Why Some Content Packages Will Fall Apart

Today most content providers bundle their channels together and you have to take them all. As this article points out - that has to end because the prices are out of hand.

One important factor that the article does not point out is the fact that today's middleware and OSS/BSS systems can tell operators exactly how many people are watching particular channels, when they are watching and for how long. They don't have to rely on Neilson ratings or any other factors. They can also use those eye-ball reports to compare channels against similarly viewed channels to see if things are over-priced.

If a channel that costs $.20 per sub is getting the same viewership as another channel that costs $.10 - how do you justify paying that $.20 in a new contract?

Cord-Cutting on Rise at Time Warner

Interesting look at how Time Warner has lost 140,000 residential video customers during the third quarter this year.

What the article doesn't tell you is that even though TW lost those 140,000 subscribers - profits are up in part because they increased the number of residential high speed Internet customers by 8%. People who cut the cord still need a good Internet connection to view Netflix, Hulu and the rest of the over the top content providers.

The real losers from TW losing 140,000 residential video customers are the content providers. That dip in TW subscribers should cost Disney (ABC, ESPN, etc.) well over $1 million a month just in Affiliate Rights fees never mind lost advertising revenue. If this becomes a trend then content companies may start rethinking a la carte pricing as a way to get back some of the cord cutters.

Do You Have the Game?

When I was a kid - boxing was at perhaps its heyday. Marvin Hagler, Tommy Hearns, Roberto Duran, Sugar Ray Leonard, and Mike Tyson. It seemed there was always a big fight but the problem was where to watch it. This was the end of the closed circuit TV era and beginning of the PPV (pay per view) era. Some bars legitimately paid for the signal and charged an entrance fee to make up for the hefty fee. Other bars had a "hot box" and received the signal illegally.

Guess where I watched many of these fights.

Today bars, restaurants, hotel common areas and other places are supposed to pay commercial rates based upon formulas that make string theory algorithms look like child's play. For that reason and because its not a whole lot of money in this bundled channel package world - having cable in these places at the same rates as a residential customer is not really a big deal.

One of the unintended consequences of a la carte TV may be to completely change this.

If Disney can no longer bundle all the ESPN channels together to get a hefty rights package fee then they may need to find other avenues to recoup the costs of buying rights to things like the NFL's Monday Night Football. One of those avenues may be to go after some of these bars and other places that are paying residential rates when they should be paying commercial rates based upon bulk rate pricing and fire code seating and a bunch of other variables.

We could wind up in a world where bars have to charge $7 for a draft beer to cover their TV costs. Or, conversely, we may end up in a world where the bar avoids these rights fees by simply offering free WiFi and people watch what they want on iPads or other tablet-type devices. We may even have scenarios where one person uses a Slingbox to get their signal from home and the bar shows it on a "group projection device" (don't call it a hot box).

Not  saying this is what is going to happen. Just saying it is possible.