News that Comcast customers in the Houston area will soon have the option for more add-ons and improvements for their media experience mostly ignores the real reason those upgrades are being made available. Competition from the DirecTV, DISH and AT&T U-verse systems for the public is the reason. That, and to find yet another way to boost income from subscribers.
America’s free enterprise system is why this works. If a company wants to stay ahead of the game it must not only diversify, but always have available the latest innovations for their customers. That only makes sense. When Toyota introduced the hybrid Prius it required that other companies come up with their own versions or Toyota would have owned that market. No company wants a rival to do that.
Other television delivery systems came up with multiple recording DVRs. So, Comcast had to do the same. About the only thing that will separate all providers now will be price and customer service. The former is real and the latter is subjective.
However, for the purposes of this piece it is the price question that drives the essay. How long can costs for home media continue to rise? We are reading more and more stories of people who have already reached the end and have joined an unofficial “cut the cord” society. They subscribe to no cable or satellite company. They watch television less and when they need something not provided by local “over the air” stations they hook in with one of the growing number of internet options which they can watch on their full screen television. What they are doing may be the harbinger for what cable and satellite will have to evolve into.
Its called a la carte programming. Viewers pick what channels they want on their system. They pay for them either by number chosen or for a set fee for channel. Viewers are already doing that with the separate pay channels like HBO, Showtime, Starz, etc. They pay an extra $10-15 per month just for those channels.
Cable and satellite companies also have differing tiers of programming that rise in cost with the number of channels in each tier. Unfortunately a high percentage of the channels offered are rarely if ever watched by the majority of viewers. Some never watch a second of the religious or shopping channels. Others, because they don’t speak the languages, don’t watch the foreign language channels.
While ignoring the channels not watched is perfectly OK, the companies include all of them in their boast of 200 or 250 channels available. They are correct, but for most viewers the number of channels of interest is far lower.
Enter the option of a la carte selection. In reality this system would have potential to put an even higher price on television viewing even if with fewer channels. Consider a scenario in which a charge of $10 per month was assessed for local channels on your cable/satellite system. Then a package of “news channels”–Fox News, MSNBC, CNN, etc was available for another $10. It gets tricky when we move to sports because their are so many options and each right now is demanding a pretty high fee from the systems. Would all sports have to be divided by network and charged at separate rates? Perhaps all the ESPN family networks were set at $15/month. Could Fox do the same by packaging its new FoxSports 1 network with whatever regional network fit? What about Comcast? NBC SportsNet and the local ComcastSportsHouston for $15/month?
While what I am suggesting would be fair for all viewers, those who didn’t want to spend for HBO or sports would not have to. Yet, the cable/satellite bill would not necessarily be cut that much, if at all, once all the channels one wanted were compiled.
It would, however, be more fair for viewers.
The downside would include potentially far less revenue for sports teams and leagues. It would also ultimately bring about the demise of many channels that are now available but rarely watched. Most if they survived would have to migrate to internet-only productions…or back to the extra digital channels on over the air TV. (Ironically if digital TV had been around BEFORE the introduction of cable/satellite the latter might never have developed or been as strong. Channels would have been available for sports, informercials, movies, etc. The network affiliates would not have been tied down to strictly what the networks provided. And those were the stations with the bigger budgets and ad revenue.)
There are more and more indications the first type of programming to face this “a la carte” future may be sports. Teams on both the professional and major college level now require huge television dollars to operate. Selling tickets, concessions and souvenirs does not come close enough to paying all the bills. Leagues have formed networks. Schools have their own networks. On the pro level the fees for rights to televise have skyrocketed. Those teams through their cable/satellite partners are demanding higher and higher viewer fees.
The latter is the key and where the system may have to change. Not everyone is a sports fan. Not everyone wants to pay for a channel or channels they don’t watch if it is reflected on their monthly bill from Cabletown. Houston sports fans are well aware that things are not going well with distribution of ComcastSportsNet Houston. The asking price is reportedly too high since it applies to every subscriber in a five state region–many of whom have no interest in the Houston Rockets or Houston Astros. But Houston is not the only city having negotiation and/or carriage problems. And it is not just a cable/satellite rivalry causing those problems.
While it is true Comcast and Time Warner are major national players they are, by law, not competitors for subscribers in the same markets. But they are competitors in the industry. Other distribution systems are direct competitors. Fox Sports is a production company like ESPN. They have no holdings in distribution. Comcast, Time Warner, DISH, DirecTV all were equal clients. Negotiations with Fox were not always easy. While they never demanded the same level of payment from the systems as Comcast reportedly is seeking they did expect to be paid per subscriber for their networks.
It is the opinion of many that the “free ride” for sports, sports teams and even sports fans has to end. Teams must justify their support by themselves. Sports fans must pay the freight by subscribing separately to the sports channels they want to watch and not burdening the non follower by making his ever increasing cable/satellite bill continue to rise.
When the concept of “pay-TV” for sports was born back in the late 1950s it was to be exactly that. It was to be the same as what we now have for “Wrestlemania” or a major championship fight. If one wanted to see it he paid extra.
The Dodgers were going to start something when they first moved to Los Angeles in 1958. Homes that wanted access would have a coin box installed to their TV. The Dodgers games would be available for only 25 cents. (Remember, in 1958 a bleacher ticket was sold for as little as 50 cents in those days.)
That Dodger system never caught on. Maybe we need something similar again. Oh, the price would be higher and teams would not generate as much revenue as they would be holding all subscribers hostage of a monthly fee. But it would be fair. Because someday enough will be enough.