Bundled cable channels are here to stay -- and that's a good thing

While anti-bundling advocates purport that a la carte programming would reduce costs to consumers, it simply isn’t true. In a series of posts from his blog Stratēchery, Ben Thompson provides compelling evidence to show that if ESPN was offered on an a la carte basis, it could maintain its current profitability only if individual subscribers paid about $100 a month for it. The assumption that subscribers could support a la carte programming without advertising is further underscored in a recent “Future of TV” report that predicted “~50 percent of total TV ecosystem revenue would evaporate, and fewer than 20 channels would survive in an a la carte world where consumers are required to bear 100 percent of the cost of the channel.” Could pay-TV reduce subscriber fees by taking a smaller profit margin? Perhaps, but that’s a topic for another discussion.

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By and large, bundling satisfies the needs of most people in the bell curve–and does so by providing mainstream as well as niche programming. But make no mistake: Subscribers’ fees help provide the funds needed to develop and air breakthrough Emmy-caliber programs like Mad Men as well as niche programs. (In an a la carte environment, each channel sinks or swims according to its individual, rather than bundled, fees.)

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