À la carte is a French word which means “choose and then sponsor”. It is widely used for picking up cuisines from the menu in a restaurant i.e. ordering food as a separate item. This helps in making a wise choice and not get bundled with a whole set meal as it leads to the proper choice of selection overall. In this digitized world, À La Carte is being used in media and entertainment world i.e. pay TV, OTT etc. Pay TV bundles usually club together similar channels and offer the same to the people, but the problem is they are getting less attractive because it cost more and also needs are not fully satisfied.
À la carte, on the other hand, is gaining popularity among consumers because of choice of specific channels. Here consumer only keeps those channels which he or she watches every other day. It is tastier because it feels like a consumer-friendly move. But will it hurt TV industry? There are many kinds of research based on it.
Most of the entertainment pay-tv providers generate half of their revenue from advertising and the remaining 50% from subscription payments. So, it will hamper the overall profitability of the industry because it was a marketing move for them to earn revenue from the bundled channel pack.
Hub entertainment research, a research company in the United States, found that only 40% people who are having one pay TV subscription have the need very well met. The number increases to 47% who are having two services, 51% with three services and finally 62% of those who are having four or more services.
WHAT IS BEST BUNDLE?
This topic is always in a debate because there is no best bundle as of now. This is because every consumer has a family and every member of the family has some different taste, so it’s always very confusing for them to select a particular bundle as the services are expanding on a regular basis.
There were findings that only 22% consumers say more offerings means much easy to choose what’s best for them which came down to 11% in 2017. Consumers are going for aggregated solutions that are 69% want to access all content from a single source and some are focusing still on big bundles.
43% people want services fully personalized and allowing them to choose the network of their choice for which they will pay, even if price channel is higher than a particular bigger bundle.
The freshness of having so many offerings in the TV content is now wearing off because now the consumer is advanced and have access to the Internet and can search and demand their own need of channels either from the app or from a particular network like OTT.
Competition from OTT
In this digital world over the top providers such as Netflix, Hulu, and Amazon prime are providing TV shows, movies etc. with a very low subscription cost. So, it is affecting the profitability of pay TV providers to the extent. It’s like pressure from all the sides. So, the need of applying à la carte is the must.
HOW WILL PROFITABILITY BE AFFECTED?
Earlier when people buy bundled pack of channels, the pay subscription fee for the channels they are not interested but it was good from the business side because they were earning revenue from both consumer and the channels advertisement.
But with the à la carte implementation, the story has changed. Now consumer picks their favourite channels and avoids the other non-interested ones. It is a good idea from consumer side but from the business side, it is leading towards losses because now the source of revenue has decreased.
To maintain a good level of profit even with the à la carte system, pay-tv providers are now planning to increase their customer’s database by making more subscriptions so that the overall cost will be reduced and in the long run profit will increase.
Another marketing move by the channel providers is that they are now pushing up per-channel prices to people who are opting for à la carte services. This is because to maintain the profit without hampering the quality of services. But at the same time, it will affect them in such a way that consumers now will buy and watch very few channels of interest and forget the rest.
There are chances that being an à la carte subscriber, the consumer will go online and watch the remaining channels, TV shows and movies in OTT providers. The consumer just wants simplicity with ease of accessibility to all their favourite channels without paying much more subscription fees.
Therefore, a consumer can treat themselves with the benefits of a la carte subscription. As it allows the renegotiation for some channel costs, a la carte would benefit both consumer and service providers.
