| The basic flaw... to ala carte pricing is a misunderstanding of how the cable/sat tv business works. Much of the costs are fixed (trucks, customer support, wires, satellites, receivers, etc). Pricing is set by what people (as in on the whole) are willing to pay for video entertainment, not what an individual channel or group of channels cost.
This drives business to use a revenue per subscriber model known as ARPU. If these companies make it too easy for subscribers to lower their monthly bill - i.e. going from that $79+ a month to $29/month, they aren't going to be able to generate enough revenue to support the fixed costs... |
|
| said by travelguy:to ala carte pricing is a misunderstanding of how the cable/sat tv business works. Much of the costs are fixed (trucks, customer support, wires, satellites, receivers, etc). Pricing is set by what people (as in on the whole) are willing to pay for video entertainment, not what an individual channel or group of channels cost. This drives business to use a revenue per subscriber model known as ARPU. If these companies make it too easy for subscribers to lower their monthly bill - i.e. going from that $79+ a month to $29/month, they aren't going to be able to generate enough revenue to support the fixed costs... If that's true then how can they continually, over and over, raise prices and claim it's not really them doing it but rather 'content providers' are at fault?
To hear many cable companies tell it the content providers are the ones 99% responsible for rising monthly fees. |
|
1 edit | said by ualdayan:If that's true then how can they continually, over and over, raise prices and claim it's not really them doing it but rather 'content providers' are at fault? To hear many cable companies tell it the content providers are the ones 99% responsible for rising monthly fees. Of course they do! But you don't actually believe them, do you? Classic strategy of "It's not our fault, it's those evil content providers..."
The reality is that it's both groups. You and I may not like what we spend of video entertainment each month, but the fact is that the cable companies know exactly what price points generates the most revenue. That pool of money is fixed over the short term. Over the long term it changes based on inflation and the amount of discretionary entertainment money people are willing to spend.
The content providers want the largest possible share of that pie, so they negotiate for as much as they can get. The cable companies want to keep as much as they can and not pass it through to the content suppliers.
I believe in the War Games strategy: The only way to win is not to play... |
|
1 edit | At $2 a channel, clearly you are wrong.
There is no package in my area for $15 that offers every channel I want. You work for the cable company dont you? What's the matter? Too lazy to deploy SDV? |
|
|
|
| said by the cerberus:At $2 a channel, clearly you are wrong. There is no package in my area for $15 that offers every channel I want. You work for the cable company dont you? What's the matter? Too lazy to deploy SDV? Perfect A La Carta pricing would be to call them up and say you only want one channel and nothing else. If I lived in Canada, I would say I want CNN for $2, and the rest would be what I could get with an antenna. |
|
| said by burgerwars:Perfect A La Carta pricing would be to call them up and say you only want one channel and nothing else. If I lived in Canada, I would say I want CNN for $2, and the rest would be what I could get with an antenna. True - but that's the problem. The content providers have no interest in their channels being offered ala carte, so they won't let the cable companies sell that way. And even if they were forced to offer channels separately, the cable companies can't afford to support subscribers who only generate $2/month in revenue.
And for those who want IP delivery of a channel, the guys who own the channels have no interest in bypassing the cable and sat companies and threatening the massive revenue they get from that source. |
|
| reply to travelguy
said by travelguy:to ala carte pricing is a misunderstanding of how the cable/sat tv business works. Much of the costs are fixed (trucks, customer support, wires, satellites, receivers, etc). Pricing is set by what people (as in on the whole) are willing to pay for video entertainment, not what an individual channel or group of channels cost. This drives business to use a revenue per subscriber model known as ARPU. If these companies make it too easy for subscribers to lower their monthly bill - i.e. going from that $79+ a month to $29/month, they aren't going to be able to generate enough revenue to support the fixed costs... To simply say that if cable companies went to pay per channel pricing that they wouldn't make enough money is a fallacy.
Lets say that if a customer wanted the scifi channel, and they pay lets say $5/month. Fine, the cable company wouldn't be able to make a profit on that because the cost of sending out a tech to hook it up with the fear that he may disconnect at any moment.
HOWEVER, you are missing the bigger picture. What if he was forced to sign, say a 2 year contract, or pay annually for it, that would be a win-win for both sides as now you have the customer and when a customer currently has the service they are more likely to add MORE channels which means MORE profit for the cable company. This is especially in part due to the 2 year contract, the customer would have to make the best of a bad situation by ordering more channels.
I think everyone is missing the fact that people are disconnecting not in part that they can't afford it, that its wayyyy too expensive for what they want to offer you. Currently in the US if you want to watch scifi on Comcast you have to purchase a specific tier of channels; most you probably would never watch. And cable channels seem to have never ending commercials...sorry Comcast I don't want to pay monthly to watch commercials.
And this is a win for consumers as well, as now the content providers can't push the cable companies because if no one is purchasing a channel, then the law of supply/demand comes into play where they would be forced to lower the channel until people are watching it or include it in like a "buy one channel - get one free". However, you have to be careful with that as we might fall into the same package trap we are in now - for example "to get the scifi channel you need to purchase A&E and you get scifi for free" without a way to just pay for scifi.
