A La Carte TV Will Never Be

Handpicking cable channels won’t make sense
Gary Neill

Cherrypicking cable channels won’t make sense in an on-demand future

The prospect of consumers getting the ability to choose which cable channels they want has proven to be a remarkably resilient fantasy.

Maybe that’s because TV executives can’t seem to resist giving the proposition just enough attention to make it seem possible. Verizon CEO Lowell McAdam described the a la carte business model at the National Assn. of Broadcasters confab earlier this month as “a novel way that could help protect subscriptions in the long run.” An unprecedented antitrust suit filed by Cablevision against Viacom has also renewed speculation.

But now is as good a time as any to point out the absurdity inherent in a debate that has raged from Congress to coffee shops going back a decade. A-la-carte channel choice no longer makes a lick of sense in the age of on-demand viewing. A post-bundle world would require a much different environment than the one a la carte fans envision, one that probably draws more on title-oriented platforms like Netflix or iTunes than on TV’s linear lineage.

A la carte might seem too damned reasonable to criticize. After all, if the average U.S. home watches only about 16 channels per month out of the 135 channels a typical pay TV subscription provides, why can’t it just be given a menu from which to pick and choose channels?

But programmers and distributors have more than $30 billion worth of reasons to not break up the bundle of channels they’ve sold together since the pay TV biz began.

Still, let’s put aside for a moment the contention that content companies have long made, which is that individual channels would cost so much more in an a la carte scenario that unbundling won’t be worth it. Instead, think about your favorite channel: How many individual programs on it do you regularly watch?

There’s no available data on this, but consider there are maybe one or two channels out there at most that inspire the kind of devotion where you’re watching more than half of the content available on a particular channel. But beyond that, who really watches more than 10% of what’s available on any single channel?

In our long-suppressed zeal to free ourselves of the multichannel bundle, it’s easy to overlook that a network in and of itself is just another kind of bundle.

A la carte is a conceptual slippery slope: If a consumer is given the ability to cherrypick, say, Bravo, but forgo Disney Channel and Nickelodeon why would the same consumers be OK with paying for Bravo shows “Rachel Zoe Project” and “Watch What Happens Live” when all they want is “Top Chef?” If I just want one hour of a channel, why would I pay for 23 others I don’t want?

And if you enjoy “Top Chef,” it’s possible you’re likelier to watch Food Network’s “Chopped” or HGTV’s “Ace of Cakes” than non-foodie Bravo programming. A cross-channel purchase based on genre is more compelling than any one channel.

A la carte confuses the true brand currency of the TV kingdom: it’s the shows, not the channels. The programming-to-pricing ratio will be out of whack as long as the channel model holds sway.

To create a marketplace truly better off without the bundle, content companies would have to share their product in one massive trove for onestop shopping of tens of thousands of programs, where they can be re-aggregated by consumers free of traditional borders including channels, production companies and the conglomerates themselves. Then let great user experience and data-mining take care of the rest.

That may not mean the channels of yesteryear go away entirely. But the notion that unbundling will leave channels more important than ever, is folly. A la carte is a delusion we’ve held onto for so long that no one bothered to notice how obsolete it already is.

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  1. Michael Rahimi says:

    Your comments that true a la carte is really individual shows not channels, is not entirely true. There are plenty of channels that I would purchase for their entirety, not just individual shows, and that is not because I watch every show, or even 50% of them. Let’s get the easy ones out of the way, the YES network (for the Yankee games), MSG (again, for the Ranger games), CNN (if Jeff Zucker does not continue to ruin it), my 24 year old would purchase Comedy Central and The Cartoon Network, not for any 4 or 5 individual shows, but for the whole network. The Cooking Channel, HGTV, AMC, TCM, and a whole host of One Word definition channels, sports, old movies, movies etc…

    Now let’s get to the more difficult, the true networks, with a variety of shows, both new and rerun. USA Network, is one I would subscribe to, because they seem to continue to produce new shows, and buy rerun shows that I find entertaining. The broadcast stations would be bought because they too come up with entertaining shows, who can predict whether the shows CBS comes up with two seasons from now will be to my liking, but chances are that some of the non-reality TV shows will.

