Average American Cable Subscriber Gets 189 Channels and Views 17

An anonymous reader writes "Nielsen, the company that studies the viewing habits of television viewers, announced its findings in a blog post Tuesday. Since 2008, the number of cable TV channels offered as a bundle rose from 129 to 189 in 2013, but in that time-frame viewers have consistently only watched an average of 17 channels. The data seems to support the notion that consumers are better off subscribing to channels a la carte, but cable companies are of the opinion that 'the price of cable TV wouldn't change much if channels were served à la carte because content providers won't sell the most popular programs to cable companies unless the provider's other channels are also served up.' Nielsen concluded in its post that 'quality is imperative—for both content creators and advertisers', signaling the possibility that more Americans will cut the cord after realizing that their cable bill has increased in the last few years but their consumption of content hasn't."

Comments

200 channels...

[Kaenneth]

and nothing to watch.

Re:200 channels...

[GreatDrok]

"and nothing to watch."

Yeah, we had satellite for a good long time but gradually pared back the channels we received because many we wanted were tied to other channels we didn't and that pushed the price up. Once we got to the basic package we realised that the vast majority of what we watched was on free to air digital HD via our TiVo so we dropped Satellite. We're down to about ten channels now. Still nothing to watch though.

Re:200 channels...

[ArmoredDragon]

I believe a la carte is the future, but I don't think forcing it upon everybody is a good idea. The market is already gradually moving in that direction due to two forces pushing it that way:

1) Netflix and Amazon already offer original content, and you're free to choose between the two. Effectively a la carte. Other companies like Sony and Microsoft have already taken interest in doing their own Netflix style offering with their own original content.
2) The content providers are pricing themselves out of the market by demanding retrans fees that are increasingly impractical.

Now Netflix and Amazon aren't a huge selection, right? And even adding Microsoft and Sony here aren't either, right? Well remember that the traditional "all or nothing" pay industry started this way. In the original Community Antenna TeleVision (CATV) days, you maybe had 20 channels to choose from, but the content selection wasn't really that good. Netflix and Amazon combined have a selection that would make those 20 channels look like crap, and the price you pay for both of them is certainly a lot less than what you paid back then (adjusted for inflation.)

In order to be fair, a la carte rules may indeed force companies like Netflix to unbundle content collections. Netflix offers content from A&E, Viacom, ABC, and many, many others...telling them to split that up would be problematic IMO, especially for the $8 a month you pay.

Maybe, maybe not. At any rate, let's not go down that road if we can avoid it. Instead let's simply allow market force #2 to kill the cable industry, forcing them to adapt. I think allowing the content companies to become the final victims of their own success would be the perfect execution of poetic justice.

Oh yeah right

[CTU]

I be willing to spend a few bucks a station to only get what I want. Could spend maybe $20 and get what I want and saved like $60

Re:Oh yeah right

[Travis Mansbridge]

Could spend maybe $20 and get what I want and saved like $60

Exactly why they won't let you.

Re:Oh yeah right

[Anonymous Coward]

ESPN is the most expensive channel in your cable package, and I don't watch sports. Just dropping the sports channels would cut a huge portion out of my (hypothetical) cable bill. Just because most people want ESPN doesn't mean everyone does.

Re:Oh yeah right

[fermion]

I like what cox communication has done. Basic cable for $35, removing the channels that has high carriage fees, such as ESPN which in aggregate costs over $6.

The only reason it will cost more per subscriber in some cases is that the costs will not longer be distributed among the 10 million viewers that subsidize the channel. So ESPN will have to decide if it can charge 2,000,000 viewers $20 a month, or cut costs an live on what the free market will actually bear instead of depending on a socialized market. Likewise Fox news cost about a $1 a month, but more people watch Fox News than ESPN, so it might only have to double it's fees. RIght now Fox News and ESPN might be up to 10% of a cable bill.

Most cable and broadcast station charge much less than 50 cents, and maybe that should be the benchmark. If the carriage fee is more than 40 or 50 cents, it should be al a carte. At that rate it makes it worth it to be selective. So a network can choose to be below that number and be included in an economy package, or be above that number and be included in levels of premium packages or a la carte. Is that not how we operate now? If you want showtime or HBO you pay for it.

Why should we pay for ESPN or Fox News just because they afraid they cannot survive the free market?

