But what if the fraction of the cost to the consumer can also mean more money in the hands of the content provider? To use the MSG example...apparently the holdup with TW is because they want to charge them the same $4.50 or so per subscriber per month that FIOS and DirectTV charge. So I'm paying about $50 a year to watch the Rangers. If the NHL were to eliminate blackout restrictions, and I could stream Rangers games to my TV in HD quality, what is that worth to me, especially when considering I could drop my actual cable costs by an enormous amount?

For the simplicity of the argument, let's ignore the fact that MSG is owned by Cablevision...

But that's a delicate dance, isn't it? Are you, as the content provider, willing to piss off the cable/satellite providers to end-around their subscription model in order to directly pocket money they would otherwise share in, to make money off of a small fraction of users? I wouldn't think a pro league would consider doing something like that until a large segment of the population was comfortable with getting its live content via streaming services. Maybe if internet/streaming services reach a tipping point, like when music downloads surpased physical CD sales, that would signal a large enough base of people would be willing to go that route that it makes sense to tell the cable/satellite providers to kiss off.

I realize that, and I'm thinking more about whether they are preparing for such a thing down the road versus what is going on today. They have to be right? They see where all other content is going, and as someone has said, sports is really the last piece. ESPN has started it with ESPN3, and as of now you need to be currently subscribed, but I figure they're getting their infrastructure in place

Additionally, aren't we already seeing some of that content provider pissing off the distributors in the form of movies/premium shows with the fighting over Netflix and other streaming devices?

Not sure that's the right metric, as the two audiences have pretty dissimilar composition.

Basically (and incredibly generically) the younger the user, the more likely they are to d'load music. The older the user (up to about age 65-70) the more likely they are to watch sports in any fashion. Maybe that changes in another decade or two, but it anywhere near there yet.

Not sure that says a great amount more about the demographics of d'loading than it does about the demographics of sports audiences.

You can stream the MLB TV through the PS3 or Roku. My picture was HD quality on a 42" tv.

probably easier to use a proxy server that fakes your IP address

In somewhat related news to this discussion:

Disney partners with Comcast to provide ABC, ESPN on-demand - latimes.com

Regrettably, your experience sucked. On my run of the mill connection (B- at SpeedTest) the view streamed to both my TV and my iPad were strong whenever the wife wasn't watching Hulu. My only MLB complaint is blackouts.

And their ridiculous policy for blackouts like where in Iowa you can't see the Cubs, White Sox, Cardinals, Royals, or Twins or how Vegas can't see the Angels, Dodgers, Diamondbacks, Rockies, Giants, and As?

SI

Another question for the cable gurus. Does anyone think companies like ESPN will eventually force an a la carte system? From what I've read, they have been racheting up their prices annually and are starting to get some pushback from the cable companies. I think it's up to $5/month just to have ESPN.

So at what point do cable companies just say fuck it and go a la carte? If all these cable channels want to keep raising their annual prices, you'll get a basic cable plan that becomes too much for the average consumer.

I think it will happen sooner rather than later. The hard part will be the negotiating. Many broadcasters specifically have it in the contract that they are to be a "must carry" station on basic.

Disney signed an agreement with Netflix a few months back, all the Disney shows should be streaming soon, with every episode of a season available soon after the season ends.

Last I heard it was well over $10 but maybe I was mistaken.

SI

While I'd like to see à la carte, the more I think about it the more I think à la carte doesn't end well for the subscriber.

I think part of why the cable companies deal with the Disney/ESPN (although, same company, y'know?) bullshit on subscriber fees is because that family of channels attracts enough subscribers that even if they lose money per subscriber on Disney/ESPN, the other stuff they're able to bundle in makes the package profitable. Loss leaders, in other words. But if it's à la carte all of a sudden, the cable companies can't use ESPN/Disney/etc as loss leaders anymore. They have to be profitable in and of themselves, OR the companies say "yeah, you can add this, but only to a package of $XX or greater."

The niche channels would also be in a situation where, since they're not getting bundled, survival dictates that their fees would have to go up since they don't get to ride coattails any longer.

What ends up happening is the consumer gets to target the channels they want, but they don't actually end up saving any money. They just get rid of the stuff they never watch and keep the stuff they do, with no change to the bottom line. From a cable operator perspective, either you're able to dump the dead weight and just keep the profitable stuff, or the act of "unbundling" has a revenue impact similar to what's happened with the airlines.

My opinion on that is that it's the cable companies who tell us that the whole bundling thing makes the most sense for the consumer...so it's likely not true in reality and these guys (cable companies, big networks, niche channels) would figure out a way to squeak out profitability or die like they should.

