When given the opportunity in a restaurant, I rarely order a la carte. I mean, the people in the kitchen do this every day, right? They have to know what sides best compliment my main entrée. I type this as if I hit high end five-star joints more than the Chick-fil-a drive-thru. The idea of a la carte TV has always been one that is presented as giving the consumer the ultimate decision making upper hand. Problem, is, nobody does the math.
The pesky math tells you the a la carte menu is very much separate from the value menu. This is why cable and satellite conglomerates have thrived over the years, they have the ability to make you pay for the crap you don’t want in order to keep down the prices for the crap you do want.
I’m the biggest sucker there is when it comes to this. I’ll look at the menu of package choices and have a conversation in my brain that goes something like this: “Wait, am I really willing to live without Bravo Spanish – West Coast? Well, I’m not sure I’ve ever watched the English language Bravo and my knowledge of Spanish is limited to menu items in a Mexican restaurant but one can never be too careful. Sign me up for the Elite Triple Diamond Platinum Package.”
If I had to find the actual Bravo on my DIRECTV channel lineup right now in order to guarantee a Dolphins Super Bowl victory, I’d have no idea where to start. Since my Dolphins fandom is involved in this absurd scenario, I’d probably get lucky enough to find Bravo then rain fade would prevent me from actually watching that Super Bowl.
As hard as it might be to believe, there are people in this world that feel about the sports channels the same way I feel about Bravo. They would have no idea where to find them but are paying the same freight we pay for those sports channels. The big difference is we pay pennies not to watch theirs, they pay a lot not to watch ours.
The exact amount each viewer pays for ESPN, the top model in this discussion, is not publicly known. However, S&P Global Marketing Intelligence estimates that number is $8.72 per subscriber, per month. That’s about as good an entertainment value as I can find. If you multiply that number by the roughly 87 million ESPN subscribers, that means the sports network pulls down around $9 billion per year in subscriber fees.
Just assume a third of those 87 million subscribers would pay for ESPN on an a la carte basis, congrats, your new annual total is $300 and you have one channel. Make no mistake, I get $300 of usage out of my ESPN subscription but my wife also enjoys watching people take old houses and make them new again. Chip and Jojo aren’t going to be free, either. You can see how quickly this adds up.
Speculation on this topic has been so strong that ESPN President Jimmy Pitaro had to squash rumors that the sports giant was greasing the skids to move to a direct to consumer model. That speculation grew when ESPN announced an ESPN+ price hike to $9.99 a month. That’s significant growth when you consider you could buy the same product for $3.99 per month just four years ago.
ESPN+ now has more than 22 million subscribers, roughly a quarter the number of subscribers to the traditional ESPN network. There has to be considerable overlap in those subscriber groups but the math is the math. That means ESPN could be adding an additional $2.2 billion in subscriber fees to the $9 billion they pull in on cable and satellite. What would Disney need to charge monthly on an a la carte basis to equal $9-$11 billion in subscriber fees?
It doesn’t seem crazy to pay $300 – $350 annually for ESPN but it is a huge chunk to start out with when it is the first network you select and you realize there are a dozen more you can’t live without. In fact, that same S&P Global Market Intelligence estimate shows you pay roughly $23.00 a month for the 13 most expensive sports networks. If that number simply tripled, just as my ESPN estimate did, that’s $850-$1000 annually on just sports.
The more we move to streaming and, seemingly, everyone has a streaming platform that is the network’s name with a plus sign next to it, the closer we get to a direct to consumer a la carte model. I’m not certain it will be the financial freedom some anticipate it will be.
What we may discover is a la carte only makes financial sense when I want a taco and burrito but no rice and beans.
Ryan Brown is a columnist for Barrett Sports Media, and a co-host of the popular sports audio/video show ‘The Next Round’ formerly known as JOX Roundtable, which previously aired on WJOX in Birmingham. You can find him on Twitter @RyanBrownLive and follow his show @NextRoundLive.
