Commentary
Freedom Isn't Free
- by Bob Garfield , Featured Columnist, May 11, 2015
Let’s say you were a customer of a gargantuan fascistic cable service that was twice the recipient of the Consumerist’s prestigious “Worst Company in America” title.
Hypothetically speaking.
Let’s say you were sick at heart every month writing a check for $64 knowing that next year it will be higher, and if you ever need repair service, you cannot rationally expect a truck to appear within a four-hour window. Let’s say a few years back when one of your heroic fellow Americans started a Web site called “Comcast Must Die,” including not one but two theme songs, you were ready yourself to die for the cause.
You, my friend, are a potential cord-cutter. You’ve been champing at the bit for streaming services to offer a large enough array of programming so you can call the cable company and tell them to pound sand. No premium tier. No triple play. No basic cable. Just broadband, thank you, with which to strangle the SOBs. Because now you want to use that co-ax to stream your shows without paying Big Cable for their overstuffed bundles. Death to tyrants!
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You have your Apple TV, or your Roku, or your Blu-Ray, or your Chromecast Dongle or your game console and you are ready to go over the top. And now that your favorite music streaming service, Spotify, is poised to announce its video version, the time has come!
Liberte! Egalite! Par-tay! Cut the cord! Create your own bundle of movies and TV shows without being under the heel of The Man! Freedom!
Or not. Let us do some arithmetic, shall we? Let’s say you like movies, sports, hit broadcast and premium cable series and, who knows, Anime. Here’s the tab:
Sling TV, $20 per month.
HBO Now, $15 per month.
Netflix, $9 per month.
Hulu Plus, $8 per month.
Amazon Prime, $8.25, per month
Crunchyroll, $7 per month
CBS, $6 per month.
MLB.com, $10 per month.
The grand total is $83.25 per month, which is $19 a month more than the average U.S. cable bill…plus whatever Spotify is going to charge you for whatever it is planning to stream. Plus whatever all future streaming services fetch for their feeds. In other words, what we have here is the first stage of a big problem. And if the cord-cutting proceeds apace, devastating a cable industry already reeling from the chaos of the advertising marketplace, it takes little imagination to imagine wholesale disintermediation and the end of Big Cable as we know it.
Which, once again, may get you giddy with schadenfreude, but don’t celebrate just yet. First of all, multibillion-dollar companies accustomed to controlling distribution don’t just fade away; they obtain it by other means. You, of course, remember the ill-fated AOL-Time-Warner? How about AOL-Comcast? How about Verizon-Yahoo?
And how about your monthly entertainment bill? Spotify won’t be the last OTT entrant. Consumers have been agitating for a la carte and now here it is. Freedom, as we have often been told, comes at a price. We’ve also been told this:
Be careful what you wish for. Because getting it may make you someday look back nostalgically at cable fascism.
Bob Garfield, former editor at large for MediaPost, is a long-time public radio personality who currently hosts Booksmart Studios' "Bully Pulpit" podcast. A 30-plus-year commentator on media and marketing, he is co-host of public radio's Peabody Award-winning “On the Media” program; senior fellow at Wharton Future of Advertising Program, SEI Center for Advanced Studies in Management; founder of the Media Future Summit and author of five books.
The average bill is not greatly influenced by HBO programs, so including HBO Now seems like trickery to get your math to work. And MLB.com? I thought baseball, formerly the national pastime, was in decline. I can't even even consider anime-spewing Crunchyroll. Also, getting Netflix plus Hulu plus Amazon Prime seems an unfair piling on as a comparison to movie-lovers on regular cable who pay much more than the average to get that many premium movie choices.
Here's my math: An OTA antenna plus Sling plus Netflix equals $29. Maybe $44 if you can't live without HBO. And, no, I'm cutting my cord, but I understand the temptation.
*not cutting* in the last sentence
Maybe the Average American who allegedly watches 8 hours of TV a day needs all this, but nobody in their right mind should. And you leave out the elephant in the room, which is that a lot of these <30 cord cutters are getting much of their programming through bit torrent sites and paying nothing.
Bob, you forgot the $10 - 15 a month you'll have to pay for a service that actually allows you to find the shows you want to watch from the sea of options you've listed. You've poked your finger right in the eye of everyone proclaiming the death of TV: the a la carte costs of that 5+ hrs we consume every day is a lot higher than some may realize.
Once again, I'm posting here with a kind of...puzzlement...about the math that "proves" that there's no threat to The Ecosystem from OTT.
Let's just skip the fact that MoffatNathanson showed (again) "The industry is contracting at a 0.5% annual rate, with a net loss of 31,000 customers in Q1" http://variety.com/2015/biz/news/cord-cutting-alert-pay-tv-business-declines-for-first-time-in-q1-1201492308/
Some of you sound EXACTLY like the people in the newspaper business circa 2002, where there was scoffing and outright mocking of anyone (including me) who suggested that the business as they knew it was being more that disrupted - it was being ignored. People don't want a newspaper, they want the news.
That's what's happening here with these, "don't worry, everything is fine" articles, which trot out the same basic, "If you wanted to get the shows you want A La Carte, you'd spend X% more than if you just had cable!" and then we get the usual rundown of some list of services that - always - somehow add up to more than some pay TV bill. Some people - more and more of them - want shows, not networks, not channels and most certainly not bundles of channels. The content discovery "problem" is imaginary.
