There has been a lot of talk about how à la carte TV is going to cost more than cable TV. I’m here to prove that for the average subscriber it won’t cost more money than cable TV.
Most of the confusion is coming from the new bundle services from places such as Discovery. It has been reported that Discovery plans to sell access to its networks, including its newly owned Scripps Networks, for $5 a month.
Five dollars may seem like a lot for Discovery, but remember that is not for one network but Discovery Networks and Scripps Networks, so you get a lot of content for that $5. However, this has taken hold for many who assume that every channel will cost $5 a month.
So let’s take a look at some of the most popular channels and see what they charge per month.
- A&E $0.33
- History $0.30
- AMC $0.50
- BBC America $0.11
- TLC $0.25
- FOX News $1.55
- BTN $0.43
- FOX Sports 1 $1.30
- HGTV $0.23
- USA $1.07
I could keep going, but you get the idea that most channels charge under $1 a month. Yes, there are a few, such as ESPN, that can charge more because cable networks know that live sports is something people are willing to watch live and they can sell more ads against it. (Unlike a show on FX that most people will fast-forward through commercials on.)
Yet even sports channels beyond ESPN are still fairly inexpensive. ESPN 2, for example, is just $0.98 a month and ESPNU is just $0.25 a month.
So what is a fair average cost for à la carte TV?
Let’s say the average cost of a non-sports or news channel is $1.50 taking into account the cost of running services and customer service. (Currently cable TV companies cover the cost of the infrastructure and customer service.)
Now look at sports. FOX Sports 1 charges $1.30 a month and ESPN charges $7.86 a month; however, beyond those two all sports channels seem to cost less than a $1 a month on average. So let’s give FS1 $2 and ESPN $8 just for easy math, and all other sports networks cost just $1.5 a month.
Let’s say you wanted all the ESPNs, FS1, BTN, and CBS Sports as part of your cord cutting package. That package would cost between $18 and $20 a month and give you every major sports network including the NFL Network.
What if you don’t want sports but you want 20 non-sports networks? At $1.50 a month per channel you could get 20 TV channels for just $30 a month. (Note: Most Americans watch 10 or fewer channels.)
From there you can do your own math, but as you can see most TV networks can charge $1.50 a month and still make more than they get from cable TV.
So why is à la carte TV not a reality yet?
The simple reason why TV networks don’t do à la carte is the fact that they can force you to pay for 10 channels you do not watch for one channel you really want to watch.
If a network wants to carry ESPN, for example, Disney makes them agree to carry a ton of Disney-owned cable networks. The same goes with FOX, Scripps, Discovery… if you want the big channel these networks own you have to also carry the smaller ones.
If true à la carte TV ever happens it will result in many smaller TV networks closing up shop. How many versions of MTV will people pay for? Would both the Food Network and The Cooking Channel survive? Not likely.
We are moving into a world of à la carte TV, but it will be a painful and slow process. Even with dropping subscriber numbers it is still profitable to force large bundles on subscribers.
Although cable TV companies and networks know what is coming they seem determined to ride out the high priced bundles because they don’t care if you really watch the channels. They get paid no matter what with a bundle.
Once à la carte TV becomes a reality networks will be forced to care if you watch the network. If you don’t watch the network—it won’t get paid. That will be a new world for them and one they don’t seem all that interested in.
Will we ever get à la carte TV?
The good news is I believe that à la carte TV is coming, but not likely any time soon and it won’t be true à la carte TV at the start.
I can easily see a model where you buy a $20 core bundle and after that you can add on additional channels for $2 each, for example.
I can see that model moving into a version that says you can build your own bundle of 20 channels but even if you only want 10 you need to pay for 20.
These all feel like stepping stones on the path to à la carte TV. So will that take five years? Ten years? Fifteen years? At this time we just don’t know—it all depends on how quickly cord cutting grows as the pain on networks increases to offer something the American public wants.
For the cost per channel, Variety did a great breakdown. Here is a link to the best version of it I could find.
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