By Tyler Quillin
This article began with an interest in the disparity between last year’s SEC Network and Pac12 Network revenue yields. However, research led to an even more disruptive evolution in cable television delivery – the end of cable bundling. As the internet continues to reshape the way we consume content, cable-bundling continues to decline.
Most of us still access cable television via the traditional bundling model, which functions through consumer subscriptions for desired channel lineups. Each of the channels provided by the service provider costs a fee to provide. These are called affiliate fees, which are licensing fees agreed upon between each service provider and the respective network. These affiliate fees are a growing influence on the pricing of service provider lineups in an evolving market where the internet provides the direct access to clients these networks never had before. Before the internet, networks needed cable servicer providers to disseminate their products to consumers, but now consumers can go straight to the source for targeted consumption of their desired programming via streaming subscription models. For example, remember the big splashes Hulu and Netflix made in the mid-2000s by providing streamed content? The Networks began offering content for free via Hulu while cable service providers were paying hefty affiliate fees. The cable service providers were unhappy, and Hulu became a subscription-based service. This marked the beginning of the end. Continue reading