Opinion/editorial on the state of pay TV today

[pjpjpjpj]

Saw this in the local Sunday paper yesterday. Thought it was interesting enough to repost just for some of the stats included, which most of us just sorta guess at.

http://news.cincinnati.com/article/2...wanted-product

Some key quotes:

The Government Accounting Office reports cable TV prices have jumped 33 percent in eight years, even though the Consumer Price Index has risen only 15 percent.

Projections are that rates will climb at 6 percent each year. The average cable viewer is charged for more than 100 channels delivered by the distributor but watches only about 18 of those channels.

The cable industry has a racket making people pay for products that aren’t wanted.

Parents Television Council President Tim Winter calls this method of cable pricing “a forced-extortion scheme.”

Law professor Warren Grimes of the Southwestern School of Law has studied this issue and estimates that cable subscribers are overcharged about $34 billion a year paying for channels they don’t watch.

Meanwhile, the National Cable and Telecommunications Association spent $18 million last year lobbying and marketing to maintain the status quo.

Sports programming is a major driver of surging cable costs. Rights fees are up as sports channels bid to secure rights to broadcast popular leagues and teams. Estimates are that sports programming accounts for half the cost of pay television, even though 60 percent of all viewers have no interest in sports. Those non-sports viewers, however, are still charged more than $5 monthly on their cable bill for ESPN alone. Cable pioneer and media executive John Malone said in a published report that it is “essentially a high tax on a lot of households that don’t have a lot of interest in sports.”

Senator John McCain of Arizona has introduced a bill in Congress that would bring about a la carte cable and stop the practice of bundling. It is too early to predict if this legislation can get through Congress, but the NCTA has already begun its PR campaign to fight it, saying in a statement that “subscription bundles offer a wider array of viewing options, increased programming diversity and better value than per channel options.”

The business model under which cable TV has operated has long been unfair and is now growing old, too. The bubble created by high cable prices can’t continue to grow, and the cable industry would be wise to adjust to the changing market before the bubble bursts. A million American homes cut the cord in the last year, now relying on streaming Internet and over-the-air broadcasts for their video consumption.

[samgreco]

Amen. I cut the cord 2 years ago. If I could get ala carte, I'd probably consider going back. I think the cable companies are dangerously close to over playing their hand. Things are changing rapidly and they could lose big in the next 5 to 10 years.

[stanger89]

I probably really need to look at what I watch and what channels it's on again. A "lot" of stuff I cared about when I last looked (when I signed up for Dish when I moved in to my house) has ended or become available elsewhere (Amazon).

I'd love to see ala carte take over. I wonder if we'd get better programming with that. As it is now there's tons of crap on that can probably only be gotten away with because it's 1) bundled and 2) on when people surf.

[Skirge01]

For the 205+ channels DirecTV claims to provide me on my current package, out of the channels I can't get OTA, I have favorites scheduled on a whopping 8 channels. There are also 4 shows I'd like to watch on HBO or Showtime, but I just couldn't justify the annual, additional cost of $648. That's just completely insane. I can easily buy all 4 show's seasons on Blu-ray for less than that every year.

If you haven't recently analyzed your viewing habits, I highly recommend doing so. It was an eye opener for me last year.

[pjpjpjpj]

Skirge, that's exactly what caused us to cut the cord 5.5 years ago and find SageTV. 95% of what we watched regularly was on network TV. I wasn't even counting on the internet streaming options that eventually became available (at first just "in general", options which didn't exist 5 years ago, but then via the PlayOn plugin in Sage, which made it super easy).

As our viewing habits have gotten to the point where we don't watch anything (except sports) live, it doesn't even matter if we get stuff via PlayOn off a website after a couple of days. We don't watch hardly anything on the night it's aired, so paying for cable would simply be paying for the ability to watch it live.