It's for sure that prices would go up a lot, and/or a lot of channels would just disappear, if they went a la carte. And that's great when it's not the channels you care about, or if you only care about a small seleciton of channels, but if it's your channel that disappears you won't be happy.

A la carte will only make sense once a large amount of people stop using cable, and by going a la carte they can pull in poeple like me. I haven't paid money to a cable company in 12 years and won't be in any foreseeable future. But if I could pick a couple of channels for cheap and be able to catch some sports or some particular programming, I'di pay them a few bucks. At this point that's meaningless to them, but if their share of the viewing market grows small, it would be worthwhile. I don't really expect that to happen though, not for a long, long time.

It's not that bundling makes the most sense for the consumer. That's not what I'm trying to convey.

What I'm saying is that "unbundling" wouldn't, I don't think, lead to any long-term cost savings for consumers. They'd pay the same amount, they'd watch the same shows, and they wouldn't even notice, by and large, that the size of their cable package had shrunk - because a lot of the benefit that cable companies try to say that bundles offer is noise.

There might be a benefit to not having to flip through that noise to find what you're looking for, but if you're like most viewers who have a particular set of channels you watch, you know the numbers anyway. When I lived with my parents in California, for me those channels on DirecTV were 206, 256, and 526. ESPN, Turner Classic Movies, and one of the Starz channels. If nothing was on that I wanted to watch on those, I might flip through and see what else was on, but there wasn't a lot of flipping through them to find the channels I was a regular consumer of, either.

At any rate, I think the à la carte route WOULD kill off a lot of the niche channels. Those are channels that survive largely because they're rolled in to the basic cable package, which means they get a cut of every subscriber to begin with. Without that guarantee, you either reduce what you spend on original content to balance the reduced revenue, or you raise your rates and hope that people respect the quality of the content enough to continue to pay.

That's not a dilemma that Nickelodeon, Disney, HBO, etc would largely face. The "big" networks would be just fine. Maybe better than fine. The folks who'd have some hard choices to make would be the niche content providers and the cable operators themselves.

And that "way" is going to be about $20-$25 a month (each) for ESPN/Nick/Disney, about $10 each for many other channels, and $5 each for the random stray stuff.

And that's before I start trying to figure out the impact of networks being forced to increase their marketing budgets 2x - 10x the current levels (which is the gap between their current spending and what premium networks spend)

The pain I'd have if ESPN was not in my life...

Look, I know it's not going to be easy...I just think that with how everything in our world relating to social interaction and entertainment is changing, it's naive to think that somehow the cable TV model won't need to change with it.

A la carte is here now. See Amazon Video on Demand. I pay $1.89 / episode to get Mythbusters now that I'm off cable. That's worth it to me, I can cherry pick the shows I want to watch. Not everything I want is there, but enough that I just don't watch the stuff that's not available (I'm looking at you Food Network).

I believe what I'm getting at is that it's naive to think that the changes are going to end up costing the consumer less.

This is basically what I'm saying, yeah.

Like, the à la carte ideal appeals to me.

The à la carte reality is one that more closely mirrors the airlines than my pipe dreams.

100% agreement. The current way gets you a ton of channels for the same price you'd be paying for a handful of channels in a la carte.

Indeed. And that would have resulted in a large amount of quality programming disappearing. You think AMC is going to spend the money it does on Mad Men, Breaking Bad, the Walking Dead when its revenue is slashed? I mean the ratings for Mad Men are ridiculously low.

You think SyFy (when it was Sci-Fi Channel) would have spent all that money on the new Battlestar Galactica without subscriber fees?

Looking at the big picture from my side, at minimum with al la carte pricing the consumer would still be paying.

$10 for a box (plus about another 10-15 for DVR service)
$10-25 for the must carry broadcast channels (required by many franchise agreements with cities, counties, and states)
And then the cost of whatever channels you want. Let's say starting at $5 for individual channels and the ability to package channels (bundling) for cost savings.

Marketing for channels would have to increase a lot because the only way they will get their name out and their new shows out would be advertising. Which like Jon said would increase the costs of those channels. Many shows that actual require real budgets (think real tv shows not crappy unscripted reality or scripted learning shows that don't require much talent, like Storage Wars) would die. The consumer would have more choice as to what they pay for but their selection of what is out there would dwindle.

