switch, cable operators want to go "a la carte"

[stationless listener]

The plan represents a complete reversal from cable operators' long-held opposition to what is known as "a la carte" programing. Over the last decade, the cable industry battled ferociously with regulators to protect the right to bundle programing, arguing it offered customers the best value.

But executives now say the change is a necessary response to shifting dynamics such as higher carriage costs and using the Web to watch programs, as well as a weak economic recovery that has forced many consumers to cancel cable television subscriptions.

http://www.reuters.com/article/2011/09/27/us-cable-idUSTRE78Q6EE20110927

Folks, it seems to be that the new ESPN MNF deal was the "feather" that is starting to bring the whole bundling house-of-cards down. Once this starts rolling it won't stop here. I think viewers who watch channels that depend on bundling to get on cable should start getting nervous as they would have to be prepared to pay even more for those channels.

Also, how would this be explained to the Disney shareholders, as they can't squeeze enough $$$$ from ESPN fast enough? It looks like they may have pushed too far in picking the pockets of consumers, while the cable companies get the angry calls. I hope George Bodenheimer can give a good explanation when they find out that ESPN was dropped on a few cable systems. It serves those greedy, cheap-arse bahstards right for killing the golden goose!

This would also start to affect the sports leagues down the road, which would force them to accelerate the movement towards directly offering their products to those interested in buying them.

 

[carolinaradio]

If we can't pick individual channels, I think sports and childrens' channels at least ought to be optional. I never watch sports and shouldn't have to pay for ESPN, ESPN2, ESPNNews, ESPNClassic, etc.

 

[flashback]

"a la carte" sounds good in theory but i think it will just end up costing more to have less channels if you dont get just a handful.

also from time to time i find good shows on channels i don`t watch that often.an example is iron man and wolverine on G4.i enjoy them but don`t enjoy the idea of paying for the channel if the way cable is distributed is "a la carte" for just 2 shows.

sometimes a channel will go unwatched for a very long period of time and one good show will be on it.a show i wont see if i picked and chose my channels.

once they use "a la carte" they wont` go back to cable as it is now.

 

[landtuna]

In another thread someone opined that the days of cable (as we know it now) are doomed. In the future they will exist only as a pipeline, a transmission service. Content creators will eliminate the middle man and direct their offerings to the Internet where they can be picked up by end customers on an ad hoc and/or ala carte basis.

20 years ago, when satellite meant C-band, there were hundreds of programmers and virtually all offered ala carte subscriptions. There was competition which kept prices down but everybody still made money. The advent of the pizza pan programmer meant you have exactly two satellite choices and one cable choice and neither is inclined to offer anything that requires them to work harder or more efficiently. Instead of competing on subscription prices they compete on slick under-the-table and bait-and-switch programs.

I subscribed to a fair number of individual services on C-band and my annual tab was about $160 per year. I could add or drop individual services at any time - no contracts. Compared to my first satellite subscription which was the 2nd tier package and the cost jumped to almost $600 per year and I couldn't drop without paying a penalty. Yes, instead of 25 channels via C-band I now received over 250 but I still only watched the original 25. The rest were either junk or of no interest to me.

After a few years of watching the subscription price continue to climb and no improvement in programming or service I dumped it all. I will not again subscribe until they put a subscription plan in place that is at least equal to what we had in the 80's. Meantime, I will continue watching the few products I enjoy at virtually no cost online. We'll see who has the last laugh.

 

[stationless listener]

In another thread someone opined that the days of cable (as we know it now) are doomed. In the future they will exist only as a pipeline, a transmission service. Content creators will eliminate the middle man and direct their offerings to the Internet where they can be picked up by end customers on an ad hoc and/or ala carte basis.

If that turns out to be the case, then Comcast was smart to buy into NBCU. They also did try to buy Disney but was rebuffed. Should the "Comcast" side of Comcast become unprofitable in the future, they would have the content to shield themselves from any loss of business in the former area. That's, of course, dependent much on how they are able to do with the content side the business. Maybe rename their cable business "NBC Cable Co." or something.

