Verizon’s FiOS television service made news a few weeks ago when it announced that it would offer its channel packages in smaller, cheaper bundles organized by category (e.g., sports, family, news). This prompted an immediate objection from Disney that the terms of Verizon’s license for Disney-owned ESPN prohibit the channel from being offered in a separate sports tier.
The Verizon offer is not true a la carte programming–viewers can still buy channels only in bundled packages–but it may prove to be a bellwether. Consumers have complained for years about lack of choice in their cable packages, which require them to purchase hundreds of channels when the average viewer watches only 17. Now that television programs are widely available on the internet, cable operators are feeling pressure to attract and retain subscribers, particularly younger ones, against the many alternative sources. This pressure will only increase as the networks themselves bypass the cable gatekeeper entirely to offer over-the-top services directly through digital platforms.
While it’s easy to predict that consumers will have increasing flexibility in choosing entertainment offerings, the final shape this will take is still uncertain. It may be impractical to expect complete unbundling of channel offerings. Assuming a modest price point of $5.99/month for an a la carte channel, a viewer who subscribes to the average 17 channels will be paying $102/month–not a saving over typical cable fees. The cable companies can also expect pushback from the networks, as the ESPN claim shows. Another point worth noting, especially for those of us who make their living in program production, is that a la carte cable may put many of the lower-tier cable channels out of business, when they lose guaranteed carriage as part of a large package.