U.S. cable operators want to go ‘a la carte’ by forcing programmers to unbundle

“U.S. cable operators are privately working on a plan to force programmers to unbundle their networks and allow customers to subscribe to channels on an individual basis,” Yinka Adegoke reports for Reuters.

“The plan represents a complete reversal from cable operators’ long-held opposition to what is known as ‘a la carte’ programming,” Adegoke reports. “Over the last decade, the cable industry battled ferociously with regulators to protect the right to bundle programming, 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.”

Adegoke reports, “Comcast Corp and Time Warner Cable, the two largest operators have lost 1.2 million video customers in the 12 months to June 30… An ‘a la carte’ menu of programming would give consumers who are not sports fans the freedom to drop high cost sports channels such as Walt Disney Co’s ESPN and ESPN 2 from basic packages. At around $4 a subscriber, ESPN is the most expensive channel in the U.S. cable business, according to SNL Kagan.”

“The specter of unbundled programming is likely to encounter fierce resistance from network owners such as Viacom Inc. or Discovery Communications Inc., which are keen to maintain the economics of selling their most popular channels as a package with their smaller, nascent networks,” Adegoke reports. “‘There is a growing recognition that the current model is broken,’ said Craig Moffett, a long-time cable analyst at Bernstein Research.”

“Moffett warned, however, that allowing customers to choose any station they wanted in any package would be economically unfeasible for both the consumer and the cable company,” Adegoke reports. “‘It could be a la carte, but not as people imagine it now,’ he said referring to smaller packs of programming more akin to what Time Warner Cable Inc. has tried. Last November, Time Warner Cable launched a three-city trial of a low cost TV Essentials pack with fewer channels. It now plans to expand that offer to other cities.”

Read more in the full article here.

MacDailyNews Take: The good: Consumer choice. The bad: Stupid consumers.

While we almost always side with consumer choice, everyone knows what would happen if channels were really offered a la carte: Hundreds of “networks” would go dark. In television, the lowest common denominator rules. Just look at what people watch en masse. If you want to go back 30+ years and end up with about thirteen channels, most of which offer vapid crap, one or two (if were lucky) so-called “news” channels, a kids’ channel, a couple sports channels, etc. then go pure a la carte.

Also get ready for thousands of writers, producers, board ops, camera people, etc. to join the unemployment lines, so you’ll still be contributing to their support, just a bit more directly – via your tax dollars instead of your cable bill.

The fact is, some bundling (less than there is now, certainly) is necessary in order for many quality and/or specialized channels to exist. They have to be very careful designing new bundles or risk losing many of the quality channels that have never once been tuned in by the great unwashed on their Blue Light Special TVs.

UPDATE: 10:53am EDT: In response to some of the comments below, some further clarification: We agree with the move towards al la carte, just not all the way to pure a la carte – unless it takes place over an extended period of time, so the industry can properly shake out.

Basically all we’re saying is that care must be taken as the bundles are refined and the shift toward a la carte takes place.

If you want to see what will survive and what won’t, just look at the ratings and remember that it costs much more than most people think to produce even the “cheapest” televisions shows. Only the top programs and top networks would be able to finance their operations within a pure a la carte model. That said, it obviously can be done and done rather well for certain types of programming, at least at the network level, as HBO has already proven.

84 Comments

    1. Funny enough, even without these changes, my “guide” channel went dark. When I tried to view it, the most hilarious thing happened….

      It starts with a windows ME boot screen (ME is ANCIENT)… and then goes into a BSOD crash/reboot. So basically the TV Guide was being run by a shitty windows machine running ME…

      I was laughing so hard it took me 15 minutes to stop, and then go watch Terra Nova. XD

      I feel like I need to post a video of it happening. 🙂

  1. kind of a douchy, elitist MDN take. People can watch whatever they want. Sure, point out that there is valuable content that only survives because of bundling, but you would make more of an impact by dropping the crappy attitude. Programs like those found on HBO survive essentially being purchased only ala carte, or is that an example of the useless trash watched by “the unwashed masses.”.

