OT: Unbundling could raise price of cable
Thought this was an interesting article. Some people, including people on the blog have argued that expanding the big ten with a focus on tv markets is dumb because channels will be unbundled in the future. However this article points to reports that unbundling could cost current cable subscribers more money for less channels. It also points out that people who watch sports would be hurt the most, having to pay as much as 37$ for sport channels alone.
I can't say this surprises me and don't actually expext unbundling to happen but thought people might be interested.
http://www.nytimes.com/2014/05/15/upshot/why-unbundling-cable-would-not…
I don't believe many people have said it's a dumb idea because of unbundling. But because of the clear shift to streaming and a lack of purchasing cable TV all together.
Also, and I may be missing something, that article seems to be a little light on facts and a little heavy on assumptions.
I'd gladly pay the $37 for the sports channels I want instead of the $125 I currently pay for those channels and a bunch of other ones I do not care to watch.
I'm not sure where they get the $37 from. MLB.tv costs $20/month. I've seen estimates that ESPN alone would need to charge $20/month minimum to break even in terms of revenue and that didn't take into account people dropping the channel after the season for their sport of choice is over.
Also, it's not just the $37 for sports. It's the $30 (rumors from a while back) for HBO and $10 each for FX, AMC, ABC, NBC, Fox, and CBS (or insert whichever channels your favorite TV shows are on) that all add up to $127 while cutting out those other channels that you don't watch. Maybe you don't watch any TV shows, but a majority of people do and they will have a hard time cutting out various stations due to their shows being on them.
That's my point though, I don't care about HBO* FX or AMC, TLC or CNN etc, so I wouldn't be buying those channels anyway. I refuse to believe that there is no way that my cable bill could costs could be less by subscribing to only 1/10th of the channels in the lineup.
* well maybe I do care about HBO, but I've gone this far without it, so I'll be ok.
All things being equal**, for a provider to offer it's service piece by piece, allowing the consumer to choose less, the individual pieces have to cost more for the provider to break even.
The consumer has to push back by consuming less to break even. (Have access to fewer channels.)
*my favorite Colonel. Although he did start WW2, according to ALF.
**Of course, everything is not equal, w/ local semi-monopolies and disruptive streaming in the mix.
It's an interesting take and I think these economists have some useful theories. The one glaring omission I saw was anything about competition. Right now, the competition for everything that's on "standard" cable (think you're typcial package), competes only with the other channels in that lineup for viewers, and hence ad rates.
If you unbundle, all of those channels will now have to compete to convince you to subscribe before you can watch. Economic theory would tell us that this would have a positive impact on both quality and price, as one of the ineffeciencies in the market (the bundling of packages) is removed as an obstacle to competition.
You also have ot factor in alternative delivery methods. What happens to streaming video, netflix, youtube, etc. Viewers and providers are going to have to consider the benefits and costs of delivering and consuming content in a way other than via cable tv.
It'll also be harder for ESPN to maintain a monopoly on being THE sports channel. What I expect will happen is ESPN will try to be a group provider, bundling ESPN and 2 and U and whatever all together. If it's Congress that forces the split, they'll still have to offer each separately and competitively price them. End result should be that ESPN will have to downsize and sell off a lot of its contracts.
to agree with you here. ESPN will have a market for live events. I have always said the bundling is not good. I pay for shows that I have never watched and never will watch. My 70 year old mother pays to watch ESPN when she hates sports.
So I agree with the previous poster, unbundling is a good thing in the long run. The lesser channels will disappear and many obscure political shows will be gone. Just give me ESPN, BTN and the Weather Channel and I am all good.
ESPN on the other hand is worth a ton of money and provides the bulk of the profits for ABC/Disney. I think they would likely double down and try and buy out contracts from other networks and become the only game in town. Because what happens in times of duress? The fat get fatter and the lean get leaner.