And again, for most of us it would not cost more.Given the cox model, even if they doubled the carrige fees for a la cart most of us could get all the channels we want for under $50. Only those that wanted the expensive premium channels would have to pay for, honestly a lot morel but that is how it should be.

Re:Oh yeah right

[pete6677]

How can Cox get away with this? Disney is famous for saying "carry all of our channels or none". That means that all of the ESPN channels, Disney channels, ABC, and every other channel that Disney owns must be included with all of a cable company's packages (and charged accordingly) or Disney will refuse to deal with that cable company at all. How can Cox (whoever they are) get away with a deal that no other cable or satellite provider has managed to get?

Re:Oh yeah right

[ChatHuant]

You're assuming everybody subscribes to all the popular channels. At least in my case, that's not true; I'd be interested in at most a couple of them, so even if the total monthly cost is spread over only the top say 10 channels, I'd still save quite a bit.

Re:Oh yeah right

[njnnja]

The funny thing about a la carte is that it works the opposite of the way most people who think about it believe it will work. A channel has very high fixed costs and overhead so it is likely that that the more demand there is for a station, the cheaper it will be per person, and the fewer people who want to watch a station, the more expensive it will be. So a high demand station like ESPN will probably be very reasonably priced, despite having a high cost to produce.

Re:Oh yeah right

[vux984]

That is an overly simplistic analysis.

Reality is that the supply of ESPN and crappy channel are both unlimited once the channel is 'added' to the network, so the a la carte price is what the market will bear -- ie what is highest price they can charge for it where charging more will lose them more subscribers than the extra revenue will cover.

For a channel like ESPN, they can raise the price pretty high and lots of people will continue to pony up to keep getting it. For a channel like "gameshow reruns from the 70s"... not so much so it will be much much lower.

Re:Oh yeah right

[ArmoredDragon]

This is probably true, hence even though I want a-la-carte, I would never advocate adding new laws enforcing it. Instead I'd prefer to allow the content companies to become the victims of their own success, as I described here:

http://entertainment.slashdot....

TL;DR, let's just allow the content companies will eventually price themselves out of the market. I don't subscribe to cable anymore, and I always tell everybody I know how they can get their entertainment without a cable sub.

The only people that are screwed are the ESPN viewers and 24/7 news channel viewers. Eventually as other people de-sub, these people will be forced to pay quite dearly for that content, and once these customers feel the pinch, the house of cards falls.

Re:Oh yeah right

[mwvdlee]

Only if you assume all people will want the same set of ~17 popular channels.

How about a "network á la carte" system, where you don't get to pick just ESPN, but all it's bundled channels as well?

I don't quite know the structure of this bundling, but I'd assume you'd end up giving the viewers a choice of some 10-30 bundles, each one containing just 1 or 2 popular channels and a dozen or so less popular ones.

It gets worse

[SuperKendall]

On 17 channels, how many actual shows are being watched...

Most people would be financially better off just buying what they like on iTunes, even at $3/episode.

Re:It gets worse

[dirk]

This sounds great but the math doesn't work out. If most people watch 17 channels let's say it's really 13 channels they have to pay 4 (removing the big 4 over the air channels). Let's assume they watch 2 shows on each channel (which seems fair). Most shows have 22 episodes a season (yes, some have less but then you also have daily shows and weekly shows that go all year). So 26 shows times 22 episodes times 3 dollars = 1716 dollars a year or $143 dollars a month. That is more than most people spend on cable per month. And that is the average, so half the people will spend more than that (and possibly even more than half since my assumption of 2 shows per channel may be low).

Monopoly cable companies

[Anonymous Coward]

I live in rural Texas and have one choice for Internet and TV. I pay $128 a month for 250 channels and a 30MBit connection. I watch the following channels:

- BBC America
- SyFy
- Travel
- History
- HGTV
- USA
- Animal Planet
- Local affiliate for Revolution TV show
- My kids watch Nick Jr. and Nick, sometimes Disney

Maybe 10 channels.. what a waste of money. I have the least amount of channels I can get and still qualify for the bundle. If I could get BBC America, I would gladly cut cable, as the rest I can get online.

