Cable bundles are apparently worse than literally Hitler, or at least the latest Kim Kardashian picture (which according to the internet is almost as bad).
It is apparently the best thing since Britney and sliced bread that cable companies are about to be forced to sell channels a la carte. I’m all for a la carte subscriptions, but I am fairly certain that most people who complain about bundles are the ones who stand to lose from it. And those are also the people purchasing cable bundles when given the choice.
Let’s take an example of a fictional cable bundle. It features five channels: Sport 5000, Princess Movies, 24/7/365 Live Stream from Oktoberfest, Swedish Trains, and Rai Uno. Sport 5000 is super popular and features Tour de France and in the short breaks when TdF isn’t available, it shows old reruns of Cheech & Chong and Harold & Kumar Go to White Castle to keep their audience up-to-date with the latest news in sports. Princess Movies show movies featuring Bridget Jones and Hugh Grant. It is also popular but the audience overlap with Sport 5000 is limited. The Oktoberfest channel features fat guys with mustaches that sound eerily like Hitler drinking large beers, and the Swedish Trains channel features reruns of streams from a broken and unused toilet stall on a Swedish train. Rai Uno is colorful but nobody knows what goes on. The three last channels have barely any viewers.
“Free” Channels
Now, the math vaguely floating around in the head in the dumbest of the people arguing against channel bundles goes a bit like this: I enjoy Sport 5000, my husband, Mr Wife, enjoys Princess movies, but nobody in their right mind watches German or Swedish crap (except for that one time in high-school primary school kindergarten). Rai Uno just makes no sense. We pay money-dollar 100 per time unit for cable, so removing the three latter channels means we only have to pay ⅖ * 100 = money-dollar less than 100 (math is hard!) per time unit, leaving more moneys for wife-beaters (not the garment) and Ashley Madison. Also, we have a couch on our porch which somehow is relevant to the math. Also the math is instead meth.
This, as summarized by the venerable Dr Cox is
The reason this is so obviously wrong is that two live stream channels and some Italian crap of course comes nearly for free. Maybe a few of the 100 money-dollars per time unit goes to the three filler channels. Removing them would be hidden by inflation within a year or two. Chances are, channels with TV shopping experience programs are free or even pay to be on the network, bringing the total cost down.
At best, the amount of money to be saved is miniscule.
“But I don’t Watch That”
The smarter of the dum-dums realize that German, Swedish and Italian entertainment isn’t entertaining and hence cheap like a bordello in Mormon territory. These self-proclaimed Einsteins of our time split the price of the channel subscription into Sport 5000 and Princess Movies and assume that if they only want one, they should only pay half.
Unfortunately, that’s not how markets work. The company behind Sport 5000 has sold rights to the cable company based on the number of users or simply as a flat fee. As it just happens, with the subscription base of 1000000 they can sell the subscription so it contributes 50 money-dollars per time unit. If, say, only 50% of the cable subscriptions are really interested in Sport 5000 – the other 50% prefers Princess movies and there’s barely any overlap between the two – those 1000000 subscribers suddenly get cut in half. Unfortunately, not literally, just the number.
Serves them right, damn dirty capitalist, says you, king or queen in the land of retards. No, that’s not how it works. By cutting the number of sales in half, the company behind Sport 5000 either has to lower production costs, increase prices, or shut down the channel altogether.
A TV channel has no marginal cost – in fact, the marginal cost might even be negative due to advertising, so selling a TV channel to 1000000 customers costs the same or less as selling it to 500000. ((The reason the marginal cost isn’t necessarily negative is that a customer who actively selects a channel is a better target for advertising than somebody who gets it as part of a package as they have confirmed interest.)) So, unless you are willing to compromise on quality, total price is going to stay exactly the same – likely, the only channels to have to shut down are the Swedish railroads and Italian TV show ones which are essentially free anyway.
Niche channels will skyrocket in price, and even the most popular ones will likely increase. People who watch many or niche channels will pay more and people who watch few popular channels will pay less. But the difference might not even be that big, because typically the popular channels are the most expensive ones. I could give you a formula for that, but we’ve already seen complex math like numbers and insults, so let’s not go there. Look at the moneys above again and forget all about the mean math. Not mean as in average.
Modern Channel Packages
Channel packages do have advantages, especially for users with a large or niche consumption: they are objectively cheaper. People who watch obscure channels get subsidized more by other users, and users already making use of many channels likely do as well.
Channel packages also have advantages for users who could otherwise save money by an a la carte selection of channels, because they remove the direct connect between channels and payment. You endure the pain of paying only once and get to watch everything you want. It’s like paying for a buffet or an all-you-can-eat restaurant. Often it would be cheaper to just order whatever steak you actually want instead of paying for the salad buffet you are not going to touch anyway, and trade the quality of your meat for an ice cream dessert you don’t really want. The package offer is not objectively a better deal, but it feels better because you have the option to take all that extra stuff without paying. While the choice all-you-can-eat TV package might objectively be worse, it makes you feel better. Also, it means that you save money by drinking 2-3 pints of beer with your breakfast at a Vegas buffet.
And that’s why modern cable packages are so popular. People pay for Netflix and NBC and YouPorn for flat-fee consumption. People use Spotify and Pandora and Apple Music instead of purchasing albums individually.
Little do people realize that they essentially pay around 10 money-units per time unit, where the time unit is a month. Those 10 moneys pretty exactly correspond to the price of one album. How many people would really buy 12 albums or 120 singles a year? Very few. I know I don’t; I buy my music by the album and used to have a Netflix subscription. I’ve bought roughly 50 alums in the past year but watch maybe 2-3 movies a month. I would totally benefit from instead having a music subscription and renting movies a la carte. I cancelled Netflix because they went all Kardashian with their DRM (at least it doesn’t work on my computer), not because I felt I paid too much.
Cable packages are just nice because they remove the pain of having to pay for individual purchases. You pay once and get everything for free. Even at a higher price of buying everything individually.