I would assume if cable companies went this direction they would also have many more On Demand options, where the consumer gets their selected channels On Demand for free with subscription and would be able to purchase single On Demands from other channels. So basically it becomes the eventual IPTV platform that many cable companies are already dipping their toes into. (the only problem with On Demand is that it's a negotiation with both the broadcaster and the production company, it's not always cut and dry).

mccain was leading the charge for a la carte, iirc, 10-15 years ago. he had a great quote, 'it's like going to the supermarket for bread and having to buy one of everything.'

that said i agree it wouldn't be any cheaper.

also, the dolans are running amc into the ground.

That assumes the consumer WANTS what they are getting now. To use some of the examples above, I'm happy to stop subsidizing Mad Men and other shows I don't care about. Folks who want sports are probably happy to pay $30/month for ESPN and its ancillary networks, and would be willing to send it straight to ESPN. They'll pay more than ESPN charges the cable companies, if they're not paying for all the other stuff they don't want to watch, and it reduces their total bill (as they'll have cherry-picked just the ESPN bit and dropped anything that drives it too high).

The problem with the current model is it is starting to get too expensive as it is, let alone where it is heading. If it takes this kind of money to sustain the business, I think the business is going to go away as people won't be able to afford it. As this thread started with, folks ARE starting to reject this, and as the price continues to climb more people reject it each year. We haven't hit a tipping point yet, but what do you think will happen when the TV portion of the bill hits $150 or more?

I have to think that'll be more like $40-$50 if you include the 2ndary networks, networks which actually have more hours of game coverage than the main AND ESPN would be very likely to aggressively bundle them to single subscribers. Remember, their contractual obligations extend far into the future, reduced revenue really isn't an option for them even if they were willing. Very few households watch only ESPN, so add 1 or 2 more and you're not reducing the total bill at all.

For some sort of benchmark, look at the top 25 cable shows from last week (a bad week to look at but its handy), 6 networks were represented there - ESPN, NICK, TNT, TBS, HIST, USA -. Of those six, the #3 most-watched total day & Primetime (Disney Ch) isn't even included, nor are staples like FOOD, A&E, DISC, HGTV, FXNC, FX, TRU, or LIF.

That's where the ala carte model breaks down in terms of saving customers money. It's 10-15 networks for even typical viewers, it's not 2-3. And if you think they'll just walk away, ponder the hue & cry raised every time a network & a carrier hit a snag reaching an agreement.

That's the point here, you aren't going to see a reduction from ala carte unless you're pretty much willing to forego anything that isn't coming OTA from the traditional broadcast networks and maybe 1-2 cable nets. And that's IF the cable nets are willing to sell to you individually in the first place.


Many many households passed that point long ago.

$150 for TV? I know it can hit $200, but that's with phone and internet thrown in. You might hit that now with a DirecTV everything package with a couple of DVRs, but even TWC is only $200/month for Signature Home which is pretty much every TV channel + phone + 50/5 Internet service. My total bill when I dropped was around $160 for TV/phone/Internet.

The TV only portion seems to be in the $60 - $120 range depending on what you get, excluding basic-only folks. But it's getting higher fast.

That's why one way or another prices are going to stabilize soon. Either they'll keep going up, people will abandon as too expensive, total revenues will drop, channels will go out of business, prices will go back down, people will return, or revenues will have to grow far less rapidly than they are today. I agree that I don't think the latter will happen, so I'm betting on the former.

Keep in mind that the main reason sports leagues are still able to sell tickets is they went after the corporate market, the number of families that still buy tickets to go to games is dropping. Look at Cincy having to go to a 2-for-1 deal to get the house packed this last week in a key NFL game. Where is the equivalent of the corporate sales for TV distribution? Maybe the local sports bar?

I don't agree with this point. I've seen many a cable account in my life and the majority are under $150 if you only include the TV portion. And I live in a market and work in a market that has the 2nd highest cost of living.

Let's throw out what a typical subscriber gets.

2 Boxes at $10 each (plus one more $1)one with DVR service $11 for $33
Digital Cable (includes broadcast and basic cable) $59 (includes 1 digital tier)
Additional digital tier $8
Premium Channel - HBO all of them $15

Total of $115 plus taxes (let us say 10%)
Grand total $126.50

Actually SignatureHome doesn't include all channels it's $200 without premiums $230 with and it includes 2 whole house DVRs in either version (with or without premiums).

Take my Dish for example (since I literally paid the bill a few minutes ago). $70 for the Top 250 pkg. Another $28/month for the addt'l rcvrs (we're not that unusual, IIRC the avg HH now has 4 TV's). No premium channels (HBO etc), no HD upcharges, no sports pkgs, no DVR's.

If my $150 estimate is off, so be it, but given that I'm paying $98 without any of the big add-ons, it seemed pretty reasonable to me.


