About 92% of consumers want some type of a la carte programming offering from their multichannel service providers, but they're not willing to pay much for it, according to a recent RBC Capital Markets survey.
RBC Capital conducted a proprietary survey of more than 1,000 consumers, asking them a variety of questions about their multichannel desires. About 92% of respondents said they would be at least "somewhat likely" to switch to a full a la carte option, with 82% saying they would subscribe to at least 11 channels and 40% claiming they would subscribe to more than 20 channels, with a weighted average of about 19 channels. Of those respondents, about 51% said they would pay at least $1 per month per channel in an a la carte world, with the weighted average being $1.47 per month.
That works out to about $28.50 per month, or about one-third the average monthly multichannel bill.
RBC Capital's conclusion? A la carte works for the consumer, but not so much for the programmer and the operator.
According to RBC, if all 100 million multichannel TV homes switched to an a la carte service at $28.50 per month, the industry would generate about $34 billion in total revenue, or about the same amount that pay TV operators paid programmers in affiliate fees alone in 2011. Estimating that about 50% of video revenue goes to pay affiliate fees, and programmers would be left with about $17 billion, or half what they received in 2011, according to RBC.
While some channels could benefit from a la carte - especially those that are receiving substantially less than $1.50 per month per subscriber in affiliate fees - "a scenario in which total industry affiliate revenues shrink is probably not something any programmer would want to participate in," RBC added.
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