It’s a pipe dream, I know, but I’m a huge proponent a la carte cable programming. We shouldn’t have to pay for channels we don’t watch, right? In a dream world, we could call our cable providers and order the 10 or 12 channels that we do watch and spend, what? $20 – $25 a month. It’s never going to happen, of course, because it doesn’t make financial sense to the networks.
Why? Let’s say, in this example, that there are 100,000 cable subscribers in your city. Let’s say you wanted to buy only the FX Network, and the FX Network would cost you $5 per month. Let’s also say that maybe 20 percent of the 100,000 cable subscribers in your area wanted FX. In an a la carte model, FX would earn $100,000 from the 20,000 subscribers. Even if, in an a la carte model, you made subscribers pay double for individual channels, FX still earns only $200,000.
However, in the all or nothing model, if you want one channel, you have to pay for them all, so FX earns $5 from all 100,000 subscribers, or $500,000. Eighty percent of their revenue comes from the 80,000 subscribers who don’t want their channel. Changing to an a la carte model would essentially deprive FX of 80 percent of its revenue.
I was curious, however, how much each channel costs the individual, and what my cable bill would look like if I could order a la carte. I found wholesale estimated channel costs for 2009, and as it turns out, the only channel we spend much for is ESPN. In fact, most channels are relatively cheap — the industry average is around $.20 per channel wholesale, but when there are 150 channels, that costs adds up. Let’s say the retail costs is double ($.40 average per channel) and that we have to pay for all 150 channels to get even one: The cost comes out to around $60 a month, which is about how much each of us pay for cable before taxes, DVR, HD, satellite service, and other fees are taken into account (or HBO or Showtime, which adds another $12-$15 per month per channel).
But, if we could purchase cable programming a la carte, using that chart and doubling for retail costs, my cable bill (and probably most of yours) before taxes and fees would probably look like this:
ESPN: $4
TNT: $.99
NFL Network: $.75
USA: $.55
ESPN2: $.54
CNN: $.51
FX: $.42
Sundance: $.25
AMC: $.23
Bravo: $.19
Comedy Central: $.14
BBC America: $.12
Food Network: $.08
PBS Kids: $.04
Wholesale Costs: $8.81
Retail Costs (x2): $17.62
So, in an a la carte model, I could watch all the channels I normally watch for $17.62 per month before taxes and fees. I suspect most of our cable bills would look much more like $20 a month instead of $60 a month, and that’s exactly what the cable industry doesn’t want, which is why we’ll never get an a la carte model.
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Here is the problem with your logic. The reason ESPN is $4.00 is because everyone is paying $4.00 towards it.
If suddenly half of the homes don’t get ESPN in this a la carte model, the price doubles.
Now you are paying 8.00 for ESPN.
The less mainstream your channel is, the less people will subscribe in this model. So the price sundance may suddenly go up 10 fold.
Without the subscription service we have now, channels like A&E and FX probably wouldn’t have survived long enough to get to a point where they can air quality programming.
Even with that programming, they may not survive. 80% of what many channels air is syndicated or old movies. Would you really pay $10 a month for a channel you watch 1-2 hours a week, 10 weeks out of the year?
you know your right, but on the other hand I’m paying for channels I dont watch. I’m paying to keep the speed network, and home and gardens, and many others afloat right now.
and while its true that one day I just happened upon the vanilla ice house flipping show on the diy net work… that is one thing I wouldnt mind losing.
If I remember correctly from the class I took in college on cable television (EDUCATION, Y’ALL), it’s not just the cable companies pushing against a la carte cable packages. Another big issue is minority representation on television. Smaller networks that shoot for niche audiences wouldn’t survive without being included in a larger package, and that means we’d be stuck with lots of stuff (OK, more stuff) aimed at the lowest common denominator white folks that watch CBS.
A la carte cable is an awesome dream, but as Bad Match points out, it would choke out lots of upstarts and off-beat channels (AMC, FX, IFC, etc.), and result in like 10 channels having all the power.
Exactly. The cable providers will adjust accordingly. You will end up paying your 60 a month if not more.
This would lead to me finally cutting the chord with ESPN.
oh yeah, trust me I know there is no way to win. I’ve been over this a hundred times with friends, and in school. the only thing that can do it is the internet.
Hey why is Peggy blonde?
I think a better system would be paying only for seasons of a show.
Say you want Community, it’s produced, sold for $X and uploaded for your pleasure.
For sports you could get league/team passes with live viewing options.
Sportscenter/News would operate the same as sports
I guess the only solution is to watch more television so you get your money’s worth.
haha +1
*blows the dust off the old broadcast degree*
From what I remember, the argument against a la carte is that the cable providers and channels wouldnt just make less whenever somebody dropped them; they’d just charge the current subscribers more. So instead of paying, say, a few cents a month for FX, you could theoretically end up paying HBO level pricing. They argue that it works in the consumer’s favor, too, but I don’t know about that. Maybe if you watched a TON of cable.
For example, when I was living in NYC and ordered an extra channel to get more ACC games, it came in a package with other channels I didn’t want.
It sucks, but they aren’t going to let go of their revenue no matter how we pay for it.
Bundling is exactly correct. Almost all the channels we watch are owned by considerably larger media conglomerates which don’t just own one channel, but maybe a dozen. They allow your cable or satellite provider to offer those channels in a bunch, but they know most of the shitty stations no one watches wouldn’t get much revenue if people could opt out.
They’re leveraging the things we want to make sure we get everything.
