OTT Finally Happening….what will it mean to what we pay for TV?

There has been lots of talk about over-the-top (OTT) programming coming to all of those wanting to cut the cord or never having ever attached the cord. This is a good article by David Carr of NYTimes talking about recent moves by CBS and HBO.

http://nyti.ms/1FnLvKU

The tricky part has always been, and will continue to be for most content providers, how to separate from the bundle while maintaining income. Those programmers with great brands, both the umbrella brand and content brands, can make this leap and get people to pay them for the programming. The vast array of smaller cable networks will have a harder time doing so. Those smaller audiences may not decide to make the separate buying decision to purchase the network or bundle of programming….the decision process is nuanced when not just buying a bundle.

And as we move towards a separation of distribution from content, we may find that the promise or hope of paying less for our TV watching habit does not really come to fruition. Of course, it will depend on what you watch and want to pay for, but for those who watch a decent amount of TV from different content owners it seems that the bill will tally to something that could match what is bought today in the bundle. CBS is charging $6 for day after broadcast shows and back catalog shows, but this will not get you sports and you have to be in a market where CBS owns the local affiliate TV station (http://en.wikipedia.org/wiki/CBS_Television_Stations).

So what if you watch CBS and NBC (picking two of four major networks), HBO, Showtime, some bundle from Time Warner (TNT, etc), and bundle from Scripps (Food Network), ESPN and then get three sports such as MLB, NFL, NBA. What would this cost as compared to your current bundle? Has to get to say $80 per month equivalent, assuming that the broadcast networks, Time Warner and Scripps are $6 each; HBO and Showtime are $8 each; sports are $10 each (league ones are not every month, but $120/season seems about right on average, so just making this monthly for the calculation). And then you pay for your high speed internet on top of that, which the cheapest stand-alone service from Comcast is 25 Mbps down speed and costs $40/month (and you can pay more for faster speeds). So $120 per month….that is more than the average American spends on a bundle today. So, this will be the dilemma. And I still think that unbundling is good for consumers as more competition and choice will lead to people finding deals and paying for just what they want. But I don’t think that it will really lower your monthly bill if you are watching programming from multiple sources….we’ll see, I will keep my fingers crossed.

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About Chris

I am a husband, father, son and brother. I worked for a long time in investment banking / advisory and looking forward to now building from the inside. What is my purpose?....don't think that I have figured that out, it is tricky. I have lots of good intentions, some of which blossom into good deeds and some of which could use a catalyst. But I am trying to figure it out, and I hope to eventually.
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