But ala carte - which is what we've been talking about here - isn't going to improve the situation.

Either ala carte will be cheap enough for folks to jump on the stations / channels they want, or folks will make decisions like we did on what things they can do without. Either way I don't think we can continue to sustain the wide variety of channels that all think they are worth a huge chunk of the pie.

Ala carte also does not have to be with traditional cable distribution. I get Mythbusters without having any cable TV at all, and I pay directly for it. There are also Youtube channels. Maybe some of these places can get by with less revenue if they don't need the distribution overhead they deal with now?

I do think current conventional TV distribution is on its way out, to be replaced by some form of Internet ala carte, because the current system is too expensive to maintain.

What about the broadcast networks? For years we've been hearing how their audience has been fragmented by expanded cable, satellite, etc so they're not getting the eyeballs that they used to and in turn aren't making the money they used to. If all those channels go away, shouldn't their commercial slots go back to being worth a ton?

Revenue isn't actually down as much as some of the doom & gloom might have you think (it's not like newspaper), it's more a case of very little growth in revenue for a number of years now (and forecasts for 2012 are between -1% and +4%). One of the gambles that broadcast made, and I'd say successfully on the whole, was to simple play hard ball and refused to drop below a certain rate floor even in the face of declining audience. Given that they're still the major avenue for reaching consumers even with the declines, it was a gamble that many advertisers chose to fold to.

The impact of the hypothetical decrease in cable channels on broadcast is also something that would be debatable I think.

There'd certainly be some gain, but others would erode to alternate delivery - Netflix, Hulu, etc - while remaining cable channels stand to benefit at least equally with the b'cast nets. The current primetime 18-49 share is 2:1 in favor of cable. Of the cable pie, networks outside the top 10 have a similar 2:1 advantage over the big kahunas.

In other words
All Cable Networks 37.3 rating in prime (A18-49) vs Big 4 B'cast Nets 18.7 rtg

Top 10 Cable Nets 11.7 rtg
All other cable nets 11-200 whatever 25.6 rtg

The question then becomes one of where those viewers end up, I think it's reasonable to suspect that the surviving cable networks would get more of them than the b'cast nets. We're talking about a big swath of niche type programming, which one do you think would be more likely to serve up most similar eventual replacement programming? Most of the survivors - cable AND broadcast - would gain, but whether any of them would gain in a very significant way is questionable IMO.

FWIW, here's a link to the numbers I'm talking about here
Big Broadcast Nets Still Losing 18-49 Share to Cable Though FOX Saw Gains in 2011 - Ratings | TVbytheNumbers

Interesting, thanks Jon.

Hope it was of some use, honestly I felt like it was a pretty scattered answer to a good question/topic.

Here's a number that I wanted to include but didn't find until after I had posted. Give or take, it looks like there's about 175 cable networks today.

About a tenth of those routinely pull (effectively) 0.0 ratings; that is, they draw less than 1/10th of 1% of the possible viewers (think networks like Current or RFD-TV). They aren't literally zero of course, but they're getting less than .00049 of possible viewers (otherwise they'd round up to a 0.1 rtg)

So take 175 networks, subtract the top 10 and subtract the bottom 15 or so, that leaves 150 networks dividing up 25.6 ratings points (remember that 1.0 rating point simply means 1% of the possible audience, i.e. bodies), with an average rating of 0.17 each ... yep, that's right, the average of that huge mass gets 17/10000ths of the population each, but the sheer number drives them up to 1/4 of the U.S. population.

Well, there are goods and bads to the model. I don't like ala carte for some of the reasons listed (SyFy can't stand to keep a scripted show for more than a couple of seasons now- imagine if they had to actually pay the bills) but we do have an example now: think of pay stations like HBO, Showtime, etc. They have some of the best scripted tv around. But I think we'd have a have and have nots happen really quickly where you are either a high end scripted network or quickly sink into realty tv hell.

But just imagine Comcast as they seem to be the suckiest of the bunch. You'll pay them a hefty chunk just for the "privelege" of bringing you tv to the tune of "$50 subscriber fee (and you get the broadcast stations free!) + $10 for each box + $20 for each DVR" like now. But then they'll pass along the station pricing straight to you with a considerable markup. You think HBO + group costs Comcast $20? Hell no- but that's what they charge you so they can have their cut.