    So while it is true that we watch individual shows or teams or genres, channel a la carte is not dead for the reasons you say. Channel a la carte is dead because the economics of it can’t work for any network who charges more than $.50/sub/month today. The content providers will not allow a la carte to happen.

    Mike

  2. rocklesson86 says:

    You know if I could pick and choose what channels I watch, then I would be happy. We have digital cable, but my family only watches 50 out of the 200 channels.

  3. wt_hayes says:

    This is an interesting debate and I can see merits on both sides of the issue. I was especially interested in the comment that the bundle provides the opportunity for viewers to sample programs they might not otherwise try in the ala carte model. Human nature being what it is, I think this is a powerful argument for the bundle. I would be concerned that my nature to only want to watch the content that I know I like would prevent me from discovering new content that I might not find. For a more in depth look at the nature and risk associated with narrowing our field of view I suggest reading Bill Bishops 2008 book, “The Big Sort.”

  4. I couldn’t agree with you more. Hulu is a great example of this, and it offers a win-win for viewers and advertisers. Advertisers like that I can’t skip the commercials, and I like that I can watch the shows I want, when I want. Soon, the ads will become more and more relevant as advertisers begin to realize they can narrowly target their message to their ideal consume since Hulu collects and shares my demographics with them. As a responsible consumer, I understand there’s no such thing as a free lunch so I don’t mind seeing commercials, but I’d much rather see commercials are relevant to me.

  5. Ryan says:

    The problem with your argument (as has already been mentioned) is that the pay-per-show model already exists via the likes of iTunes. I’m not going to consider Netflix currently since the majority of their on demand programming is old hat and we’re talking about current TV. So, iTunes charges $2-3 on average for an hour long show. Assuming I only watch 1 hour of TV per day (which is very conservative), I’m still paying $60-90 per month for programming, which is already approaching a monthly cable/satellite bill. Now, assume I watch 4 hours of TV per day (which is the actual average for Americans) and I’m paying $240-360 per month not including the cost of the internet subscription. In what world does that make any sense?

    If this is the type of writing typical of Variety, I’m glad to know I haven’t been missing anything.

  6. Ray Carpenter says:

    I think that the editor at variety should now see that 100% of the input disagrees with his position. It seems that those that are allied with the Cable group are the only ones in favor of the Status Quo. I did notice an article a few days ago where a fairly large cable group wanted to buy essentially on a “a la carte” method but did not indicate selling with those same parameters. It is unfortunate that something is not done about bundling from the major programmers. Channels are forced on cable systems in a way that is close to Blackmail. Take it or suffer in extreme payments for the ones you want.

  7. Lukeboy335 says:

    You sound like a shill for the cable/sat lobby. I gladly pay for Showtime and HBO each as bundled providers because their content generally pleases me. That doesn’t mean that I’m willing to pay for the 200 other channels I never watch on Direct TV. If the only alternative to paying these bloated bills for content I never watch is cutting the cord, then so be it. The cable industry like many others will adapt or perish. I will get the content I want one way or another.

  8. jr23 says:

    why do we have to pay for all the Spanish channels i cannot watch,
    and sports i do not watch at least com out with some better packages
    although comcast hides as much information as they can to even what your supposed to get
    and you cannot get a straight answer from c/s

  9. DJR12 says:

    “In our long-suppressed zeal to free ourselves of the multichannel bundle, it’s easy to overlook that a network in and of itself is just another kind of bundle.”

    Well and succinctly expressed. However, I think we overlook two rather large factors. The first is that the networks themselves, though perhaps obsolete, have no incentive to cooperate in this new world. They put the money down up front for pilots, and they invest heavily in promoting new series and finding them an audience. So when you talk about doing away with the network bundle, you’re talking about cutting out the major source of funding and promotion in creating series. Perhaps Netflix and Amazon step in and become network replacements, but that world is in its infancy and nowhere near ready to replace all of that network infrastructure.

