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Steep cable price hikes could soon make cord-cutting a reality

bigdoublezero said:
No, I'm comparing how two industries package lots of things that everyone necessarily might not want individually to bring down costs overall. Muggsy Bogues is not a meerkat, I'm sorry.
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but the cost's never go down. When has a channel bundle ever lowered your cable bill? That "savings" is only just a spin to explain the unsustainable business models of content providers. The more channels a network umbrella "provides", the more ad revenue it can generate to meet rising costs and sustain (for another quarter) it's profit margin. The costs of that unsustainable business model (there can only be so many channels before equilibrium) are passed on to the cable companies, who pass it along to subscribers.
 
I'm sorry, you don't understand what you're talking about. The channels can't do business without a guaranteed revenue stream from bundling. I encourage you to read more about how the cable industry works.
 
bigdoublezero said:
The channels can't do business without a guaranteed revenue stream from bundling. I encourage you to read more about how the cable industry works.
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They've really put themselves in a bind then. Maybe you can explain how they did business before bundling?
 
I wish I wasn't such a sports junkie... otherwise, I would have dumped cable years ago.
 
The wife and I dumped cable a few weeks ago. A few HD antennas, some Roku boxes and a Plex server and we're all set.
 
ImTheCaptain said:
A great (and timely) story on All Things Considered yesterday
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it's truly amazing how little I know about cable.

"You might not realize it, but between a third and half of your cable bill goes directly to pay for channels like CBS or ESPN. Though you'd never see it listed on your monthly cable bill, nearly every channel you get has a secret price. Industry analyst SNL Kagan estimates that, whether you watch it or not, you're paying something like 6 cents a month to the Hallmark Channel, 60 cents a month for CNN, and $5.54 a month for ESPN, the most expensive channel around...But these prices are hidden. They get rolled into the price of your bundle of channels. Needham & Co. estimates that ESPN rakes in $7 billion from cable customers, even though many never even watch the channel."

myDeaconmyhand said:
A huge chunk of that content has no market demand, it only exists in the vacuum of cable television where there is no competition. Why do you believe that technical innovation will allow that bloat to remain in existence? Your entire point in all this is grounded in the lack of competition, but you're only supporting evidence as to why that lack of competition will continue is government lobbyists.
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"Take a company like Viacom. It owns popular channels like MTV and Comedy Central. It also owns thoroughly unpopular channels like Palladia. But it can tell a cable company that if it wants MTV at a good price, it also has to carry Palladia..."Bundling is an almost unbelievably good business for channel owners..."It is a subsidy. The question is, overall, is there a value proposition for the subscriber?" asks Howard Homonoff, a cable industry consultant..."
myDeaconmyhand said:
Those niche, "bloat" channels could not sustain themselves in an ala carte model.
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"Needham & Co. estimates just 20 channels would survive in an unbundled world."
"Owners of television networks have every incentive to preserve the status quo. It's too lucrative, and they say it subsidizes niche content and expensive shows with smaller audiences"
"...I don't believe sports are going to go away. I think there's going to be a market correction," Hooks says."
myDeaconmyhand said:
The more channels a network umbrella "provides", the more ad revenue it can generate to meet rising costs and sustain (for another quarter) it's profit margin. The costs of that unsustainable business model (there can only be so many channels before equilibrium) are passed on to the cable companies, who pass it along to subscribers.
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ImTheCaptain said:
without those channels and additional revenue streams to subsidize them, your premium channels (at least premium to you) will cost much more.
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myDeaconmyhand said:
what people will watch and what people are willing to pay for are two separate things. Those niche, "bloat" channels could not sustain themselves in an ala carte model.
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"Time Warner shocked many when it proposed offering CBS a la carte to resolve the contract dispute...
"...Verizon has proposed paying for channels with a sliding scale based on their actual popularity."
"Cablevision's CEO even said he sees a day when the company sells nothing but Internet access."
myDeaconmyhand said:
I said that the free market wouldn't allow for Cable Companies to transfer all of their current profits from a fading cable tv industry into the ISP business. They are going to lose profits as cable dies and home telephones completely disappear.
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"But all sides know cable can only get so much more expensive before customers cut the cord completely."
myDeaconmyhand said:
The whole movement to cut the cord is in recognition that the cost of cable has become unruly due to that bloat of unwanted programming and channels. People increasingly don't want all of that content, and your belief that they're stuck with it in perpetuity is foolish IMO.
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It seems the end of television may be nigh, what with people not willing to pay for bundling, and content providers seemingly unable to exist without it.
 