Re:Monopoly cable companies

[Jason Levine]

You can buy individual shows from Amazon for $1.99 an episode. They have many of the shows that air on cable. Make a list of the shows you and your kids watch. See what is on Netflix and Amazon (both Prime streaming or pay-per-episode streaming). You might find that you'd save money by getting your shows from there instead of cable.

The Wall still relevant 35 years later

[The Grim Reefer]

So even with 189 channels, Pink Floyd is still pretty close with the lyrics from "Nobody's Home"

I've got thirteen channels of shit on the T.V. to choose from.

Re:The Wall still relevant 35 years later

[jonwil]

Bruce Springsteen got it even closer with "57 Channels and Nothing on"

Re:The Wall still relevant 35 years later

[ballpoint]

"Shit to choose from" more accurately describes the offering than "nothing on."

Same problem as always...

[jasno]

Wife is addicted to crap TV. I would cancel my $200/mo U-Verse service in a second if she'd let me.

Re:Same problem as always...

[Opportunist]

Wives are a bit like Windows. Once you upgrade from girlfriend to wife, it's like upgrading from a previous Windows version to a later. You can, technically, go back, but it usually costs you a lot of time and effort, and if you're not careful a lot of your stuff is suddenly gone.

Re:Same problem as always...

[jrumney]

Judging by his sig, he practically has cancelled the wife.

This makes sense

[TsuruchiBrian]

I am convinced that the price per channel would go up if everyone was able to purchase channels a la carte.

It costs $X to produce all the content, and they need to charge each customer more than $Y (where y = x / number of customers) on average in order to make a profit. Everybody knows no one could possibly be watching 200 channels. But if all of a sudden people decide they want to only pay for 20 channels, then everybody is going to be paying the same price for just those 20 channels.

People want a la carte because they think it will be cheaper, but it probably won't be on average. For example It'll be cheaper for people who watch 5 channels and more expensive for people who watch 30.

The real way to save money on a la carte, is to cut out the middle man (e.g. the cable companies). If you can purchase content directly from the supplier (e.g. from HBO, or comedy central, etc), that's however many less salaraies that need to be paid by your subscription costs.

And 36 are shopping channels

[RogueWarrior65]

Does this number include the duplicate HD channels, the spanish channels, the religious channels, or the pay-per-view channels? 36 shopping channels? Really? REALLY PEOPLE?!? AMAZON ISN'T GOOD ENOUGH FOR YA?!?!?

Anti-competative measures

[currently_awake]

So the reason we can't pick and choose, instead of buying bundles is because of anti-competitive measures by the suppliers?

$60+ for ESPN

[CritterNYC]

And a big part of that is the over $60 a year you're spending on ESPN and associated networked even if you never watch sports.

Wrong conclusions

[hibiki_r]

The fact that most people only watch a few channels doesn't really mean that a la carte would be cheaper overall.

Imagine that there are two channels. It takes a hundred bucks to keep the channel airing for a month. We have two viewers, A and B. A likes channel 1, and B likes channel 2, and they dislike the other channel. Right now, they each pay $100 to watch both channels, although they only look at one. Each channel gets paid $50 per bill.

So imagine that we switched to A la carte. Now A only subscribes to 1, and B only subscribes to 2. They channels still need the same amount of money to stay on the air, so what is the new price? subscribing to channel 1 is $100, and subscribing to channel 2 is $100 too. both channels get the same amount of money, both people pay the same bill... and they now get half the programming. Success?

So let's say that now ESPN charges $20 per subscriber. They do so, because they believe that the value they provide to the average subscriber is about $20. Let's say I don't like ESPN, Well, ESPN didn't get any less valuable, it's just that I will not pay the $20, and said $20 are going to be passed on as rate hikes to the people that want to watch the channel.

So while some people that really just watch very few, cheap channels, might get some savings, if your 17 channels include ESPN, Disney Channel, CNN, AMC and HBO, guess what? You will probably be paying a whole lot more than before, as unbundling makes every single channel more expensive, and you just happened to like 'anchor' channels that can really ask for a premium.

Re:Wrong conclusions

[FaxeTheCat]

Your argument is based on the assumption that the price per channel reflect the cost of running it. It does not.

The income for a channel is based on what the market (subscribers, advertisers) will pay. The channel has to create its content based on that income. This basically means that in your scenario, if both viewers wanted only channel 1, they would pay half the cost.
Channel 2 would be without viewers, and would have the hard choice of either creating attractive content to get its viewer back, or simply close down.
There is no law in nature which says that all TV channels have to exist forever. Actually, a lot of them are not needed at all.