That content needs to make into your home somehow. You have the option of using the internet, but only if the channels choose to distribute that way. Something tells me if you're paying $37 a month to get ESPN via a cable or satellite provider (and actually choosing to do so as opposed to having little choice), then ESPN won't be likely to stream their content for free. If the cable/satellite providers are going to remain competitve, they'll have to deliver value adds to differentiate themselves.
Niche channels can still exist as long as they keep their costs down, just like today. Except, instead of getting $0.03/month from every cable/satellite subscriber, they'll get $1.50/month from the much smaller # of subscribers that choose to pay for them.
solves a lot of problems. must confess we get satellite for a few months during football season, but the other 8+ months/yr the box is dark.
Most of Southern California would starve.
Are you making fun of people from Southern California, or going out to eat? Because saying we go out to eat isn't exactly a huge insult. "What's that? You take your wife out for dinner? Clown!"
I have two young kids though, so I almost never go out to eat.
time is precious and while i like the occasional diversion like anyone, t.v. is a time-sucker and there are many, many things to fill those time slots that are more worthwhile. even when we have it, we only watch a bit of college football on saturday's and about a quarter of the lions game (can't tolerate more than that), never a day's worth.
living in socal there are plenty of activities we used to engage in that were fun and didn't involve the box.
That's all well and good, but I have young kids. One of them takes naps like every few hours, so I can't exactly head out for a hike for the afternoon or spend the day on my surf board. By 8pm, both kids are asleep (or getting there). From that point until we go to bed, there aren't a ton of things my wife and I can do together, since that's our only time to spend as a couple.
Not watching TV is obviously an option, but it's not a solution to the problem at hand. If I said, "I want to become a vegetarian, does anyone have any good recipes for me?" and you responded with "Just eat some meat" that doesn't exactly solve my problem, does it? That's what you're doing right now. You're not a big TV person? That's fine. Everyone has different priorities in life. But that doesn't add much to the thread.
to do even with kids in the house (we have 7) that don't include t.v. while living in socal. they can nap in the truck on your way to fish, swim, hike, go to malibu, seaworld, topanga, watch the fireworks, etc. and if the only time you have with mgowife is in the evening, like many of us, then spend it with her even if it's sitting on the couch reading next to each other, as opposed to hooked to the t.v. and of course walk over to the computer and post here once in a while.
only offering alternatives, from a former socal resident.
incidentally, lets hope the SD fire isn't near Mgobrewmom's new home.
So you're ok with sitting next to each other reading a book and not interacting with your wife at all but giving in to the time-sucker TV where you are actually watching the same thing and can talk about what happens that's a bad and wasteful thing?
Laptop, Netflix, Amazon, ESPN3, and sports bars for my whole adult life. Baffles me that people pay $2000+ a year for cable television.
HDMI cables do great things.
I know it's not cheap, but it's worth it for me to be able to watch almost every single Michigan Hockey game now (from out of state). With all the Fox Sports channels and a few others, I think there were maybe 2-3 games this year I missed. Cable is really nice to have for live sports
isn't an option without a cable TV subscription.
I pay $16 bucks a month for Hulu Plus and Netflix both streamed on my PS3. Haven't had cable in two years and its been great. If I have to watch a football game, I can stream it on some not so legal sites or go to my girlfriend's place.
The estimated price of unbundled channels comes from the cable companies themselves, who have an obvious interest in maintaining the status quo as long as possible. So obviously they're going to put out numbers that make it sound like unbundling will drastically increase prices.
See, the numbers they come up with are essentially "How much would we have to charge in order to make the same amount of money?" In actuality, when unbundling does happen out of necessity, the question will be "How much can we charge so that people will still use us at all?" The current structure of TV providers is unmaintainable in the internet age, and cable companies are going to make WAY less money when it does eventually come crashing down.
The "good stuff" is expensive to produce if its original content, or expensive to present if it's popular big time sports. And they know people will pay top prices for it.
