"Cord cutters rejoice" has been the oft-written headline preamble to numerous stories written this week about the groundbreaking a la carte programming announcements from HBO and CBS.
But in a world in which every programming network is stripped out of the pay-TV bundle and sold individually, consumers could find themselves paying a lot more to get the channels they want.
The Wall Street Journal broke down this lose-lose model quite elegantly Friday, outlining a new a la carte-based business that has managed to strip away many of the overlooked synergistic benefits of the pay-TV bundle.
While a la carte distribution could suit single individuals who watch a limited number of channels, households filled with family members who watch many different types of channels might find themselves wistfully recalling the days when a $90 cable bill gave them everything they wished for.
With distribution footprint shrinking significantly for virtually every programmer in an a la carte paradigm, advertising reach would be reduced accordingly. That's why Needham & Co. analyst Laura Martin predicts that the number of channels available to consumers would shrink from hundreds to about 20. Overall annual TV business revenue, she adds, would be reduced by half, or about $70 billion.
So far, sports has not been part of any of the major a la carte announcements--CBS All Access, for example, doesn't include the network's NFL coverage. However, sports fans could be particularly hard-hit if major outlets like ESPN broke off from the bundle.
Quoting SNL Kagan data, WSJ predicts that ESPN's roughly $6-per-subscriber price could swell to $30 per sub in an unbundled world, where non-sports fans aren't around to shoulder some of the burden.
For more:
- read this Wall Street Journal story (sub. req.)
Related links:
Aereo crusher CBS launches $5.99-a-month online service
It's really happening: HBO sets a la carte streaming plans for 2015
Report: Time Warner looking to deploy HBO in more Internet-only packages
HBO ahead on profits for now, but Netflix is better positioned, analyst says
Aereo set to appear back in court as report surfaces that investors aren't done