Sure but Disney who owns ESPN and a bunch of other channels can't get behind al-a-carte unless the it gives them MORE than they get on those bunch of channels now when you or I choose to buy just one channel like ESPN. Your implication is that if the cable company must pay $1.40 or 35 cents, in al-a-carte world, those of us that want ESPN can pay either $1.40 or 35 cents too
or, as you offer, maybe a little more, and the math works. But it doesn't.
As is, when you pay your $1.40 or 35 cents, every other person in that cable system is paying it too. In al-a-carte world, it's unlikely that every other person and you & I will keep paying 35 cents or $1.40 or a little more, so the directly-attributable revenues via subscribers would go down.
Now, lets further assume that all the other channels in the Disney package cost maybe $5 per subscriber "as is" (I'm just picking that number out of the air). In al-a-carte world, maybe "we" subscribe to all of them too at $5 or a little more but again, as is, EVERYBODY is delivering that $5 for all of them. I can easily identify a number of Disney channels that I wouldn't want if I could buy them al-a-carte. I bet you can too. And I further bet just about everyone else can too. So something less than that $5 is Disney's proposition in embracing al-a-carte. Why should Disney do it? What's in it for them?
Here's another: the commercials that run on that <number of channels "I" don't watch" that wouldn't be in my al-a-carte> channel bundle help subsidize the Studios. So, as is, a bunch of Disney channels that I won't watch have commercials running on them that I don't see that flows revenues to Disney who can then use those revenue toward making some of the Disney content that I do want to watch. Al-a-carte kills those (eye of the beholder) "worthless" channels, killing off that subsidy revenue.
So, here's what al-a-carte might look like:
- Let's say, the average U.S. household pays about $70/month right now
- Al-a-carte probably needs that to grow up to about $90/month or more to have any chance of Studio support.
- The math will NOT be 200 channels/$100 = 50 cents per channel. "I" want to subscribe to 10 channels. 10 channels times 50 cents = $5. My new al-a-carte cable subscription should be $5 per month.
- Instead, the math would be something like, X most popular channels will be individually priced like HBO at about $10-$25 per month. For example, your (and my) ESPN channels, would probably be up there in that $2X/month range.
- Revenue & greater profitability modeling would evolve pricing so that the handful of must-have channels in al-a-carte will cost about $20+/month more than what is made out of the existing model from all subscribers (else, why do THEY bother?)
- Many of "us" then decide that the current model is the better value or, if the momentum kills the current model, we reluctantly embrace the new and talk about the good old days when we could get 200 channels for about 25% less than what about 10-15 channels cost now.
I recently looked into how much money is in the commercials. Per that math, the commercials (the vast majority of which "we" never see because they are running on channels "we" never watch) yield a revenue of about $54 per household per month. This needs to be covered in the al-a-carte scenario too. Either the commercials on the channels we are watching will need to cost a lot more (which has some potential) or our subscription fee will need to increase to cover the commercial subsidy lost in the switch to al-a-carte.
Let's split the difference for "what if" purposes, meaning the commercial selling machines are able to persuade the buyers to pay a lot more to make up about half of that $27 per household. The other $27 will need to be modeled into the al-a-carte pricing for "our" 10-20 channels. If the numbers I've shared above are correct, current model is about $70/month on average. I'm guessing they need it to go up to about $90/month to make al-a-carte worth it to them. Add this $27/month to make up for the lost subsidy revenue. Net result:
As is: $70/month for 200 channels.
Al-a-carte: $117/month for 10-20 channels.
One more thing: why does a Comcast allow this new model to replace their lucrative cable model when a Comcast controls the pipes through which this replacement model must flow? They don't. They just raise their broadband tolls to make up for the lost cable revenue. So:
As is: About $45/month for broadband
Al-a-carte: About $100/month for broadband.
Where's Apple's cut in this new model? They seem to like the old 30% right off the top. So we better get their cut in there. If $117 covers the Studios interests + lost subsidy revenue, add the 30% on top of that so they net $117. That gets us to $167/month. Apple gets their 30%. The $117 gets Studio participation. And we get to pay a lot more for broadband too.
This is how it works if we want it. The numbers can certainly be off but not by much to the downside. It's easy to dream al-a-carte for us consumers but then try to make it desirable for all of the other players. Why should the Studios do it? Why should the broadband gatekeepers support it? What does Apple get out of it? Once you make the math work for the rest of the chain, the system we have seems much more appealing (IMO). The only way al-a-carte looks great is if someone(s) else in the chain takes a big financial hit so that we consumers can actually get a break on the monthly toll. Is that the Studios? Is that the broadband toll masters? Is that Apple? Once you rule all of them out (else, why should they support the change?) all that's left is us to cough up the "more money" to make al-a-carte desirable to them.
So, like you, I can't say it will never happen but it will take something drastic to make it go. It doesn't happen just to save us consumers most of the monthly cable bill we pay now. Nobody- including Apple- other than us consumers have such a goal. If it's going to happen, I think you have to bypass the broadband middlemen, meaning we need some way to link our homes to an iCloud without going through pipes owned by Comcast, Time Warner, etc. That would solve one big hole.
Assuming that hurdle is leaped by something amazing, perhaps that something amazing can also take over the broadband connections for non-video at a dirt cheap rate relative to what we pay now. If so, the difference if what we pay for broadband now vs. this amazing new innovation could be put toward the Studios. Perhaps that can be enough to make up for the $27 estimated in lost commercial subsidy? Maybe more? That's 2 birds with one stone.
Maybe Apple chooses to do this for less than 30%. Maybe something much less?
If so, that leaves us with the Studios who will still need to be paid more than they make now to be motivated to do it. If we could eject the Comcasts, etc out of the equation (both cable TV middleman AND broadband supplier) and if Apple as new middleman doesn't demand too much revenue to be the new middleman and if the amazing new replacement can deliver all broadband so cheap that there is meaningful savings in that bill, then the overall combination of paying a bit more to the Studios for the content, Apple taking a smaller-than-expected cut and being able to fully bypass the cable+broadband middleman might yield an al-a-carte offering at only about the $20 or so MORE per month than what we pay now. But that's a lot of "ifs" and it depends on a broadband communications breakthrough innovation that doesn't appear to exist now.