...the $1 per channels is speculation on my part, HOWEVER I don't think it's nearly as crazy as you make it seem. there are many small channels on cable.
You're thinking about "small channels" from a purely consumer point-of-view and as if they are all silos. If cable currently only pays 14 cents per (small) channel, why can't we get it al-a-carte for $1? The channel will still make a huge profit for that channel. That's pretty logical from our perspective.
BUT, how the whole business works is that the bundles of channels "forced upon us"- a mix of highly desirable channels and upwards of 24 hours of crap channels- delivers a combined source of revenue & profit... even if we only watch the desirable channels. And it's not just our subscription revenue but also the commercials that run on all of the channels in the bundle that has to be factored in.
Go your way there and we pick only some small channel we like for that $1. Are we leaving out 5 or 10 other small channels that were formerly bundled in with it? If so, we're also taking our value as a household's eyeballs out of the advertising revenue on those 5 or 10 channels... along with our 14 cents per or whatever we pay per channel. Work that kind of math out in various al-a-carte fantasies and the combined revenues & profits are greatly at risk even if a small channel favorite could go from realizing 14 cents to $1.
The point is that the magic number is not cost-per-channel for any of the channels. It's average annual revenue per subscriber (and average annual commercial revenues per subscriber) for the "as is". Last I checked, we all pay- on average- about $73/month for some variation of cable or satt. If that's true, to motivate those that are not us consumers to embrace the change to some new model, the monthly take will need to start there AND preserve what they make from the "as is" commercials revenue AND, if Apple gets to pile in on top, there needs to be enough extra made to give Apple what it will want as a new middle man.
Getting to pick a small group of favorite channels will harshly cut into overall OPM (commercials-driven) subsidy revenue and that will need to be made up in how the al-a-carte pricing for those favorites is modeled. Similarly, picking a handful of channels should also cut into average revenue-per-subscriber-per-channel if the math was thought of that way, so THAT revenue needs to be made up too in how al-a-carte channel pricing is modeled. Apple wants to make money as a new middleman. Cable doesn't have to take the hit even if Apple takes a big bite because Apple's replacement entirely depends on Cable's broadband pipe. Etc.
So, on a micro level, channel based profitability can look very good when thought of as 14 cents vs. us paying- say- $1 per channel in al-a-carte. But the net objective of everyone else will be to preserve the $73 (actually they will want to see it increase) and pay whatever Apple wants. Thus, the math would look more like this:
"As is" 200 channels for $73/month (on average) vs.
A favorite 20 channels for (I'm wild guessing) $103/month (on average) vs.
A favorite 10 channels for (again wild guessing) $103/month (on average) vs.
A favorite X channels for $103/month (on average). You pick the number for X.
$103 is wild speculation but I would guess that to be toward the bottom of the al-a-carte range. If we want commercial-free, al-a-carte, add at least $54/month though I think that would probably have to go up too (that's much less speculation).
It's for these reasons, I just don't see any scenario of $1/month channels of programming made by professionals (maybe if youtube programming was monetized as some kind of paid channel). Frankly, I'm surprised that HBO NOW arrived at $15 and CBS is trying to roll out at $6 (and not surprised because they look too high).
Note: all that said, I'd love $1 al-a-carte pricing myself. I probably could pick about 20 channels for $20/month and get everything I want from my current satt package. But that's the easy part. The hard part is motivating the rest of the chain to deliver that. Why do they want $1/channel pricing such that someone(s) like me can go from about $80/month to about $20/month while also cutting in Apple and giving them an Apple-sized cut too?
