So called "a la carte" pricing - or where consumers and pay-TV subscribers get to choose to subscribe only to specific pay-TV offered channels - will hurt consumers and the pay-TV industry, with fewer than 20 TV channels which would survive on its own.
That's according to a new report, Future of TV Report, out by analyst Laura Martin from Needham & Co.
The bulk of pay-TV tailored TV channels available on South African pay-TV operators such as MultiChoice's DStv and On Digital Media's TopTV, as well as the bulk of content available on several other packaged channels offered, are from America.
Without a tiered offering where less watched and less popular channels are grouped in tiered products as is the case currently, fewer than 20 TV channels would survive.
Pay-TV operators which are companies and which are in business and exist to make money and generate economic returns on investments, would simply cease to offer variety and just focus on the channels on which they can maximise income as well as ad revenue - meaning the most watched channels.
In the Future of TV Report, Laura Martin says "selling" pay-TV created TV channels one by one would also remove 50% of the total revenue for the pay-TV industry at large in America - or about $70 billion.
The report warns: "We can find no math where unbundling is the best economic answer".
Pay-TV subscribers who subscribe to a specific bouquet, largely because of sports, help to fund the availability of certain TV channels such as The Food Network for instance.
"Virtually every household watches several channels that would not make the cut," says the report.
Letting pay-TV subscribers choose specific channels will halve the total market capitalization of the current TV ecosystem in America.
"Our calculations suggest that if the TV bundle starts to degrade, $400 million of market capitalization will turn into $200 million over 10 years," says Laura Martin.
"I may feel that Bravo, A&E, History Channel and The Food Network justify the $70 (R690) a month fee, while my husband attributes more value to the sports channels," says Laura Martin. "In each case, the price/value relationship is intact, but predicated on different channels for each person in the household."