Re:Wrong conclusions

[stdarg]

The reason your example works out like that is the channels have equal costs, which is unrealistic.

Let's say channel 1 costs $80/subscriber and channel 2 costs $20. So the total is still $100 with 2 subscribers.

Now they unbundle. A, which likes channel 1, now pays $160/month. B pays only $40/month.

My example is taking advantage of the difference between popularity (50% each) and cost (80% vs 20%). Perhaps in real life, the channel which costs $20 would only get 20% of the subscribers, in which case they'd still have to pay $100. However, I suspect in real life there are many channels that have broad appeal and lower than average costs. For instance there are many channels more popular than ESPN that cost a lot less. For instance, according to http://www.mediabistro.com/tvn... last month TNT, USA, TBS, History Channel, and Fox News were more popular than ESPN. But according to http://allthingsd.com/20100308... the costs are:
ESPN - $4.08
TNT - $0.99
Fox News - $0.58
USA - $0.55
TBS - $0.49
History - $0.22

HGTV, which is right after ESPN in April ratings, costs only $0.14.

So what would probably happen in the unbundled case is that enough people would subscribe to these channels that costs would approximately double. (I'm guessing this since I read that about 60% of the country watches ESPN, and these channels are about as popular). I would definitely pay $0.44/month for the History Channel because I like some of their shows (Pawn Stars, American Restoration, Vikings). At $1/month I might even pick up Fox News, and USA. I'm not sure about TNT and TBS. I would definitely not get ESPN.

Where the consumer gets screwed with a la carte pricing is the fixed costs of the cable company, into which I'm also categorizing current profit level (since cable companies aren't going to move to a la carte if it means less overall profit, regardless of margin).

Let's say today I pay $100/month for cable TV, of which $25 is fixed costs, $25 is profit, and $50 is content. The new model would be $25 for fixed costs, $25 for profit, and then whatever channels I want. So my minimum monthly bill is still $50 even for a single channel, which is ridiculous. Maybe I end up with 20 channels for $20/month, so my total bill is $70. I'm saving money, but only 30% for giving up 95% of the channels. And it would be sad because while I didn't pick up TNT, I would miss their showing of the Christmas Story or whatever in December. There would be a bunch of those lost opportunities, just to save $30. And the old system is no longer available to me, because buying all the channels would now cost $150 instead of $100.

But who knows, perhaps the cheap channels would be cheap enough that lots of people would subscribe even though they don't watch. When you're talking about channels costing $0.20/month or less, it's like "why not" except for channels you really, really don't have any interest in.

Re:The content providers are the problem

[Bob_Who]

Welcome to Capitalism in America: Parker Bros. Monopoly was a prophetic game. Market making has little to do with supply and demand in the traditional sense. Now its an artificial bundle of services rammed down your throat at inflated prices. Shit you don't want with money you don't have...nor the time to find viable alternatives to your needs, in the current "free" market of consumer choices.... Whatever happened to Freedom of Choice?

It's the Sports

[Rhyas]

It would be interesting to see if those 17 average out to specific channels, or categories of channels. i.e. Sports Broadcasts.

Honestly, I'd be a cord cutter and I know a lot of other people who would as well, if there were *reliable* alternate way to get the sporting events I want to watch. Baseball, Hockey, Soccer, Auto Racing, just to name a few that you can't really get outside of a cable subscription. Football *could* be piled in there as well, mostly because there are relatively few games on the broadcast channels on any given weekend for a given region. However, NFL is probably the *most* available of any sport.

I never watch anything else that can't be reliably streamed from Netflix, Prime, Hulu, etc. But I have to pay for all of it to get the sports. ):

Re:We HAVE to have a la carte!

[chromaexcursion]

You don't quite understand the problem.
ESPN and CNN are forcing cable to bundle, not the other way around.
Did you know ESPN is owned by Disney? They force sports fans to get Disney kids ....
Works both ways.
Putting pressure on the cable companies does nothing. Write congress, not much likely to happen there.
Drop to basic service if you don't want bundles.

So be it...

