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21st Century Fox Boss: A La Carte 'Total Fantasy'
by Karl Bode 08:48AM Friday Aug 09 2013
"A La Carte is a fantasy," declared 21st Century Fox president Chase Carey this week during the company's investor day this week, responding to increased pressure of late for cable operators and broadcasters to expand and improve the options made available to consumers.

Like any good legacy industry executive, Carey made sure to put his head in the sand when to comes to industry evolution, threats and his need to adapt, not only denying cord cutting, but insisting viewers don't want a la carte options anyway:
quote:
..."this is an issue that will play out over the next 10-plus years, not the next three years." For now, he said, “there isn’t an alternative today, or even on the horizon. We see no meaningful cord-cutting activity. "In fact, given the opportunity for a la carte, Carey asserted, viewers would reject it — provided the TV services on offer are tailored smartly enough. "Consumers actually want the bundle; they just want a different bundle," he said.
The problem is, the options being given consumers really aren't much different or smarter than they were ten years ago, thanks in large part to guys like Carey. That was the last time consumer pressure for broadcasters to offer a la carte was at a fevered pitch. Carey and others shot it down, claiming that a la carte would raise rates and kill niche programming (that wound up happening anyway). Carey and most broadcast executives have historically fought against the kind of "smartly tailored" new options, a la carte or otherwise.

As for cord cutting, many of the concept's fiercest deniers are now clearly acknowledging it's a real trend, and Carey likely has less time than he thinks to start adapting.

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FFH
Premium
join:2002-03-03
Tavistock NJ
kudos:5

The money will flow no matter what

As long as people want content to watch, companies like 21st Century Fox, will still make boatloads of money, whether that content is thru cable channels or streamed over the Internet. Cord cutting will have little effect on their bottom line. If due to cord cutting or a la carte, sales of junk TV shows is reduced, they will just charge more for the good stuff people keep demanding.
--
"If you want to anger a conservative lie to him.
If you want to anger a liberal tell him the truth."

Majestik
World Traveler
Premium
join:2001-05-11
Tulsa, OK

Re: The money will flow no matter what

I don't think anyone who has cut the cord and created their own ala carte cares whether the company will make money or not.
Don't care if they charge more to other people who want to watch those shows.
It's about their own personal financial bottom line in the home.
They can watch the show or the whole season weeks or months later. Some will download it illegally.
At least that's the way it is for the friends and families I know.

My ala carte is under $10/ month with Netfix,Hulu,Amazon,and OTA. Some I know will download movies illegally. I prefer to just rent later from ITunes or maybe Vudu. I also do other things like work,read,and other activities.....one of the reasons why I cut the cord and went ala carte years ago.
--
The adventure continues...Sanctuary....
biochemistry
Premium
join:2003-05-09
92361

1 recommendation

Re: The money will flow no matter what

Netflix is $7.99 by itself. How are you spending that other $2 exactly?

Majestik
World Traveler
Premium
join:2001-05-11
Tulsa, OK

1 edit

Re: The money will flow no matter what

The $2/mo. cover the few movies I rent each year.
Used to be about $15/mo. for a while but I didn't see the point in paying for Hulu Plus and commercials especially if I can't stream Defiance and some others on my iPad.
--
The adventure continues...Sanctuary....

KrK
Heavy Artillery For The Little Guy
Premium
join:2000-01-17
Tulsa, OK
As long as their business is protected, subsidized, enforced and mandated by Government, they will do well. They will never be satisfied, however. They don't want boatloads of money. They want *all* they money.
--
"Fascism should more properly be called corporatism because it is the merger of state and corporate power." -- Benito Mussolini
maestro7

join:2004-08-31
Loganville, GA
Reviews:
·Comcast
·DIRECTV
·AT&T Southeast

Carey swerves into the truth, somewhat...

