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

(Mis)Uses of Technology

from the dead-and-bloated dept

Mon, Mar 27th 2017 6:27am — Karl Bode

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

36 Comments

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Ninja (profile), 27 Mar 2017 @ 5:26am

It's been 5 years since I dropped cable and *ominous drums* it doesn't make any difference at all. Except if you count the amount of money saved (about $3500).

Of course I don't have access to some programming if I don't pirate it because there are no other alternatives but with time I started to care less and less about what I was missing to the point I don't even bother to pirate anymore. I'm hardly alone here.

So it's worse than simple monetary losses to the cable companies and channels. It's about going into irrelevance which in the long term is worse than losing some money by going stream.
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TheResidentSkeptic (profile), 27 Mar 2017 @ 6:44am

Never learn from History, do they?
150 years ago, people went to the park to listen to the band playing in the band shell or gazebo.

Early 1900's nightclubs were the rage - people went out to listen to the band and the singers. Music in the park died out.

Radio came along - and families huddled down to listen to the big bands - or Orson Welles scaring the country half to death.

TV came along - and families moved from Radio to TV and watched one of the 3 choices during family viewing hour.
And Radio's heyday slowly ended.

Cable came along to offer way more channels - and broadcast TV slowly fell into irrelevance. But it was still "watch our show at 8PM on Tuesday".

Digital arrived. Streaming is growing. We're no longer "tied down" or forced to watch only when the controllers want us to sit down and watch. We can choose what to watch, when, where, and on what device. We're not tied to the radio in the corner, the tv in the living room, and most importantly - not tied to anybodies clock but our own.

The world has changed again. Get with the NEW program. (pun intended)

No amount of kicking, screaming, stomping feet, suing customers, or passing stupid laws will stop this change. It will delay the inevitable - but not for long.
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Roger Strong (profile), 27 Mar 2017 @ 6:50am

Re:
What if they throw in a newspaper subscription?
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AnonCow, 27 Mar 2017 @ 6:59am

With Trump in the White House and Pai at FCC, it is only a matter of Comcast writing a big enough check to get cord cutting crippled by completely eliminating net neutrality.

By the end of 2017, I'll wager that the big cable ISPs will have put crippling bandwidth limits on their customers that all but prevent services like Vue, YouTube TV, and Hulu from operating successfully and forces Netflix to pay so much for peering that their financial model's viability is called into question.

If the FCC doesn't do it, Kushner will do it by executive fiat under the White House Office of American Innovation
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Not an Electronic Rodent (profile), 27 Mar 2017 @ 7:08am

Not just them

You'll know the entire sector has actually learned some sort of lesson when the cost of traditional cable drops.

Except, it's not just them that has to learn, is it?

Cable executives say they can’t pass on savings since their programming costs are still rising faster than cable bill increases.

The "this programme is worth $36gazillion because we say it is and, well, copyright" attitude of the major content producing companies would have to change too.

Suspension of respiration pending outcome ill advised...
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Anonymous Coward, 27 Mar 2017 @ 7:10am

rubbish! you ask any of the cable companies! nothing is changing, customers aren't leaving, no one is losing money! yeah! right!
as with all the 'entertainment companies' they have and still expect to carry on dictating who does what, with what, just as they have for the last 30 years. the bigger problem is the corrupt politicians who do whatever they can to aid the industries, rather than making them stand on their own feet, face up to reality and the future and then start to compete with all things and each other! until that happens, progress is going to continue to be real slow and all that does in hurt innovation, new companies and progress into the future!!
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Dave, 27 Mar 2017 @ 7:23am

Just not in Canada.

www.cbc.ca/beta/news/business/youtube-streaming-netflix-canada-u-s-hbo-1.4039694
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That Anonymous Coward (profile), 27 Mar 2017 @ 7:31am

"Cable executives say they can’t pass on savings since their programming costs are still rising faster than cable bill increases."

