Thursday, November 25th, 2010

Bundled Prices

Cable TV is brilliant at selling us what we don’t want. Typical cable subscription plans include dozens of channels of utterly irrelevant pap. Think FitTV and the DIY channel. The average American home receives 126 channels but watches only 38 in a week, according to a Credit Suisse analysis. And the price of cable bundles is still rising above the rate of inflation.

So it is unsurprising that cable networks and broadcasters refuse to allow consumers to buy channels “a la carte”, one by one. They fear, not unreasonably, that allowing consumers to choose what they want to see  would condemn much of their line-up to the dustbin. All those channels living off the sporadic attention of bleary-eyed, past-midnight channel surfers, which depend on ads for devices to lose weight while eating through an ingenious leveraging of the jaw, would probably disappear.

But cable may not be able to resist unbundling much longer. Squeezed by rising cable prices, viewers have been cutting the cord and dumping their subscriptions, turning instead to the Internet for entertainment. Cable companies are responding by offering cheap pared-down plans with fewer channels. Earlier this week Time Warner announced it would launch a “TV Essentials” package excluding channels like ESPN, Fox News, TNT and MSNBC. It would cost $39.95 in NYC –well below the $63.50 for its standard cable package.

This is standard price discrimination –offering a variety of prices so people will sort themselves into different tiers of service depending on their willingness to pay. A rock bottom service package allows Time-Warner to retain financially stressed consumers. And it also  offers higher-priced premium plans for the rich who can afford them. But could this be a first step to unbundling too?

I would love to be given the option to pay $4 for an ESPN subscription, rather than have it included in my basic menu. I wouldn’t purchase it, but many people would. We would all be happier.  And those who wanted full service could always buy Time Warner’s $189.95 “Signature Home” Service. This will give subscribers access to everything, including the most sought after service aof all: the opportunity to schedule an appoinment with the Cable Guy.

That may be worth the money.

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One Response to Bundled Prices

  1. Gracie says:

    My web site – homepage (Gracie)

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