Do Customers Benefit if Cable Providers Are Forced to Unbundle Channels?

The Canadian government, led by Interior Minister James Moore, is moving to compel TV providers to allow customers to purchase channels individually, rather than forcing them to purchase bundled packages.

“We don’t think it’s right for Canadians to have to pay for bundled television channels that they don’t watch,” Moore told Reuters.

On the surface, this sounds pretty great, especially for those who tend to stick with their 10-or-so favorite channels and eschew the other 290 included in their expensive bundled package. Plus, it sounds like a great way for cable providers to take a step into the 21st century and possibly regain some hold over the folks who are ditching cable for streaming services in increasing numbers.

Unfortunately, as several publications have pointed out, cable providers being forced to offer channels individually isn’t quite as wonderful for consumers as it seems. The main reason is obvious: providers aren’t going to eat the lost revenue – they’re going to make up for it somehow. Plus, it would decrease diversity in programming because less profitable channels that are currently being carried by bundles are going to be dropped in favor of sure bets.

From BusinessWeek:

According to a study published this summer by Needham Insights, half the industry’s revenue — about $70 billion — would disappear if people didn’t have to pay for bundled television. The firm thinks only 20 stations would survive the fallout.

“Consumers in most à la carte models end up paying more or less the same as what they were paying before, and all they have to show for it is that now they have fewer channels,” MoffettNathanson research analyst Craig Moffett told [the Globe and Mail].

Yep, looks like I’m sticking with streaming television.

(via VentureBeat)