From a recent Seeking Alpha Market Current entitled, "Putting a number to cord-cutting" (»seekingalpha.com/currents/post/1197642), it's interesting to note that while cable companies have lost 3.2% of their Q2 subscribers while satellite (+0.2%) and telcos (+16.4%) have increased during the same period, Mr. Carey isn't completely wrong regarding the concept of people wanting different types of packages.

However, something that the telcos can offer (with dramatically lower latency than satellite and, likely, cable cos) that the other companies cannot is higher-speed Internet. I think that helps to explain the significant quarterly shift of subscribers from cable to especially telcos. After all, most cable/sat/telco companies offer essentially the same channel packages, so that cannot be a materially significant difference between them all to justify the subscriber shift.

To me, the real issue is that folks are moving to receiving their content via different modes of delivery (e.g.: streaming on a non-TV device). Will a la carte be a subsequent step? Eventually, but it's going to take the likes of Apple TV, Intel's STB, Aereo or something similar to be willing to go to trial with enough separate a la carte channels on top of an existing package (or allow packages to be personalized) to see if a la carte is truly a workable alternative.
davidhoffman
Premium
join:2009-11-19
Warner Robins, GA
kudos:1

Re: Carey swerves into the truth, somewhat...

Where in the world do you get that the majority of wireline telcos are offering significantly higher internet access speeds than the majority of cable companies? AT&T is so incompetent, or cheap, that they failed to implement the top 24Mbps download speed for ALL their ADSL2+ subscribers. The same goes for Windstream and many other telephone companies. Forget about 250Mbps VDSL2 systems. They are not happening. Most of the cable companies have gotten a good start on fully implementing DOCSIS 3.0. In a couple of years we should see cable modems capable of bonding 16, 24, and 32 downstream channels. That means theoretical speeds of 608, 912, and 1216 Mbps. Real world maximums will be half of those. DOCSIS 3.1 could increase those speeds by 50%. 32 channel bonded D3.1 could deliver real world speeds of 912Mbps.
maestro7

join:2004-08-31
Loganville, GA
Reviews:
·Comcast
·DIRECTV
·AT&T Southeast

Re: Carey swerves into the truth, somewhat...

At the outset, I had mentioned latency first and then speed second. For sats, the latency is atrocious. For cable, while the speeds you quoted are in some cases theoretical, their topologies fundamentally share the same bandwidth which (again, in theory) isn't necessarily the case with DSL (U-verse) or VZ's FiOS service.

However, that wasn't the main point. The main point is the absolute marked shift in subscribers away from cable cos to telcos.

Something besides a content subscription has to rationally explain that, as all cos carry effectively the same video packages for essentially the same price points.

And I think that's worth paying attention to, because that's where Carey fears the numbers, per his rhetoric.
davidhoffman
Premium
join:2009-11-19
Warner Robins, GA
kudos:1

Re: Carey swerves into the truth, somewhat...

The FCC's Measuring Broadband reports showed that DSL had higher average latency than cable. »transition.fcc.gov/cgb/measuring···Full.pdf

I think the drive to DSL may be for the same reason I moved to AT&T's lowest DSL speed tier from AT&T's highest DSL speed tier. Big income reduction. The local cable company's least expensive internet access is still more costly than AT&T's bottom speed tier. I have stayed with old fashioned AT&T POTS because I trust it more for E-911 service than I do cable telephone service.

I have never had pay TV, as I could never afford it. I have been OTA rabbit ears for 25 years.

juilinsandar
Texas Gooner
Premium
join:2000-07-17
San Benito, TX

Real battle is for content not channels...

Would anyone even watch AMC if not for Mad Men, Breaking Bad or The Walking Dead?

battleop

join:2005-09-28
00000

Re: Real battle is for content not channels...

There are people like me who won't watch AMC even with those shows.

PaulHikeS2

join:2003-03-06
Manchester, NH
said by juilinsandar:

Would anyone even watch AMC if not for Mad Men, Breaking Bad or The Walking Dead?

