In the past decade, we’ve seen plenty of changes but one of the biggest ones has been that middle men have seen their power stripped away because of the Internet. Record companies are no longer as powerful as they used to be. Authors are self-publishing their books. Filmmakers are releasing their movies online.
The next giant to fall, I believe, will be the cable and satellite providers.
Out of the 300 plus channels that you have on your television, how many of them do you watch regularly? For me, the answer is seven (Fox Soccer Channel, GolTV, ESPN2, BBC America, Comedy Central, TBS and HBO). Instead of paying more than $50 per month to my cable company who provides me a wire to bring channels into my home, what if I could make a deal directly with HBO, Fox Soccer Channel or any of the other networks to watch their content for a monthly fee over the Internet to my TV set or computer?
And how much would you pay for each channel per month? Five dollars sounds fair to me. Plus by dealing directly with Fox Soccer Channel, HBO and other channels, I’m not stuck in a one-year or two-year contract with my satellite provider. Plus I don’t have to pay a monthly fee to rent a DVR or a remote control from my cable company. And with the a la carte option, I get the self satisfaction in paying for what I want instead of paying for boring channels that don’t interest me at all.
This future isn’t going to happen overnight, but it’s definitely heading that way. It’s one of the reasons why I believe Comcast bought NBC so that instead of just being the cable company, they now have quality assets that people actually want — programming. Even ABC and CBS are reportedly contemplating a deal with Apple to provide their programming via a subscription model over the Internet.
For networks such as Fox Soccer Channel and GolTV, cutting out the middle man allows them to not being held hostage by Time Warner Cable and DISH Network respectively.
Plus with Setanta Sports, who have been trying to expand their reach for years and still haven’t been able to get on as many cable providers as they would like, this would help bring Setanta Sports directly to consumers instead of dealing with the archaic multiple system operator (MSO) set-up that cable companies have where they’re structured on a regional basis instead of being nationwide. Imagine how much further along Setanta would be as a business if they didn’t have to expend so much energy just trying to get on a cable platform for people to watch their channel.
Would you be in favor of a system where you could pick and choose only those networks you’d like to subscribe to and then deal directly with those providers to subscribe to their programming? Or not? Click the comments link below to share your feedback. I’m very interested in what you have to say on the matter.
Funny, but those are the channels I mostly watch too…with Setanta thrown in there too of course. While I normally don’t watch the other 95% of channels I have access to, sometimes I DO when I find something good on them. And that choice is a powerful motivator not to change to an a la carte “direct from the source” model. It seems cost-ineffective to pay for a channel I might watch a single movie or show on per month, but when you don’t have access to it is when you finally see something you would watch on that channel in the guide!
I’d agree with CA_backpacker. Only subscribing to the channels you already watch is a sure way to get stuck in a rut and fail to discover new things. Although, access to programming through things like hulu.com might negate that in some way.
Couple of other twists, though there are certainly self-publishing authors and filmmakers releasing movies online only, most of them would rather be in bookstores/cinemas because that’s still where the widest exposure exists. In the same way, Fox Soccer Channel currently has more “subscribers” by being bundled in with the sports package on Comcast, rather than as a standalone subscription channel.
The cable companies aren’t going to an a-la-carte model anytime soon. Each individual channel has no interest in creating a network large enough to deliver the shows to you. The costs of streaming software, costs of processing transactions, customer service, etc. are a barrier to that model. Additionally, internet streaming is not yet a great alternative (in quality terms) yet and cable companies know it.
I think in theory this all sounds fine. But at the end of the day you are left with a disaggregated market for the consumer (much like the EPL is now on 3 channels). Maybe for someone who watches 7 channels as you say its fine. But what about a family of 4. Lets say a father watches the 7 channels you mentioned, a women watches 7 different channels, and then 2 kids watch another subset of 10-12 channels. You end up needing to make deals with 20-30 channels, who knows how much it costs or how much of a hassle it is.
Also are these all available over the internet, or does your service provider decide what you can get access to online? Say Comcast owns NBC and Apple provides ABC, if you have Comcast internet guess who isn’t getting ABC. If that is the case we are back where we started.
