The big picture
In the name of protecting cable customers, lawmakers and regulators are encouraging the cable industry to pursue a la carte programming offers and "family tiers" of service that don't include material that could be offensive or inappropriate for children.
This seems like a good idea in many ways, particularly as cable rates have gone up. Time Warner's family tier, the first to be announced, layers a set of family-friendly cable services on top of the company's $12 basic cable package that adds kids' shows and news for another $12.99 per month.
But although consumers view a la carte programming as a way to pay only for what they want and not for what can seem to be an overwhelming amount of programming, I think in the end, they will wind up paying more for less.
And less is not where the video entertainment industry is headed--with the growth of video-on-demand titles moving into the thousands from cable companies and from Verizon via its FiOS TV, a dumbed down cable offering hardly seems to be the ticket.
In the meantime, the fundamental means of support we've all taken for granted during years of viewing high-quality programming at low cost--advertising--is under attack from all sides. As TiVO-like services such as digital video recorders gain popularity, fewer consumers actually view ads, choosing instead to view programming when they choose to, rather than when it is broadcast. The delivery of TV programming to iPods, cell phones and other devices creates additional means of revenue, but it's not clear that these will replace billions in ads.
At the same time all this is happening, advertising revenue for Internet companies such as Google and Yahoo is on a sharp incline and is expected to overtake basic cable ad dollars.
Rather than try to address one piece of the puzzle, it would make more sense to view the big picture. A la carte cable offerings and family tiers are likely to be a short-term option that is more politically correct than market friendly.
E-mail me at CWilson3@primediabusiness.com.
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