No. Without programming that a certain percentage of the market finds attractive, viewers will not watch. Are you simply pointing out the incredibly obvious, or is there another point you are trying to make?
--
Jay: What the @#$% is the internet???

dvd536
as Mr. Pink as they come
Premium
join:2001-04-27
Phoenix, AZ
kudos:4
said by juilinsandar:

Would anyone even watch AMC if not for Mad Men, Breaking Bad or The Walking Dead?

amc? do i get amc? hell if i know.
--
Despises any post with strings.

spewak
R.I.P Dadkins
Premium
join:2001-08-07
Elk Grove, CA
kudos:1

No Duh!

Hey Chase,
Way to go genius! Tell us something we don't know! Ass!
kaila

join:2000-10-11
Lincolnshire, IL

That's fine, ignore your market.....

There's a whole generation who are never going to pay for packaged content the way it's being sold now. Opportunities abound for those willing and able to meet the needs of those consumers.

IowaCowboy
Iowa native
Premium
join:2010-10-16
Springfield, MA

Correction

It's 20th Century Fox.

They were formed by the merger of 20th century films and Fox Films in the 1930's. They've put out some good movies over the years like Home Alone 1 & 2, Speed, The Sandlot, and a few others.

Karl Bode
News Guy
join:2000-03-02
kudos:39

Re: Correction

Renamed last April:

»en.wikipedia.org/wiki/21st_Century_Fox
biochemistry
Premium
join:2003-05-09
92361

Re: Correction

Correction: 20th Century Fox is a subsidiary of 21st Century Fox. The former is the film studio while the latter includes that film studio and a whole lot more.

Karl Bode
News Guy
join:2000-03-02
kudos:39

Re: Correction

Carey works for 21st Century Fox, it was the 21st Century Fox investor day, as every news outlet that covered the story notes:

»news.google.com/news?ncl=diBdBof···sh&hl=en
biochemistry
Premium
join:2003-05-09
92361

Re: Correction

I don't disagree with that. Iowa was referencing the film studio which is still 20th Century Fox. In the article you correctly identified 21st Century Fox.

IPPlanMan
Holy Cable Modem Batman

join:2000-09-20
Washington, DC
kudos:1

1 recommendation

Obviously not watching those cord-cutter numbers rising...

»www.youtube.com/watch?v=zDAmPIq29ro
elray

join:2000-12-16
Santa Monica, CA
Reviews:
·Time Warner Cable
·EarthLink

Who knows consumers best?

Fox, et al, are in the business of marketing their content to the public.
They know our viewing habits, tastes, and spending limits.

To date, content bundling, resulting in the average household base pay-tv bill exceeding $65, is endorsed by the overwhelming majority of consumers.

Ala-carte offerings will only be endorsed by industry, if they result in greater revenues. In other words, ala-carte will cost the average household more, not less, than their current subscription - and thus, will fail.

So unfortunately, it is quite fair for Fox to characterize ala carte as "fantasy".

Majestik
World Traveler
Premium
join:2001-05-11
Tulsa, OK

Re: Who knows consumers best?

For me and others at this point it doesn't matter anymore.
They and other companies can characterize ala carte as anything they want.
--
The adventure continues...Sanctuary....
Skippy25

join:2000-09-13
Hazelwood, MO
said by elray:

In other words, ala-carte will cost the average household more, not less, than their current subscription - and thus, will fail.

You can keep repeating that just as I will keep repeating the opposite, which does not make either correct.

With that, a la carte will save a vast majority of all homes substantial money.

Who is right? We wont know until it happens, but I am betting on me.
elray

join:2000-12-16
Santa Monica, CA
Reviews:
·Time Warner Cable
·EarthLink

Re: Who knows consumers best?

said by Skippy25:

said by elray:

In other words, ala-carte will cost the average household more, not less, than their current subscription - and thus, will fail.

You can keep repeating that just as I will keep repeating the opposite, which does not make either correct.

