The Cord-Cutting Fantasy

I've been asking someone to do the math on this for a while, and Ben Thompson went and did it, and the results are interesting... and damning for the future of the A La Carte TV model.

Only 4.8 percent of households watch ESPN. If ESPN were only available a la carte, each of those households would have to pay $101.60/month for ESPN to achieve the same revenue numbers they do currently.


Now, there are a couple of directions to go with this. Another statistic, the amount the average household would save if they didn't choose ESPN, seems negligible when viewed out of context, but imagine if I could forego hundreds of channels (in come cases, maybe even thousands). A few cents here and there, monthly, makes a difference.

This is, of course, like any business strategy memo, all assuming that the current revenue model for all of these channels will not change. But shouldn't it? Hundreds of channels were created to fulfill an imagined need for channel count and diversity, which can no longer compete with online content. Aren't we now at a point where we can start cutting the chaff and letting a channel that can't hold its own without subsidy go broke?

ESPN will stay alive, and continue to make money. ESPN Classic? Not so much.

Of course, the bottom line is that in any delivery-altering model, just like the music business, the players might be forced to factor in reductions in incoming revenue as a result of a new, consumer friendly model. The question seems to be, will the TV industry take those cuts (however small) now, when it should, rather than later, when it must?