Is a la Carte Cable a Sucker’s Bet?

Being able to pick and choose which cable channels you want instead of having them all bundled into one package would bring “economic ruin,” according to recent research from Yankee Group. But as online video grows, the point may already be moot.

“A la carte” pricing for cable has been a hotly-debated topic since… well, since people first looked at their cable bill and cursed their provider. Yankee says the average cable subscriber pays $60 a month for basic cable, and Nielsen Media Research said that the average cable subscriber pays for 85 channels and only watches 16.

While the siren song of sticking it to the cable company via a la carte is tempting, Yankee predicts switching to such pricing would have disastrous immediate effects including:

  • Fewer channels: the loss of carriage fees for programmers would translate into niche networks losing revenue and subscribers, while forcing surviving networks to charge individuals more to subscribe to their channels.
  • Less ad revenue: with just the channels you want, there are fewer casual viewers aimlessly flipping through the dial. Fewer viewers results in fewer ad dollars. Networks that survived the shakeout could charge more, though.
  • Economic impact: fewer networks and fewer TV ads means fewer jobs which would be felt throughout the economy.

(via Research Recap)

FCC Chairman Kevin Martin has come out in favor of a la carte cable pricing, saying it would assist minorities. But his fellow FCC member Robert McDowell has said that the commission would need to be “very, very careful” on that issue. McDowell points out that with the online video boom, consumers already have more choices than ever for watching content.

Of course, proping up cable companies and their dying business models isn’t a good reason to keep a la carte around. But go ahead, keep fighting; we’ll be over here watching Hulu.

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