Oh, Canada: Beta Test For U.S. A La Carte Programming
For a la carte packaging in the U.S., cable operators talk a lot about the value they give consumers in packaging hundreds of channels at one low cost. What a deal, they say.
There are big differences between the two countries. On some Canadian systems, a big percentage of pay TV homes have many fewer channels than U.S. subscribers. So adding more basic channels in an a la carte framework would seem to work. One package has added up to 25 additional channels, priced at 72 cents Canadian apiece.
This will perhaps only affect a few Canadian networks that have low home penetration.
The situation in the U.S. would be different. For ESPN, A&E, Discovery, USA, TNT, FX and others, big money could be lost. Home penetration could fall anywhere from 30% to 60% -- with comparable losses in ad revenues. Analysts say it would be akin to “detonating” the business; estimates see the cable industry losing about half its revenue from subscription fees and advertising – or around $70 billion. Needham Research says fewer than 20 channels would survive if consumers had to pay for each one separately.
U.S. a la carte does exist in other media forms. Consumers pick and choose programs in digital video and from time-shifting machines like DVRs. But the cost for such selections isn’t “a la carte.” The menu is prix fixe – such as monthly fees for premium video services like Netflix or Hulu Plus.
Viewers also pay monthly fees for satellite, cable, or telco programming packages. Supply and demand will be the ultimate enforcer. If enough consumers depart their monthly services because of growing higher prices, some operators may be pushed to take some some a la carte action.
Maybe it won’t be an “either/or” scenario. Maybe it will come down to choice – perhaps between buying 200 channels for $70, or only six channels you really want to watch for $75. Sure, that seems like a stupid financial equation. But what if other enticements were attached – such as fewer commercials on those six channels?
Perhaps. as with digital platforms, providers need to consider not just la carte selection of channels but also of specific programs – as they already do in some respects with video-on-demand services. Then they can figure out pricing.
A la carte seems close at hand -- even as the entire business continues to hide under financial deal-making between content owners and distributors.
McDonald’s is also cheap for the amount of hunger satisfaction -- and fat -- you can consume. Happy Meals are nice packages as well. Skip the fries next time.
Maybe you don’t need extra cooking shows, real housewives epics or wannabe vampires/zombies dramas. Drill down -- beyond just the channels you want -- to individual programming, and some real a la carte pricing.