With that, a la carte will save a vast majority of all homes substantial money.

Who is right? We wont know until it happens, but I am betting on me.

Nope. Ala-carte will never be offered the way you, Karl, or the populists and "consumer" advocates wish - and by the way I'm with you in that desire. But absent legislation - which I would generally oppose, I don't see how the content industry is going to take "less" (their math) in exchange for more headaches, nor are they going to burn the last-mile companies, despite their public fights.

The majority of homes buy bundles - because they have diverse viewing habits, which bundles address. While a few savvy consumers have determined that they can cord-cut, while entertaining their preschoolers with DVD material or Netflix (not exactly cord-cutting, but I digress), over 100 million households continue to subscribe to pay-tv in its current form, and that simply isn't going to give way in a country where the couch is the most common place of refuge.

Buying channels discretely incurs a whole new administrative nightmare and overhead expense. While you and I might be able and willing to subscribe via a pick-list on a web order form and pay online, the aforementioned 100 million will want to call someone (that eliminates Google) to address their concerns; I spend at least an hour per year per household on the phone with CableCo under the current model; with ala-carte, I would expect that to double or triple. Industry doesn't want the customer outrage that will happen with such a transition, nor do they want schizophrenic income to replace what is effectively consistent annual revenue from packaged subscriptions and bundles.

Your dreams of $2/channel charges - for only the channels you want, simply doesn't pencil out. There would be a connection/account charge, and a minimum number of channels required, and the per-channel rates would vary based on popularity - perhaps $30 for the "basic broadcast tier" (hookup fee), plus a minimum of 15 channels from the "basic cable" tier, "as low as $2/month" - for channels you don't watch, while the ones you do are from the "entertainment" catalog, "as low as $3/month".

After you try to do the math and explain it to your wife and kids, and you've encountered enough on-screen prompts to "add this channel to your lineup", and you get enough grief because you omitted the 50ShadesofGrey 4K Movie Channel and the GrrrlllPower Network, you will shrug, and buy the $70/month "Super Deluxe Basic Plus Variety Pack", which includes 85% of the channels you would have picked, and 30 extras you didn't plan on, but find something within to watch.

I'll take that bet.
Skippy25

join:2000-09-13
Hazelwood, MO

Re: Who knows consumers best?

Never is a pretty bold statement. Do you mean never, like we will never land on the moon or never like we will never create a colony on our sun? Both of those things have been said but only one of them were true while the other was spoken by a short sighted person.

I would highly disagree with your statement on why homes buy bundles and would say they buy bundles because they have no choice. Until there is a choice and we see how the market goes, you are foolish for saying otherwise. That is almost like me saying a majority of homes buy a computer with windows on it, because they enjoy the features that windows gives them.

"There would be a connection/account charge, and a minimum number of channels required..." - Again you are stating things as fact though you and I dont know what would happen. I have no dreams of a specific channel charge and would fully expect a basic connection charge. With that basic charge, I certainly would not expect a minimum channel requirement as the "cost" of having the service is paid in that connection charge regardless of channels. Would channel prices be diverse? Sure they should be and there will more than likely be packages by genre, # of channels and such to choose from. I am not sure where you got $2 a channel from, because I would expect it to be rare for channels to be over $1.25 a month with a majority probably closer to $1.

I'll take that bet as well. $50, if it is closer as a whole to what you say than me I will send you $50.
CXM_Splicer
Looking at the bigger picture
Premium
join:2011-08-11
NYC
kudos:2

Re: Who knows consumers best?

I think you are both wrong

We WILL see ala carte but not the way you are looking for it. All it will take is one executive at one network to have some initiative (in other words a new guy) and offer streaming. The obstacles are minor and easily overcome. Want to guarantee uptake? Just make shows available to subscribers the day before they air. There is an entire new market of possibilities just waiting to explode... as soon as the old farts at the networks get out of their antiquated mindsets. Cable companies will revert to last-mile pipe companies, 'programming consolidators' will buy channels wholesale and restream custom packages... different tiers for commercial-free, standard, even a free tier if your next car is a (insert advertiser here). DVR? What's that? I can pull up anything the network has available in my subscription.

