Of all the things that irritate us about pay TV, bundled packages that make us buy 80 lousy channels just to get the premium stuff tops the list. Intel and Dish realize this, and are leading the way to à la carte programming where we'll buy only the channels we want.
Although we're still a long way from à la carte pay television where we pick and choose what we want, the two companies are exploring smarter, smaller and more flexible bundles that allow subscribers greater leeway. It's the first step toward a true buffet which, frankly, is the future of subscription television. Intel and Dish are smart enough to see this, even if they don't quite have the muscle to make it happen yet.
"We're still for à la carte, because the internet is à la carte today and we know we have to compete there," Charlie Ergen, Dish co-founder and chairman, said at Dive Into Media. "It's going to go there slowly."
Intel is the latest to jump into the subscription TV and set-top box game, a very impressive move when you consider the tech titan is taking on pay-TV juggernauts like Comcast, Time Warner and Dish. But it will use broadband, not coaxial cables or satellite dishes, to deliver content when it launches later this year, allowing it to pump content anywhere. That gives Intel the chance to change the way we watch TV.
It wants to start by offering what Erik Huggers, vp of media, called "a better bundle." Instead of making subscribers pay for dozens, even hundreds, of channels they don't want just to get the few they do, Intel wants to offer niche bundles. Like, say, a sports-only bundle that would offer the myriad variations of ESPN or a lifestyle bundle with HGTV, The Cooking Channel and similar networks. It isn't the à la carte format we've all been hoping for, but it is a big step in that direction.
Intel took some flack for not promising cheaper cable bills or à la carte with its yet-to-be-named service. The reality is that if Intel had walked into NBC Universal or Disney and asked for à la carte channel subscriptions, there's a good chance they would have never got past the wall of laughter from network executives. Networks bundle their offerings to pay-TV providers in order to recoup the costs of creating redundant shows (how many ESPNs do we really need?). That cost and those channels are passed on to viewers. If you're a Comcast customer and you want Nickelodeon, you must pay for all of the Nickelodeon channels.
Intel's smarter bundles are an end-run around that. Such baby steps are crucial to convincing networks and media conglomerates that the way people watch TV has changed drastically and will continue to change. But there's one company making a far more vocal call for à la carte television -- Dish. The reason is simple: "I think people are cutting the cord," Ergen said. To combat that, Ergen wants to hook viewers when they're young, and keep them plugged in. Doing that means giving them what they want.
It's an admirable goal, but Dish, which was established in 1996, isn't in the best position to make it happen. It's got a spotty history with the networks, in part because it has a history of rocking the boat. AMC and DISH had very public falling out and network blackout, over a legal kerfuffle involving the now-defunct Voom network, and it's neck-deep in another fight with CBS over the Hopper ad skipping technology. Intel is in a better position to negotiate with the media companies because it doesn't have the legal and contractual baggage the other pay-TV companies do. Delivering content via the Internet will allow Intel to deliver network programming to anyone with a broadband connection. Every IP address is a potential customer.
That's got a lot of appeal to the content providers, who might be willing to play ball if it means expanding their audience -- and revenue. Intel's reach also will weaken, if not destroy, some of the cable monopolies found in communities. With that level of coverage, Intel could quickly become the largest pay-TV provider with the negotiating clout needed to to offer even smarter bundles and eventually, if the TV stars are aligned correctly, à la carte pay TV.
Still, the company will be dealing with an industry that's slow to change.
"Rome wasn’t built in a day, it’ll take time," Huggers said.
Viewers are already changing the way they watch TV and that inflated cable and satellite bills are starting to take an affect on the bottom line. Last year was the first year that cable subscriptions not only stopped growing, but took a small dip from 100.9 million to 100.8 million households. Those household numbers are expected to shrink to 94.6 million households by 2017. Pay-TV companies and networks need to make a change to stop the loss of cord cutters and entice the potential audience that's never paid for TV. Over-priced bundles with channels no one watches will only serve to alienating customers and potential customers.
Intel's insane leap into media could not only help the chip-maker diversify its business, it could save an industry by pushing it forward.