    1. HBO is a premium network. Obviously (to most), it’s not part of this discussion. If a channel can make it on its own using a premium model, it’s not at risk from unbundling.

      1. I dumped them and haven’t missed them one bit, as much as I thought I might. Love keeping that money in MY pocket.

        Regarding MDN take:

        “Hundreds of “networks” would go dark.”

        Hundreds of “networks” deserve to go dark.

        Who says you only 13 channels, “most of which offer vapid crap, one or two (if were lucky) so-called “news” channels, a kids’ channel, a couple sports channels”

        YOU GET THAT CRAP NOW WITH 130 CHANNELS, ALREADY!

        1. Then YOU pay for the thousands who’d join the unemployment roles which, according to the Dems, should be extended indefinitely (created yet another dependent class of Dem voters).

          I’d rather they keep their private sector jobs and pay for ESPN bundles, thanks.

          1. No thanks the average employee working in the entertainment industry make a hell of a lot more than a welfare recipient.

            What pisses me off the most though is when I pay twice for the same channel, IE I pay for a certain sports channel, but when I select the HD version of that same channel I get a message telling me I have to pay for it again in HD. How about I pay for it in HD and you drop the SD version.

          2. we’re into poorly thought out, low grade, misleading political commentary here now? great.

            I think it’s way too simplistic to go from unbundling programming to seeing unemployment rates skyrocket in Hollywood. The industry has been in flux for some time now — there’s an insatiable need for content, even if the current system of sourcing and distribution is under severe pressure, new markets and business models are developing. The creative talent will gravitate towards that, not the unemployment lines.

            It’s called creative destruction and the (more or less) efficient reallocation of capital. That’s a bit more nuanced than simplistic and misleading political doomsday speak.

            1. 100% agree with “think.” Everyone is paying out the wazoo for content that is 14,400% higher than they can possibly consume. Think about it! While your TV is streaming the show you’re watching, 144 more channels, that you are paying for, are getting dead ended at your tuner. That’s not even taking into consideration that much of the time, no one is watching anything.

              BUT! The real story is this! There are only so many advertising dollars to go around in support of all this program content. What keeps the weaker sisters afloat is the complete uncertainty for advertisers as to who and how many are watching. With al la carte purchasing of custom bundles, now everyone knows who and how many are watching a given network. The money follows the eyeballs, but get this! Ad dollars are now getting better results. Advertisers, having greater certainty of a return on their ad dollars, are now more willing to spend. More money flows to the industry, because the guy paying for it is getting a better deal. The industry will have to improve their content, because the market they are competing in has become open and transparent, which is the opposite of the way it is now which is closed and blinded by the bundling franchises.

              Yes there will be loser networks, but it all depends on how many people watch what. Hunting and fishing networks will probably blossom with unexpected riches as ads learn and become certain of the numbers. Children’s networks may become fewer in number, but those surviving will be stronger.

              My WAG is that less than 20% of the channels will fall, because the eyeballs will still keep doing what they have been all along, watching their favorites, and that has supported what gets watched and what doesn’t get watched as it is now. Surely it will continue to support what gets watched after al la carte.

      1. It may be true that complete freedom of choice will cause TV junk to proliferate. However, it is not fair and ultimately economically unfeasible to force people who like the trash and generic (news, weather) programs to pay for packages that include the smarter programming that smarter people want to watch, just so the smarter people can have something to watch at a reasonable (or cheap) price. In the end, smart people will have to pay more for smarter programming at a higher cost for their niche market. And that’s how it should be. Of course, if philanthropic groups and individuals choose to subsidize it, then it could be opened up to larger numbers in the hopes it would do them good. But forcing the issue through arbitrary policies or government regulation is dumb and against the sea change.

  2. Wow, can’t believe they’re even considering it. You mean I wouldn’t have to cancel Fox News, I could just not subscribe to it in the first place? Cool!

    Is this what Apple has been waiting for? It’s what I’VE been waiting for. I haven’t had cable since 2002.

