À la carte cable has been the dream of nearly every digital-minded cable television subscriber for the better part of a decade.
Cable and satellite television providers all loosely share the same business model when it comes to channel diversity. Cash cow channels like ESPN, network news outlets, TNT, TBS and USA all sell subscriptions and allow lesser known channels to exist.
Channel diversity has been a selling point for television providers for years, but eventually the end consumer realized that most of their time is spent watching 10 or fewer channels. With this realization, the dream for À la carte programing was born, but up until the last couple years, gatekeepers and technology restrictions have kept this dream from becoming reality.
Although some took the plunge and cut the cord completely, others have put their dreams on the back burner (most notably sports fans) and remained loyal television subscribers.
As technology has improved and a few cable giants have entered the À la carte space, including HBO, the dream seems to be closer to reality than ever before.
Consumers are now accustomed to on-demand streaming services like Netflix, Amazon Prime Instant Video and Hulu that offer popular cable series, movies and even groundbreaking original content at a relatively low monthly price.
Set-top devices like the Roku, Apple TV, the Amazon Fire Stick and Google’s Chromecast have even bridged the gap from the web to your television.
Dish Network even announced Dish Sling earlier this year which offers streaming rights to top channels (including ESPN) for only $20 per month.
This is what everyone wanted, right? Well…
Streaming and Sports
Sports viewership drives television subscriptions and ratings. If you aren’t a sports fan, great! There’s a chance you may be able to jump to À la carte offerings today, if you haven’t already.
ESPN is the no-doubt driving force behind cable television subscriptions and despite this, “the Mothership” has sent several influential personalities packing within the last month.
Call it a bet on younger talent, a frugal business decision or a sign of dwindling revenue, these moves have raised some major questions.
Fox Sports’ Clay Travis suggests that it signals hard times ahead as cable subscribers begin to fall at a rapid pace.
So if people start cord cutting – the catch all term for individuals who decide they’d rather not pay for a cable or satellite subscription – ESPN has by far the most to lose of any channel in the country. ESPN has become the most powerful sports company in the world because just about every single cable and satellite subscriber in the country pays in excess of $6 a month for ESPN. That’s despite the fact that only 20% of cable and satellite subscribers would be willing to pay for standalone ESPN according to a 2013 Needham and Company report.
So, what does this all mean? ESPN’s revenue, as with every other cable channel’s, have been falsely inflated for years thanks to the package structure of cable television.
Could this finally lead to ESPN and other sports channels giving in and going direct to consumer with À la carte offerings? Probably not (yet).
Many online publications have thrown around figures stating that an ESPN À la carte offering would cost upwards of $30 per month.
Wait a minute, the À la carte television dream was about lowering your monthly bill, right?
For a diverse sports fan, like myself, who enjoys watching nearly every college sport and most pro sports, À la carte offerings really start to add up.
I devoutly follow three pro teams, major golf championships, NASCAR and would require ESPN, ESPN2, the SEC Network and ESPNU to ensure I didn’t miss a signle University of Alabama sporting event.
Let’s do a little rough math to estimate the total cost of my À la carte offerings (per month) to satisfy my diverse sports taste. Please note, some of these prices are speculations as many À la carte offerings don’t exist. Speculations will be marked with an asterisk (*).
ESPN – $30*
MLB TV – $24.99
NFL – $25*
NBA TV – $129/year, ($10.75 per month)
Fox Sports – $15*
NBC Sports – $10*
TOTAL – $115.74
To gain full access to the sports I want to watch today, À la carte, it would cost $115.74 per month! Granted, you could cancel some league specific offerings during the offseason and there’s no way of knowing how much ESPN, the NFL, Fox Sports and NBC Sports would charge for their offerings, but I consider the estimates above to be reasonable.
Keep in mind, estimates place the average monthly cable bill per household at $65 per month.
I understand that I’m not the average sports fan and many would simply subscribe to ESPN or another network to ensure the best bang for their buck, but that’s a downgrade from cable.
Television Deals and Sports Leagues
It’s no secret that sports league revenues rely heavily on television deals. Take the SEC Network for example. The first-year, niche college network backed by ESPN, is set to pay out $31.2 million to each member school in 2015.
Not to mention the NBA just inked a deal with ESPN and Turner Broadcasting to the tune of $24 billion over nine years.
The success of sports leagues undoubtably hinge on television deals.
Look, the Green Bay Packers aren’t paying Aaron Rodgers $22 million per year thanks to the hot dog you bought at Lambeau Field and the Cleveland Cavaliers aren’t floating LeBron James $42.1 million over two years in response to a rise in game program sales.
Big money contracts are thanks to television deals and À la carte offerings could change the economics of sports forever.
To the sports fan, À la carte streaming seems like a dream, but today it’s an expensive and convoluted nightmare with lasting economic effects.