Sorry this post is so negative, I typically hate all the negative stuff on here.
Kevin, you raise good points that all need to be considered, but I still see the programmers as the one that will gain more power while the middle men will continue to lose out little by little.
Internet streaming is not perfect yet but it’s getting closer. I’m essentially intrigued by Roku and the deals they’ve done with Amazon Video Services and Major League Baseball where they’re streaming high quality movies and baseball games.
No one knows where the future is heading, but there’ll be plenty of changes along the way.
Cheers,
The Gaffer
You’re right. A La Carte always sounds fine until you breakdown the numbers, the cost of providing the service, etc. Besides, what would do when our “favorite” channels don’t have anything special on? Gotta channel surf, right? The other night my kids and I discovered a channel devoted to all things Mormon, the BYU channel. Well, the programming was terrible and kinda spooky, which made it all the more entertaining!
Yeah, in spite of the totality of waste that constitutes most cable/satellite packages, I’d likely stay with the potpourri that my current provider, DIRECTV offers me.
Gaffer,
give this link a look. Not sure if it’s applicable to this article or not, but sounds interesting.
http://online.wsj.com/article/BT-CO-20091222-707769.html
Interesting points Kevin. I think you’ve made a really good argument why we won’t see “mainstream” programming in an a la carte fashion anytime in the near future, if ever. I agree that for most programming, the aggregated market of a network delivery system is likely the only economic way to make program development and broadcasting viable.
But it might work for specialist programming or a specialist market, like sports. Unlike mainstream programming, there aren’t the same program development cost – sets, actors, directors, production, etc. You don’t need the income and subscribers from a heavyweight show like 24 or The Simpsons to develop new ideas that might or might not blossom into star shows, and you don’t need to advertise to a wider audience in the same way. For sporting events, while you might need to advertise particular games, you’ve got very little production costs comparatively and a ready-made captive market of sports fans. It is exactly why specialist single-sport or even single team channels are viable, like the NFL Network or even dediciated channels for the Yankees or Rangers in New York. It’s exactly why MLB.com has been so succesful.
I live in Canada, and I have to pay $15 a month for Setanta Sports, which is basically a specialist EPL/Champions League network for me. With it, I can watch 5 or 6 EPL games in a weekend, including all the “Big 4″ matches. Without it, I get one of the Saturday 3pm (England time) kickoffs on Rogers Sportsnet (a regular cable channel sports network like ESPN), usually between mid or lower table teams, and one game on the Score, the Sunday 12 noon fixture, which is also like ESPN.
I don’t get Setanta as a package, I have to order it individually, as I would for GolTV, or Fox Sports Network Canada. I’m not the only one who orders it either. My whole footie team are subscribers. So the model of a la carte clearly can and does work with specialist sports programming. There is a market to be had there.
If the EPL were to go to a direct streaming model like MLB, I would happily subscribe. Odds are good that it would be cheaper than my $15 a month for Setanta (and then some additional composite costs for my cable where I get the Sunday game and an alternative Saturday game), and I would get every game. The money would go directly to the league, so they would cut out the middlemen, possibly more than one, involved in the broadcast on networks.
I do think there is a market available for that sort of thing, even if it will not generalize to all markets and all circumstances.
Cheers,
Jon
“Five dollars sounds fair to me.”
You are dreaming. Pricing for your one-on-one, direct model will look more like $2.95/month for the channels that no one watches anyway and $14.95/month for the ones you want. End result, you’ll spend the same amount of money for 8 or 10 premium channels . . . admittedly, these are probably the only ones that you are watching anyway!
Well Foxsoccer.tv is an example of not having to deal with the cable companies. I have certainly thought about subscribing to them. I have already dropped cable TV entirely anyway and use internet streaming to watch FSC. Plus Footytube is a great site for highights particulary with the EPL and Champions League games.
Jon, I agree with you. I didn’t mean to say that its not viablefor any network in any circumstance. Niches and Specialty markets always exist. Hell I pay over $100 a month for cable and internet and for some reason I also pay the $150 a year to watch 1 game a week on setanta-i.
I absolutely think pay models can and do work. Even FSC on Comcast which isn’t a strict a la carte is similiar in that for the $10/month you get set of sports channels.