Because the idea of paying the cable execs less for doing a shitty job of keeping the companies profitable has never crossed their minds.
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Digitari, 27 Mar 2017 @ 7:38am

rumor has it...
there is a writer strike looming, and everyone knows what happened last time.........
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Anonymous Coward, 27 Mar 2017 @ 7:45am

Re:
Keeping the company profitable has crossed their mind, its just that they have one tactic to do so; make the customers pay more for less.
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Pixelation, 27 Mar 2017 @ 7:54am

Working that way
Working on the wife to dump cable. We've been watching some shows with Amazon Prime and I can't believe how pleasant it is to watch a show without commercials. Like Joni Mitchell said, "you don't know what you've got 'til it's gone". In this instance, it's like a case of Syphilis.

Certainly won't miss it.
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Anonymous Coward, 27 Mar 2017 @ 8:00am

Grumblings from an Old Geezer
I gave up satellite TV years ago, there was no cable in my semi-rural neighborhood at that time. Cable eventually came, I ignored it. In return, I have all that cash for other things. In place of satellite/cable TV there are:
- books (yes dead tree things still exist, avoid Amazon!),
- electronic books (Project Gutenberg),
- audio books (Internet Archive/Librivox),
- old time movies (Internet Archive),
- old time radio shows (Internet Archive)
- personal electronic projects,
- ham radio (yes it still exists),
- wood working,
- gardening,
- the Internet and
- occasionally broadcast TV (Dr. Who, Star Trek).

What do I need cable/satellite for? Nothing. Cable/Satellite TV prices are unacceptable, their content objectionable (sex, violence and politics).
Let their executives bury their head in the sand. They will change or die, wall street with them. Good riddance to bad trash.

OG
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OA (profile), 27 Mar 2017 @ 8:02am

Re:
Interesting what people think they need but really don't. When they stop getting it they just do without. It reminds me of that Star Trek TNG episode about one planet profiting off the addiction of the neighboring planet.
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Anonymous Coward, 27 Mar 2017 @ 8:02am

Re: rumor has it...
I guess I'm not everyone. What happened last time? I wasn't aware there ever was a writer's strike.
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Anonymous Coward, 27 Mar 2017 @ 8:05am

Re: Grumblings from an Old Geezer
"What do I need cable/satellite for? Nothing. Cable/Satellite TV prices are unacceptable, their content objectionable (sex, violence and politics)"

Without the bit in parentheses I would have thought you were referring to reality shows. You can get plenty of objectionable content that you refer to on the Internet ( ͡° ͜ʖ ͡°)
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DB (profile), 27 Mar 2017 @ 8:07am

Bogus "bundle" counts?
I wonder if number of channels in a package has been verified by an unbiased observer.

From my observation when visiting other areas, the unique video content hasn't increased. Every 'channel' now has at least two copies, some three (SD, HD, UHD). Eight years ago only a select set of channels had an HD version, and 4K UHD didn't exist.

Some systems also had far more audio channels, with the new ones being foreign language. No doubt they are counted as part of the bundles, but they shouldn't be counted with the video 'channels'.
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Anonymous Coward, 27 Mar 2017 @ 8:07am

Re: Working that way
Here was a way that worked for me. I just made sure to show how all our money is being used. You Need A Budget is a great tool to organize your finances. Once she actually saw how much cable costs, it became her idea to get rid of it. In it place we paid for the premium version of Hulu. We already had Prime and Netflix and that will be the 3 we use. The call to comcast was amusing. Our rep was excited about all the savings he making us and still keep our cable. I then told him to remove these features from our bill and add the the next tier of internet. Dropped another $50 from his quote. He sounded disappointed for some reason.
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Roger Strong (profile), 27 Mar 2017 @ 8:08am

Re:
The Canadian cable companies are repeating the American music distributers' response to digital music 15 or 20 year ago: Launch their own digital service, make it awful, and then declare that people aren't interested.

