Cable Technology Feature Article
A la Carte TV: Reality (Still) Bites
By Bob Wallace, VP of Content
A la carte TV grabs attention when mentioned once or twice annually, though there’s next to no hope for the approach of creating flexible subscription programming packages by choosing individual channels, for important obvious and less obvious reasons still not fully understood by the consumer masses.
The nirvana of the long-discussed a la carte concept is a package of only the channels you want, resulting in a markedly lower price than those offered by pay-TV providers, who have been pulling out all the stops to stem the rising tide of cord cutting and rising sports programming costs.
But while everyone agrees they pay for more channels than they watch or want, content owners have long said that if they sold operators one channel instead of the entire set, the result would be a higher price for that one designed to cover those not chosen. So much for the lower price outcome.
Some outside the video industry are surprised that pay-TV providers are in favor of moving toward an a la carte model. Why? These companies pay content owners for many groups of channels that make up their programing tiers. And as everyone knows, you pay for many channels you never watch, and others you may not even know you have.
Subscribers never like their monthly invoice and more than many are leaving to lower cost alternatives. Providers like that even less, and created the entire TV Everywhere (TVE) customer retention strategy to address this very serious business issue.
Anything that reduces content costs for pay-TV service providers would likely do much more than TVE for retaining customers. It could also help telcos, cablecos and satellite operators acquire new customers in a market full of competitive alternative programming options.
No surprise there.
The packaging of channels by service providers and content owners can be attributed to hamstringing innovation when you consider the case of the much pre-hyped Intel TV “service” that media outlets claimed would be launched at the annual Consumer Electronics Show this past January in Las Vegas.
Intel has the chip and device wherewithal for a TV service, but if it truly is an a la carte-based approach, as has been widely reported, the tech giant will face the same reality operators have always faced. Perhaps that’s why “the service” wasn’t on the launch pad in Vegas?
I wouldn’t expect an a la carte pay-TV subscription service anytime soon regardless of provider.
And don’t forget advertising. If a cableco, telco or satellite provider only took one or two of a package of ad-supported channels, what would happen to those not chosen?
Back to the Past
If only the channels with the largest audiences were offered to subscribers, cord-cutting would shift into warp speed because shows with a smaller but more loyal and engaged users would be benched. It’d be like going back through the hot tub time machine to the early 80s when you had a handful of major TV channels (with CNN and TBS), MTV, ESPN (News - Alert) and movie channels that showed okay movies but lacked the original series craved today. Be careful what you wish for.
It might be best to think of a la carte as a restaurant, not TV service menu.
There’s always hope that an epic change can occur – especially with subscribers cutting cords and TV rights fees continuing to climb (and the concern raised here about young demographics never signing up for a pay-TV subscription - ever.)
Another upbeat thought: pay-TV providers have been successful in adding targeted programs to specific language or interest demographics. Perhaps if these were expanded or combined, some consumers could get by with less than all they want while saving some money.
Maybe separating sports programming and/or other genres would ease the problem for those uninterested in the extra channels. It’s an idea worth exploring. But the basic economic challenge of making the same or more money from a smaller audience doesn’t bode well for anyone.
When I interviewed execs for a 2006 feature on a la carte TV, all players in the TV ecosystem, including researchers and analysts, agreed it was a bad idea. So much has changed with “TV” since, except for the concept of a la carte.
I know, in the same time period, we’ve gone from mainframes and dumb terminals to tablets and smartphones. Why can’t we get an a la carte-based pay-TV service?
Our best hope is to keep pressing and asking, without holding our collective breath.
Edited by Braden Becker