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myDeaconmyhand said:
"You might not realize it, but between a third and half of your cable bill goes directly to pay for channels like CBS or ESPN. Though you'd never see it listed on your monthly cable bill, nearly every channel you get has a secret price. Industry analyst SNL Kagan estimates that, whether you watch it or not, you're paying something like 6 cents a month to the Hallmark Channel, 60 cents a month for CNN, and $5.54 a month for ESPN, the most expensive channel around...But these prices are hidden. They get rolled into the price of your bundle of channels. Needham & Co. estimates that ESPN rakes in $7 billion from cable customers, even though many never even watch the channel."
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I've heard this used as a reason why cutting the cord will never work, but the truth is that the changing market will change the way ESPN does business. In a less centralized cut the cord world, there's more room for competition to pop up. Individualized sports networks (MLB, NFL, NBA, MLS, Big 10, etc) are already reality and streaming content to paying subscribers and many more (ACC) are under talks. They could cut ESPN out of the picture all together as contracts run out. ESPN would be forced to give up the crap it shows that no one really cares about across 8 different channels and refocus on showing content people want at a price they are willing to pay. They can leverage their infrastructure as an advantage. HBO, Showtime, AMC, etc already have streaming infrastructure...it's just a matter of changing how and who they sell their content to. Netflix and Amazon are producing their own content and showing that selling direct to the consumer rather than to a cable/satellite company is viable.

The idea that we're "locked in" to the current means of content consumption is absurd. It's been somewhat static only because the technology in that area has been static. The changes over the last 10 years are major. As media consumption moves into the internet/computing world, Moore's law comes into play. I doubt we'll still be using this same old tired content model 10 more years from now...and the change would likely come even sooner if not for the long-term contracts that bind many of these deals.
 
RacerDeac said:
I've heard this used as a reason why cutting the cord will never work, but the truth is that the changing market will change the way ESPN does business. In a less centralized cut the cord world, there's more room for competition to pop up. Individualized sports networks (MLB, NFL, NBA, MLS, Big 10, etc) are already reality and streaming content to paying subscribers and many more (ACC) are under talks. They could cut ESPN out of the picture all together as contracts run out. ESPN would be forced to give up the crap it shows that no one really cares about across 8 different channels and refocus on showing content people want at a price they are willing to pay. They can leverage their infrastructure as an advantage. HBO, Showtime, AMC, etc already have streaming infrastructure...it's just a matter of changing how and who they sell their content to. Netflix and Amazon are producing their own content and showing that selling direct to the consumer rather than to a cable/satellite company is viable.

The idea that we're "locked in" to the current means of content consumption is absurd. It's been somewhat static only because the technology in that area has been static. The changes over the last 10 years are major. As media consumption moves into the internet/computing world, Moore's law comes into play. I doubt we'll still be using this same old tired content model 10 more years from now...and the change would likely come even sooner if not for the long-term contracts that bind many of these deals.
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This.

I think the sports leagues are the ones to really watch with this. The NHL has their own online-only subscription service (I have used it in the past when traveling during hockey season to keep up with Carolina). Were it not for blackout restrictions, I could easily do the same thing at home and cut out cable altogether. If the NFL were to do something like this and come up with a tiered subscription model (all the games, your team only, etc.) it would be game on. All the leagues would do it. Then you'd get the same kind of thing from other content creators. HBO comes to mind as being a content creator that could go online only (they already have the infrastructure with HBOGO) and forget the cable companies.

All it's going to take is for that first domino to fall.
 
RacerDeac said:
The idea that we're "locked in" to the current means of content consumption is absurd. It's been somewhat static only because the technology in that area has been static. The changes over the last 10 years are major. As media consumption moves into the internet/computing world, Moore's law comes into play. I doubt we'll still be using this same old tired content model 10 more years from now...and the change would likely come even sooner if not for the long-term contracts that bind many of these deals.
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that's all i'm saying. I get that cable companies own the internet right now, I get it. Cable TV though, as a specific broadcast platform, is on it's way out. The high speed internet infrastructure in the U.S. is highly outdated, and is well behind the technology of other first world countries. The cable conglomerates, who are currently preventing competition and innovation through governmental lobbying, will have strong ISP competition in the very near future, as innovation is inevitable.
 
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