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[mrorangesoda]

It's the HBO Go model.

It makes sense IMO.

Hulu sucks.

Hulu is largely popular for its broadcast tv content, so it really doesn't make sense in the HBO GO way.

[ReturnoftheMack]

Hulu is largely popular for its broadcast tv content, so it really doesn't make sense in the HBO GO way.

Yeah but broadcast TV still needs to make money somehow and if you cut out the advertisers, they are fucked.

[guitarsmashley]

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A couple of years ago, I did the math and determined that, if I were to purchase the entire season of every show I watch each year on iTunes, the cost would run me around $1000 per year, and that even includes purchasing shows that are freely available on Hulu, or the various network’s websites. Meanwhile, I pay $1500 a year for the privilege of fast-forwarding through commercials, while if I’d simply bought each season on iTunes, I could do without the commercials, and I’d get to keep those seasons, as well.

Still, I justify the $1500 expense because of sports programming, kids’ programming, and because I don’t like waiting until the next day (or the next month) to see certain shows. For a lot of people, the tipping point is already arriving. Last year, thanks to services like Hulu and Netflix, more than 1 million people cut their cable subscriptions. Since 2008, 2.65 million people have cut the cord. Still fewer people are adding cable subscriptions (there were only 112,000 new cable subscribers last year).


What’s the cable industries plan to combat the losses? Raise the prices, of course. Cable prices are already increasing at around six percent each year. Today, the average cable bill is $86. By 2015, the average cable bill will be $123. By 2020, the average cable bill will be $200. That’s $2400 a year. For that amount of money, right now you could buy full seasons of around 60 shows (40 sitcoms, 20 dramas). Obviously, the cost of downloading a full season will increase over time, too, but even if, say, sitcoms ran $50 a piece and one-hour dramas ran $100 per season, you could still purchase 36 seasons of television a year.

Who watches 36 seasons of television per year? Why does anyone still pay for cable? Just imagine how much better our lives would be if we cut the cord? We’d be more selective about the individual shows we pay to watch, and we might get out of the house more to watch sports programming. That may sound inconvenient now, but when cable bills begin to rise toward $200, we may finally reach our tipping point.

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It’s a pipe dream, I know, but I’m a huge proponent a la carte cable programming. We shouldn’t have to pay for channels we don’t watch, right? In a dream world, we could call our cable providers and order the 10 or 12 channels that we do watch and spend, what? $20 – $25 a month. It’s never going to happen, of course, because it doesn’t make financial sense to the networks.

Why? Let’s say, in this example, that there are 100,000 cable subscribers in your city. Let’s say you wanted to buy only the FX Network, and the FX Network would cost you $5 per month. Let’s also say that maybe 20 percent of the 100,000 cable subscribers in your area wanted FX. In an a la carte model, FX would earn $100,000 from the 20,000 subscribers. Even if, in an a la carte model, you made subscribers pay double for individual channels, FX still earns only $200,000.

However, in the all or nothing model, if you want one channel, you have to pay for them all, so FX earns $5 from all 100,000 subscribers, or $500,000. Eighty percent of their revenue comes from the 80,000 subscribers who don’t want their channel. Changing to an a la carte model would essentially deprive FX of 80 percent of its revenue.

I was curious, however, how much each channel costs the individual, and what my cable bill would look like if I could order a la carte. I found wholesale estimated channel costs for 2009, and as it turns out, the only channel we spend much for is ESPN. In fact, most channels are relatively cheap — the industry average is around $.20 per channel wholesale, but when there are 150 channels, that costs adds up. Let’s say the retail costs is double ($.40 average per channel) and that we have to pay for all 150 channels to get even one: The cost comes out to around $60 a month, which is about how much each of us pay for cable before taxes, DVR, HD, satellite service, and other fees are taken into account (or HBO or Showtime, which adds another $12-$15 per month per channel).


But, if we could purchase cable programming a la carte, using that chart and doubling for retail costs, my cable bill (and probably most of yours) before taxes and fees would probably look like this:

ESPN: $4
TNT: $.99
NFL Network: $.75
USA: $.55
ESPN2: $.54
CNN: $.51
FX: $.42
Sundance: $.25
AMC: $.23
Bravo: $.19
Comedy Central: $.14
BBC America: $.12
Food Network: $.08
PBS Kids: $.04

Wholesale Costs: $8.81
Retail Costs (x2): $17.62

So, in an a la carte model, I could watch all the channels I normally watch for $17.62 per month before taxes and fees. I suspect most of our cable bills would look much more like $20 a month instead of $60 a month, and that’s exactly what the cable industry doesn’t want, which is why we’ll never get an a la carte model.

[habitual]

Yeah but broadcast TV still needs to make money somehow and if you cut out the advertisers, they are fucked.

There is advertising on Hulu Plus.

Hab

[ReturnoftheMack]

There is advertising on Hulu Plus.

Hab

I'm assuming Hulu Plus will end with this.

[ReturnoftheMack]

I understand why people like a la carte. I have no interest in it though.

Sometimes I like to try new shows or sometimes something I want to see is on a random channel.

Lately, I've been watching a lot of ID and shows with plane crashes. I probably wouldn't have those channels on any a la carte.

[habitual]

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Interesting article.

I remember for a long time during the 80's and part of the early 90's our cable bill was roughly between 20-30 dollars a month with HBO. Granted we only had one HBO channel and roughly 40-50 channels (which is still more than I watch now).

And a VCR you could record and save entertainment on for at least 5-10 years (before the quality badly degrades).

Hab

[habitual]

I'm assuming Hulu Plus will end with this.

There was no mention of dropping the monthly fee.

Everything I got from the article was that was more of in addition too kind of thing.

Maybe they're adding another tier to Hulu, I don't know...

Hab

[Lord Ice]

As long as I can watch episodes that haven't been on television for years. Sometimes, you feel like basking in the Lammas-ness of Renegade.

[Lord Simian]

I tried Hulu Plus a while back, but dropped it immediately when I found out that everything that's available on free Hulu... Is not necessarily available on Hulu Plus. I'm sorry, but if I like your free service enough to step up and pay you for more... I should not LOSE content for that.

They continued to charge me, despite acknowledging that yep, Mr. Morris, we see right here in your account file that you DID cancel three months ago. I only last week won that fight and got my refund....

But as for the topic at hand, with moving out and having a baby, my wife and I are looking at ways to cut bills, and one of the things we're thinking of is forgoing cable. Just live with network tv, and streaming services like Netflix. This seems like a move calculated to lose customers like me, and I can't see how that makes business sense....

[Muppetesque]

Honestly outside of Community there isn't anything I watch on Hulu anymore. I don 't care waiting to see something I want to watch so streaming from Netflix has met my needs.

So I'll swear off Hulu like I have cable... no big deal.

[AaronW]

Thank god for the Usenet! I'm even willing to pay for it too.

[Timbales]

if you've got cable, why bother with Hulu?

The real issue with cable is that in most markets, they have a monopoly. I can't get cable or high speed internet from anyone other than Time-Warner. I can get other services like it, like Dish Network and slower internet, but it's not the same thing.

[prozacman]

it might just be like how we have to prove we are over 18 to view M rated trailers for video games. Have the ability to click a buttons that says we qualify

[AaronW]

I go with fast internet, Netflix streaming, and a whole lot of downloading. I do get HBO for free for a couple more months but I'm dropping it. The whole cable model is so last century, I have no patience or need for it.