How about a compromise on bundling cable TV channels?
If you had asked me last week how I felt about people having to pay for dozens of TV channels they never watch, I’d have told you it’s an unfair and archaic practice that should be done away with.
I’d have said pretty much the same earlier this week after a report was issued by the New York investment bank Needham & Co. warning that a switch to so-called a la carte programming would cost the pay-TV industry about $70 billion and leave viewers with fewer than 20 channels.
And after a lively, at times heated, conversation with the author of that report, I still think it’s wrong to make consumers pay for products they don’t want.
But the other side is making some interesting points.
“If you unbundle, it would be bad for the TV industry but also bad for consumers,” said Laura Martin, senior media analyst at Needham and author of the report, “The Future of TV.”
“The question is whether value to consumers is measured by the quantity of choice available or the price,” she told me. “I think choice is better.”
By Martin’s reckoning, you can’t have both. Either you go all-in with the idea that a wide range of programming choices defines the best possible TV experience or you believe every channel should sink or swim on its own merit.
If the latter, she argues, you’ll end up with just the major networks, Fox News, ESPN and a handful of other channels with large enough audiences to attract advertisers and thus help underwrite programming costs.
“Fifty percent of television is paid for by advertising,” Martin said. “No channel generates a single dollar in advertising revenue until it reaches at least 25 million homes.”
In other words, if the Golf Channel couldn’t piggyback on more-popular channels, it wouldn’t be able to sell any commercials and thus wouldn’t make enough money to survive in an a la carte world unless subscribers were charged the equivalent of membership at Pebble Beach.
I get that. And the answer, I’ve long believed, is that if the Golf Channel can’t attract enough viewers to be financially viable, adios Golf Channel.
Remember Doritos 3D? The puffy snack was introduced by Frito-Lay about a decade ago. Not enough consumers embraced air-filled chips, and Doritos 3D disappeared from store shelves. The market had spoken.
Why should TV be any different?
“There’s a lot of waste with these huge bundles of channels,” said Linda Sherry, a spokeswoman for the advocacy group Consumer Action. “People are paying a lot of money for channels they don’t watch. They’re not getting a good deal.”
To me, that’s the bottom line here: Are consumers getting the best possible deal? As long as you’re being forced to swallow channels you never watch, the answer has to be no.
Martin’s response is that consumers are indeed getting a good deal — a great deal, in fact. It all depends on how you look at it.
If the average cable bill runs about $70 a month, Martin said, people should view that as $60 for the dozen or so channels they watch on a regular basis, plus an additional $10 for the option of watching more than 100 other channels any time they please.
“Who knows?” she said. “You might find something you like and that you’ll become passionate about.”
This ability to discover new programming — the opportunity to make choices — is more important to most TV viewers than saving a few bucks a month, Martin insisted.
But why does it have to be an either/or proposition? Why can’t the TV industry, like the newspaper and music industries, learn to survive, albeit painfully, in a world where people have more control over the media they consume?
Moreover, it’s not like the cable and satellite industries don’t see the writing on the wall. TV subscribers are decreasing while Internet customers are booming. More and more people are watching their favorite shows online.
Brian Dietz, a vice president of the National Cable & Telecommunications Assn., said cable companies are adapting to changing times.
“Compared with other sources of entertainment, cable’s value is unmatched in both cost and quantity,” he said. “With Americans watching more TV every year, at just 23 cents per viewing hour, the value of the cable subscription is the best of any form of entertainment.”
But Dietz declined to comment when I asked whether cable and satellite companies could do more to address customers’ needs — for example, by offering smaller and smarter bundles.
If Martin is correct, and it’s true that people’s viewing choices would be significantly limited by a la carte programming, why can’t the industry chart a middle course and offer bundles that actually suit customers’ viewing habits?
For example, I watch a lot of movies. I also watch news shows and local channels and some arts channels and AMC when “The Walking Dead” is on.
I don’t watch sports (sorry, Dad). I don’t watch foreign-language channels. I don’t watch anything that even remotely could be construed as “reality TV.”
As it stands, there isn’t a cable package that matches my interests. No matter how aggressively I try to cut costs, I still end up paying for lots of channels I don’t want just so I can get the ones that I do.
There were reports this week that cable companies may try to lower customers’ bills by breaking pricey sports channels into a separate tier — that is, offering them only to those who want them. If so, this would be a prudent move.
But why stop there? The TV industry has studied people’s viewing habits with rocket-science precision. They know exactly what people watch and what any given person may want to watch.
If a la carte programming is a choice killer for the industry and consumers, then it’s time to introduce interest-related tiers or mini-bundles that narrowly address a viewer’s TV needs. And people should be able to add or subtract such mini-bundles from their channel lineups as they see fit, without any penalty.
This would allow niche channels to continue finding an audience and provide viewers with plenty of choices, while at the same time address the core problem of requiring people to pay for unwanted programming.
If the TV industry thinks this is too daunting a prospect, I hereby volunteer to sit down with them and show them how a system of mini-bundles would look. And I’ll bet you’d be happy to do the same.
In fact, let’s get the ball rolling right now. Tell the cable industry’s lobbyists which 12 channels you’d want in the perfect programming plan. The email address is email@example.com.
Nobody wants a store with just 20 products to choose from. But nobody wants to have to buy 150 products when they only want maybe two or three dozen.
The pay-TV industry would be wise to accept that.
David Lazarus’ column runs Tuesdays and Fridays. He also can be seen daily on KTLA-TV Channel 5 and followed on Twitter @Davidlaz. Send your tips or feedback to firstname.lastname@example.org.
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