Consumer groups have long lobbied for cable and satellite television providers to offer “a la carte” channel options instead of the big subscription packages that have been the industry’s model since forever. The rationale is very simple, most television subscribers watch only a tiny handful of the channels available to them; they shouldn’t be charged for the vast majority they don’t watch. The television companies don’t like this for an equally simple reason; it costs them just as much to supply ten selected channels as it does to supply all three hundred or so. A cheaper package instantly costs them money.
The cable and satellite providers have been able to hold the line on this through lobbying and less than honest claims that allowing people to pick only a few channels would lead to the extinction of smaller and niche programming. But all that while they’ve been nervously eyeing the rise of the internet as a medium capable of providing just as much entertainment as television. Now it appears things are beginning to tilt rapidly in the internet’s favor.
Earlier this week, Sony announced that PlayStation 3 owners would be able to purchase the NFL Sunday Ticket. Most of the coverage has focused on the potential consumers, and on the slight absurdity that one season of Sunday Ticket ($340) costs more than the PlayStation itself ($250). Even so, the benefits for Sony are obvious. They’ve been promoting the PS3 as your do everything entertainment box for years, and adding the NFL brings reality one step closer to the tag line of “It Only Does Everything”.
For DirecTV though, this arrangement marks a forced departure from its longtime strategy of using the Sunday Ticket as leverage to acquire and lock in subscribers to its broader programming packages. Since the inception of the Sunday Ticket back in 1994, DirecTV has paid enormous premiums to make sure that its subscribers – and only its subscribers – have access to the cornucopia of football it represents. Now that arrangement is beginning to crumble.
Moreover, it’s crumbling not because DirecTV had a change of heart and decided the happiness of football fans is more important than its bottom line. It’s crumbling because the NFL insisted. As a condition of the last extension of DirecTV’s exclusive contract, non-subscribers have to get a way to access games over broadband no later than 2012. For now that arrangement is under the aegis of DirecTV itself, but broadband is broadband and no one has exclusivity over the internet.
It isn’t hard to picture a situation a few years from now where the NFL begins selling access to games directly through its own website. After all, the NFL doesn’t give a shit about DirecTV, it only cares about raking in as much money as possible selling its product to viewers. Nor would such a move necessitate the NFL actually broadcasting and producing the games. The television networks could still do that, all the NFL would be doing is cutting out the satellite/cable middlemen. Consider the PS3 deal. Right now any $340 subscription fees are getting split three ways (Sony, DirecTV, NFL); it’s only a matter of time before the NFL starts to wonder why DirecTV, by far the least necessary link in that chain, should get a piece of the action.
Extrapolating further developments in how Americans receive and pay for their video entertainment from this one deal is tricky business. For one thing, the NFL is in a uniquely sweet spot as a content provider. Their games only happen during a short period of the year, every week features at least a few very important matchups, and because of their popularity they basically have to be watched live. No one else has those advantages, not other pro sports leagues, not HBO, not news channels, or traditional networks.
However, there’s no denying that Sunday Ticket availability on the PS3 is the result of technological improvements that extend far beyond first and ten. The infrastructure traditionally used to put live video in the homes of paying customers, once a fearsome array of transmitters, cables, and satellites, is increasingly irrelevant. Customers and content grow closer every day, and the idea of paying for all those channels you don’t watch is set to become as quaint as ordering from the Sears catalog by mail.
