Cable A-La-Carte - A Great Idea, or Is It?

I know it sounds like a great idea to offer all the cable networks individually and to allow consumers to pick and choose the ones they want. 

But is it really? 

I have no doubt that consumers will suffer if cable operators, by law, had to offer their channels a-la-carte.  It sounds good at first but, when consumers face the reality of their new choices, they will discover that they are facing the prospect of having to choose far fewer channels than they have today or pay much, much more for them.

Why? 

Because an important percentage of revenue for programming networks like CNN, ESPN A&E and Discovery comes from advertisers. Advertisers rely on ratings and ratings are enhanced increased by "accidental" viewing or the by-chance landing on a network by channel surfers.  Take those viewers out of the mix, and, poof, viewership decreases and advertising revenue that supports program creation and development evaporates.

Bundling networks into packages has been great for consumers

When it comes to video product, cable and satellite distributors are indisputably successful.  Together they serve over 90% of the nation's television households. 

Think about it.  Where else do you have seemingly endless entertainment and information options for $2 per day?  Without the contribution of revenue from advertisers, the cost for those networks would have to be fully borne by consumers. 

Life in an a-la-carte world

In an a-la-carte world, two bad things would happen.

• New networks would not get funded or launched
• Numerous existing networks would cease to exist

I oppose government-mandated a-la-carte, but not because it would be bad for my business.  To be perfectly honest with you, unlike the networks, I don't believe cable operators would be negatively impacted in an a-la-carte world.  In fact, some distributors think it would make their lives easier when it comes to dealing with the networks.

I oppose it because it would dumb-down television.  It would force the networks to program for the masses.  Is that all you want on television?  In addition to mass-appeal programming, our current system encourages the existence of diverse, niche and narrowly focused networks. 

Now I understand that there are times when we all feel like we have "500 channels and nothing to watch."  But I have no doubt that a lot of really great services such as TV One, Hallmark, Biography, Discovery Green (one example of a future service), and dozens, if not hundreds, of other current and future networks would simply cease to exist or won't be created at all. 

The cost of television today

I also understand that there are increasing costs that are putting serious price pressures on television.  Sports programming, in particular, is spiraling out of control.  But we must resist the temptation of blowing up a mostly successful system to deal with narrow problems within it.  We have found other ways to offset increasing costs by creating new optional tiers of programming.  And let's not forget that cable customers massively are finding opportunities to save money by purchasing our bundled voice, video and data offerings at attractively discounted prices.

Sure, a-la-carte absolutely sounds like a great idea, but sometimes something that sounds too good to be true is just that -- too good to be true. 

Comments

[ARGO]

It sounds like the real issue for cable companies is advertising on non-popular stations.

Why would any cable company want non-popular channels in a line up or bundle?

I can only speak for myself. But, I only watch maybe six channels on basic bundle and I never use "on demand" option.

Cable A-La-Carte is a good way to weed out the low viewed channels and force channels to listen to customers or die off.

The only issue I have is the government mandating because that moves against choice and nobody knows what the future will bring with technology demands.

That's my drooling about Cable A-La-Carte.

Thanks Michael for the blog.

[Steve Pugh]

I like the idea of Cable A-La-Carte. I only watch my local channels in Louisville and the news channels anyway. I think Insight is a great service however, and would not want Cable A-La-Carte if it truly made them lose alot of revenue or lay off workers. I have had Dish Network, and Direct TV and there is NO comparison, Cable is by far and away a better service. Final Thought, while I don't watch many channels I'm sure there are many with different taste that do. And this blog is a great idea as well. Thanks Michael

[Nestor]

I think alacarte will be moot soon anyway. Because of my work schedule, almost all of my viewing is VOD anymore. VOD offerings on my service have more than tripled in the last couple of years, most of them being "free" VOD (National Geographic, BBC, Adult Swim, etc.) With the move to digital, how is that different compared to alacarte?

[Chris Thurman]

I was all for A-la-carte till i read this, I never really though about lesser known networks or yet to be networks suffering.

[Tom French]

Cable A-la-carte may not be the answer but something between that and the bundling is a solution. Most consumers want to know they are in charge of what they buy and get what they want. When bundling gives us a great value we also get a lot of wasted space on the "dial". I do not like to have to go through 150 channels looking for what I want to watch but I do not want to have to pay $100 or more per month to watch the channels I like. I don't think that selecting each channel is appropriate but we could start by indicating the channels we do like and since Insight can communicate with our boxes some other channels that are similar could be added into the bundle and even changed periodically to create interest in new programming without sacrificing the channels we like.

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