When it comes to entertainment, today’s customers want three things: the ability to watch the content they want however they want—without breaking the bank.
Subscription-based services like Netflix and Hulu Plus—two leading over-the-top (OTT) content providers—are becoming increasingly attractive to customers because they meet the aforementioned three criteria. The affordable services allow content to be streamed on mobile devices, tablets, laptops and televisions, so customers can watch what they want to watch wherever they happen to be—so long as there’s an available Internet connection.
The surge of popularity in OTT services has led some to speculate as to whether cable bundles will eventually disintegrate, allowing customers to purchase channels on an a la carte basis. After all, the average cable package consists of 189 channels, and the typical customer only watches 17 of them.
Shouldn’t customers be able to pay only for what they want?
Verzion CEO Lowell McAdam went as far as saying he believes it’s only a matter of time before the industry as a whole embraces a la carte pricing. The logic behind that line of reasoning might be found in the fact that channels found traditionally on cable—like HBO, Showtime and CBS—have announced their plans to launch independent OTT services. And we can assume additional channels will announce similar plans in the not so distant future.
But these new standalone OTT services might not carry the kinds of price tags customers had in mind. Some companies seek to offer OTT bundles similar to today’s cable packages. According to recent reports, Sony is planning on releasing an OTT bundle that might include up to 100 channels. The catch? It could cost up to $80 a month, which is somewhere in the ballpark most customers already pay for cable.
On the other end of the spectrum, CBS’ OTT service—which doesn’t include NFL games—costs $5.99 a month. But that’s just for one channel. Multiply that price times the 17 channels people watch, and you can see how quickly the numbers add up.
The right combination of a la carte pricing and OTT content will likely save some customers money each month. But it remains to be seen if the same holds true for the average consumer—and the early numbers don’t paint the prettiest picture.