In before someone registers “The Dust Off The Old Broadcast Degree” as a username and tells Patty how great she was.
Shouldn’t some young person chime in here on some device I’ve never heard of mocking cable? TV? in 2012?. The kids, they are a la carte.
“The kids they are a la carte.”
I think you could go to jail for a comment like that.
If they want me to stay 500 yards away from schools they oughtn’ve built one 400 from my lawn chair.
If this were an option, there would honestly probably only be like 15 channels left standing. Which would obviously be fine because everything else is just garbage.
This is also the prime reason i recently cancelled Directv and just rely on Hulu and Netflix. It’s not perfect, but for the shows i watch that aren’t on Hulu Plus I can always find them on some off-market streaming site.
Just remember that the 15 channels left standing are probably going to be the ones with the biggest ratings. But that just means the shows are good since everyone is watching them, right?
/compares ratings of Community and Two and a Half Men
//autodefenestrates
I’m doing the same thing, but highly recommend adding amazon prime to the mix. If you order much at all, the free shipping pays for the subscription
So why not let us choose which channels but require a minimum number of channels taken?
I still might buy a $54 package if they let me choose which 100 channels I get rather than sticking me with Oprah’s network and Speed Channel, and various others I’ve never done anything more than turn past. I believe there’s a Horror movie network I don’t get and a few others. And I really don’t need regular channels when all I watch is the HD band.
This analysis is only half the picture. The reason why a la carte makes no sense is because cable companies have HUGE sunk infrastructure costs. That is what you’re mostly paying for when purchasing cable TV. Once these companies have spent all that money laying the cable, the marginal costs of adding an extra TV channel is really, really low. That’s where your analysis comes into play.
How long does G4 last in this model? BBC America?
I’d get all the Ancient Aliens I could handle because History is a money maker. And our guy Guy would be free to stink up diners all over the country with the scent of Axe body spray.
Nerds and geeks ought to be the last people in the world to support this. Freak show programming like TLC’s entire lineup keeps real programming possible. The point has been made already, but do we really want a strict democracy here? I can only handle so much Ashton Kutcher and whatever the hellbreed a Snooki is before I have to abandon my true love, TV.
I work in broadcast and was involved in my station’s last round of retrans negotiations. Most of the cable companies we dealt with would love to move to a la carte platforms as well. Even though they would have to come off of their monthly fees to subscribers they would prefer it. The reason being that the forced bundling from cable networks is what pushes those fees up to start with.
During our negotiations I couldn’t find one cable provider who could admit that he would miss lifetime, bravo, or hgtv all three of which they paid more for than our affiliate broadcast station in the last retrans cycle.
It really is a matter of the cable networks holding cable providers and their viewers over a barrell.
Paul from the Gump is right as far as he goes. I used to work for a major cable operator (Woohoo! Biggest Bankruptcy Ever!) and the reality is the same one we used back in 1996 when that douchebag Al Gore’s college roommate (no, not Tommy Lee Jones, the other dipshit) was running the FCC.
Everybody thought that regulating cable charges would make bills go down. Our lawyers were smarter than the government lawyers, and we found ways to make everybody’s bill go up instead, plus we could blame the government. We even found a way to demand that the broadcasters pay us for carriage or get dropped and lose most of their ratings.
You guys that think Netflix is the answer better hope for an alternative internet provider–because if enough people drop video for internet-only service, that rate will double or more to make up for the lost video revenue.
Ohhsweetoncord is right about the sunk costs. And even worse than that is that a lot of the channels you like are owned or partially owned by Comcast, Cablevision, Time Warner (yes, I know they split the company, but still) and so on.
There’s no escape other than cutting the internet cord, and I bet most of us aren’t prepared to do that…so we’re screwed.
On the other hand, I did just get off the phone with Comcast and explained to them that they should knock a third off my monthly bill or I’d go to the other provider that finally (!) offers an alternative. You should try that too.
Can you imagine going to the grocery store for some milk … and only being able to buy milk in a bundle with eggs, tampons, batteries, an avacado, shoelaces, and a can opener?
Ha ha. Cable. You people are so quaint.
I’m not buying the argument that the internet providers will double their charges to make up for loss of TV revenue. In the US the internet is becoming more of a utility than a commodity and the people will not accept that.
I say a-la-show is the only way we get out of this. Think about it. We go to see the movies we want to see and pay for those per viewing or rental. Some of us buy our favorite shows on DVD for each season if we want to re watch it. So just pay per view. I like the concept of HuluPlus but even that is limited because the cable providers have way more money to throw at the networks to get shows on demand. Which sucks when one has been ahead of the times for a while now. Plus I don’t get shows that are on FX or AMC that I enjoy watching. If the networks would realize the potential the internet has for bringing shows to the masses, we could move away from cable/sat providers or push them to go to streaming everything. Netflix took out most of the movie rental places just by shipping dvds to your door steps and then adding the streaming as a service made it even more difficult for retail stores to keep it It can happen it just needs someone with enough money to get something to really catch on. Once that happens, well… Only time will tell. Until then I will be satisfied knowing that because I dropped cable/sat I was able to buy a new TV with that money.
I’m totally feed up with satellite and cable.I pay over 70 a month and that’s for the cheapest package DTV has.That’s including HD 4 receivers and taxes.So I use netflix for 8.00 a month and with 62.00 I save I can rent a lot of movies. i use a antenna for my local broadcast .I do love netflix streaming you watch what you want when you want.I don’t under stand why we have to pay a premium for channels when they sell commercials ?