The "Documentaries" TV category for Shomi consisted solely of:
- Big Brother (Really.)
- Top Gear (but nothing less than 7 years old)

Those of us who opted for Shomi in our cell phone contracts are still paying for it, even though it shut down last year. (An announcement was made that we'd get Netflix as a replacement, but first you had to subscribe to extra services that cost more than a Netflix subscription. Services that aren't available most places regardless.)
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Digitari, 27 Mar 2017 @ 8:28am

Re: Re: rumor has it...
https://en.wikipedia.org/wiki/2007%E2%80%9308_Writers_Guild_of_America_strike

it killed a lot of viewing, even though the writers did get aq bigger cut, it was from a smaller pool, and they got money for DVD sales.
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Robert Beckman, 27 Mar 2017 @ 8:29am

Good Deal
That quote really doesn't tell the story it's trying to.

If there are 70 channels that each get 0.5% viewership for $13, then that means that 70 * 0.5% = 35% of viewership only accounts for $13 of cost.

That's a fantastic deal, I would probably sign back up for cable if it scaled that way, for all channels at $39.

According to that quote, the niche channels are the best deal, and they should drop the expensive ones.
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DannyB (profile), 27 Mar 2017 @ 8:30am

Re: Bogus "bundle" counts?
It's not just two copies (SD, HD, UHD) it's two copies like CSPAN1 and CSPAN2. And HBO. ESPN. Etc.

The need for a "1, 2, 3 etc" versions of the same channel is to sort of poorly compensate for the inability to watch on demand.
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Anonymous Coward, 27 Mar 2017 @ 8:31am

I am one of those evil millennials that won't pay for cable. I do fine with netflix, hulu, and amazon prime, plus the occasional show OTA HD. I don't watch or care about any sports, and not looking to subsidize ESPN or watch garbage "reality" shows. Screw cable.
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DannyB (profile), 27 Mar 2017 @ 8:42am

Re:
How can programming costs be rising faster than cable bill increases? Is it Hollywood Accounting at work again?

First, cable bill increases are already at an insane rate.

Second, aren't production costs getting lower? CGI Special Effects are now cheaper than ever. Video Editing can be done on a MacBook. Good quality cameras are in the few thousands of dollars. Digital Audio workstations are cheaper than ever.

Maybe I don't know what I'm talking about, but aren't there plenty of wannabe young cute actors that can't get jobs? Don't some fraction of those have enough talent to audition for parts in new TV shows?
Clue: new actors might not demand the same pay as big name actors.

Funny, it seems that Netflix is able to start investing many millions into production of quite a few new shows, many of which seem to be well liked. Netflix sometimes even buys a series without making a pilot first -- unheard of in the business. Netflix sometimes even buys more than one season at a time.

Netflix is not the only one making new original shows.

So it seems like Cable is doing something wrong.

Oh, maybe it is Reality TV. When I first saw Reality TV, I knew it was the death of cable. Then we started getting new crap quality content. I knew it was all over when the History channel had Ancient Aliens. And Discovery or Learning channel had crap like Ghost Hunters.

So maybe programming costs are just an excuse. Maybe the reality is that cable UNDER-spent on content and now they're paying for it. I remember in the 1990's when there was interesting content on cable TV. But then the commercials were the killer. Oh, wait. So cable is raking it in with higher and higher subscriptions, AND more and more commercials, and STILL complains about money? Really?
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TripMN, 27 Mar 2017 @ 8:53am

Re: Re:
That might be useful for:

Starting fires

Wrapping fish up

Papering the bottom of a bird cage

Emergency toilet paper

See, Newspapers aren't dead!
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TripMN, 27 Mar 2017 @ 9:00am

Re: Re: rumor has it...
Joss Whedon made Dr. Horrible's Sing Along Blog
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Anonymous Coward, 27 Mar 2017 @ 9:21am

Inovate or perish. Looks like their learning that the hard way.
Shit just got real for the cable co's when youtube of all things jumped on the live TV streaming band wagon.
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Anonymous Coward, 27 Mar 2017 @ 9:33am

Re: Grumblings from an Old Geezer
That's OK, they have a solution for what they view is the real problem - you.

