September 22, 2013

Why we Don't Have A La Carte Cable TV Programming

Have you ever wished you could just pay for the TV channels you watch?   You probably have.   Most of us watch probably less than 5% of the 100's of cable TV channels available.   Why pay $50 or $70 or whatever for 100+ channels if you really only like watching 7 of them?   Can't we just pay for the 7 channels we do want?   Makes perfect sense right?

The problem with that concept is that everyone would only pay for a handful of channels and so you'd either end up paying $10 per channel or cable TV revenue would plummet.   And what would happen to the more obscure channels that most people never watch?   They'd die because their handful of viewers willing to pay couldn't support an entire channel.

They're trying A La Carte in Canada right now so we'll see how it goes.   But that article about Canada has this explanation:

"Needham Research estimates that a purely a la carte model would wipe out $70 billion in revenue for the U.S. TV industry and that fewer than 20 U.S. channels would survive if consumers had to pay for each one separately."
  
Another report on that study from Needham says that  the total revenue is about $150B and that doing away with bundling would wipe out 50% of it.

Hard to say how accurate that report is really.   I imagine if they did go to an A La Carte system you'd still have bundles available and a lot of people would just stick to the status quo and keep the whole 100+ channels for $70 or whatever.   People are lazy and they like variety.   Maybe that wouldn't be a big factor and the vast majority would  catch on quick and get rid of all the channels they never watch.

But in my opinion its hard to see how we'd all come out ahead financially in the end.   The cable / satellite TV companies would not want to lose revenue so they'd figure out the pricing that would keep their revenue the same.   I assume that we'd then end up paying $5-10 per channel and the net cost would be flat.
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