Cable TV companies resist a la carte offerings of channels because they want subscribers to buy tiers of service. If we could opt to receive only the dozen or so channels we regularly watch and not pay for others, that would be good for us as consumers, but not for the cable companies or the cable networks. They would rather have a smaller charge spread over the mass of subscribers instead of a higher charge for those who really want a particular channel.
So even if I don’t want my MTV, I still have to pay for it.
Interestingly, as the New York Times reports, the cable companies use the opposite logic to avoid adding the Big Ten network and other sports networks to their basic service or even extended basic. They want to add a separate sports tier that only the hard-core sports fans will get. They don’t want to pass along the dollar-per-subscriber the Big Ten network is demanding, for instance, to every subscriber’s cable bill.
The reality, though, is the cable companies don’t want to pay the $1/subscriber. If it was 25 cents per subscriber instead, they would signing all of us up for it.
But whether they like it or not, a la carte is coming. Joost, for example, has been heralded as providing a way for users to share super high-quality video, and as people see that they can get access to most of the video they want simply through their broadband internet, they will be increasingly likely to dump cable altogether and just get their video through the web. Instead of being limited to several dozen or even a few hundred channels, consumers will have literally unlimited choices for video viewing.
In the future, instead of buying internet service as an add-on for your cable TV service, you’ll just have high-speed internet, and cable as we know it today won’t matter much. It isn’t that cable TV companies will all go bankrupt, but their business model will have to change.
And it’s interesting that even Joost, which has such disruptive potential for cable TV, may itself be facing disruptive competition before it even gets out of beta. TechCruch had an interesting post Friday, entitled The Clock is Ticking for Joost. When Flash 9 becomes widely available, the quality of all web video will double, reducing the advantage Joost has today. And users won’t need a special software player to receive this quality: it will be available through an ordinary web browser.
This all will work really well for pre-recorded programs, but what about the cable news networks and live sports? I think what’s most likely is some people will subscribe to the news and sports networks they want (like mlb.com, nfl.com, nba.com) and get the video streamed over the web. They’ll get rid of their cable TV altogether, much as families like mine have abandoned their landlines for phone service.
This in turn will put pressure on the cable companies that the federal regulators haven’t. Faced with the reality that consumers do have choices of how to get their video (since they could use DSL or satellite dish to get their broadband), the cable companies will eventually open up to a la carte.
What do you think? How long will it be before the reality of broadband video access forces cable TV companies to allow subscribers to pick which channels and networks they want? If you have cable TV now, what’s the one channel or type of programming you can’t do without? What’s keeping you a cable subscriber?