a la carte

Consumer Reports wants it. So do a whole lot of consumers. But, get ready for some “bad” news. We’re all going to be paying a whole lot more for our video entertainment. Count on it. On top of that, there’s more video in a head-spinning array of options.

Pay-TV companies lost nearly 800,000 video subscribers last year, almost twice as many as a year before — the latest evidence that a growing number of Americans are sick and tired of paying through the nose for hundreds of channels they never watch. But if the future of TV is paying only for the channels you want, and I firmly believe that it is, the big question is how much each channel should cost.

The first step in Canada’s government-mandated plan is partial. At first, pay TV providers only have to offer slimmed-down basic package for $25, with theme packs like sports or entertainment channels as add-ons. Some U.S. cable and satellite companies are already starting to offer slimmer packages, such as Sling TV from Dish for $20 a month. Full channel choice, or a la carte, is due in Canada by the end of the year.

For TV consumers, the ideal new digital a la carte TV service isn’t getting hundreds of traditional TV channels — more like a dozen and a half. A new first quarter 2015 survey from TV search company Digitalsmiths, a TiVo-owned unit, says consumers ideally want a package of 17 channels, with the ideal monthly price of $38.

It should be no surprise that most Americans say they would prefer to create their own television bundle by picking and choosing which networks are included from an a la carte menu. A recent poll from Reuters/Ipsos found that 77% of Americans would like “a la carte pricing.” Surprisingly, many respondents understood just how much it would cost for their favorite channels in an a la carte model.

Unbundling and a la carte were forbidden words in the traditional video world a few years ago. However, with Dish recently announcing its Sling TV streaming service, cable nets launching streaming options and a slew of online video providers changing the competitive space in video, unbundling and creating consumer-friendly TV packages are expected to happen sooner or later, speakers said at a CES panel in Las Vegas.

Unbundling sounds promising, but more choice and the possibility of paying less do not necessarily translate into consumer satisfaction.

Anvato Chief Evangelist says: “With new content monetization solutions like live linear streaming, live ad insertion and video-on-demand syndication, a workable revenue model is emerging for more and more content owners, too, including niche networks. Maybe by finally rationalizing programming delivery, à la carte models will spark television’s third Golden Age.”

Combining current streaming services including Netflix, Hulu, CBS All Access and the expected price of HBO’s service, which starts next year, would run you about half of the average price of monthly cable and satellite television service. If you’re a sports fan, sorry, the streaming services won’t do it for you alone. But adding an a la carte option to your basic cable subscription might offer you more choice than buying up on the next rung of your cable or satellite service.

The two announcements of online streaming services look to be a big step toward allowing consumers to choose some or all of their TV channels, rather than having fat program bundles forced on them by pay TV providers.

The “Local Choice” proposal by Sens. Jay Rockefeller and John Thune to let cable and satellite customers choose which broadcast TV channels they pay for has led to a battle between small cable companies and broadcasters. While cable companies usually are opponents of mandates to sell channels individually instead of in bundles, in this case they are fighting for à la carte and against the broadcasters.

The broadcaster advocacy group TVFreedom is pushing back on a new Senate retrans reform plan that would let cable and satellite subscribers pay for only the broadcast channels they want to watch. The “Local Choice” proposal from Sens. Jay Rockefeller and John Thune hits broadcasters too hard and does too little to change other problems in the marketplace, according to TVFreedom Director of Public Affairs Robert Kenny.

What’s the biggest complaint of cable and satellite customers? I have to pay all of this money for a whole bunch of channels I don’t even watch. That era’s about to come to an end after approval of the Time Warner Cable-Comcast deal. But expect what DirecTV did to The Weather Channel to happen 100 times over.

The Canadian government will soon require cable and satellite television providers to make it easier for customers to buy only the channels they want rather than pay for bundles, the country’s industry minister said on Sunday. “We don’t think it’s right for Canadians to have to pay for bundled television channels that they don’t watch. We want to unbundle television channels and allow Canadians to pick and pay the specific television channels that they want,” Industry Minister James Moore said during an appearance on CTV’s Question Period.

Sen. John McCain (R-Ariz.), who introduced legislation to unbundle cable channels, explains why an a la carte system would be good for consumers, without harming the TV industry.

21st Century Fox COO Chase Carey underscored the value of sports programming and downplayed calls to end the bundling of television channels. During Fox’s Investor Day Thursday, Carey splashed cold water on calls for pay TV distributors to offer television channels separately so consumers could pick and choose which networks they wanted. Carey said the TV industry’s practice of selling bundles of channels remained a good value for consumers.

Was Time Warner Cable being hypocritical this week when it proposed to carry CBS-owned stations on an a la carte basis — which CEO Les Moonves rejected as PR “grandstanding”? The broadcaster distributed evidence today to support that view, including a class action suit filed in June that accused Time Warner Cable of abusing its distribution clout in Southern California by failing to give subscribers a choice to pay for TWC channels that offer Los Angeles Lakers and Dodgers games.

Sen. Richard Blumenthal (D-Conn.) has signed on to co-sponsor the Television Consumer Freedom Act of 2013 with Sen. John McCain (R-Ariz.). The bill, introduced in May, seeks to coerce the pay TV industry to start selling channels to consumers on an a la carte basis instead of large bundles.

Cable operators moving to a la carte pricing would leave a massive financial hole in the TV business, according to a new report. Needham analyst Laura Martin estimates that so-called unbundling would remove 50% of total revenue for the industry at large, which comes to about $70 billion.

The Arizona senator touts his proposed Television Consumer Freedom Act in the missive.

ESPN President John Skipper said Tuesday he isn’t too worried about proposed legislation from Sen. John McCain (R-Ariz.) that would allow consumers to pick what channels they want instead of buying a big package of networks. “We don’t think the bill has any momentum,” Skipper said to reporters after ESPN made a presentation to advertisers in New York City. His view that McCain’s legislation is a long shot is shared by many television industry insiders.

Cherrypicking cable channels won’t make sense in an on-demand future. A post-bundle world would require a much different environment than the one a la carte fans envision, one that probably draws more on title-oriented platforms like Netflix or iTunes than on TV’s linear lineage.

As they face greater competition from the Web for viewers of TV shows and movies, MSOs have a chance to remake themselves in the iTunes mold and charge for only the channels a subscriber wants.

HBO could one day be offered as a standalone service, not tied to any specific level of pay TV subscription, Time Warner chief Jeff Bewkes said yesterday.