bundling

By Graeme MacKay, The Hamilton Spectator – Thursday, October 17, 2013

Government wants to force providers to unbundle TV packages

The government’s plan to force content providers and distributors to unbundle cable and satellite TV packages and offer viewers a more à la carte way of choosing the channels they subscribe to might seem like a consumer-friendly move, but some experts say it could end up hurting consumers and the TV industry.

“It’s a horrible idea,” said Laura Martin, a senior analyst in the entertainment, cable and media division of the U.S.-based investment and asset management firm Needham and Company
Martin and her colleague Dan Medina wrote about the potential impact of the unbundling of television services in the U.S. in a July 2013 report titled The Future of TV. They  suggest in the report that unbundling would cost content owners and distributors about half their revenue and shrink the channel offerings available to U.S. consumers to “fewer than 20 channels.”

“Most entertainment cable channels generate about 50 per cent of their revenue from advertising and 50 per cent from subscription payments,” they write. “The reason there are subscriber payments at all is that there is zero ad revenue until a channel reaches at least 25 million homes. Any channel with less than a 25 per cent penetration of U.S. households (and recall that HBO — the best of  the best — only has 30 per cent penetration) would probably not survive in an à la carte world.” (Source: CBC News)

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