I have a theory about the TV bundle.
From the outside, it may look like the pay-TV bundle is headed into a death spiral. Viewers are binge-watching shows online and avoiding the commercials that feed revenues. Programmers are starting to go direct to consumers with content, bypassing pay-TV providers. And some of the best new shows on TV aren't on broadcast or cable, but on Netflix, Amazon and Hulu.
All of these trends show that the pay-TV business has to evolve. But they don't prove that the TV bundle is on its way out.
More content choices and new distribution outlets are fracturing TV audiences, and that's happening at the same time that traditional pay-TV bundles have become bloated with seldom-watched channels and networks that are increasingly expensive for service providers to license. The resulting perception is that the monthly cable bill is too high and the bundle is too filled with content consumers don't want.
The bundle itself isn't at fault, however. Bundles still make sense from a financing perspective because they help subsidize development of new content. Done right, bundles are also good for consumers. They help expose viewers to new shows, and they can help keep costs down by making revenue more predictable for programmers.
The reality is, the bundle needs a reset. Cut down the cost and the content catalog, and the perception of value changes. This is already happening with skinny bundles. Netflix, Sling TV and HBO Now are all content bundles, but offered at a much cheaper rate and with limited but valuable programming. Because there are no long-term contracts, consumers can even combine skinny bundles and still end up with a lower monthly fee than the one that comes with a traditional cable package. (See Dish's Losses Are Sling TV's Gains.)
In my own case, I might consider pairing the upcoming Comcast Stream offering -- which will include broadcast networks, HBO and a cloud DVR feature -- with Sling TV for live ESPN and my existing Netflix subscription. All told, those three bundles combined would only cost me roughly $45 per month, and I would get all the content I currently care about.
Set-up doesn't require new equipment, and in theory, I'd be able to cancel any of the services at any time.
Here's the thing, though. Because these bundles are so useful, I can see service providers adding to them over time. More original programming. More syndication of old TV series. More coverage of sports events. That's a good thing. But it will also cause the price to creep back up again. Eventually, the skinny bundle will become a fat bundle again, and the cycle will start all over.
The bottom line is that bundles aren't bad, and they're not going away. But they are subject to competition and disruption. And when they get too big, someone needs to hit the reset button.
— Mari Silbey, Senior Editor, Cable/Video, Light Reading