Tuesday, May 5, 2015
Consumers have tolerated years of bloated video programming tiers with annual rate increases well in excess of the generate inflation rate. They have not had any options largely because no intermediary wanted to tick off a key programming source.
Seemingly overnight, intermediaries have begun to offer smaller and presumably cheaper bundles of programming. If we’ve reached a tipping point, perhaps intermediaries have grown bolder in light of programmer experiments with disintermediation, the elimination of an intermediary heretofore able to impose a markup for little value enhancement. HBO, CBS, Netflix, Major League Baseball and others now offer a viewing option requiring a broadband subscription without also requiring a pay television subscription.
Will these new skinny bundles offer consumers a cheaper and better value proposition? Don’t bank on it.
Savings, if they occur, will flow to consumers that eschew all sports content networks and refrain from the most costly non-sports networks. So if the following content providers offer you “must see” video, a skinny bundle probably won’t save you money: any and all ESPN channels, any Regional Sports Network, TNT, Disney, Fox News, NFL, USA and TBS.
Programmers, new packagers like Hulu and incumbent distributors know how to blend must see and never see video. Those undesirable channels do not add much by way of cost and get added, largely because content producers like to expand their “shelf space” with ancillary channels.
A skinny bundle likely will not have must see content in inventory, or will require supplemental payments. No one has announced a true a la carte single network purchase option, instead offering smaller, additional tiered, themed content like sports, children’s programming, lifestyle, etc. as Verizon has proposed.
Bottom line: even if you might make do with 7 -15 channels, others in your household typically won’t make do with the same ones you like, or the skinny bundle inventory.