But hey, Comcast et all, keep digging yourself your grave and not listen to your customers. Your stupidity will be the death of you yet. I could care less, as they just don't "get it". You need to make the content cheap and easy to get. Why do you think bittorrents became the pirates #1 choice? The "pirated content" is easy to get and DRM free. DUH! |
|
| said by k1ll3rdr4g0n:To simply say that if cable companies went to pay per channel pricing that they wouldn't make enough money is a fallacy. Lets say that if a customer wanted the scifi channel, and they pay lets say $5/month. Fine, the cable company wouldn't be able to make a profit on that because the cost of sending out a tech to hook it up with the fear that he may disconnect at any moment. HOWEVER, you are missing the bigger picture. Shall we step back to reality for a moment? I just went over to the Comcast investor relations web sit and pulled the following details out of their 2009 annual report:Total Analog & Digital Video Subscribers was just shy of 42M, which is a 1M increase over the 2008 number. Their revenue went up almost 4% as well, so subscribers are not trading down to cheaper packages.
So this idea that Comcast and the other cable companies are bleeding subscribers is not supported by reality.
I didn't take the time to compute the actual ARPU numbers, but it doesn't take a rocket scientist to figure out that it takes more than 16 $5/month subscribers to replace one $80/month subscriber. Given that pretty much everyone who wants cable has cable, there isn't a huge pool of starving students sitting around waiting for $5 pricing. |
|
CorydonCultivant son jardinPremium
join:2008-02-18
Denver, CO | reply to travelguy
And thus the need (IMNSHO) to separate out the cost of maintaining the last-mile network (which ought to be run and regulated as a public utility) and the cost of delivering services over that network.
Set up a municipal fiber network, but let Comcast, Qwest, AT&T, Cox, whoever sell TV channels, On Demand, Internet connectivity, phone service, whatever, over that network. Ideally you make it so you can buy services from several different parties...maybe cut out the middlemen altogether.
It's basically like unbundled local loops updated for the fiber age.
--
"Religion allows people who would otherwise be arguing about whether the Death Star could beat a Borg Cube to have a place of respect within society." |
|
| reply to travelguy
said by travelguy:said by k1ll3rdr4g0n:To simply say that if cable companies went to pay per channel pricing that they wouldn't make enough money is a fallacy. Lets say that if a customer wanted the scifi channel, and they pay lets say $5/month. Fine, the cable company wouldn't be able to make a profit on that because the cost of sending out a tech to hook it up with the fear that he may disconnect at any moment. HOWEVER, you are missing the bigger picture. Shall we step back to reality for a moment? I just went over to the Comcast investor relations web sit and pulled the following details out of their 2009 annual report:Total Analog & Digital Video Subscribers was just shy of 42M, which is a 1M increase over the 2008 number. Their revenue went up almost 4% as well, so subscribers are not trading down to cheaper packages. So this idea that Comcast and the other cable companies are bleeding subscribers is not supported by reality. I didn't take the time to compute the actual ARPU numbers, but it doesn't take a rocket scientist to figure out that it takes more than 16 $5/month subscribers to replace one $80/month subscriber. Given that pretty much everyone who wants cable has cable, there isn't a huge pool of starving students sitting around waiting for $5 pricing. Are you saying this story is false then?
»Cable TV Losing 1 Million Customers A Year
And in reality, you can spin the number of customers however you want, what you should be interested in is the number of PAYING customers. I know someone who rented a room at a house, subscribed to Comcast, moved out without letting Comcast know, and Comcast never shut off the service. Not saying it was right to not let Comcast know, but still, I'm sure if it happened once I am sure it has happened many times which the numbers the company puts out may not be as reliable as an independent firm (as the independent firm is not biased). Do you really think Comcast would put that they are losing customers on their public website? |
|
 ReformCRTCSupport Your Independent ISP
join:2004-03-07
Canada | reply to ualdayan
You're right on about the almighty ARPU. I've been saying that for months here. It's virtually worshipped as God by these companies.
I disagree that they won't cover their fixed costs, though, by going ala carte. That is hog-snot and they know it. The lower ARPU will be spread out by a much wider customer base, if they don't piss them off too much first. |
|
 morboComplete Your Transaction
join:2002-01-22
00000 | reply to travelguy
said by travelguy:And even if they were forced to offer channels separately, the cable companies can't afford to support subscribers who only generate $2/month in revenue. Then they adapt and change their model. It can be done. I can never see a cable bill going for $2 for one channel, but I can see a 3-5 channel selection for $15 being offered. People would love to just have the channels they want.
Cable can survive in an a la carte environment. It's the annoying channels that cannot. |
|
 GbcueAlmost P.E.Premium
join:2001-09-30
Santa Rosa, CA
kudos:8
 ·AT&T U-Verse
| reply to travelguy
said by travelguy:Shall we step back to reality for a moment? I just went over to the Comcast investor relations web sit and pulled the following details out of their 2009 annual report:Total Analog & Digital Video Subscribers was just shy of 42M, which is a 1M increase over the 2008 number. Their revenue went up almost 4% as well, so subscribers are not trading down to cheaper packages. The problem is, there is *no* cheaper plan.
Analog TV, before Comcast forced the switch to SDV (with box rental fees) was $70/month + taxes!
Before, it used to be $35 a month (probably 10 years ago).
Then we switched to U-Verse.
--
My Blog 2.0 |
|
