Another take on a la carte programming

A la carte programming. Everyone wants to pay for just what they watch. We’ve shown you before how that could end up costing you more, and how it’s not likely to happen as long as cable companies and content providers are actually the same people.

Still, it’s compelling. If you think about it, someone figured out how to do music a la carte. It used to be that if you wanted one song, you probably had to buy the whole album. Now it’s easy, just pick the song you want even if it’s an obscure album cut, and depending on your choice of music store, it’s between one and two dollars to get. Point is, someone figured out how to do it.

Is that where TV is heading? iTunes and Google Play offer TV shows for individual rental, too, but the price seems a little high for just one show that you’ll watch once. It still seems like whether you prefer traditional pay-TV or streaming, you tend to want to pay once for a whole bunch of programs.

Digital Trends recently did an article on a la carte programming where they claimed that it was coming, slowly, and there might be a painful transition. We certainly agree with the painful transition part… as traditional content providers begin to collapse in favor of pure a la carte alternatives.

Look for example at Game of Thrones. Why? With its position at the intersection of geekdom and business, it’s an excellent case study. The program airs on HBO (a Time Warner company) and is produced by HBO, although it’s likely that for business reasons there’s a separate company just for that purpose.

Now, say you like this show. Right now you have three alternatives: Subscribe to HBO through your cable or satellite company or download it illegally, or pay $4 per episode through iTunes or another provider. The average customer pays about $85 per month for basic cable, then add HBO for about another $18 a month and you’re up to $103 per month. Even if you only subscribe for the three months a year when the show airs new episodes, Game of Thrones is costing you $309 per year.

Wait a minute, you say… you get a lot of other programming besides that. You get all the cable channels, you get all the other HBO stuff… but maybe you don’t want that. Maybe you just want Game of Thronesand therefore it’s costing you $309 per year. So, you decide to go for streaming. That’s $40 per season which is a lot cheaper. Of course you’re probably also paying $50 a month for internet service, so the real cost for the same three months is $190. Hey this is 2013. It’s pretty easy to justify an internet connection, but still, apples to apples, right?

Or, you take that same internet connection, which costs you $150 for three months, and you just download the thing illegally.

$40 per season is probably too much money for a single show. If you have 8 shows you watch, it ends up costing the same as subscribing to cable or satellite… or you spend a lot of time pirating.

Now let’s look at the business case. HBO could probably make more money by offering its shows a la carte at its own web site for $10 per season than they make by reselling them through iTunes or through cable. Why don’t they do that? Because HBO is owned by Time Warner, which also operates a cable company. The last thing they would want to do is convince people they don’t need cable (or so you’d think.) So they intentionally decide not to do that.

At some point, this has to get more logical. Pay-TV pricing, which has doubled in the last ten years, will double again soon, outpacing inflation by a large margin. This is mostly due to programming costs. In that same ten years, HD streaming has gone from impossible to commonplace; where will it be in ten more years?

Something has to change, and it must start with common-sense pricing that helps guide the pay-TV industry where it needs to go, as well as common-sense options for customers who would rather not pirate programming. That begins with content providers like HBO, and the time to start is now, before everything falls apart.