    Peace.
    😉

        1. Mossman clearly illustrates how we allowed our country to get into this mess. Too many believe that the Daily Show is actually news and just blindly agree with Stewart and Colbert in an attempt to be “cool”. Say what you want (or what Stewart says you should) about Fox but at least they seek out the story and report on it rather than just commenting on others efforts. Yes, they have commentary as well but that happens on a show that is identified as commentary and their viewers understand that.

          1. America is a mess because of divisive ideology-based politics that provoke and tweak emotions rather than allow rational thought. A political system where parties are allowed to form guarantees this as surely as unregulated capitalism results in monopolies or oligarchies.

            No one seriously takes DS or CR as news, but where Fox shows whip up its adherents into enraged frenzy, DS makes people laugh at the absurdity of BOTH sides–the right just happens to provide better comedic fodder. If you doubt this, why hasn’t a right-wing comedy show succeeded? The right certainly has enough money to fund such a show, and mock all the so-called left-wing politicians and media. Or is fomenting rage the only currency the right has?

            If a freaking comedy show is the cause of America’s mess, the country is beyond saving.

            1. If you truly believe that DS and CR don’t have a political agenda then you sir put the Duh back in Duhlusional. Need proof? How about the pathetically attended “Rally to Restore Sanity”? I agree that there exists “divisive ideology-based politics that provoke and tweak emotions rather than allow rational thought” however, I suggest that it’s the “progressives” tweaking the emotions. Don’t be fooled, laughter may be the most powerful emotion there is. The left knows that if you can turn your opponent into a laughing stock then you can persuade the multitudes to dismiss their threatening ideas and ultimately dismiss or better yet eradicate the opponent themselves. To quote the Progressive Patriarch Saul Alinsky, “”Ridicule is man’s most potent weapon”.

              Whereas conservatives are actually talking about the issues and proposing ideas. Don’t believe me, turn on a radio in any city in America and you will find dozens of “right-wing” talk shows with hosts and listeners proposing ideas and solutions. You won’t find any Liberal talk shows succeeding (without government subsidies or the backing of a Liberal Fat Cat). Why? Because Liberals just aren’t engaged and the shows can never sustain themselves. Which is exactly how Obama wants it BTW- “stop listening to talk radio”.

              So let’s agree that Liberals are more serious about making us laugh and Conservatives are more interested in making us think. To assert that Conservatives don’t have enough material for a Liberal-Mocking comedy show is ridiculous. The Democratic party that brought us such gems as Barney Frank, Al Gore and Nancy Pelosi???? Come on. It’s not that conservatives lack a sense of humor it’s just that right now things are a mess and the bulk of the conservatives in this country want to talk about solutions not just mock the opposition.

    1. Delivery source doesn’t matter. Any company, including Apple, offering content for sale or subscription would have to consider what would be lost if they became a dominant content provider and offered a pure a la carte model.

  3. Why should anyone other than the consumer determine what is worthwhile TV entertainment? A pure “a la carte” approach would expose the farce that some media elite knows best. No one should be compelled (in this case by “bundling”) to pay for what they have intention nor desire to watch.

    The “stupid” consumer should be free to go to McDonalds and order a Big Mac, then visit the near-by Chik-fil-A for french fries and wash it all down with a frappuccino from Starbucks! Why? Because we all should be free to spend our money in the way we think is best…even if some super smart guy at MDN or Comcast thinks otherwise?

    1. Sounds great, Mr. Starry-Eyed, however, as MDN already stated, pure a la carte only works if you’re fine with going from hundred of channels to a handful that offer common denominator trash TV.

      1. There is ZERO evidence that a la carte TV would result in nothing but a few crap channels. Quoting MDNs opinion like it was a fact is lazy thinking at best.

        In every place where technology and economics have allowed for unbundling of products the consumer has one in the end. Music, Computers (at one time you had to buy IBM software and IBM drives to put into IBM mainframes), and on and on. Freedom of choice is the invisible hand of the marketplace that pushes/pulls companies into providing real not perceived value for customers.

