Streaming Video Competition Slowly Begins Killing The Bloated, Pricey Cable Bundle

from the dead-and-bloated dept

If you recall, the cable industry has spent the better part of the last decade arguing that a la carte television (offering users the ability to buy channels individually instead of in bloated bundles) would do two things: raise rates for all consumers, and kill off niche channels, which the industry argued simply couldn't survive outside of the bundle. The industry repeatedly used this logic to justify its decision to avoid delivering not only a la carte, but cheaper and more flexible channel bundles in general.

Some ten years later, and you'll be shocked to learn that higher cable TV rates and the death of niche channels... are happening anyway. The Wall Street Journal this week penned an interesting look at how cable companies are increasingly culling lesser-viewed channels from the cable lineup, largely to make way for more expensive programming (read: mostly sports). The report notes that while consumers have endlessly decried the high costs and limited flexibility in the channel bundle, the number of channels in the cable bundle has ballooned all the same:

"Since 2008, the average number of channels in U.S. cable bundles has grown from 129 to 199. But people typically watch only about 15 a week, according to Nielsen. Many networks get small audiences. Nearly 70 channels that collect an average of $13 of Americans’ monthly cable bills each accounted for about 0.5% or less of total TV viewing in January, according to a WSJ analysis of Nielsen and Kagan data."

As broadcasters demand more and more money for the same content, cable providers have started either eliminating lesser watched channels from their cable lineup entirely, or shoveling these channels off into higher-priced bundles in a desperate attempt to stave off inevitable evolution.

But the die is already cast. Customers are tired of paying $130 per month for 200 (largey unwatched) channels, and are increasingly fleeing to streaming competitors -- resulting in 2016 seeing the highest cord cutting rates on record. Despite this, broadcasters continue to demand higher and higher rates, resulting in more and more annoying content blackouts and carriage fee disputes. Said disputes, which involve users losing access to content because cable and broadcasters can't agree on new rates, only act to further drive these annoyed customers to streaming alternatives.

And while cable companies have started ejecting lesser-watched niche channels from the lineup (not really as big of a deal as claimed as the PewDiePie era should make clear), consumers are expected to happily continue paying the same amount of money:

"Don’t expect cable-TV prices to fall as channels die: Cable executives say they can’t pass on savings since their programming costs are still rising faster than cable bill increases."

That's of course why many smaller phone and cable companies are getting out of the cable TV game entirely, since their lack of size for leverage in content negotiations means their profit margins are untenable. It's also why giant companies like Comcast and AT&T are increasingly merging, consolidating, and buying content factories like NBC Universal or Time Warner, in the hopes that owning the cow helps them weather the evolutionary shitstorm to come.

The problem of course is that the cable and broadcast industry will eventually have to make less money in the face of streaming competition. It's not really a choice, but it's been marginally entertaining watching the sector try and avoid this reality.

Right now, some companies are offering so-called "skinny bundles" to appease frustrated customers, hoping these customers won't notice caveats, fees and hidden charges make these options as expensive as the traditional bundles they're supposed to supplant. But ultimately the cable and broadcast industry will have to lower traditional cable prices and begin offering more flexibility if they hope to truly compete with the original programming coming from the likes of Amazon, Netflix, YouTube, and eventually, Apple.

You'll know the entire sector has actually learned some sort of lesson when the cost of traditional cable drops. Until then, most of this shuffling around of channels is little more than a superficial, aesthetic attempt to avoid the stark reality that overlarge and overpriced cable TV bundles are doomed by the rise of streaming video competition.

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Filed Under: a la carte, cable bundle, competition, streaming video