Verizon’s new “skinny bundle” of cable channels is being scorned by competitors and challenged by networks, but it may be a step toward the a la carte offerings consumers have long demanded.
“I don’t happen to believe that the bundle as we know it is dead,” said Bob Iger, the chairman and CEO of Disney, in an interview with CNBC Tuesday morning. In addition to its own line of channels, Disney also owns ABC and ESPN, making it one of the largest networks in the country.
In April, Reuters reports, Verizon began offering “Custom TV” packages, charging $65 a month for broadband service, 36 basic channels, and two genre-based channel packs. Customers can add additional channel packs for $10 each, and are free to adjust their options after 30 days.
Unlike other “skinny” bundles, Verizon’s package does not include sports channels among its basic offerings, giving subscribers the option of foregoing some of the priciest channel options. (RELATED: TV Anticompetitiveness, a la Carte)
Cable prices are projected to increase by about 12 percent by 2018, driven by rising programming costs, The Wall Street Journal reported last year. Disney-owned ESPN is by far the most expensive channel, costing cable providers $6.04 per subscriber, compared to a median price of just 14 cents for other channels.
“It’s not a pure ‘a la carte’ the way some consumers want, but we are certainly through the Verizon offering going to have more choice and the type of choice that has not been associated with traditional pay TV services,” Greg Ireland, a director at market research firm IDC, told Reuters.
While acknowledging that, “we are entering a new era in which the consumer demands more choice and more customization,” Iger said he doesn’t believe customers will embrace Verizon’s new service. “I haven’t seen a skinny package that in my opinion delivers great value to the consumer yet,” he asserted. (RELATED: The High Cost of Cable Bundling)
Executives from Time Warner Cable offered a similar appraisal during a recent conference call with investors, according to Stop the Cap, a consumer website.
Time Warner COO Dinesh Jain, for instance, expressed skepticism that consumers would find custom TV attractive, saying, “I think a lot of the times, customers don’t want to get bogged down in a lot of choices to make on those kinds of things.”
“There’s a lot of talk and a lot of work going on out there from other guys,” Jain noted, “And if any of their things work, we’ll just be fast followers on that stuff.” (RELATED: McCain Works to Break Up Cable Bundles, Experts Push Back)
According to DSL Reports, a consumer-oriented broadband news site, Custom TV may not be quite as cheap as it appears, because with added fees the total cost rises to between $85 and $100 per month.
Still, by establishing the precedent of decoupling sports channels from basic pay-TV packages, the article claims that Verizon is making important headway toward fully flexible programming, which could open the door to greater savings for consumers in the future.
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