SI

in netflix news (sorry if this is a repost, haven't read the entire thread lately), the window to wait to rent new releases is well on its way to 2 months. redbox is fighting it, netflix is not:

Redbox, Warner Bros. headed to war over new DVD delay - latimes.com

Has there been any insight on how the 28 day push has helped the studios? DVDs are typically at their lowest price the week they go on sale, and then return close to or at MSRP for the next month or whatever until a random sale kicks in. I'd think people either choose to buy that week or not at all.

I'd love to see those statistics, if they are out there. I know for me, it hasn't changed my buying habits one bit. I figure if the movie is not good enough for me to get it, then it's not good enough to get it because I don't feel like waiting a couple months. Really there have been very few movies that I've purchased lately, I'd rather throw on a good old movie than watch most of what's coming out.

At what point does paying for what you download become standard, like a meter from the electric company?

I remain surprised at how many businesses are moving toward this assemble-content-subscribe model, and how they will react when (not if) the cable companies dispense with flat rates altogether.

We also can't ignore the small percentage who can't get broadband, and the significant percentage (of all ages) who won't, even when available.

IMO, the broadcast networks have done a poor job informing people that there is still a way to watch television using an antenna.

i think phone plans are a better model than electric meters. pick a plan, and if you go over, you pay more. cell phone companies seem to be doing just fine under this plan.

They've done a poor job of it because they make heck of a lot more money having them go through their local cable/telco or dish company to get it. Broadcast networks are simply the favored children of the cable networks any more.

It becomes standard when (and I think "if" can still be used) the cable/telco/dish distributors can no longer make profit by distributing it over their own network. So for the content owner, there is still disincentive to bite the hand the feeds them by going over the top of their distribution partners. But if that revenue path starts drying up...you'll see more & more metering as the cost is subsidized today from other revenue streams.

At the end of the day...it is a fairly fixed cost to operate a land based communications system. If you cannot continue to profit in 1 way...you simply have to move the costs & to the other method of generating revenue. There is no universal solvent to this that eliminates those costs altogether.

This is precisely on the money if you use the presumption that consumers like having choices in content. If you assume the consumer only wants A, B, and possibly C...then in the short-term a la carte makes lots of sense until you realize what happens in the mid- to long-term is stagnation of content & options to where thats really all the options that can self-sustain themselves.

Cable operators don't dictate everything contrary to popular thinking. Yes, there is negotiation when it comes to carrying "just" MTV (for example) vs carrying the other 12+ networks bundled there but the reality is that the network wants the lowest tier possible (meaning...most eyeballs) and they will scale/bundle the cost accordingly. Getting closer to a la carte is what they attempt to do by offering "Tiers" such as sports, movies, etc. so that people who don't want those types of content dont have to pay the premium for it. This is probably obvious but what may not be as obvious is the reasons for putting certain channels into those tiers vs others and how those costs are structured (there are actually some fairly complex models for some networks that essentially don't have a "cost" until you determine how much you want to charge, and what networks you want to stack with it, and what those associated networks charge which could be similarly modeled as the 1st...essentially a circuitous effort). Thats why the argument that MSG puts forth is disingenuous or misinformed (take you pick)...contracts are ALWAYS different from provider to provider based on when the last negotiation occurred. Just because MSG gets that rate from some providers doesn't mean those same providers are paying the same rate for everything else they carry. It isn't rocket science by any means...but it certainly isn't cut & dry "fair is fair" either as all providers have contract renewals to plan for & anticipate rising costs. They're simply at different stages with different providers at any given time.

There are some loopholes around the bundling though on the commercial side (generally). For instance, Dish (or maybe its DirecTV) has a standalone ESPN a la carte cost for commercial customers (such as hotels) that they offer. So if you dont want to pay ~$4-6/month, per room for that 1 channel (but also get the other 2-3) you can opt out. That actually is a smart idea (imo) because it really highlights what people really are paying for & the disparity between networks. And the higher the big names like ESPN keep driving up their cost, the less room there is to subsidize an MSG-type network. Of course...MSG doesnt give a crap about that & rightfully so from their perspective...but they also are not the "must-have" network (in most consumers' minds) that ESPN is (or at least thats still popular opinion in the industry).

As for Netflix type companies of the world. They are attractive to content owners that want their 2nd tier content distributed (or library-type) but at the end of the day the content owners are always going to sell their content to the distributor that pays them the most for it. So just like Starz did...when Netflix is adding eyeballs to their content, they will sell it cheaper. But when Netflix is taking eyeballs from the more profitable delivery chain to the less profitable delivery chain...they aren't going to continue to spite themselves when those contracts run out.

Somebody like a Google-type could be a viable threat but they will have a lot of challenges...the least of which will be whether anybody trusts them to stick around when the business gets "boring".