About 70% of pay-TV subscribers in the Los Angeles area cannot watch their hometown baseball team, the Los Angeles Dodgers, on TV. To blame for this baffling circumstance is the current cable TV business model, and the skyrocketing price of content.
In 2013, the Dodgers inked a deal with Time Warner cable for exclusive rights to air their games, for a mind-boggling $8.35 billion. The plan was for Time Warner to then turn around and become the distributor, striking deals with other local TV providers. The plan was pretty simple by cable industry standards. By paying such a massive sum, Time Warner could control the market, essentially creating a monopoly for themselves. To recoup the gigantic investment, they’d simply overcharge the other cable providers for deals, and as is always the case, those cable providers would bundle the newly created LA Sports Net with their other channels, passing off the costs to their entire subscriber bases, regardless of whether or not individual customers wanted to pay a premium to see Dodgers games.
Unfortunately, the plan to stick consumers will the bill for outrageously priced content, after padding the wallets of not one but two middle men, backfired completely when the other cable providers wouldn’t play ball with Time Warner. DirecTV and AT&T, the other major TV providers in the LA market, were left in a tough spot. They could either pay up for outrageously overpriced content, and pass those costs on to customers who would inevitably complain about the price increase, or opt not to, and have customers complain that they can’t watch their local team. Much to Time Warner’s chagrin, the other TV providers chose the latter option.
That leaves us where we are today. The 70% of Los Angeles pay-TV subscribers not on Time Warner Cable can’t watch the Dodgers. DirecTV and AT&T have a market full of unhappy customers. Time Warner Cable is out over $8 billion dollars. And the Los Angeles Dodgers are only reaching 30% of their target audience. The insane and broken cable business model, that makes content-owners feel absolutely invincible at the negotiating table, has left everybody unhappy.
The situation in LA is really sort of a macrocosm of what’s happening in households across America. Content creators know that viewers want to see their content, so they can demand whatever high prices and onerous conditions that they want from distributors. The distributors know that they can relatively easily pass on their costs to their customers. But at some point, the price gets so high, that those customers say enough is enough. Just like DirecTV and AT&T, cable subscribers across the country are balking at high cable bills that attempt to pass off too-high costs for content that in many cases they don’t even want, on to them. Rather than pay up, they’re deciding to go without, a decision that isn’t easy or fun. What seemed like a sweet deal for the distributors, passing off high prices and taking a cut themselves, completely falls apart when prices hit that breaking point.
FreeCast Inc imagines a world where this kind of thing simply doesn’t happen. Rather than attempt to play the middle man for profit like Time Warner Cable has, we see the Internet as an open platform for the world’s content. Our business thrives by connecting content creators with their audiences. Rather than blowing $8 billion dollars on a bad deal, in a post-cable world, Dodgers fans, not just in LA, but across the world would be able to get their games straight from the Dodgers or even a distributor like Time Warner. Rather than depending on bundles to pass exorbitant costs around, when selling direct to consumers, any distributor would learn very quickly what price is too high. The free market would set prices where they belong, making the current price gouging shenanigans impossible.