“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.