…other than to go the way of newspapers.
It’s hard to understand the rhetoric that ascribes human traits to a medium, but writers continue to make assertions about the things that “television” and, more broadly, “video” “want.” The most recent offender is an op-ed piece in the New York Times that asserts that “Television Is Not Free and Does Not Want to Be.” Of course, after clarifying their own inherent bias on the topic of à la carte media pricing, the question the Times should be asking is whether consumers still want to pay for television.
Eduardo Porter’s conclusion is as follows:
If we’re lucky, we’ll get a world in which TV is not free, but we will only pay for it when we want to watch it.
My first thought is, “lucky for whom?” In Pay TV circles, this is known as à la carte pricing. Like many other communications and media products and services, Pay TV has traditionally been sold in service bundles. This bundle has included a combination of direct subscription revenues (the bundle) as well as third-party advertising revenues. In his editorial, Porter suggests that we should get rid of the bundle, eliminate the advertising and allow people to buy just the programming they want.
Which is a very self-serving conclusion for someone from a company, and in an industry, where the Internet has beaten a profitable business model into submission. It’s as if Porter is saying: newspapers have to live with this inevitability, and so should the television industry.
But there are several key differences. The first of which is that newspapers are not television. The second is the triple play itself. Perhaps newspapers have to deal with the reality they’ve created for the precise reason that they aren’t in the business of selling Internet access. But Pay TV providers commonly find themselves in the business of selling Internet access, and the cross-subsidy between Pay TV, Internet access and telephone service provides a level of protection across the board.
You see, Porter, along with many others within the technology, media, online video and advertising industries, misses the key point of service pricing, bundling and regulation. Consumers like bundles with predictable monthly costs, even if they pay more than if they were to buy each service individually. And within the digital home, American consumers bundles occupy spending four to one against individual purchases for media, communications, software, etc.
Why pay more? Who knows? But ask any marketer, go buy lunch at a fast food restaurant, and you’ll see that the bundles go faster than the (less expensive) à la carte options.
This applies to the triple play, because fixed-line Pay TV providers have the unique ability to do the following:
- To raise the price of stand-alone Internet access;
- To advocate for network neutrality;
- While at the same time seeking regulatory frameworks to reinforce (a) network management, and (b) “quality of service” tiers for Internet access; and
- Subsequently blocking competing (video) traffic over Internet connections within triple-play service bundles.
I won’t go through the numbers here, but it’s a very simple outcome. The MSOs will stand behind Network Neutrality with a 100% guarantee that they will offer “network neutral” services….at a much higher price than within the triple play. Doubt that? Look at what keeps happening with the BBC iPlayer and Project Canvas, which is an attempt (in the U.K.) to carry television traffic, profitably, over public Internet services.
Having worked in product marketing, and having worked with communications service companies for more than 15 years, I’ll present an alternate reality. If we start watching television online in truly large, Nielsen-rating numbers (and not the drips and drabs we’ve seen so far), that’s when we’ll see that we will still have the option to watch online. It’s just going to cost us more than we’re currently paying.
To Porter’s other point — in which we don’t want to watch advertising — the numbers are already in. Among DVR users, advertising viewership is up over the traditional linear audience. People who record programs are more likely to watch advertising.
Sorry, Charlie. TV isn’t going the way of newspapers. And if you really want to get serious about saving money on television, get a digital antenna and watch over the air. All this flap about Cablevision and Disney (ABC), and yet there’s remarkably little discussion about over-the-air signals. Probably because the next rainstorm would send everyone right back to their Pay TV provider.