yeah but in this case they brought on these extra channels and are spinning it as "continuing to innovate". they didn't need to bring these additional channels on. without these channels like for the past year or so, wouldn't the price have remained the same?
Or are you saying that these channel additions were part of an agreement or condition that to continue to offer some of the existing channels they needed to take the additional channels and charge more?
If that's the case, then why don't they do that now? Carrying less channels would reduce costs, while raising the price would increase profit. One would think that we wouldn't have to force them to move in that direction it what you say is true.
If they keep increasing the price every time they add more channels pretty soon it’ll end up being the same as the old cable subscriptions. What happened to a-la-carte channels?
I am part of the group of people who would go back to the cable companies if they would budge on their channel packages. I would pay per channel if I could just customize my listing.
I bring this up because you are totally right, but at the same time if the cable companies will evolve to what consumers want, they may not have to take this route.
If not, we can hope they dont charge too much more, they are already making the US look stupid on the world stage of internet access prices.
This is essentially how cable TV packages are priced now, and most people believe that software apps will replace TV channels eventually, so yeah--it's believable that cable companies would try to do this.
It amuses me to hear you say that, since for years people complained about bundling from the cable companies. They wanted to pay a la carte for exactly the channels they'd consume, in the belief that the price would be lower by removing the channels that they didn't want.
The situations aren't exactly parallel, but in a lot of ways we got what many people always wanted, but that doesn't make everybody happy. I draw no conclusion from that observation, other than to note it.
> like breaking up the traditional channel bundle and increasing access to more personalized and niche content.
Yea this is benefit decreases every day. The "cord-cutting" phenomenon is dead. Want to watch a discovery show? Oh great, it's only on Discovery plus now, $5 a month. Want to watch Premier League soccer? Peacock Premium! Cobra Kai? Netflix... marvel? Disney+. Oh but you can't watch THIS nfl game on here because it's blacked out locally for TV. Champions League soccer? Sign up for CBS All Access. Can't forget HBO Max!
When you add everything up, cable for me was actually cheaper. But now I'm screwed, because they aren't putting shows on TV channels anymore to get people to sub to their streaming service.
The chart says it all. TV fees per subscriber are still so lucrative that they will pay you to stay to the tune of $20/month. Not sure how sustainable that model is since you will not be able to charge more for that down the road, but maybe this works for shareholders in the short term.
As a general trend I only see this leading to greater consolidation in the market. Less providers means less churn which seems to be their target. Fingers crossed we get to the point where buried wires are no longer a limiting factor and more entrants can begin competing.
Sure but there's no incentive for anyone to make them cheaper. The cable operators make more by creating more expensive packages and then can justify it by putting a bunch of channels in them. The networks make more by forcing the operators to take small/niche channels if they want the popular channels. And since cable networks are not perfect substitutes, you can't just disrupt the industry by carrying a bunch of channels no one cares about. Also, because the channels have a fair bit of power in the relationship, they can structure their contracts with the operators in way that it's not economically viable for the operators to unbundle.
You're assuming they were cable-cutters, which is common around here but still uncommon in the wider market. More likely, they had both cable and Netflix (maybe were testing the waters) and when the price change hit, they dropped the Netflix and stuck with cable.
Study the ownership charts and it all becomes clear. There are not 10 companies producing 10 channels. There are like 3 to 5 companies producing everything you watch. So in your scaled down example, there's only perhaps two companies each producing 5 channels, and using the miracle of economy of scale they only each collect $10. You might very superficially think each channel costs $2 but because of economy of scale and intentional government regulation it costs like $9.50 to produce one channel, $9.75 to produce 2 to 4 channels, and $10 to produce 5 channels. The lights go out on the whole system if they don't get their $10 of revenue so they have to charge "around" $10 for one channel, you can forget $2 or even $5. Well, not everyones viewing patterns are going to match one corporation, so most people are going to end up needing to buy from both companies which is $20 so a la carte is dead. In an artisinal world of bespoke channels made by individual companies or people, a la carte would work, but economy of scale and financial pressures means everything you see comes from a very narrow funnel. And that narrow funnel is why its culturally changing from broadcasting to extreme narrowcasting and revenue is collapsing, but thats another issue.
Another analysis mistake is thinking channels are all equal and of equal value. Most channels are filler taking up bandwidth to keep competitors at bay. It is exactly like retail brick and mortar software sales in the 90s where you'd have a gigantic cardboard box containing a half sheet of paper and a CD in a sleeve rattling around in there. The fillers make little to no money but they make sure that a competitor doesn't have the space to set up something that could be a hit (its quite a downward spiral).
Eventually the cable companies are going to give up on trying to manage a system that delivers every channel to every station all the time, and then the game will really be on, and its a game of logistics and scaling and financialization that the cable co has already won, so best of luck to the new entrants, but other than provoking some short term innovation...
Ok, so if I understand your argument, the additional revenue from off-cable sources would be offset significantly by a reduction in cable subscribers? If so it sounds like the newspaper 'trap' where the costs of the printing presses (sunk cost infrastructure) gets a smaller base to amortize over.
I don't know enough (or much at all) about the pricing structure of cable. I've read about the disputes when TNT is suddenly no longer on Dish Network and instead there is a missive about how TNT is being so unreasonable about costs yada yada. But those events have suggested that there is fixed cost per anum that Dish and the Cable companies pay to carry the premium channel's content, and then the content distributor is left to make that money back by squeezing it out of subscribers.
So assuming there isn't a contractual obligation of exclusivity (and in HBO's case they are on all the other things like Direct, Time-Warner, etc) would it be reasonable to assume that they could add the additional outlets without changing their pay-TV structure at all? And if they could, wouldn't that revenue be all accretive to the bottom line?
I agree that a completely re-whacked HBO would have a totally different cost structure, but offering up their original programming to say NetFlix to stream? That seems pretty straight forward.
This was just an artifact of 'circuit-switched' CATV networks. With an IP-based network you can have 100,000 channels that cost nothing as long as they're not being watched. Literally anyone can start their own cable channel. (Starting to sound familiar yet?)
In such an environment, a la carte programming is the only thing that can possibly make sense. The tiered plans are gone for good, and cable companies will just have to deal with it and get over it.
i suspect the remaining customers aren't very price sensitive, and not the type to try something new to lower their bill by a huge amount. the cable companies have realized this and decided to milk it for all it's worth.
The experiment didn't need the full power of a station to prove though. I'm not really sure that this is as much innovation as you imply. Channels have been splitting their bandwidth for years. In fact, Congress wasn't really happy with the network's decision to fraction the signal as the intent was a single full bandwidth signal. We've also already seen what the switch from MPEG2 to MPEG4 can do for allowing more channels via cable boxes.
It's also a case of equipment available today is much more robust compared to the cable TV. I was testing the MPEG4 abilities of some of these earlier boxes. Encoding based on the white papers provided for the chips, we found these were not very accurate and required a lot of tweaking to get to work. The chips in today's TVs are much better, so there's a lot more that can be gotten away with.
the issue now is that it is getting very expensive to not have someone who bundles many channels together. I know people bemoan high cable prices but with every content owner coming out with their own channels its going to be expensive to watch.
Or are you saying that these channel additions were part of an agreement or condition that to continue to offer some of the existing channels they needed to take the additional channels and charge more?
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