[Bartles]

The data seems to support the notion that consumers are better off subscribing to channels a la carte, but cable companies are of the opinion that 'the price of cable TV wouldn't change much if channels were served à la carte because content providers won't sell the most popular programs to cable companies unless the provider's other channels are also served up.'

Then cable will die.

When a company decides it is better to not provide value to it's customers, and there is now a plethora of other options, they will soon find themselves without customers.

Oh yeah?

[RevWaldo]

Well, there's like a bajillion web sites, and I only visit about ten on a regular basis! Who's wasting bandwidth now? Checkmate, new media!

.

Yeah, excelsior

[theoriginalturtle]

In 1996, my rural cable system sent us a big mailer: GOOD NEWS, WE'RE ADDING SIX CHANNELS!

As it turned out, there were three religious networks and three new shopping channels. I sent them a letter (they were not an ISP back then) suggesting they combine all that crap into one channel, call it The Jeezus Shopping Network, and that would free up the other five analog channels for stuff I actually wanted to watch.

Never heard back from them.

Here's the Scoop

[schnell]

Nobody wants to hear this, but it's the truth and people should understand it:

• Unbundling will not happen anytime soon
• This is because a handful of TV channels have a f***load of viewers (ESPN, Fox News, etc.)
• If your TV station has a f**kload of viewers, you are an idiot if you don't charge cable providers a high fee to carry it
• If you paid for each of those channels a la carte, it might be $10+/month or more, just like HBO
• Instead, those providers "bundle" those channels with less popular ones because - even though the big channels are the cash cows - they still make money on advertising from less popular channels
• For anyone (Disney, Fox, others) who have killer content on one channel, having more channels (even including less popular ones) = more money
• People pay higher cable bills, but more niche programming is out there - for example, the fact that you get Cartoon Network/Adult Swim is subsidized by what you pay for CNN. If channels were unbundled, it's unlikely that the ratings of "Adventure Time" or "Venture Brothers" could pay for Cartoon Network to be on the air.
• Unbundling may happen at some point, but when it does 70% of today's cable networks will go away. Maybe you don't watch most of them, but recognize that it will result in a diminishing of the wild diversity of programming (brilliant and crap, left and right politically, in many languages) that is arguably one of the best things about the "there's nothing on" diversity of channels today that doesn't appeal to many viewers but serves many previously neglected niches.

Re:Here's the Scoop

[odie5533]

The subsidization of niches seems to be failing of late. Rather than serving their niche, low-tier channels want more viewers so they can get a bigger cut of the pie. To do this, they tailor their programs for mass appeal. When once the History channel presented factual information about history, now it airs episodes of Pawn Stars and Ancient Aliens. When once TLC actually stood for The Learning Channel, now it airs things I'm embarrassed to know the names of. When once Sci-Fi aired niche science-fiction series, now SyFy is mostly about Ghost Hunting series. Abandoning the niche pulls in more viewers. I'd gladly pay $10+/month for an actual Sci-Fi channel that aired original science fiction series that haven't been retooled for the lowest common denominator of viewer. I think internet series are going to fill the niches going forward, while television seems to be homogenizing.

Re:Here's the Scoop

[nine-times]

Unbundling will not happen anytime soon

I think you're right, but what may happen sooner is that the whole "cable" system goes away. My prediction is that within 10 years, the number of cord-cutters will grow, and you'll see people move to streaming solutions similar to Netflix and Hulu. Of course, those services will continue to "bundle" in a bunch of content that you're not interested in, either, but nobody will care. You don't hear people complaining, "Why am I paying for that movie on Netflix that I have no interest in watching? Just let me pay for what I want!" But of course, if someone does feel that way, they'll be able to just buy the TV shows they want on services like iTunes and Amazon.

It'll happen. It's already happening. Right now, cable companies and content owners are in about the same place as the record stores and record labels were in the late 90s. What's unclear is, how long can the cable companies and content owners prop up the existing system? Who will die off, and who will make some kind of transition to the new model? Who will be Apple's analog in this scenario, and who will be Tower Records?

Just went through this

[Snotnose]

Went to pay my Uverse bill friday, it had jumped 50% (from 117 to 179). Went through the series I record, found 11 channels I actually care about.
Called Uverse Monday, was on hold 40 minutes and they disconnected me.
Called again Tues, was on hold 40 minutes and they disconnected me.
Called again this morning, ended up agreeing to fewer channels, no HD, no Showtime, for the same damned price I'd been paying the last 4 years.
I'm thinking I'll spend tomorrow researching laws (I live in California) to see if that verbal contract is valid, and what my options are.

