The True Cost of A La Carte TV Is High

Cord cutters have long dreamed of a future in which they can pick and choose the programming they want, instead of getting 135 mostly useless channels in the cable bundle?but that future has a high cost. Cable companies have long argued for the value of the bundle over the cord-cutter's dream. "The cable package presents an undeniable value and the consumer would pay more and get less with a la carte," an ESPN spokesperson told The Philadelphia Inquirer recently. Getting "less," of course, is the point. People watch an average of 16 channels per month, according to Variety's Andrew Wallenstein, yet typically pay for something like 124, per numbers from the FCC. But, paying for all 16 of your favorite channels separately would add up quickly.

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ESPN, for example, if sold on its own, would cost somewhere in the $20?to?$30 dollar range, according to various analyses. HBO, another valuable property, would cost more than the $15 or $20 per month it gets in the cable bundle. Then add in AMC for Mad Men, Bravo for Top Chef, the FX for Louie, and other sports channels for lesser sporting events, and you're nearing that average $73.44 Americans pay for cable TV. Plus, you might feel compelled to add on more channels just in case of special programming events, like Sharknado on SyFy. Even if each one of those cost less than the $10 per month, as the TV industry says they would, that's still nearly a $100 per month bill.?

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The current system is a deal specifically because all cable subscribers are paying for channels they never ever watch. "We are all paying each other's TV taxes," Derek Thompson explains over at The Atlantic. The people who don't ever watch ESPN pay $4.69 per month, but in turn people who never watch AMC pay around $3.50 per month. "The idea is that if 100+ million households all pay?$70ish a month?for television, the breadth of the customer base will support a diverse and thriving entertainment business without asking any group to pay too much for what they want." Unbundling the channels would put more of a financial burden on each person.?

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In addition, a la carte channels would have to charge even more because the audience drop would result in decreased advertising revenue. The bundle brings more viewers to channels?you can't channel surf your way onto a station you would never watch if you don't pay for it a la carte. It's also a guaranteed sell to advertisers. AMC can say, look we have access to all of Comcast's subscribers. Unbundling that would ruin everything?in theory.?

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In this every-channel-for-itself system, some stations wouldn't last. Big cable companies have already threatened to drop small channels that don't bring enough viewers. Without the bundle to subsidize them, these less-watched channels would die. In some cases, if nobody is watching them, then maybe they deserve that fate. But, others have argued that without the current set-up, a tiny channel like IFC could never produce a gem like Portlandia, or in an even more extreme case AMC would never have enough money to make Mad Men.?

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All of this isn't to show what a great deal you all are getting with pay-TV, but the financial leverage of the companies that control the content. The current scenario is very lucrative for them. Any change to it would have to be equally lucrative. So, cord cutters, you have to consider: Are you willing to pay the high price of unbundled television? Or, on the other hand, you could sacrifice some channels that only have one decent show. For some people, like Wallenstein, that's why a la carte isn't good enough. To him, channels are also just "bundles;" he wants a la carte television programs:

To create a marketplace truly better off without the bundle, content companies would have to share their product in?one massive trove for one stop 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.

Source: http://news.yahoo.com/true-cost-la-carte-tv-high-191607736.html

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