The only thing I miss is Cincinnati Reds baseball. I could get it through MLB.tv if I wanted to use a VPN to spoof my location elsewhere or whatever, but it's not worth the bother for how many times I actually find myself free to watch. If a la carte cable came available, I might consider just getting "Fox Sports Ohio" for that alone. But then, I don't know if it would be worth getting all the hardware required to get it into Sage anyway. All I have now are two HDHRs, and I'd need to look at a Colossus or HDPVR and all the mess those entail....

[stanger89]

Originally Posted by Skirge01

For the 205+ channels DirecTV claims to provide me on my current package, out of the channels I can't get OTA, I have favorites scheduled on a whopping 8 channels. There are also 4 shows I'd like to watch on HBO or Showtime, but I just couldn't justify the annual, additional cost of $648. That's just completely insane. I can easily buy all 4 show's seasons on Blu-ray for less than that every year.

Yeah, when I had Dish I watched a lot more "cable" content. SyFy still had some decent stuff on, Discovery too, I had BBCA in HD. But since then most of the good stuff on SyFy has been terminated, Disco too, and BBCA, well part of my savings from switching to a bundle on my fiber service I use to buy those shows from Amazon in HD.

If you haven't recently analyzed your viewing habits, I highly recommend doing so. It was an eye opener for me last year.

Yeah, I think it's definitely time.

[MattHelm]

Originally Posted by Wayneb

That is one thing I really miss about C-band satellite, we had a la carte programming and you could buy only the channels you wanted very cheaply.

I agree 100% on that, even though I bought some packages, being able to get a channel for $0.10/month (not a typo) was great!

[davefred99]

On the same note I wish there was some way to address the problem off Bundling Internet with TV and Phone services. if you try to cut one out they just up the price off the others to discourage you from doing it.

A few years ago when I signed up for Verizon Fios they had a great deal @ $89.00 for all there services. after the first year it went up to $119.00 for the same so I dropped my Phone service for my own VOIP but it only saved me a few bucks a month. Now I have contemplated just keeping my Internet only and they want something like $65.00 just for there standard Internet plan. I could go with Time Warner a little cheaper but not near as good for internet as Fios.

Bottom line for most folks cutting the cord sounds good but its not as simple or cheap as it should be. The cable companies know its all about Data and have built there price structure around it.

[tmiranda]

I wonder how much the average consumer would save if they went to a la carte pricing? My guess is that the popular channels would cost quite a bit making the savings less than expected. It wouldnt surprize me to see prices of $4.95 per month for the popular channels and $0.99 per month for the less popular.

[stanger89]

I just thought of this, but I haven't seen it mentioned anywhere. Ala carte TV would probably eliminate clear QAM. The only reason clear QAM works is because everybody the provider serves has the same base set of channels, so they can control access by just disconnecting homes, homes that have the service have the channels.

This is the case for me with my provider, everything HD (save movie channels) is clear QAM since everybody that has service with them has that (not sure what they do if you have internet only though, maybe a filter).

If everybody can have different sets of channels you need to control access on a per user basis, that means you'd have to encrypt everything, and authorize each channel per each user's hardware.

[Skirge01]

Originally Posted by tmiranda

I wonder how much the average consumer would save if they went to a la carte pricing? My guess is that the popular channels would cost quite a bit making the savings less than expected. It wouldnt surprize me to see prices of $4.95 per month for the popular channels and $0.99 per month for the less popular.

4.95 * 8 = 39.60 < 70.99... where do I sign up?

[Tiki]

Originally Posted by stanger89

I just thought of this, but I haven't seen it mentioned anywhere. Ala carte TV would probably eliminate clear QAM. The only reason clear QAM works is because everybody the provider serves has the same base set of channels, so they can control access by just disconnecting homes, homes that have the service have the channels.

This is the case for me with my provider, everything HD (save movie channels) is clear QAM since everybody that has service with them has that (not sure what they do if you have internet only though, maybe a filter).

If everybody can have different sets of channels you need to control access on a per user basis, that means you'd have to encrypt everything, and authorize each channel per each user's hardware.