On the issue of cable channels where one or two shows might be viewable, they could entice people to buy in with ads via the Internet offering a sneak preview of the show. Another idea would to sell by hour blocks for the day when a typical show would air. This might be worthwhile when it comes to premium first-run episodes.

 

[nomadcowatbk]

A lot of people are only keeping cable for live cable only sports. Will they ever offer a sports only package or will events go to a pay per view system if your team doesn't appear on ESPN much or at all like if you're a KC Royals fan ;D? I never watch ESPN from March-Sept and even then only when my teams appear but that's not even every week.

 

[DToTheJ]

In another thread someone opined that the days of cable (as we know it now) are doomed. In the future they will exist only as a pipeline, a transmission service. Content creators will eliminate the middle man and direct their offerings to the Internet where they can be picked up by end customers on an ad hoc and/or ala carte basis...

You mean, kinda like how the broadcast networks are twisting cable operators' arms for transmission fees "or we black out our signal for something that people can get over the air"?

(By the way, I started that thread you refer to... : )

 

[Tim from Springfield IL]

IF the cable companies indeed want to go with some form of "a la carte," I would expect that there would at least have to be a basic package of channels that all customers would be required to buy before picking their "a la carte" packages--similar to the Comcast "Digital Economy" package that I gave a local (Springfield, IL) lineup for in the Time Warner cheap cable package thread linked below:

http://boards.radio-info.com/smf/index.php?topic=198322.0

So I would expect that there would be no escaping the likes of the shopping channels, a few kids' channels, public access, religious channels e.g. TBN, etc. before customers can even purchase a la carte for sports, additional kid channels, etc.

 

[WPPCProductions]

I hope some day this will come.I tired getting soaked with these subsriber fees from channels that I never watch.

 

[FreddyE1977]

For one thing, this will be a death knell for MTV.
There are millions of parents out there who would refuse to have it
in their homes if it was not bundled.

 

[landtuna]

For one thing, this will be a death knell for MTV.
There are millions of parents out there who would refuse to have it
in their homes if it was not bundled.

Cable arrived in my neighborhood in 1980 and the first thing I did (having two young boys at the time) was to block MTV. I've never regretted it.

 

[WPPCProductions]

For one thing, this will be a death knell for MTV.
There are millions of parents out there who would refuse to have it
in their homes if it was not bundled.

No loss.One less reality show channel to watch.But I do feel for the displaced employeees.

 

[arnoldevns]

Simple truth: if a la carte happens, you will pay a lot more and get a lot less. Many channels will go out if business, and the ones left will charge a lot more per month than they do now just to make up for lost subscribers.

 

[flashback]

^exactly.

 

[landtuna]

Simple truth: if a la carte happens, you will pay a lot more and get a lot less. Many channels will go out if business, and the ones left will charge a lot more per month than they do now just to make up for lost subscribers.

Disagree. We had ala carte once upon a time and prices were very reasonable. Of course, there was much more competition than today. Oh.....wait....maybe THAT'S the problem!!! ???

 

[PTBoardOp94]

Simple truth: if a la carte happens, you will pay a lot more and get a lot less. Many channels will go out if business, and the ones left will charge a lot more per month than they do now just to make up for lost subscribers.

Getting a lot less hours of programming isn't necessarily a bad thing as long as I can save a few $$$. If I really could pick and choose any channels, I might pick these ten:. CNN, Fox News, CSPAN, CSPAN2, Comedy Central, Cartoon Network, ESPN News, and three of my locals.

If that will cost more than my current 70 channel package, then I'll put up an antenna.

 

[fybush]

Simple truth: if a la carte happens, you will pay a lot more and get a lot less. Many channels will go out if business, and the ones left will charge a lot more per month than they do now just to make up for lost subscribers.

Disagree. We had ala carte once upon a time and prices were very reasonable. Of course, there was much more competition than today. Oh.....wait....maybe THAT'S the problem!!! ???

You're referring to the C-band dish days, I believe...but I'm not sure how far you can extend that economic model to today's media environment.

