That's why they only do it for really premium content, not a channel you want to pay $1 a month for-and even then, they are prone to bundle these services into "Ultimate Sports Fan" or "Movie Lover" packages rather than building a custom set of choices just for you. In this environment, attempting to give people only the networks that they want simply adds costs and hassle for the company, which has to customize everyone's feed and then deal with the inevitable errors. It costs a great deal to run cable to your house, and make or buy television shows to send down that pipe it costs basically nothing for each show you actually watch. Other studies indicate that the average consumer would pay more, to cover the transaction costs of an unbundled system.īundling is what happens in markets with a high fixed cost and a low marginal cost. But they are mistaken in the belief that unbundling will bring their bills down one recent estimate was that unbundling would lower prices by $0.35 a month. What they dislike is paying so much for cable. As James Surowiecki pointed out last year, most people actually like bundling-they don't want to buy books by the chapter or newspapers by the article. Plus you lose what economists call the option value of the other channels-that every-once-in-a-while experience of seeing something you want to watch outside of your usual channels. your cable bill is exactly what it was, there has been no net increase in the number of great shows, and you have to spend two hours hassling with the phone company because they gave you the Science Channel instead of SyFy. So instead of getting (to make it easy) $1 apiece from 5 million viewers, they need $10 apiece from 500,000 viewers. Before, say your channel made $5 million a year off of affiliate fees now they need to make that $5 million off of the 10% of viewers who actually watch them occasionally. Well, everyone else also only pays for the ten channels they want. Now say we break it up so that you only pay for the ten channels you want, out of 100. Right now everyone on your cable network is paying for everything. ![]() Nor does unbundling mean that you can save money by just paying for the channels you want. There are more networks devoted to reality shows than to making things like Game of Thrones because there are more eyeballs on the reality shows to sell advertisers. Moreover, all those channels already get another significant part of their revenue on a per-user basis they charge advertisers (roughly) by the eyeball. So it isn't really the case that Alyssa is subsidizing terrible content cable channels are at least roughly paid on how many eyeballs they can attract. First of all, as far as I know affiliate fees do, in fact, vary by how popular the content is: ESPN gets more than ID, and networks with too few eyeballs get bumped entirely unless they're affiliated with a more powerful network (i.e. Instead, I'm stuck subsidizing endless spinoffs of Tyler Perry's House of Payne. I imagine those networks would be happy to take their greater share of my subscription dollars and use them towards nifty programming. I'd pay what I'm paying for cable now if I could just get BBC America, SyFy, USA, TNT, FX, Bravo, AMC, Showtime, HBO, and ESPN. Channels could opt to be available in that initial tranche, or to stay independent like HBO, or participate in both. Cable's obviously much more dependent than either of those kinds of art on delivery mechanism, but if I were the strong, profitable, critically acclaimed network, I would totally gang up on the dead weight I was packaged with and insist on letting consumers do something like pick ten channels for a set price and then pay a la carte for extra channels. ![]() The music industry's evolved to a point where I am no longer required to pay for the skits on hip-hop albums. Martin books, I had to guy the whole Left Behind series. No one would stand for a model where to buy George R.R. The bundle of channels that come in a cable package are a truly random spread of things, and while that may seem like it provides a lot of choice, it's not actually letting me pay directly for the things I'd like to purchase. It often indicates a user profile.īut it's far from clear that unbundling would either reduce costs (which is what most people think) or direct more money towards the sources that Rosenberg wants to support:īut it's not just the delivery mechanism for the product that's a problem: respondents in the survey that article cites say they think cable is a bad value, and with good reason. Account icon An icon in the shape of a person's head and shoulders.
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