If you talk to pay-TV insiders and analysts, the buzz these days is about so-called skinny bundles. Fewer channels. Lower monthly costs.
Soon, even the thinnest bundles might be a thing of the past.
“Skinny bundles are simply a placeholder for a la carte,” said Greg Ireland, an analyst at market researcher IDC. “Consumers really want a la carte, so it’s hard to imagine we won’t get there.”
Some of the biggest names in broadcasting are experimenting with a la carte services abroad, where they are less beholden to the whims of cable and satellite companies.
In this country, the pay-TV industry has been insisting for years that a la carte is a nonstarter. It would cause the price of individual channels to skyrocket, industry executives have said, wiping out less-popular channels with relatively small audiences.
I suspect a new breed of programming entrepreneurs would emerge and find ways to thrive in this more competitive environment.
What a la carte would do is make pay-TV channels work a whole lot harder to attract and hang on to viewers. Seems like a surefire way to get better programming.
Nearly half of U.S. pay-TV subscribers would prefer a la carte channels, according to a recent survey by the accounting firm PricewaterhouseCoopers. Pay-TV subscribers are getting so fed up, about 20 percent say they will cut the cable cord this year.
At the moment, Ireland said, the pay-TV business is all about a rapid shift to streaming services such as Netflix — what the industry calls over-the-top, or OTT, services. To access these services, you need a high-speed Internet connection rather than a traditional cable or satellite subscription, plus a device to get them into your TV, such as Roku, Apple TV or a game console. A Wi-Fi-enabled smart TV will work too.
IDC found in a recent survey that 86 percent of cord cutters subscribe to Netflix, compared with 39 percent who pick Amazon Prime and 30 percent who join Hulu Plus. Each service, for roughly $10 a month, offers a variety of viewing options, including movies, TV shows and original content.
The heavyweight among over-the-top services is HBO Now, which costs $15 a month and provides full access to the cable channel’s content. Other premium channels, including Showtime and Starz, are available for closer to $9 monthly.
In Canada, they have just gotten started with a government-mandated system called “pick and pay.” Canadian pay-TV providers now must offer a base package of local and educational channels for $25 a month (about $20 in U.S. currency). Beyond that, they have to offer individual channels on an a la carte basis or skinny bundles of as many as 10 channels.
Ireland has his doubts that a government-mandated a la carte system would fly here. “Programmers would kick and scream,” he said.
But he thinks U.S. pay-TV companies eventually will find their way to a similar place, with skinny bundles existing alongside a la carte channels.
The exciting thing is that, after declaring over and over that there was no way we would ever see an end to expensive bundles of hundreds of channels, the pay-TV industry is moving toward a new business model based on giving people what they want.
That’s a start.
David Lazarus is a Los Angeles Times columnist.