A la carte TV? Probably Not Anytime Soon
In a perfect world, I’d fire up my streaming set-top box and watch live streams of my favorite channels. During commercial breaks, I’d be shown advertising that I might actually be interested in — no Cash4Gold! — through some kind of Facebook integration. And I’d have access to previously-aired episodes of shows on my channels without having to subscribe to a certain service-tier.
Would I concede anything for an experience like this? Absolutely. Take DVR away, under the condition that every single show on all of my channels is available for on-demand viewing as soon as it has aired. I’ll be more receptive to commercial watching if it means I don’t have to worry about DVR scheduling and hard drive space. I’d also be willing to pay a little more than cable providers do for certain channels. As long as I get the channels I want and my bill is lower, I’d be happy as a clam.
So I’d get the channels I want, a larger, more-quickly updated on-demand library, and a lower bill. Advertisers would get more bang for their buck because their ads would be shown to a more targeted audience. And networks would be able to see exactly how many people are tuning in for a particular show and how many elect to watch that show on-demand later. This is a world of consumer convenience and smarter, more cost-effective, more analytical business for networks and advertisers.
What stands in the way of this world, this a la carte streaming television model? Two things: cable companies and fear of the unknown.
It’s no secret that many cable companies are monopolies. They operate in most areas without any terrestrial competition, where the choice between TV providers consists of a single cable company or a satellite TV provider like DirecTV or Dish Network. And many do so while also controlling the high-speed Internet market in that same area.
With that in mind, imagine the ways a cable company could make life uncomfortable for TV networks who venture out onto their own. The cable company could put strict Internet bandwidth caps in place or selectively degrade service coming from a certain website. It could also hike Internet rates up to cover the revenues lost from bailing cable TV subscribers. When a cable company can also potentially stifle Internet-based innovation, it puts TV networks in a very tight spot.
That’s why many networks have tip-toed out into the world of Web-based streaming video, but very few have done it live and almost none offer their full content libraries — at least, not without a cable TV subscription. It’s a fear of what the unknown might hold in store. Should a company test the waters of live streaming video, who knows what the repercussions might be? Perhaps the cable company would refuse to carry the channel and a significant source of revenue for that TV network would be gone.
Of course, it’s a two-way street here. The TV networks aren’t totally free of guilt, as they often bundle their major channels with a bunch of less-popular ones; so, in addition to Major Cable Network, you’re also getting The Goat Channel and Home Knitting Network. It’s a really complicated relationship where cable companies know they need to carry certain channels and TV networks know they need the audience that cable provides, but both would absolutely do without the other if they could.
And now you can see why we’re still sitting in neutral. Why try out new delivery methods when a cable company will pay to carry a channel? By sticking with cable, TV networks shed a lot of risk by pulling in guaranteed payments from the cable company, and the large, built-in cable audience makes its easier to sell advertising (even if tracking its effectiveness is less efficient).
I have no doubts that a la carte TV is in our future. Whether it’s through a cable TV provider or over the Internet (which probably comes from a cable TV provider), it’ll come. I’m just not sure it’ll happen anytime soon. We’re just too stuck in our current model and we don’t have enough competition in the cable space to push things forward.