5 ms·

> 70% of the money I'm paying is going towards channels I have absolutely no interest in Why does that bother people so much? The incremental cost of deliverin

by pkulak 10y ago

> 70% of the money I'm paying is going towards channels I have absolutely no interest in Why does that bother people so much? The incremental cost of delivering you a new channel is zero, so it makes sense to just deliver all of them. Where is the wasted money that's implied by a statement like this? If the average person watches 3 channels, and provider has a choice: charge $30 per channel and let everyone pick only the ones they want, or just charge $90 and let everyone watch whatever they want. I'd rather not be forced to choose the few channels that I'm locked into.

joekrill 10y ago
Because the majority of people -- particularly a technically oriented crowd like we have here on Hacker News -- are seeing the bulk of their costs going toward channels we never watch. Like ESPN. The amount cable providers pay ESPN per viewer is ridiculously high compared to other channels. And for folks who never watch this stuff, we get a bit annoyed that that's what is causing our skyrocketing cable bills.
- jessriedel 10y ago
  However you may think money is earmarked, the proper comparison is to the alternative world where channels are priced a la carte. And the standard econ analysis here is that everyone benefits from these bundles, not just the cable company and not just consumers of popular channels like ESPN. It's all about marginal costs. http://cdixon.org/2012/07/08/how-bundling-benefits-sellers-and-buyers/ http://cdixon.org/2012/07/08/how-bundling-benefits-sellers-a...
fullshark 10y ago
It bothers people because cable packages are so expensive. If they were cheaper no one would complain.
- mason55 10y ago
  Sure but there's no incentive for anyone to make them cheaper. The cable operators make more by creating more expensive packages and then can justify it by putting a bunch of channels in them. The networks make more by forcing the operators to take small/niche channels if they want the popular channels. And since cable networks are not perfect substitutes, you can't just disrupt the industry by carrying a bunch of channels no one cares about. Also, because the channels have a fair bit of power in the relationship, they can structure their contracts with the operators in way that it's not economically viable for the operators to unbundle.
  - bdavisx 10y ago
    >The cable operators make more by creating more expensive packages and then can justify it by putting a bunch of channels in them. But they won't make more money if they keep driving more people off.
    - mason55 10y ago
      Where are you going to go? All the OTT providers are similar, it's just fewer channels for less money. No one has an incentive to sell you individual channels and the channels don't have an incentive to sign contract with someone who would sell you individual channels (because they can just do that themselves for $10/mo). Remember that a cable operator can't just decide to start carrying a channel, they have to sign a contract, so a channel can ensure that they can always under cut someone who's selling unbundled channels and still make a healthy profit. If you're interested in more than a couple channels then it's going to be cheaper to get a package through someone like Playstation VUE or Sling. You're paying anywhere from $20-$75 for one of those services and once you put it on top of your monthly internet how much are you really even saving vs. a Double Play from a cable provider?
- bbcbasic 10y ago
  Amen. I won't complain about all of the stuff on Netflix that I ain't gonna watch, when it is so cheap anyway.
1_2__3 10y ago
Because nobody likes to pay for something they don't want? No, incremental cost is not zero, or there'd be infinite channels.
- pkulak 10y ago
  I said incremental cost of _delivery_.
smoyer 10y ago
I was in the cable industry for 30 years and ESPN was (at the time) about $6 of a $60 cable TV package. It was the largest fee for produced content. Other channels had to pay to be included in the line-up just so they could subsist on advertising revenue. I'm not suggesting whether ESPN is or is not worth that kind of premium but it's also not surprising to me that they're suffering this type of subscriber loss. More importantly, ESPN subscribers are CATV (or satellite, etc) subscribers which means these companies are also hemoraging subscribers. In the case of CATV companies, the equipment and cable plant are huge expenses and these companies usually build out more plant financed on the assumption that there will be large cash flow. The cost of the plant isn't going down even if there are no television subscribers. I'd expect to see the cost of unbundled Internet services from these companies gradually approach the price of their "double-play" offerings (TV + Internet).
mason55 10y ago
The theory is that most of the cost of your cable package is going back to the networks. So from a technology side the incremental cost to add channels is zero but from the business side the cable operator still has to pay for each additional channel they put on their service. If they put fewer channels in the package they sell you then they could sell you the package for less money.
fredleblanc 10y ago
I'd argue that the idea got into my head because that's how it's being marketed upon purchase. For Sling at least, "$25 gets you all of these channels, or $35-ish gets you these, or just do $40 for EVERYTHING!" The marketing pitches value based upon quantity first, quality second. I guess I _was_ just hoping that the coming revolution was something like a "pay per channel" thing, where channels set what they believe is a fair value to charge monthly and I can decide a la cart which ones I want. I get that the cost per channel would be higher, but with the ability to pick and choose, with no obligation into buying into the bigger picture, I feel like there's at least be more pressure for the networks to produce quality content. I know that's probably small-town thinking, but it's a hope. The numbers in this article of "ESPN subscribers" is not equal to "people that watch ESPN," and I get why switching to a "only selling to people who are genuinely interested" model is absolutely terrifying — because the numbers inflate when subsidized across the entire subscription populace. That's the insurance model, and I don't see cable/Sling as entertainment insurance. Not sayin' you're wrong, I'm just saying I wish there was another option that wasn't buying shows on iTunes if I just want one channel's programming.
- douche 10y ago
  At least in the past 12 months, the proposition with Sling has basically been Disney +ESPN or all the other channels.