So is that a bad thing?

[dutchwhizzman]

Sure, lots of channels will cease to exist. But the makers of the content are already using different outlets like youtube to get their content out there. Once they get enough following there, they might strike a deal with netflix or a similar company. Just because "24/7 content you can't choose" goes away doesn't mean that you can't replace it with "content you choose whenever you want it".

TV has been the industrial age of amusement and news. In a lot of "industrial" products, we are now producing custom ordered items, keeping the price low because of automation. If you don't buy your car off the lot, you can have any colour, engine and accessory package you want. It will be produced especially for you and it won't cost you a dollar more than the same car would cost you off the lot. I don't fit in confection sizes (too tall) and I have a lot of my clothing made. Compared to name brands, my clothing is cheaper and often higher in quality. This is because they now have computer controlled cutting machines that calculate the correct fabric cuts and the fabric gets cut by a robot. This is how modern TV is going to work as well.

People now have a choice what content to watch and when to watch it. It may be bad for TV channel owners, but in the end, this will provide improved quality and diversity of content at a price that people are willing to pay for it. Advertising models will adapt to this. In show product placement, more ads on the cheaper subscription compared to the premium one and so on. Don't be fussy about people moving your cheese but adapt and reap the benefits.

Re: And that ...

[Anonymous Coward]

The homeless typically don't watch much TV either. Correlation is not causation.

Re:So your standing for the status quo

[ButchDeLoria]

Or we'll have an Affordable Entertainment Act passed, that essentially just forces us to buy our old shitty cable packages, but for more money. We'll call it Romneytainment.

It's the networks fault...

[Lumpy]

Honestly if they did shows "ala-carte" things would be different. I would GLADLY pay for TV shows I like Fox cancels Almost Human and replaces it with another cop show that has a lower average IQ rating so it will work better for the typical FOX viewer.

IF shows were Ala-Carte I could give my money directly to the show creators. Betting Firefly would be brought back to life in a heartbeat if FOX did not want to let that IP rot and Die.

Re:It's the networks fault...

[Megane]

Fox cancels Almost Human

Fox also canceled Alien Nation, so I'm hardly surprised. Over two decades later, and Fox is still cancelling SF shows.

17 seems high

[roc97007]

I would think that the average would be lower, especially in this economy. The "network" channels plus a few of the basic cable channels. Maybe eight or nine total for the most part, with very rare ventures into maybe two or three more. Do people really sign up for "pay" channels anymore?

I think that if people could really buy ala carte instead of having to buy nearly 200 channels or nothing, the numbers might be different.

We dumped cable during dot com bust (I was out of work at the time) and went to Netflix. You can't imagine what reducing your TV budget from $120 a month to $6 a month does to your budget. We also invested in this think called an Antenna, which was surprisingly cheap. Our homeowner's association did not allow antennas (thereby handing a monopoly to a local really terrible cable company) but the communications act of 1996 invalidated that.

We had cable again for a short time in 2006 to try out the latest crop of DVRs, and they stink. Sluggish response and not enough disk space. (I think I calculated once that DVR disk space costs 12 times as much as the same space purchased at Best Buy.) Dumped all of that at the beginning of the current recession, got a roku instead. (A one time cost that was less than one month in cable TV fees.) Wife and child watch shows a year or so out of date, but they have gotten used to it, and they can binge watch. (Which isn't necessarily a good thing....)

I need internet as I work from home, but fortunately fiber is available in my area, so I don't have to deal with comcrap. Now we have two Rokus, one upstairs and one downstairs, wife has a Hulu account and daughter has her own Netflix account, and all I'm paying for is the network.

The cable TV model is obsolete for several reasons -- real time vs demand, package vs ala carte, and unreasonable cost. But I think it will take an older generation (what I call the "tv tray generation") dying out before the cable companies finally go under. But it's inevitable.

Me? I really don't have much time for TV. Fridays is "pizza and movie night", and we take turns picking the movie, but other than that and The Big Bang Theory, I'm largely ignorant of what's on the tube. And -- a little insight -- you'd be astonished at how much productive time that frees up.