I do think OTT is going to win out in the long run. But that's really just the underlying technology.
The tough part is getting rid of the bundle. I'm not so sure that'll happen, although I really hope it does.
All of these giant media companies would much rather sell you 10 channels for $20 than a single channel for $5.
If a la carte starts happening in a serious way, it's going to be a huge win for consumers. But almost nobody on the other side really wants it. They're going to fight tooth and nail to keep the bundles.
Basically it's a zero-sum game for the consumers amongst themselves while being a win for the seller.
If too many people put a value 0 on too many bundled items, it's most definitely a consumer loss. The author admits this, but claims that collectively it is a win. There's no basis provided for this assumption though, other than that it is the market. I have no problem believing the cable market is flawed though (local monopolies).
This is anecdata, but if true hits the core:
Traditionally people I know always bought (happy meal or) big mac/quarterpounder & co (this could be inaccurate dollars, because it's not the local currency) for $6, because the sandwich was $4 a la carte, and the fries an additional $2. So sure, even if my value on soda was as low as $0.1 I would still make out ahead.
But then the previously unavailable double cheeseburger arrived, which had as much meat and tasted about the same as a quarterpounder, for $2. And the Big Mac sandwich occassionally sold for $2.5.
And me who genuinelly always put a negative value on soda (really, I did however trade it for a smaller milkshake) and always drink water, would now instead save 67% since I generally could do without the fries as well.
I'm sure I'm an aberration in wanting just a double cheeseburger with water, but I'm not so sure I'm an aberration in getting a raw deal out of bundling.
The analogy with a buffét is interesting in both its similarities and its differences. People eat different amounts, sure, but there is a finite amount one could eat, and it's not everything at the buffét. Some will eat more expensive stuff (HBO, ESPN), and some will eat cheaper stuff, but the cost to the restaurant is a finite amount of food.
The analogy fails when in bundling TV it would be like sending every buffét customer 10 full dishes, of which they can only eat 1-2 full ones.
Another issue is viewer count and measurement. In traditional TV you've got the Nielsen box and all its flaws, as well as scheduled TV giving a LOT of power to broadcasters to dictate popularity by air time (and ads).
When I pay for a Netflix bundle, in aggregate with every other customer, our money is directly mapped to exactly what shows we watch, and while they can try to push some shows, they have a lot less power in dictating what people watch. This means that shows no one wants no one pays for, because they will simply not produce it. In traditional TV this was different for a myriad of reasons, including less consumer choice in the bundle (you choose a channel, not a program), no control over air times, etc.
TL;DR: I don't disagree with the economics/maths in that link, but I disagree with the premise of the input consumer value, and available choices.
http://www.recode.net/2017/2/20/14666282/ben-thompson-strate...
Another analysis mistake is thinking channels are all equal and of equal value. Most channels are filler taking up bandwidth to keep competitors at bay. It is exactly like retail brick and mortar software sales in the 90s where you'd have a gigantic cardboard box containing a half sheet of paper and a CD in a sleeve rattling around in there. The fillers make little to no money but they make sure that a competitor doesn't have the space to set up something that could be a hit (its quite a downward spiral).
Eventually the cable companies are going to give up on trying to manage a system that delivers every channel to every station all the time, and then the game will really be on, and its a game of logistics and scaling and financialization that the cable co has already won, so best of luck to the new entrants, but other than provoking some short term innovation...
That's pretty reasonable.
Though and as of now your hard wired Internet provider makes it impossible to have just affordable Internet without having some type of TV package. Any streaming service who doesn't also provide Internet service is highly disadvantaged!
I been paying $55 for 12 months for Internet and a few local and cable channels. Now that's expiring it went up to $70 a month but Internet alone is either $50 for 6Mbps or $85 for 25Mbps. 6Mbps is junk and Comcast knows it and if I added YouTube my expenses would be $85, yet who knows if 6Mbps would support solid streaming?
I'm waiting for 5G fixed wireless from Verizon and Att for some competition to Comcast! I'm sure they too will make it equally unaffordable to just have Internet without their DirectTV Now and Fios. Erggh these OTT services have a tough road ahead of them.. they will probably all end up merging with internet providers.
Still doing crazy stuff with antennas.
First off, there are really two main reasons for someone not to have a cable subscription:
1. They don't care about the content
2. Price sensitivity
At Aereo, we saw these sort of mix together to create hugely elastic demand.
For a while, we offered a $1 "day pass" that would give you access to live TV for 24 hours at a time.
During the Super Bowl and various award shows, we had crazy numbers of people sign up for these day passes. We actually had to stop offering them, because we literally couldn't build out the extra capacity in a cost-effective way (remember, we needed distinct physical antennas and transcoders for every user we served).
It was tough enough to get people to pay $8/month for access to live broadcast TV and a cloud-based DVR. I have no idea how YouTube will convince anyone to pay $35.
If they can work out the licenses, I'd imagine something like a day pass would work well with consumers – but it's probably hard to get the economics of that to work out.