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Cable Technology Feature Article

January 25, 2013

Video Distributors Take First Steps to Constrain Programming Costs

By Gary Kim, Contributing Editor

Sports programming costs, which have been leading high subscription price hikes for video entertainment services, remain a problem in the business, but small changes are coming.

Some providers, including Verizon (News - Alert) and DirecTV, are offering consumers packages that do not include some regional sports programming as part of the most popular packages.

In truth, many would say the moves are only warning shots, since the big problem is the cost of ESPN (News - Alert). But so far, nobody seems to want to risk the consumer backlash that moving ESPN to a sports tier would probably entail.

Still, new retail packaging that starts to split out sports might be more extensively offered, at some point, with potentially huge ramifications for programming costs.

The new Verizon “FiOS (News - Alert) TV Select HD” package provides access to “the most popular genres” with the “exception of sports of any type,” Verizon says. 

Image via Shutterstock

When purchased in a stand-alone fashion, FiOS TV Select HD, with 100 plus channels including 30 cable networks, will cost $49.99 per month. In contrast, the FiOS TV La Conexion plan with more than 185 channels including 69 of the hottest Spanish language channels is $54.99 monthly standalone, and the FiOS TV Prime HD package with more than 210 channels is $64.99 per month standalone.

New DirecTV subscribers who live in areas where there are more than one regional sports network, and want all those channels, are being asked to pay a monthly surcharge of $3.

Granted, those are incremental changes, but they suggest that a gradual move to greater end user choice is coming. Supporters of full a la carte options might have to wait quite a long time for significant change.

But if the concept of identifying genres should develop further, it is at least conceivable that “sports” tiers could emerge. That would have ramifications beyond the simple matter of greater end user choice.

Programmers prefer to be carried on the “most popular” tier of service, generally referred to as “expanded basic,” in a generic sense, because that offers the channels with the widest potential audience, and hence higher potential ad rates.

But putting specialized channels on a discretionary tier of some sort disrupts that business model.

Want to learn more about the latest in communications and technology? Then be sure to attend ITEXPO Miami 2013, Jan 29- Feb. 1 in Miami, Florida.  Stay in touch with everything happening at ITEXPO (News - Alert). Follow us on Twitter.

Edited by Brooke Neuman

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