When I was young, I was amazed by cable TV. So many channels! Nickelodeon, Cartoon Network, Fox News (yep, I was that kid), and hundreds of others? To someone who grew up with only our local ABC and FOX affiliates, that kind of selection was unbelievable. However, what I didn't understand at the time was the seemingly unlimited buffet of viewing options laid out before me actually represented a heavy-handed industry practice that often left consumers high and dry. That said, recent changes in the industry landscape are making it possible for consumers to reclaim their fair share of control over TV.
Let's start with how the cable TV industry works today. Channels are owned and produced by entities called Content Owners (or simply "owners"). Owners include companies like Viacom, Disney, Turner, and Discovery Communications. The owners, in turn, offer their channels to Content Carriers (or simply "carriers") to deliver to customers. Carriers include DirecTV, Dish Network, Comcast, Cox, Charter, and others. The carriers are charged a fee by the owners for each channel they carry (called a subscriber fee) which varies by channel and is based on the number of customers who subscribe to each channel (Channel A may have a subscriber fee of $0.50 per subscriber and Channel B might have a fee of $0.35 per subscriber). This fee is largely what determines the prices the consumers pay when subscribing to a cable service.
Now, here's the stickling point: If you have a cable subscription, you likely weren't allowed to pick out which individual channels you wanted. Instead, your carrier asked you to pick a "package" containing a pre-determined assortment of channels. Hmm... when you think about it, that does seem a little strange. After all, why should you have to pay for hundreds of channels that you care nothing about if you just want the handful that you want regularly? This has been a major point of pain for consumers over the years; besides, what other industry makes you do that? And how is that fair? If you want to go to the grocery store and buy a Coke, does the store make you buy a Pepsi, too? The more you think about it, the more you might be upset at your carrier for not letting you select your channels al le carte.
However, the reason the carrier sells to consumers in this way is because that is precisely how channels are sold to them by the owners. For example, Disney owns ESPN, ABC Family, and the Disney Channel (among many others). DirecTV may want to carry ESPN, but not ABC Family or the Disney Channel. However, it is Disney's policy that they will only sell these channels together, so if DirecTV wants ESPN, they're going to have to pay for (and carry) ABC Family and the Disney Channel, too. In addition, as part of the agreement between Disney and DirecTV to carry these channels, Disney may dictate that DirecTV must offer all three in the same bundle; that is, DirecTV cannot offer consumers a package that includes ESPN but not ABC Family and the Disney Channel.
Simply put, if you're wondering why you're paying $70 per month for 200 channels when you only watch about 5 or so, this is it. You have no choice but to buy all of these channels from your carrier because your carrier has no choice but to buy them that way from the owner. Pretty raw deal, huh? Well, the good news is that change is on the horizon.
With the rise of high-speed internet, new content delivery services like Netflix, Hulu, and Amazon Prime have started taking over consumers' viewing habits. Increasingly, Americans are spending more time watching content using these services than through cable. In fact, a small but quickly growing number of consumers (called "cord cutters") are simply cancelling their cable subscriptions and getting all of their content over the internet. This new trend has forced owners and carriers to change their business plans. Now that consumers have more choice in the market, the practice of forcing them to overpay for their content is starting to become a liability. The first evidence of this shift in business strategy is being seen in a new service called Sling TV.
Sling TV, launched in January of 2015, is an internet-based TV service that provides channels like ESPN, A&E, AMC, CNN, History, and others for a much lower price than traditional cable ($20 for the base package, as opposed to the average Cable TV subscription which costs $70). The way Sling TV accomplishes this is by focusing on offering only a small selection of popular channels, which significantly reduces subscriber fees. In addition, since Sling is entirely internet-based, consumers can watch TV over any internet-connected device including tablets, cell phones, PCs, gaming systems, and media set-top boxes.
Win-win, right? Well, almost. Sling TV is still in its infancy, and as such, there have been some growing pains. First off, content delivery over IP (the internet) isn't as smooth or reliable as delivery over cable. As a result, unstable feeds and even short-term blackouts have been regular occurrences. In addition, the bandwidth requirement to maintain a quality feed is pretty high (no official measurement, but the general rule is that about 50-75 Mbps or higher is needed), so unless you have a relatively strong connection, your best bet may be to stick with cable for now.
Still, for all of its shortcomings, Sling TV is a huge step forward for the industry. With it, the marketplace has choice and the cable TV establishment has competition. That, together with a consumer base that is largely dissatisfied with being taken advantage of and is willing to give new players in the industry a look, constitutes a strong start to the quest to take back TV.
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