Sports fans are getting a fairly good deal with the status quo, as most cable systems make non- fans subsidize sports programming, aka the Rutgers and Maryland business case.
Game of Thrones/Sopranos type content will never be cheap, whether you buy it by the episode or bundle it into a package, because its quality programming that everyone wants to see and can demand a premium price.
So pick your poison. Pay a lot for a packakge or pay a lot per show. Either way, you'll pay. Or you can save money and get Iron Chef and white trash reality shows real cheap.
You can also bundle/unbundle a restaurant meal - pay for a dinner that includes sides, buy ala carte, or prix fixe. But a good meal will cost you a lot anyway you buy it.
and you get HBO on TV if you have HBOGO.
You cant get just hbogo
Well, yeah, isn't that how packages work? But akin to the above posters, I'd pay for just sports channels and HBOGO. Pretty much all I use anyway with the occasional Netflix binge.
Seems like it would only be more expensive for families, which is where the money is at anyway.
Families are served pretty well by Netflix too, they have lots of streaming kids shows. Even if I had to pay $37 for the sports channels (I doubt that number, at least if they want to keep customers), that plus Netflix would still be way better than what I'm currently paying for DirecTV.
Devils advocate . . . How do you control what is watched though? Does Netflix have parental controls?
They have profiles, I set it up so her profile has a bunch of her shows on it.
Netflix actually has the best parental controls of any way to view media (TV, Youtube, etc) because you can select the exact shows children have access to or can choose more broadly based on rating.
why people want channels unbundled, but people always exaggerate cable costs so much its rediculous. Either that or you are paying for a bunch of extra boxes and dvrs or something if your bill is 135 a month just for cable. If that bill is for cable and internet like mine then thats a pretty good deal if you ask me. Even if I ditched the cable, I would still be paying a steep price for 50 mbs internet service. And comcast xfiniy streaming service is about 1000x better then netflix and its free with your subscription. If I dropped cable and paid about 65 bucks a month for internet..I dont think id come close to the value of the cable service I am getting for 70 bucks of unbundled channels, not to mention the free streaming service. Lastly I will point out that streaming sports ove the internet stinks. Yes you can watch the game but when you could be watching in hd.. streaming is a crap substitute to save a few bucks imo
I wouldn't be surprised if you choose your channels for a year at a time to keep that kind of stuff from happening (though I doubt you would really do that unless you don't like watching Michigan basketball). But it would be difficult for the providers if you could sign up for and cancel every channel at any point you wanted to. Or it's possible the pricing is different if you buy it for the year or pay monthly, etc. If I were BTN, I would set my prices so they were something along the lines of 5 bucks a month or 30 bucks for the year, something like that.
low rent reality tv shows are cheap to produce and get more viewers than most sports so chances are you would see more of that, not less.
Serve customers more, gouge them less, and recommend to your competitors to do likewise. Oh, and convince the municipalities (where I live in Michigan, anyway) to encourage competition by offering more than one vendor: Comcast.
It's utter bullshit. The report is based on what the channels are charging the cable operators, not what their value would be on the open market. The cost of BTN is what people are willing to pay for BTN. If they make it too much people won't get it.
The whole point of unbundling is they're using bundling to way overdrive prices for channels people don't want. Severe downsizing is bound to happen because they can't go on living like they are.
Thank you.
This is the same scare tactic the cable companies have been using for years, every time this topic comes up.
These channels, when broken free from packages, have to actively compete against each other and against internet downloading/streaming services, not to mention video games and just a generally expanding list of entertainment choices as technology continues to grow.
No one is paying $10 a month for FX plus another $10 for AMC and another $10 for Comedy Central etc etc when they can get hulu+ or netflix or whatever for the price of one of those.
Cable is already losing customers to the net. They're acting like the record companies were a decade ago and trying to fight the technology or rig it in their favor (tearing down net neutrality,) when they ought to be working on finding sensible ways to diversify their services and take advantage of the options technology gives them.