Media

Are the Rules About to Change in the Pay-TV Sector?

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For years U.S. consumers have tried to persuade cable and satellite companies to offer subscriptions to viewer-selected channels — so-called a la carte pricing — rather than the high-priced packages the pay-TV providers offer. The pay TV companies have been unmoved.

The companies have made a concession to the rise of Internet video streaming by allowing subscribers to their TV packages view those programs on Internet-connected devices like set-top boxes, smartphones, and tablets. In the U.S. this is known as TV Everywhere and is limited to what are known as authenticated customers. In other words, TV Everywhere is not exactly TV for Everyone.

In the U.K. satellite company Sky TV offers a service called NowTV. Anyone can purchase a one-month subscription for about $15 that gives customers access to movies on demand and to live TV. NowTV even offers a one-day pass to six premium sports channels for about $17. The company also offers an authenticated TV Everywhere program called Sky Go for its subscribers.

ALSO READ: Americans Watch Only 17 TV Channels

So, how has this affected Sky TV’s subscriber base? Have full-package subscribers deserted the company for these limited packages? In a recent interview in San Francisco, Sky TV’s vice-president of business development said that a third of Sky’s subscribers use Sky Go to get authenticated videos on their mobile devices while U.S. users of authenticated apps from pay TV operators total only about 20%. NowTV also provides incremental revenue to Sky from unauthenticated customers.

Dish Network Corp. (NASDAQ: DISH) has announced a plan to launch a streaming TV video service early in 2015 following a landmark deal with The Walt Disney Co. (NYSE: DIS) that would include Disney’s children’s programming and its ESPN sports networks. The service may also include access to Netflix Inc.’s (NASDAQ: NFLX) and other streaming video services. Details and pricing are still being worked out.

Dish hopes to attract 18- to 35-year olds who either don’t want or can’t afford to pay the $100+ monthly subscriber rates for hundreds of channels available to full subscribers. Dish chairman Charlie Ergen says, “We’re going to make [content providers] more money because [the streaming service is] going to reach more eyeballs, and we’re going to make more money because it’s all going through our pipes.” Ergen allows that the promised revenue increase won’t happen overnight or even in the first year.

What Dish’s service will do, though, is break the pay-TV commitment to all-or-nothing subscriptions. Depending on the content and pricing Dish offers, this could be a real game-changer for consumers. For the first time, they’ll have a real choice and get to vote with their wallets.

ALSO READ: Apple Dominates TV Everywhere Viewing

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