Blog Post

Five companies that want to break up your cable bundle

Tired of paying $100 for hundreds of channels if you only watch five of them? You’re not alone: An increasing number of companies is also looking for alternatives to the traditional cable bundle. The alliance of companies pushing for unbundling contains a few unexpected candidates — one of them may even be the very company that charges you for that bundle.

Pay TV providers have long complained that TV networks force them to carry channels they don’t want. But in recent weeks, those complaints have turned into action, with Cablevision (S CVC) suing Viacom (s VIA) to break up the network’s bundle, and Verizon (S VZ) starting to talk about paying programmers based on their performance, as opposed to a flat fee for a bundle of channels.

So who is trying to break up the bundle, and how? Check out our list:

Verizon: Putting its money where your eyes are

Verizon execs have been talking for some time about changing things up, to the point where director of consumer video services Maitreyi Krishnaswamy, who is responsible for the company’s FIOS TV service, said last year that cord cutting wasn’t growing fast enough for the company. The logic behind those remarks? If consumers cut the cord, then programmers are going to be more willing to rethink the deals they’re having with Verizon.

Verizon sells bundles - but it would like to change them.
Verizon sells bundles – but it would like to change them.

Looks like this is now beginning to happen, at least on a smaller scale. The Wall Street Journal reported this weekend that Verizon is pressing smaller channels to pay them based on their actual performance, as opposed to a flat fee per subscriber. The result wouldn’t actually be a pick-and-choose TV lineup. Instead, Verizon would potentially distribute even more channels — but only pay the ones that are actually attracting eyeballs.

Making this model work won’t be easy for Verizon, especially when it comes to the biggest cost drivers, which are sports channels like ESPN. (s DIS) But some smaller channels might be eager to sign on. This could potentially lead to some cheaper bundles that offer actually more content, save for some of the most expensive fare.

Cablevision: Suing to get rid of the duds

Cablevision has chosen to take its attack on the big bundles to the courts: The company sued Viacom (s VIA) last month to get out of a contract it struck just two months earlier, arguing that Viacom is forcing the company to carry a number of channels its customers don’t want. The lawsuit is about a total of 12 channels like MTV Hits and VH1 Classic, but it could ultimately threaten the whole concept of a bundle — which is why it will likely get settled out of court.

Aereo: A new kind of bundle

Aereo is circumventing the cable bundle altogether with an offer that’s squarely aimed at cord cutters: The company offers streaming of broadcast networks like ABC, CBS (S CBS) and NBC (S CMCSK) for as little as $8 a month.

Aereo's tiny antennas.
Aereo’s tiny antennas could have a big impact on bundles.

It’s undercutting the cable companies through the use of a legal loophole, which involves an elaborate setup of miniature antenna farms, and resulted in a lawsuit brought against the company by those very broadcasters. However, the company won a first round last year, and is now looking to expand to close to two dozen cities this spring.

To learn more about Aereo and the company’s take on the future of television, check out our upcoming paidContent Live conference, where I’m going to chat with the company’s CEO Chet Kanojia about these very issues.

Boxee: Unbundling the DVR

Boxee’s new Boxee TV device comes with a promising proposition: The device won’t just let you watch major broadcast networks without paying for cable, it will also upload any show airing on those networks to a cloud DVR with unlimited storage and streams them not only to your TV, but also to your iPad (s AAPL) or computer. Boxee’s cloud DVR is currently only available in limited markets, and the device itself has been met with mixed reviews – but the idea behind it is definitely disruptive, because it’s essentially TV Everywhere without the expensive cable price tag.

Netflix: Showing that you can succeed without a bundle

Netflix (s NFLX) has long shied away from discussions around cord cutting and cable bundles, with execs insisting that that wants to be complementary to cable, and that it will eventually just be another channel that consumers subscribe to, just like HBO.

Netflix's House of Cards is like a cable show, but  without a cable bundle.
Netflix’s House of Cards is like a cable show, but without a cable bundle.

However, the big difference is that you can only get HBO as part of a premium cable bundle. Netflix, on the other hand, is available to anyone, no matter whether they pay $50, $120 or nothing at all for cable.

That strategy has been working well for the company: Not only does Netflix now have 33 million subscribers, investors have also given the company a thumbs-up on its original content strategy, with stock roughly doubling since the beginning of the year.  And with new, original shows about to debut on Netflix every month this spring, the company seems to demonstrate HBO that you can, in fact, succeed without being part of a bundle.

Image courtesy of Flickr user HarshPatel;Photographer.

13 Responses to “Five companies that want to break up your cable bundle”

  1. I tried to eliminate my cable or “cut the cord” and keep only internet service. I found that it is impossible in the city I live in. There are only 2 cable/internet companies in my city. If you remove the internet or cable the price goes up without bundling. I am a returning student and need internet service for school. I wanted to remove cable to save on my monthly expenses because I don’t have as much time to watch it but also find I watch more of the main networks anyway.

  2. Chuckish

    Netflix IS A BUNDLE! It’s amazing to me that people act like Netflix is the white knight that’s completely anti-bundle. Hello! What are you paying for? A bunch of content you’re not watching. Does Netflix offer pay-per-view? NO. It’s a bundle.

    Also, like Jake said, at this point in time, the bundle is the best deal for EVERYONE. The consumers. The cable companies. The content creators. The networks. EVERYONE. Unless you literally watch 1 or 2 channels, you’ll probably be paying similar money for a few channels which is just silly. Plus, guess what, if any of your favorite channels aren’t mainstream or backed by a major conglomerate, they’ll either file for bankruptcy or get bought up by a major conglomerate and changed so it will no longer be your favorite channel.

    Just stop with this anti-bundle cheerleading non-sense and do just a little bit of critical thinking Please.

  3. Channel Master

    Janko forgot to mention Channel Master. 60 Year antenna manufacturer geared for Cord Cutters and Cord Nevers. Check out our line of Subscription Free TV consumer electronics including OTA DVRs.

  4. Legal loophole.

    Only such a round about way was needed to the US companies lawsuit happy trigger fingers in trying to maintain their monopolies. It’s a shame how many legitimate companies are dead because of ‘er mah gaud we dont’ like that’ and go scream ‘copy right copy right’ sue sue sue’ ‘dmca! dmca! sue sue sue’

  5. Do people really want less choice? If you watch 3 channels that’s $30 a month, assuming Netflix pricing per channel. 10 channels will be $100 a month. And none of them will give you a DVR. Is that really better than 200 channels for the same price? Do you watch the same channels the other people you live with watch?

    • Not even close to being accurate, Jake. What people really want is to pay less than the $100 a month they’re being forced to pay now while being able to chose, say, 50 channels from 250 that are available instead of being forced to buy the whole $250. The cost won’t anywhere near $10 a channel. In fact, I suspect it’ll be more like $0.50 to $1 per channel per month, plus a basic service fee of maybe $20 per month.

      Personally, I watch maybe 30 channels regularly out of the 250 I must now buy from DirectTV.

  6. This is not happening fast enough! They are finally acknowledging even couch potatoes don’t watch 300+ channels? Really?! I watch 3-5 channels on a regular basis and the rest are dead to me but I must pay for the bundle…there are some channels I actually want but doesn’t come with my current bundle. The entire business model is just silly! I’m glad Netflix is forcing the issue and show them changes are coming fast. Actually, I like to see Netflix stick this one to them all and force them to break up bundles and thus making it cheaper as well. PAY only for the channels you watch.