Both HBO and CBS are planning on offering standalone, cable-free subscriptions to streaming services – something that consumers have been asking for.
However, what consumers may not be aware of is that the services could cost quite a bit more than they expected. HBO and CBS are essentially cutting out the middlemen, and shaking up the way things are normally done in the television world – and the transition may not be very smooth.
Bundling for pricing. When television viewers have to subscribe to each individual channel they want to watch, versus using a bundle package with cable or satellite providers, this could cause problems. While each channel is individually a lot cheaper, that doesn’t account for households where there is a variety of different tastes. When each family member chooses their two to three channels, the monthly price tag could be a lot higher than the current average rate for services (around $90 per month).
CBS is starting with a price of $5.99 per month, and will only offer the service in the 14 big cities where it owns TV stations initially. Eventually there are plans to roll out the service nationally. CBS is ready to roll out their service this month. HBO has only just announced its offering, but it is expected to debut next month at about $15 per month. Other channels such as Univision and ESPN are also floating the idea of a service-free direct-to-consumer subscription. In the case of ESPN, going unbundled could result in a $30 per month fee.
Move toward offering content online. Driven by the popularity of Netflix, Hulu and Amazon.com Inc’s Prime Instant Video, many networks have taken steps toward offering their content online – but typically it is for a set period of time. CBS will become the first network to offer a monthly subscription service with a robust line up. However, analysts worry that unbundling would drain over half of the revenue – or $70 billion – from the television industry due to less media buying opportunities and other factors.