Out of the total universe reached by the higher-profile cable channels of the day, what percentage do you think were getting the programming via C-band dish? 5%, perhaps? Maybe 10% at the most? I'd guess those numbers are probably on the high side - and that most of them represented a customer base that would not have been reachable at the time by cable.

In other words, we're talking about a fairly small niche audience that was getting programming that way. From the point of view of an HBO or a USA or an MTV, whatever money came in from the big-dish customers was gravy. It wasn't the core of their economic model in the same way that subscriber fees from cable companies are now.

Were there any networks in that era that both did the things the bigger cable networks do now (i.e., expensive original programming or major-league sports rights) and based their economic model largely on subscriber fees from the big-dish customers?

I'm thinking the answer is "no"...and if that's the case, I'm really not at all certain how much that example can tell us about today's situation.

 

[dave73]

If I were to go back to pay TV, the first thing I would request is for the local channels to not be included. For where I live, I get all the full power stations I want in Chicagoland, plus 1 PBS station serving NW Indiana. Satellite's refusal to carry subchannels (whether programmed locally, or for a national audience) is part of the reason I don't want the service (considering some of the salespeople selling Dish Network & DirecTV insist I don't need those subchannels, or refuse to acknowledge that they exist, like one for DirecTV that refused to acknowledge that WTTW has WTTW Prime on 11.2). Cable buries the subchannels in the digital tier, & they're mixed up in the bunch (if any are carried). For Specific channels, I'd pick stuff like Cartoon Network & Boomerang (probably watch Boomerang more), Lifetime (yes I watch this channel from time to time), TBS, Discovery, Bravo, E, Comedy Central, Food Network, HGTV, Disney Channel, Toon Disney, DIY, maybe BBC America, & probably others. My choices aren't much, but these are the channels I'd likely watch the most. With DirecTV, I last remember them offering PBS East & West. I don't know if they still offer that to everyone or just to markets without a PBS station. Being in the Chicago market, it was nice to watch WGN America (was called WGN Superstation when I had DirecTV), along side WGN-TV on DirecTV (something not offered on cable to Chicago market viewers).

 

[stationless listener]

Perhaps related to the topic, I found this interesting tweet from John Ourand: http://twitter.com/#!/Ourand_SBJ/status/118427122355277824

Ourand_SBJ John Ourand
For the first time since November 2009, no cable network reaches 100M homes, according to Nielsen. Weather is tops at 99.897M. #CordCutting?

Also this: http://twitter.com/#!/Ourand_SBJ/status/118426887881105408

Ourand_SBJ John Ourand
ESPN has dropped to 98.648 million homes; ESPN2 is in 98.470 million homes. Others: Golf (82.934M), Speed (77.394M) and Versus (74.989M).

As to the idea that a-la-carte could result in higher prices, perhaps that's true for premium content. However, I wouldn't say the same for basic or standard fare. A point of inflection would be reached and that any prices increases after it may not be as profitable. The fact that people are already dropping cable subscriptions is anecdotal evidence already for the cable/satellite companies. Why would content providers be any different from market pressures?

Look at the music industry as Exhibit A for what happens when content providers think they can continue charging more and more for material, no matter what.

 

[landtuna]

You're referring to the C-band dish days, I believe...but I'm not sure how far you can extend that economic model to today's media environment.

Yes, I was referring to the old C-band days. But I think you missed my point - that being that there were many, many more national programmers in those days offering to sign you up for either packages or ala carte or a combination of both. It was automated and could be performed via phone or online. Because the receivers were addressable the data center in SoCal handled everything seamlessly.

In today's world, for any large metro area, we have no practical choice when it comes to cable/sat services. Two sat and one cable company, that's it, and they can charge pretty much what the traffic will bear. That is the biggest reason prices have climbed and customer service is a thing of the past.

It doesn't matter what products are being offered nor that HBO now has original programming instead of being a pre-digested movie channel.

Companies made money in the 80's offering ala carte and would do so again. Customers could vote with their dollars as to which services deserve to exist. There is too much junk and duplication today and it increases the cost for everyone.