Survey: à la Carte Value Vexes Consumers

Only 53 percent of consumers surveyed by Forrester Research Inc. said they would be interested in getting their cable programming via à la carte, a business and TV pricing model the cable industry strongly opposes despite heavy duty pushing by Federal Communications Commission (FCC) Chairman Kevin Martin.

Although it might be expected that more consumers would desire à la carte pricing, there appears to be confusion about the potential value of the model among those who are interested in it.

According to Forrester, consumers surveyed in 2006 said they would spend, on average, $24 per month for 26 channels -- 53 percent less than they pay now to get one fourth the number of channels. Assuming that U.S. consumer households watch eight hours of TV daily, that equals about 10 cents per viewing hour. In comparison, an hour of prime time costs advertisers 60 cents per head, and cable subs today spend roughly 22 cents per viewing hour.

"At $0.10 per hour, à la carte pricing would never work," argues Forrester analyst James McQuivey, the report's lead author. "Producers and cable companies wouldn't get paid enough to survive, and consumers would lose desired content."

Further, those in favor of à la carte did not jibe with expectations that only consumers who watch a lot of television or were strapped financially would find value in the pricing model.

"The people most likely to experience the benefits promised by the FCC don't recognize those benefits more than other consumers," the report noted.

Forrester also shot down the FCC's argument that à la carte would give parents control over content considered harmful to children. According to Forrester's findings, families that regularly watch the Disney Channel are much more likely to also regularly watch channels for more "mature audiences," such as HBO and MTV.

"Even if these homes are offered à la carte pricing, when compared with the total population, their appetite for adult-targeted programming means that many families would not choose to be more protected than they are today," Forrester said.

Forrester also teed up this as a suggestion on how cable could satisfy the FCC when it comes to this hotly debated issue: prepare to offer a range of news, sports, drama, or education bundles for $10 per month each -- much more than the revenue that's currently coming in for those channels.

Based on its survey, the research firm believes about half of the customer base would select a cheaper bundle offering more than 100 channels, while the rest would be more choosy.

Although the National Cable & Telecommunications Association (NCTA) and other cable interests are strongly opposed to à la carte, and Forrester's research argues against a strict application of the model, Cable Digital News chief analyst Michael Harris suggested in his column last week that à la carte could actually be a net positive for cable operators, particularly when it comes to conserving and allocating precious bandwidth. (See Ordering à la Carte.)

— Jeff Baumgartner, Site Editor, Cable Digital News