That solution is data caps.
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DB (profile), 27 Mar 2017 @ 9:34am

Re: Re: Bogus "bundle" counts?
Multiple mixes of a channel (HLN / CNN Headline News, CNN Airport) can be only a minor additional cost over producing the primary channel, while potentially multiplying the advertising and carriage fee revenue.

The producers don't schedule the content to optimize for viewer convenience. Their goal is to get you to watch the advertisements, not the channel contents. A good example is the Weather Channel "local on the 8s". It claimed to give a weather synopsis every ten minutes. It shows it very briefly, and constantly shifts the actual start time over two minutes so that people aren't likely to avoid seeing the commercials.
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Anonymous Coward, 27 Mar 2017 @ 9:35am

Re: Re: Bogus "bundle" counts?
Not to mention home shopping 1-14, Get Religion 1-9, and the like.
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Mike K., 27 Mar 2017 @ 10:42am

Cable is Dying
Cable companies like Comcast are overpriced as hell. Customer service was a pain in the ass and they just didn’t deliver. I ditched them and tried Hulu--again overpriced (not as bad), not to mention a ton of filler entertainment. Lately I’ve been using SelectTV. For those who haven’t heard of it (it’s relatively new), their guide to a diverse world of streaming content is pretty f’n slick and costs much less than either.
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ECA (profile), 27 Mar 2017 @ 10:53am

CORPORATIONS AND RELIGION
That OLD "Im right you are WRONG" attitude..
"Do it My way or NO way"

Its funny.
For all the small channels that would PAY to be on cable..and CABLE pays then $0.03 for EACH person watching??

200 channels..
20 you watch mostly.
100 others that show something interesting, ONCE IN AWHILE..
80 channels You dont care about..

There are VERY few channels that CABLE pays more then PENNIES and DIMES for..100 channels cost them $3-$70..
CABLE could FORCE the big guys to COMPETE..but they dont. The Sports industry is BOUGHT OUT.. And always go to highest bidder for STUFF we really dont watch..
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orbitalinsertion (profile), 27 Mar 2017 @ 10:56am

Re: Re: Bogus "bundle" counts?
and one for each US coastal TZ
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Anonymous Coward, 27 Mar 2017 @ 10:57am

Re: Cable is Dying
Don't forget that the likes of Comcast have hold of your short and curlies, and can pull on them by imposing data-caps, or tying your Internet use into a cable package. Without net neutrality there is nothing to stop them making unlimited Netflix ,Hulu or Prime etc. part of different cable bundles.
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ECA (profile), 27 Mar 2017 @ 1:23pm

Re: Never learn from History, do they?
They dont learn from BASIC ECONOMICS..
They dont learn that 1,000,000 Showing up to a SHOW/Auditorium isnt always a good thing..
They Dont want things Cheaper..The movies industry and Channels, Own the whole system or get Paid for Every step in it..

It Costs them Nothing..in the end. The TV Corps(7-8 of them) Own 70% of all broadcasting around the world..

WE could DROP the cost of broadcasting by about 90%...but they dont want that, they want to have EVERY chance to hide money in TONS of expenses..Expenses THEY control..
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Narcissus (profile), 28 Mar 2017 @ 5:27am

Hi land of the free and home of the brave, commie country here (sometimes colloquially referred to as "Western Europe").

I pay 70 Euros a month and for that I get:
- Cable TV (most channels HD)
- I'm allowed to connect 5 TV's using cards directly in the TV, so no set top box (15 Euro one time cost for a card)
- Additional 5 screens where I can stream all TV channels with an app (tablet or laptop)
- HBO
- 300 Mb/s internet (no data caps)
- Landline for phone (convenient for screening sales calls)

Isn't it time you became a bit more free?
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Monika, 22 Mar 2018 @ 12:11am

Is Online Video Streaming Potentially killing the traditional TV
Great piece of content. Here is more about how online video streaming potentially killing the traditional cable TV: https://goo.gl/zYXTZV
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