    The second factor is the cable companies themselves. They obviously have no desire to be reduced to a “dumb pipe.” If they are forced to become such, expect cable internet fees to skyrocket to compensate for any lost revenue the cable cos experience. And in most areas, cable is still the only viable option for high-speed internet delivery. As for satellite companies, they would be even more behind the 8-ball because they offer no significant service beyond delivering TV channels.

    One last point — at this moment in time, cable cutting makes financial sense only for those who watch a limited number of shows. I’ve priced it out many times, and given the 30 or so Season Passes that populate my TiVo, the 50 bucks a month feels like a bargain compared to buying individual seasons via iTunes or DVD.

    • Chris K says:

      One of the issues that is often overlooked is the fixed cost of the cable plant, back office systems and people. At a minimum you should assume that there is probably $15-$20 in fixed costs to provide any service at all. So a true a-la-carte model would say, pay me $30 for a pipe and $0.25-$10 per channel. When people think ideally of a-la-carte at the channel or show level and see the Cable companies as just a $30 dumb pipe they forget that if the only source of revenue for the Cable companies are the dumb pipe they will not be able to provide it for $30, there is cross-subsidization at the service provider and content provider level.

      For most customers it feels better to pay $50 for 200 channels than $40 for 50 channels even if you don’t watch any of the other 150 channels.

  10. Laurence Glavin says:

    Only by having entire channels available can a viewer discover a new show he or she might not have selected before. BUT, viewers SHOULD be able to exclude a category of channels he or she wouldn’t be interested in having on the menu of options, sports for example. Or an all-childrens shows channel if one doesn’t have children. I understand there are people who actually watch those home-shopping channels, but it should be possible to exclude them also. When I added a tier of channels to watch Current just before Keith Olbermann started, I was forced into also receiving at least 20 channels, one of which was useful: C-Span 3. I keep Current for Stephanie Miller and John Fugelsang, but the minute Current goes away, I may drop that entire block…at least I believe I still have that opportunity.

  11. Ray Carpenter says:

    The “a la carte” model is the only way cable will be viable in a few years. The days of forcing many channels on all subscribers is going and needs to go away. No one will be able pay for the bloated bills of some of the programs. ESPN is a prime example of bloat. Many subscribers would forgo having the channel but they have done a great job convincing cable companies that it has to be there even at the terribly inflated price. I would love to see a world that people could vote with their money to get rid of the junk channels. At the present continuing spiral no one will subscribe in a few years. I managed a cable company and saw the problems of subscribers becoming priced out of the market. Vertical integration is also a real killer of a free market. Free OTA is becoming mired in a maize of problems due to vertical integration.

  12. James Condo says:

    You should be working for cable systems…we are a decade away from internet delivery of programming. In the meantime why should I have to pay for all the ESPN channels when I never watch. I may only watch the big four for a couple of shows but I do not want to lose them.

  13. TurnerBrewer says:

    This article is spot on. It is the Tv shows that everyone wants, not the channel. As a cord cutter myself for over 3 years – I choose to buy my shows al la carte using Apple TV and iTunes. I still pay considerably less than I would if I subscribed to cable.

  14. Eric Buchman says:

    I don’t disagree with people who say “a la carte” is the future of all media, but I do worry about the unintended consequences of such a future. I tried to write up my thoughts on the matter here: http://buchnotes.com/2011/01/19/is-a-la-carte-cable-really-the-answer/

  15. Way to try to prove a point by completely changing the argument. There is no logic in the argument at all. You take we only want to pay for the channels we want argument and discount it by turning it into a we only want the shows we want. This is reductio ad absurdum at it’s worst. What a joke of an article!

  16. LuigiDaMan says:

    You miss the point. There is already a la carte programming available on the net and via net flicks. It’s by program, not channel. The days of cable shoving 200 channels down your throat and paying $200 a month are over. Don’t think so? Let’s you and I see where it is in 5 years. Record industry wrecked? Check. Newspapers and magazines down the tubes? Check. Radio dead? Check. Cable TV still hanging on? For now, maybe.

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