Why not take a different spin on this? Why aren't we talking about the opportunity that is here? If some consumers don't like live linear TV, and they don't like the cable TV business model SO WHAT? Sell to them anyway. It should be clear by now that if a consumer wants to spend $40 a month on "less" content - but they are happier for it, why is this a bad thing?
Why not point out that HBO Now and WWE and others just found revenue that they would have never seen, ever, because that market isn't going to "age into" a cable package. Distributors will still make money as ISP's, content owners will need to develop some retail skills, and after a giant upheaval, this multi-billion dollar business will be a multi-billion dollar business.
Martin,
You are a very careless reader, an arsonist of strawmen ("proves") and almost hilariously uninformed about whose article you are reading, and what preceded it.
BG
@Martin, let's say that you are one of those guys who doesn't like bundling and you want to buy ESPN and only ESPN a la carte. Let's further say that the pro-rated monthly fee for ESPN in your current cable "bundle" is --and I'm making up this number---$5. Do you really think that ESPN will charge you only $5 per month if it sold its service direct to you? That seems most unlikely. For one thing, in order to get you to buy, ESPN would have to go to the expense of marketing to you and servicing your subscription. That adds to its cost. Moreover, in order to maintain its current national coverage levels---and ad revenues, to say nothing of carriage fees----it's not in ESPN's interest to undercut itself by selling a la carte---at bundled prices. So your monthly fee might be $10 or $15 or more and they probably will demand a firm non-cancellable deal for at least one year, maybe more, just to get that rate. Now that's just speculation on my part, but it's also good business from ESPN's point of view.
These comments are fascinating... Desperate arguing for the niche market of consumers who will go through the hassle cost of learning to live with highly restricted entertainment choice,
Bob's argument is accurate ( of course, I would say that since I've been pointing this out for years). And what it suggests to me is we should expect that cable cutters are a niche market - perhaps 5% to 10% of the market (and that 5-10% which has always benergy lower consumers of programming).
I would add three thoughts:
Find me a cable bill with the typical basic channels plus HBO plus MLB Extra Innings plus Crunchyroll's manga plus another movie channel to balance Netflix / Amazon, all for $64 and I'll sign up. Douglas Ferguson's math is a lot more relevant to the cable-cutter discussion.
This is kind of a stretch, but I think it might work to illustrate the problem a la carte may bring:
Let's say we're all back in the pre-TV era, when the only way to see a film was to go to the theater. Then let's say that after reading ads for the film, film reviews and via word-of-mouth, you decide to go see the film. You pay your money at the door and watch the film. Then, on your way out, you're asked by the theater staff if you thought the film was worth the price. If you say "yes", off you go into the night. But if you say "no", you get a full refund (for the purposes of this example, let's imagine that everyone is always 100% honest.)
... So, if that system were in effect, how long do you think it would take before every theater and every film production company on the planet would go bankrupt?
... The moral is that every production of every piece of entertainment that charges admission, beginning with the Greeks, rip-offs a certain percentage of the audience, by necessity, if it is to remain viable in the long run. To sum up; ...P.T. Barnum was right, and thank gawd that he was.
On my latest Comcast invoice, they included the "Channel Lineup". No explanation of what you are paying for but separated into groups with overlapping channels. One of the notes on the bottom does say in very very fine print, "Federal law requires subscription to Limited Basic Service to receive any other level of video service."among other stuff. So before the unbundling, this part is a whole made up of channels determined by ? Comcast ? Cable companies such as TNT, AMC, USA and ESPN among another 50-60 channels are under expanded service. There is also a digital ecomony, too, but no pricing on any of it. The more complicated they make it with more choices, the more people cry uncle sooner. And true that people watch programs rather than channels, they can begin and start like your shower. Where's Waldo ?
As the future unrolls, I think we'll find that, despite the costs, people are less likely to sign up for new cable subscriptions. At least for me, I couldn't imagine switching from Netflix/Amazon/Hulu/HBO over to Comcast's cable. Despite all these calculations, it would cost me a good deal MORE, and I alreay pay enough for my internet service, thankyouverymuch. Also, I just hate that brand so much that I'm willing to put up with the mysterious "hassle costs" and "content discovery problems" I keep hearing about. Of course, YMMV.
Interesting. You include a 100 percent ad model (CBS) at $6. I'm pretty sure they will be quite happy to be watched streaming, with ads, for free. And choose one: Hulu, Netflix, Amazon Prime. I don't personally know anyone who subscirbes to more than one service. It's akin to subscribing to Time Warner Cable AND Comcast. The redundancy is silly. Most broadcast will simply broadcast a stream online. CNN, for example. Based on what I normally use, my cost will be somewhere between $25 and $35. That's not to negate that there may be more money to make in a la carte pricing, since bundling gives you more for less. But if you're just looking for news, a little sports and some basic entertainment, you could save a bundle, if you will.
There are a obviously a lot of considerations associated wiht this issue. Not the least of which is what is good for the distributor is not necessarily good for the content provider. I would say in general though that at the end of the day, if anyone thinks the content will cost them less than it currently does - regardless who provides it or how it's provided - then they are probably livng in Colorado. Pass the pipe, man!!