Tuesday, April 17, 2012

Consumers Want A La Carte Programming So They Can Pay Less

Why the threat of cord cutting?  It is because consumers have grown tired of watching their cost of cable explode and are seeking alternatives to a cable subscription.  Those consumers in markets with telco overbuilders like to play the game of switching, or at least threatening to switch, in order to get discount pricing from their cable operator.  Others, according to the latest survey, would rather pay just for the channels they watch.

"U.S. consumers would overwhelmingly prefer to pay for just 19 TV channels at $1.50 a pop than their current multichannel packages, according to a new survey.  RBC Capital Markets found that 92% of over 1,000 respondents are interested in a a la carte TV offering that would cost them far less than the $84 they pay for access to at least 91 channels on average."  Unfortunately, a number of the notable networks would want much more than a $1.50 for their service.  And cable operators don't have the ability to unbundle networks and sell individually because of contractual issues.  Most networks require that they be offered to the largest group of customers and that their reach exceeds 90% of total homes that subscribe.  In today's marketplace, a la carte offerings by a cable operator are not realistically possible.

So consumers seek other alternative means to watch programs that they want at a price point that they are willing to pay.  Hulu just announced that their premium subscription service, priced at just $8 a month, already has over 2 million subscribers.  Netflix is offering its own low priced streaming service as well.  What percentage of these customers are also cable subscribers was not released; it would be interesting to learn if these customers are cord cutters or not.  Are these services complementary to cable or indeed upstarts?

Consumers may want to find alternatives to their cable subscription or they may simply want to complain and won't really act to cut that cord.  A la carte sounds like an ideal solution but it won't happen in the current cable operator model.

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