We can only repeat ourselves on a la carte so many times before our heads burst in frustration. I think we’re one or two posts away from that point, so this may be my last word on the subject.
But first, let me explain the reason for my frustration. Rob Pegoraro, the gadget guy at the Washington Post, has an article up about beating the high costs of high tech in a slow economy. In it he extols what he believes to be the virtues of a) Internet video and b) a la carte TV.
You can also turn your broadband connection into your TV service. The networks offer free streaming video of most shows at their own sites and such third-party portals as Hulu, and you can buy shows at Amazon’s upgraded video-on-demand service and Apple’s iTunes Store.
You may find that these options permit you to chop down your TV service to a cheaper bundle — or, if your tastes line up, drop it entirely in favor of free, over-the-air digital broadcasts. The Web can become the a la carte programming bundle that TV service providers refuse to sell you, greatly reducing your monthly costs. And in the process, you can help teach the cable and satellite folks that we’d like that choice.
Pegoraro deserves credit for trying to help consumers manage their pocketbook in tough economic times, but a la carte is one idea that makes a good bumper sticker slogan (after all, who isn’t for more choice?) but actually would end up costing most consumers more.
First, Pegoraro suggests that you get your broadcast programming online via video portals. This is impractical on a number of fronts not the least of which is the fact that broadcast television is free over the air. Suggesting that you pay for broadband service to watch free TV is sort of odd – especially in an article about cutting costs.
Second, he suggests you may greatly “reduce your monthly costs”. But is that true? For most consumers, probably not. Let’s assume you are what Nielsen describes as a “TV user”. On average, TV users watch a bit more than 127 hours of TV per month. Most television programs sold through iTunes or Amazon’s Unbox run $1.99 per program whether it’s a 30 minute or a one hour program. If your tastes run to sit-coms or home improvement shows, you’ll be paying about $4 an hour. If you’re the TV user consuming 127 hours a month, your bill just jumped to more than $500.
If your thing is one-hour dramas, you can cut that down to about $250.
Your monthly expanded basic cable package runs you about $60.
Think of it this way: If you’re a single person living alone, and you don’t watch all that much TV, web content in a consumption-based billing model may work for you and save a few dollars. If you’re married, and have to worry about what two people watch, your costs start to rise dramatically. He’s watching episodes of Eureka and Battlestar Galactica. She’s watching Miami Ink and The Daily Show. They both watch Deadliest Catch and South Park. Those are just the cable favorites. Throw in Chuck, Dirty Sexy Money, CSI and Law and Order (all 94 different versions) and you’re talking a lot of scratch for even a handful of individual programs. Now add in a couple of kids, and you’re off to the races.
Also, Pegoraro’s piece assumes that programs would cost the same in an a la carte world as they do now. This ignores basic market forces. The reason your program costs $1.99 the day (or the season) after its original air date is because the network made most of the production costs back on advertising during the original airing.
If people were to totally disconnect their TVs, and only consume on demand through iTunes and Unbox, programmers would still need to make up the money they lost with no advertising during the original run. That $2 program today may become a $5 (or more) program tomorrow. When you’re suddenly paying $100 or more for a season of your favorite show, it might lose its luster.
The fact is a la carte has been weighed, measured, and come up wanting. Study after study has determined that for most people costs go up, not down, in an a la carte model. If you watch very little TV, you might see some reduction. But based on Nielsen’s numbers, people are watching more, not less, TV.