    1. Absolutely right! I hate having to pay for sports channels I don’t watch just to get the tier with the kids channels and science channels I do watch. And I don’t think you’d end up only a few lowest-common-denominator channels. But if you ended up with fewer — but better — channels, I’d be fine with that.

    2. Unbundled bundles would work just fine:

      The Hypocrisy Bundle (Religion)
      The Weight Gain Bundle (Sports)
      The Paid Programming/Repubican National Commiitte Bundle (Fox News/vegetable slicers)
      The High School Dropout Bundle (foreign language)
      And so on. And I will still continue my uninterrupted record of never having spent a dime on cable television, or watching more than 10 hours of broadcast TV a year.

  4. Ouch! MDN, you’re usually on point and funny, but “unwashed”? Blue light special TV’s? I’m in the upper 5th percentile in income and education, but I don’t poop where I eat. I realize your demographics probably will let you get away with this characterization, unless some pundit hangs you out to dry. Personally, I would’ve toned that down a wee bit…

      1. Sharp honesty is one thing. Being crass or (pardon the bad pun) “bundling” a specific group of people as unwashed is blatant bigotry. That plus the day that my local TV store can offer me the identical unit for a similar price as the blue boxes can, I’ll buy it there. Currently, they’re 35% more. “The rich don’t get rich, they stay rich…”

      2. Agreed… even if MDN is wrong in this case. I love MDN’s takes for the most part.

        a la carte sounds really nice in my view. I’d gladly remove about 2/3’s of the channels I have if this went through at probably a considerable cost savings.

  5. Promise

    Promise

    Promise all those smarmy televangelists and boring shopping channels are gone, and Increase my bandwidth with the newly available room.

    I would buy into that change in a heart beat. Keep them and you will probably loose me too in the near future.

  6. Dare I say that Steve Jobs may be right again? He has said many times something to the effect that TV is a brainless activity. Back in the 70’s we had channels 3, 6, 10, 13, 17, and 29 in the Philadelphia area- and none of them offered 24 hours of programming. I think we got outside more back then to say the least, or at least found other things to do. Just sayin’.

    Maybe Steve knows that the television industry is about to shrink dramatically, which is perhaps the reason that AppleTV is still just a hobby?

    1. Yup. Outside. Where you can experience true reality as opposed to watching someone else’s “reality”. I love how some of these tangental topics get people’s ire up more than the topics that hit a bigger societal nail. Think I’ll put the phone down now and go get some reality. Outside…

    2. I also grew up outside the Philadelphia area in the 70’s and remember those exact same channels! I would love to see the cable providers offer package bundles in say quantities of 25, 50, 75 channels. This way you could pick your favorites channels, cut out the crap you don’t want, but still get a few you only watch occasionally. It would also be nice if you could add a channel for a day, similar to pay-per-view for special shows or sports events. I know we rarely turn on ESPN2 unless Penn State is on, so it’s kind of a waste of channel space.

      1. Much like buying individual songs instead of the whole album? iTunes anyone? Purchase/rent a show/movie/event/etc on your iPhone/iPad over 3G or 4G and Airplay them onto a tv or projector (or via AppleTV). This would eliminate the cable companies altogether. I think the cable companies realize this- they’ve been acting crazy lately, with moves like this.

  7. Funny. correctu and To ramen voice similar concerns… And my panties don’t bunch at saving money. That allows me to purchase more AAPL! Where does everybody else buy their LCD or LED altars?

    1. Liberal. Another un needed political slam. Is that all the modern American can do on boards these days?

      More and more when I come to MDN these days I just dont bother with the comments. Back in the day around here it was fun with the wit and all. But wow. The times they are a changing.

  8. Here’s how I would like to see bundling happen:

    Offer each “channel” for a unit price appropriate for the content offered. Then, offer 3-4 pricing packages: cheap, low, medium, high. Let ME pick which channels I want to include in whatever price package I feel I want to pay for (or can afford).

    Simple, easy, and the customer gets choice while the cable company still “bundles” channels.

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