Wednesday, April 30, 2014

Want to pay for just the TV channels YOU want to watch? Get ready to pay thousands more - and see at least 124 TV channels disappear.

Further to the debate under consumers and pay-TV subscribers who "demand" to only pay for the TV channels they individually would watch under a so-called "a la carte" system, an interesting study done in 2013 has found that pay-TV subscribers in America would end up paying thousands of rands more and that at least 124 TV channels would completely shut down and disappear.

Consumers and pay-TV subscribers who don't understand how the pay-TV model work and the delicate ecosystem of content creation, distribution and cross-pollination of programming, keep demanding the somewhat utopian option of only wanting to choose the individual TV channels from a pay-TV operator they might want - instead of paying a single fee for packages of channels and grouped television content made possible through

Much more education and awareness needs to be done under ordinary consumers and pay-TV subscribers of the back-end business of how pay-TV works.

A lot of pay-TV subscribers don't understand that it functions like your gym and country club, and offers aggregated benefits to all subscribers or members: there's a pool and a bar area and a Stairmaster and dumbbells in every weight increment whether you use it or not (or only once a year) because of the collective value everyone's contribution unlocks.

And if you only use the pool and "overuse" it, that's fine too. In the end it evens out in everyone's benefit.

The results of the research applicable to the American pay-TV market cannot be generalised, but keep in mind that by far the majority of TV content, TV channels, and TV programming seen and channeled to South Africa comes from the United States.

The study therefore give a good indication of what will happen with the TV channels and content seen in South Africa should "a la carte" be enforced in America or in South Africa.

Needham & Co. which conducted the research, also looked at the impact on consumers and pay-TV subscribers economically, as opposed to from the perspective of pay-TV operators.

Needham & Co. found that if an American pay-TV subscriber switched to an "a la carte system" where a subscriber has to pay per TV channel, that the price of 180 TV channels would rise from $720 per year for the 180 TV channels as part of a bouquet, to $1 260 per year for the exact 180 TV channels if you still wanted them all and picked them one by one - 75% more expensive.


Because less pay-TV households will get or choose a specific TV channel - lets say for instance The Sunshine Channel which isn't appreciated and watched by so many but which has colourful well-produced and critical acclaimed movies on a rainy day - that channel becomes less valuable to place commercials on.

Because advertisers want a large reach and because The Sunshine Channel doesn't have a large reach, the pay-TV operator has to increase the price a single pay-TV subscriber must pay to make up for the deficit due to the drop in TV households.

The opposite is also true. While The Knitting Channel's viewers are fewer, because the channel is in a bouquet, those pay-TV viewers and subscribers currently actually contribute to the much more expensive to run and distribute Quidditch Channel.

Take The Knitting Channel away, and those who want The Quidditch Channel will have to pay outright for it - and sports rights are extremely expensive and keeps rising above inflation.

Sports TV channels will become the most expensive individual TV channels to subscribe to under an "a la carte" pay-TV order.

Sadly also - although it might be someone's favourite TV channel, or though a TV channel might carry or produce a subscriber's favourite TV show - a lot of less generally watched, niche TV channels, will simply disappear because not enough people choose it.

According to Needham & Co. at least 124 TV networks would disappear - and with that the programming it offered, because it would simply no longer be economically viable.

Goodbye kids channels which don't have commercials, goodbye news and documentary channels.

If its virtually impossible to get a niche channel like Syfy on MultiChoice's DStv even under the current grouped dispensation, it's a veritable fact that the bulk of niche TV channels currently offered on that operator's channel line-up would disappear and simply not be offered - although it might be your favourite TV channel.

Not in the report but also worth noting: South African viewers and pay-TV subscribers don't necessarily see TV shows and programming on the same channels which are making it and showing those programmes in America, since its sold to various different TV channels through different international content distributors.

If 124 TV channels - even 10 American TV channels disappear - with it will go a lot of TV shows originally produced for those TV channels which will simply no longer be available, and which won't be made.

If the AMC TV channel in America goes away ... goodbye The Walking Dead on FOX, Mad Men, Breaking Bad and The Killing on M-Net - all in one go. And that's just one channel.

The true impact and intricate, yet massive (and devastating) erasure of TV content becomes unimaginable when you go and sit and really think of what all is affected and how if 124 TV channels were to cease.

Don't believe Needham & Co., don't believe me.

Next time your in a hotel, ask yourself why everyone gets a little shampoo in their room, why everyone can use the swimming pool, why anyone can call for an iron, why you can have your air-con on 5 at full blast the whole time while someone else don't have it on at all. Why you can ask house keeping for 50 towels if you want, even if someone else uses none.

Then ask yourself if you'd pay less and get more value if the hotel, instead of a price for an overall value offering of amenities, made you pay individually for every little thing just you wanted or used.

Then ask yourself what kind of a hotel if would be, and if you'd even like to stay there.