The telecom giant’s small step towards unbundling has really stirred up the cable networks.
Following in the steps of ESPN, both Fox and NBC Universal have come out against Verizon’s new FiOS pricing plan, allowing customers to choose from packages of channels to add on to a basic bundle, similar to Dish Network’s Sling TV. While Verizon seems to think that it’s found a loophole that makes their new “Custom TV” option kosher, Fox and NBC join Disney’s ESPN in claiming frankly that Verizon is out of compliance with their contracts, also noting that the telecom giant did not consult with them before announcing the plan.
While unpopular with the cable channels who depend on collecting per-subscriber fees from the largest number of households possible, Verizon’s more flexible TV bundles were largely welcomed by consumers who have for years now been signaling unhappiness with the pricey and bloated TV bundles that they’d been forced to pay for. Traditional pay-TV providers are under pressure as the cord-cutting trend accelerates, costing them video subscribers at an increasingly alarming rate. As more television networks, from CBS to HBO, begin offering their content online, selling subscriptions to access their libraries directly to consumers, it would appear that à la carte TV is set to arrive, whether it’s offered through the cable and satellite companies or not. Virtual pay-TV products like Dish Network’s Sling TV or Sony’s Playstation Vue also offer smaller and more affordable bundles of channels. Verizon is rumored to be working on a virtual pay-TV offering of their own.
It’s understandable that the networks are displeased with the idea of unbundling. If every pay-TV subscriber is forced to take half a dozen Disney and ESPN channels, regardless of whether they have any children or interest in sports, that’s a massive source of income that Disney can count on as a sure thing, without having to do anything. But if consumers can start opting out of even some of those channels, it threatens the very foundation of Disney and other TV networks’ businesses. Networks want their money, but consumers want to spend less on pay-TV, resulting in the TV providers getting caught in the middle. While Verizon’s creative solution to this conundrum has the company under fire from its network partners, something’s got to give or the decades-old cable TV business model will remain on path towards collapse.