The Status of A La Carte Television in the U.S.

In October 2013, the Canadian government announced that cable and satellite providers would be forced to unbundle their channel packages and must allow consumers more options when it comes to picking only the channels they want to watch, and paying for them accordingly, by means of an a la carte pricing infrastructure.

Telus Corp, one of the biggest telecom businesses in Canada, recently declared that they’ve experienced a 13% profit growth. CEO Darren Entwistle told Reuters that he expected “significant” returns as a result of a la carte customer loyalty last autumn, and he appears to have been correct in that view.

Many believe that the existence of similar plans for United States subscribers frustrated with television companies is long overdue, and remain hopeful that changes will occur in the near future.

InvestorPlace journalist Jonathan Berr projects that the Comcast-Time Warner Cable merger may have an impact, writing that “costs and retransmission fees will cause a rebellion” amongst consumers and put an end to the status quo.

Likewise, Rocco Pendola over at TheStreet reached a related conclusion, arguing “when a company as massive as TWC/CMCSA emerges, the game changes,” although his bet is that such a service could be more expensive.

It seems more and more likely that it’s not a case of if so much as when.

Legislative Efforts

Surveys from RBC Capital Markets, AP-Ipsos and Pricewaterhouse Coopers reveal that large majorities – 92%, 78% and 73% – desire an a la carte tier from their service providers.

The 2013 Ericsson ConsumerLab TV and Media Study found that a la carte content appears in the top five important services that consumers are looking for in the future.

As of late, politicians have made some efforts to alter things, but not much has come of their actions.

Sen. John McCain (R-Ariz.) and Sen. Richard Blumenthal (D-Conn.) co-sponsored the “Television Consumer Freedom Act” last summer. The purpose was to aid in cable package unbundling.

“Consumers should not have to pay for television channels they don't want to watch, and deserve the option of purchasing channels individually,” said McCain at a press conference.

Similarly, last November Sen. Jay Rockefeller (D-W. Va.) introduced the “Consumer Choice in Online Video Act.” In a statement, he said his goal was to “give consumers the ability to watch the programming they want to watch, when they want to watch it, how they want to watch it, and pay only for what they actually watch.”

To date, nothing has happened with either piece of legislation, and the documents are currently stagnating in the halls of Congress.

A New Venture

While consumers favor a new pricing structure, they’re facing an uphill battle. Comcast CEO Brian Roberts stated in a September 2013 interview with PBS that he believes the “historic model … [is] the best deal for consumers,” and 21st Century Fox CEO Rupert Murdoch thinks the idea “kills the whole business model.”

One company, GroupFlix, has decided to lead the charge in 2014. The Oakland-based startup allows viewers to pay a monthly fee in exchange for the specific shows that they want to watch right after they air, as opposed to other subscription services that require users to wait 30-90 days, or more, until after a season ends. Subscribers select the show they want, purchase it and they’re then free to keep it permanently for viewing on any device they want. 

According to GroupFlix CEO James Norman, “We’ve been brought up on the concept of subscription, monthly pass, paying however much a month you can to possibly get entertained. By wrapping that model into what already exists today — in terms of delivering next-day content — [it] allows us to give consumers what they want at a slightly cheaper price with an easier purchase model.”

The beta version of the service was filled up with 1,000 people last month, and is expected to launch in the second quarter of this year.

If it proves to be successful, cable companies and government representatives may take note, and a la carte television could just arrive quicker than expected.

Author: Brian Cameron

Image credit: Adam Vilimek (Shutterstock)

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