Actually you've pretty much summed up the reason they are phasing out clear QAM already - not because of a la carte, but because they want to be able to have fine-grained control remotely. By forcing you to have a cable box at every TV, they can authorize and de-authorize content very easily without rolling a truck, and it is much harder for people to "hack" the system and steal cable. As a bonus, they get an added revenue stream by renting the box(es) to you.

[drewg]

Originally Posted by stanger89

This is the case for me with my provider, everything HD (save movie channels) is clear QAM since everybody that has service with them has that (not sure what they do if you have internet only though, maybe a filter).

If everybody can have different sets of channels you need to control access on a per user basis, that means you'd have to encrypt everything, and authorize each channel per each user's hardware.

I think you might be one of the few people in the country where clear qam works for anything but the basic channels -- I'm jealous!. I'd be surprised if any of the bigger players did not already use encryption. I know that Time Warner and Comcast both do (the only ones I've had in the digital era).

Drew

[will]

Originally Posted by tmiranda

I wonder how much the average consumer would save if they went to a la carte pricing? My guess is that the popular channels would cost quite a bit making the savings less than expected. It wouldn't surprise me to see prices of $4.95 per month for the popular channels and $0.99 per month for the less popular.

I think cable companies are less likely to offer true a la carte pricing. I do see, in the near future cable companies offering the full packaging (like today) or predefined "buckets" of channels that are cheaper than the full but would be more expensive than the full package if you added up all the bucket offerings. I think this will be a good way for the cable companies to slow down the cord cutting but still maintain some of their profits.

[pjpjpjpj]

Originally Posted by will

I think cable companies are less likely to offer true a la carte pricing.

They aren't going to, at least not until multiple other companies finally show it can be done in an economically feasible way and that (plus cord-cutters) starts to significantly - and I do mean significantly - destroy the cash cow they've had for nearly 4 decades. Then they'd have to adapt. But until then - and I'm still not sure we'll see that anytime soon - they will fight tooth-and-nail to keep the current system in place. Or, I suppose, I could have said "read the article in the OP".

There have been many threads on this topic here and I've always maintained that a la carte programming isn't going to happen as easily as many here suspect. Not because of anything technology-wise, but because of the enormous amount of money the cable companies are making and the fact they're not going to just give it up without a huge fight. They have billions of dollars and will spend whatever it takes to maintain their stranglehold. Their latest plan is to simply buy networks, so they own the content themselves. My suspicion is we'll see these a la carte deals we've been hearing about (i.e., Intel) come out without many (or any) of the most-desirable networks, and/or with outrageously-high prices, and they'll fail from lack of consumer interest.

As far as the question above about pricing, multiple places I have seen (including the OP link) indicate that ESPN, the most-in-demand channel, costs between $3 and $6 of your cable bill. The price is obviously based on how many subscribers are getting the channel. An article I linked here a while back indicated that, using a conservative estimate of how many people would be expected to buy it a la carte, they figure ESPN would need to charge $20-$25 just to break even with the money they get from contracts with pay providers now. ESPN is all about the money (anyone who follows college sports knows that) and they aren't going to start selling their product cheaply a la carte if it lowers their profits. Add into that the fact that if ESPN thought about selling a la carte, behemoths like Time Warner would start talking renegotiation of their deals to carry them. Now, this could still work for some people; I know a boatload of guys who have cable exclusively for ESPN and nothing else, and would be glad to pay $25/month instead of the $70-$100 they pay now. But the average household with two adults and multiple children will probably want at least 5 to 10 channels. Depending on rates, that may or may not be cheaper than cable now.

Someone once told me (maybe a decade ago) that a la carte cable wouldn't happen because the religious channels have a powerful lobby, and they know that they'd all die from lack of viewership if not for being packaged into cable bundles, so they spend outrageous money to line the pockets of people in DC and keep cable the way it is. I have no idea if there's any validity to this story or if it's a conspiracy theory, but it seems like the latter.