My point was in response to the initial post that seemed to suggest huge changes. My thinking is that as a whole I don’t think we end up with the market making massive sweeping changes.
Also, I have seen the MLBtv player. While the video is good, the picture just isn’t quite there. Im not a techy so I don’t know enough about how close we are but it would be interesting to get someones perspective on it.
Never happen. There are too many bundled channels that could never survive on their own. Even the premium channels…they are mostly affordable (extra 10-15 per month) because the larger bucket that you purchase allows them to be delivered to you with incremental cost.
If you forced smaller niche channels like some of those you mentioned as well as things like Golf, Tennis, Food, Travel, etc. to stand on their own they would not be able to generate enough revenue to live on.
Power in numbers!!!
I currently subscribe to setanta-i, which has poor quality but it is something I am more than happy to live with if the alternative is to pay for content I have no interest in via cable.
Yeah, lets just hope internet bandwith caps aren’t the future then. Broadband availability and speed (and no caps!!) in America would have to be improved before this could even be an option.
Like others have said, the popular channels subsidize the less popular ones. Without Fox, FX, Fox News, etc., we wouldn’t be watching Fox Soccer Channel. There was a big push last year for a la carte pricing but the FCC declined to take action because a few studies found that it would be hurtful to the overall amount of programming available. Also, online viewing will not catch on for a LONG time. If you are a subscriber to Setanta-i, you know all about the wonders of Setanta owning TV rights but not online rights. It sure is nice to not be able to watch Russian Premier League, Champion’s League, or other programming because they don’t own the online rights. The industry, as a whole, has a long way to go. I just wish there was a consumer friendly cable/satellite provider out there. I hate Time Warner, many websites complain about Comcast. Verizon isn’t available in many places, DirecTV is okay but you have to sign a contract, etc. It is really a shame that the people in charge of selling these rights and acquiring rights for their respective networks don’t take a more mature approach. Instead, I’m forced to watch illegal streams of NFL Network (not available in my area), Champion’s League (Setanta not available in my area, Setanta-i has no online rights)… the list goes on and on.
This would be great but it’s a long way off on a number of fronts. Bandwith, no real incentive for established networks, not sure if the economics would work etc.
It’s also not as wonderful as it sounds. I have been a setanta-i subscriber for several years as I don’t want to go satellite. While I am thankful to have access to the content they have at a reasonable price, they are frustrating to say the least. Constant technical issues and poor customer service (that’s being kind) are routine.
I don’t see a la carte being viable outside of very niche markets for quite awhile.
Unfortunately, what seems fair to you has little to do with the price you pay. For instance, most studies of a la carte cable put the cost for ESPN at $15 per month or more. Since everyone subsidizes ESPN for you, whether they watch it or not, the cost of the channel is significantly lower for you. With an a la carte model, that goes away.
Further, most programmers have a dual revenue model – subscriber fees plus advertising fees. Since advertising online generates substantially less revenue than advertising over the web, the amount they would have to make up in an online model could drive that per channel price even higher.
So you may well end up with only the few channels you watch, but find you’re paying as much or more for them because you’re no longer sharing the cost with others.
Never going to happen.
The cable companys have no reason to,the average cable subscribing American couldn’t care less about this.paying their cable bill is just like paying the electric bill or filling up with gas…..just another monthly expenditure.odds are if you care enough to do anything about,you already have….I pay for streaming service from foxsoccer & setanta(which if I really wanted to I could drop & just rely on streams) and the rest I get from hulu,justin.tv,torrents,etc…the average person would just rather pay the $100 per month.
Nowadays you can get more content off torrent sites and it is a much more convenient solution as you aren’t limited to what is on at the time or you don’t have to stick to a schedule and you have a wide range of content.
The only problem is the internet doesn’t have very many great streaming services so watching live sport is out of the equation.
The internet is far superior to networks already but until streaming catches up there will be some channels you just are better off seeing on your network provider.
I have this same conversation with people ALL the time. Glad to hear other voices speaking up about it.
I guess I’ll just go back to “Iraqi-Definition” on iraqgoals.net hahaha.