Cable Unbundling and A La Carte: Pretty Dumb Cost-Saving Ideas

Without embarrassing anyone in particular – many people called for unbundling of cable fees in favor of a la carte channels. We haven’t researched – but we likely have pushed for it as well in past blog posts.

Regardless – consumers are acting with alarm that prices on streaming are rising so quickly. Hulu with live TV just increased its price by $10 per month in fact.

Here is why unbundling may have been bad for consumers.

It was pushed for the wrong reasons – people saw cablecos as big, greedy companies and wanted to weaken them.

This was, of course, reinforced when the cable companies had a dispute with content companies over fees and forced the content off the air for some period of time.

People were sick of paying for the egregious ESPN charges – not just people, everyone, it seems, hated the control Disney had on the TV market.

Fast forward – we now have access to numerous streaming options and new ones like Apple’s recent entry mean more choice than ever.

We have lost something important, however.

The cable companies like all organizations pushed to make more profit every year. In doing so, they acted as a check to runaway streaming cost increases.

Streaming networks now are free to invest in their content – with seemingly unlimited resources as consumers will have to pay to get access.

This, by the way. is the exact same situation as student loan debt.

Politicians in their infinite wisdom wanted to help poor people get into college so they offered loans for any degree – by taking them over from banks.

This caused universities to spend ever-more money on their professors, in order to rank higher – knowing the government would help defray increased admissions costs.

Bottom line – the lowest income people are on the hook for even more debt – often coupled with degrees that are unlikely to get them high-paying jobs.

The free market acted as a check against student loans for degrees which would not generate commensurate levels of income.

Likewise, cable companies acted as a check on runaway content costs.

The subset of people who just want a few streaming services will be winners but for many others, the costs for their streaming consumption will soon outgrow their cable costs.

There is an upside – we no longer will flip 100 channels with nothing to watch – the quality of content is improving with so much investment going into it. But it will cost you.

 

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