Declaring the current pay-TV model “broken and unfair,” top media analyst Jeff Kagan, says that a la carte “would bring fairness to cable television pricing.”
Jeff Kagan is one of the foremost experts on the telecommunications industry today, combining knowledge of technology with astute business analysis and a grasp of the issues facing wireless, internet, cable TV, and consumer electronics. As a result, his condemnation of the current cable “bundling” regime and approval of a la carte are significant. Essentially, Kagan says that destroying the current pay-TV model is ultimately a good thing all around – for the entertainment industry, cable and satellite companies, subscribers, and parents alike.
Writing in Digital Journal, Kagan stated that “it may be true that introducing an a la carte pricing model into the cable television and pay TV mix would destroy the traditional model — but is that really a bad thing? It would bring fairness to cable television pricing. It would force customers who want to watch expensive networks like ESPN to pay more per month, and it would let customers who don’t want to watch them to pay less.”
Comparing the current “bundling” regime with the practices in other industries, Kagan asked, “in the automotive industry we can charge more for a basic car so it can offset the higher price of the loaded car. Would that be fair?… It may be true that a la carte pricing would destroy the current pay TV model, but that model is currently broken and unfair. It charges every user for expensive networks even if they don’t view them. Charging customer for what they watch seems more fair than charging every customer for networks they do not watch.”
Kagan also points out that both investors and customers would benefit under a la carte: “The investor wants the cable television industry to earn as much as possible. The customer wants the cost they pay to be as low as possible…If we come at this with fairness to the customer in mind first, the marketplace will settle in to this new model and will continue to grow, and the investor will also win. It always seems to work this way.”