by pkulak 10y ago

joekrill 10y ago

Because the majority of people -- particularly a technically oriented crowd like we have here on Hacker News -- are seeing the bulk of their costs going toward channels we never watch. Like ESPN. The amount cable providers pay ESPN per viewer is ridiculously high compared to other channels. And for folks who never watch this stuff, we get a bit annoyed that that's what is causing our skyrocketing cable bills.

jessriedel 10y ago
However you may think money is earmarked, the proper comparison is to the alternative world where channels are priced a la carte. And the standard econ analysis here is that everyone benefits from these bundles, not just the cable company and not just consumers of popular channels like ESPN. It's all about marginal costs. http://cdixon.org/2012/07/08/how-bundling-benefits-sellers-and-buyers/ http://cdixon.org/2012/07/08/how-bundling-benefits-sellers-a...

fullshark 10y ago

It bothers people because cable packages are so expensive. If they were cheaper no one would complain.

mason55 10y ago
Sure but there's no incentive for anyone to make them cheaper. The cable operators make more by creating more expensive packages and then can justify it by putting a bunch of channels in them. The networks make more by forcing the operators to take small/niche channels if they want the popular channels. And since cable networks are not perfect substitutes, you can't just disrupt the industry by carrying a bunch of channels no one cares about. Also, because the channels have a fair bit of power in the relationship, they can structure their contracts with the operators in way that it's not economically viable for the operators to unbundle.
- bdavisx 10y ago
  >The cable operators make more by creating more expensive packages and then can justify it by putting a bunch of channels in them. But they won't make more money if they keep driving more people off.
  - mason55 10y ago
    Where are you going to go? All the OTT providers are similar, it's just fewer channels for less money. No one has an incentive to sell you individual channels and the channels don't have an incentive to sign contract with someone who would sell you individual channels (because they can just do that themselves for $10/mo). Remember that a cable operator can't just decide to start carrying a channel, they have to sign a contract, so a channel can ensure that they can always under cut someone who's selling unbundled channels and still make a healthy profit. If you're interested in more than a couple channels then it's going to be cheaper to get a package through someone like Playstation VUE or Sling. You're paying anywhere from $20-$75 for one of those services and once you put it on top of your monthly internet how much are you really even saving vs. a Double Play from a cable provider?
bbcbasic 10y ago
Amen. I won't complain about all of the stuff on Netflix that I ain't gonna watch, when it is so cheap anyway.

1_2__3 10y ago

Because nobody likes to pay for something they don't want? No, incremental cost is not zero, or there'd be infinite channels.

pkulak 10y ago
I said incremental cost of _delivery_.

smoyer 10y ago

I was in the cable industry for 30 years and ESPN was (at the time) about $6 of a $60 cable TV package. It was the largest fee for produced content. Other channels had to pay to be included in the line-up just so they could subsist on advertising revenue. I'm not suggesting whether ESPN is or is not worth that kind of premium but it's also not surprising to me that they're suffering this type of subscriber loss. More importantly, ESPN subscribers are CATV (or satellite, etc) subscribers which means these companies are also hemoraging subscribers. In the case of CATV companies, the equipment and cable plant are huge expenses and these companies usually build out more plant financed on the assumption that there will be large cash flow. The cost of the plant isn't going down even if there are no television subscribers. I'd expect to see the cost of unbundled Internet services from these companies gradually approach the price of their "double-play" offerings (TV + Internet).

mason55 10y ago

The theory is that most of the cost of your cable package is going back to the networks. So from a technology side the incremental cost to add channels is zero but from the business side the cable operator still has to pay for each additional channel they put on their service. If they put fewer channels in the package they sell you then they could sell you the package for less money.

fredleblanc 10y ago

I'd argue that the idea got into my head because that's how it's being marketed upon purchase. For Sling at least, "$25 gets you all of these channels, or $35-ish gets you these, or just do $40 for EVERYTHING!" The marketing pitches value based upon quantity first, quality second. I guess I _was_ just hoping that the coming revolution was something like a "pay per channel" thing, where channels set what they believe is a fair value to charge monthly and I can decide a la cart which ones I want. I get that the cost per channel would be higher, but with the ability to pick and choose, with no obligation into buying into the bigger picture, I feel like there's at least be more pressure for the networks to produce quality content. I know that's probably small-town thinking, but it's a hope. The numbers in this article of "ESPN subscribers" is not equal to "people that watch ESPN," and I get why switching to a "only selling to people who are genuinely interested" model is absolutely terrifying — because the numbers inflate when subsidized across the entire subscription populace. That's the insurance model, and I don't see cable/Sling as entertainment insurance. Not sayin' you're wrong, I'm just saying I wish there was another option that wasn't buying shows on iTunes if I just want one channel's programming.

douche 10y ago
At least in the past 12 months, the proposition with Sling has basically been Disney +ESPN or all the other channels.