Ala Carte is coming one way or another, it is only a matter of time.
maestro7

join:2004-08-31
Loganville, GA

Re: Who knows consumers best?

This is exactly what Apple and Intel (I'm sure others) are steadily working towards.

I think the last-mile STB is begging to explore a la carte exactly the same way that iTunes put CDs to bed.
elray

join:2000-12-16
Santa Monica, CA
Reviews:
·Time Warner Cable
·EarthLink
That "new guy" will be fired, and he should be. What a disaster!

Ala-carte isn't going to work unless the consumer gets to choose from a full menu, with an easily understood pricing scheme, and it will have to cost more, absent destructive/revolutionary copyright/content-leasing legislation.

One network offering up its fare for streaming? That's what we have now - a chaotic web of incomplete sets that appear and evaporate with a shift in the wind, from a dozen different potential sources.

What you describe seems to imply a lower value for content. Good luck with that approach - the studios aren't going to repeat the iTunes / Netflix / retransmission-consent playbook again.

Just because the technology exists to deliver video cheaper, doesn't mean the public has the right to pay less for coveted content.

morbo
Complete Your Transaction

join:2002-01-22
00000
Reviews:
·Charter
Just because this is what cable companies want to happen, doesn't mean that is how it will happen. Consumers can and will vote with their wallet and buy a la carte television that costs less overall and providers fewer, although specifically chosen, channels. Sure the cost per channel will be higher, but if consumers can get the channels they want and fewer channels they don't want, the cost will be lower.
b10010011
Whats a Posting tag?

join:2004-09-07
Bellingham, WA
Reviews:
·Comcast Formerl..

I would be satisfied with more bundling options

If they would bundle all the sports, entertainment, and news separately I could live with that. After all it's the sports like ESPN that cost the most. In 30 years of cable TV I can not remember ever watching ESPN or any of the dedicated sports channels.

I do like the options of all the entertainment channels. Sure I tent to watch maybe a dozen regularly. But when nothing is on me 'regular channels" it is nice to be able to channel surf and find something to watch on some channel you never watch.
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Bellingham Scanner Kicks Ass! »bhamscanner.kicks-ass.org/

•••••••

88615298
Premium
join:2004-07-28
West Tenness

He's sort of right.

"Consumers actually want the bundle; they just want a different bundle," he said.

If for example you had ALL sports channels including ESPN in a sports tier and reduced the price of the regular service to reflect that and also did that with say kids channels too then sure people would take bundling without ala carte.
stevedaytona

join:2008-03-04
Daytona Beach, FL

No Options

I would be happy with *any* bundling option. These are my choices:

Basic (I assume but no mention on the cable co website)
Digital (huge number of channels most of which I never watch)

Then IF and only if I subscribe to Digital can I then add on small niche channel "packs" and also the premium channel packs (HBO and the like)

This isn't really bundling at all - no doubt other cable/sat providers are different. I have checked into the sat providers but none work out cheaper for the channels I DO want.

The only thing that stops me cutting the cord is live sports.
Kamus

join:2011-01-27
El Paso, TX

No a La Carte? No problem!

Who gives a crap? On demand is way better than a la carte or conventional cable anyway, do as you wish!
corinthos

join:2007-10-09

21st Century Fox would be one of the ones I would get

I'll end up cutting soon. Right now i just keep cable because it is convenient but pretty much I could just buy the 6 shows I watch digitally and buy a few old seasons of CSI/NCIS/SVU/random rerun sitcoms to duplicate what I pretty much watch.

In fact if they were to ALA cart by even parent companies for the channel then 21st century fox would win by me. I'd probably just get 21st Century Fox and Discovery Communications channels. Instead they will just end up losing a subscriber all together.