More Channels, More Specialization

(Photo: 3/4 of zer0)

There’s a story in the July 3 edition of The Australian about the Fox Footy (Australian Rules Football) Channel. That the channel exists illustrates how changing technology increases well-being.  With the plummeting cost of TV production and transmission has come a great growth in the number of specialized channels.  When I was a kid, the U.S. had three networks and a few independent channels in big cities. Today, things like the Fox Footy Channel have increased the ability of the medium to cater to specialized tastes. 

Since I’m not the only American who likes Australian football, or footy, I expect to see the channel on U.S. TVs soon — thus increasing variety, increasing my total utility.  Any thoughts on likely future channels that will cater to even more specific tastes?

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  1. YP says:

    To the contrary, I actually feel like television channels are becoming increasingly homogenized. I can barely tell the difference these days between Bravo, TLC, History, etc. These channels used to be far more distinct–Bravo showed operas, symphonies, and art-house movies; TLC showed a lot of educational programming; History was mostly historical documentaries. Now it seems that they all show some general combination of “reality” programming and movies that may have some vague connection to the channels’ former selves. I’m not positive, but I’d suspect that it’s cheaper to run a cable network like that, getting higher ratings by appealing to the masses rather than catering to niche interests.

    The closest comparison to Fox Footy is the current Fox Soccer here in the US. But it’s going away next month as a separate entity since Fox is choosing to move its soccer coverage to the new flagship Fox Sports 1, where it will be shown alongside other sports.

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    • Mike B says:

      It was determined by many channels that having 100% of a niche market was inferior to having a small part of a more main stream market or having a niche brand with mainly mainstream programming. Having a channel and putting something on the air is indeed cheap, but having real programming is still very expensive. As long as you are looking to post up content that is either cheap to produce or cheap to acquire then feel free to specialize. However if catering to specialized tastes takes money don’t expect that whole long tail thing to happen.

      The Fox Football channel pays a couple of talking heads and gets in on shows already being produced. It pays a fair market price for the rights that are tied to the revenue from ads, not the cost of production because US broadcast rights are basically gravy to those that cover the matches for their intended markets. The same model works for all kinds of other content, but in every case the shows have to have mainstream appeal somewhere to get made.

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  2. Peter Cooper Jr. says:

    I think that the generation that grew up with only a few TV stations must not realize that we’re well past the stage of needing a TV channel to show up on cable or something. There are plenty of online “channels” with every type of sport, game, or hobby already there, since as you say the costs are so low. Even just having thousands of viewers is enough to sustain many of these channels.

    The real issue with cable is the opposite of what you describe: Subscribers have to pay the content providers for all of the channels they get, even though the vast majority of them are ones that they don’t watch. It’s a pretty inefficient market.

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    • Mike B says:

      It’s a cross subsidization scheme which typically can’t be measured using standard methods because they tend to have high aggregate benefits with uneven distribution. One can think of it as having to pay 10 cents a month for each of 150 channels you don’t watch, or paying $10 a month for each of 6 channels you watch often and then the other channels are thrown in for free. Without the scheme people would become more aware of what they are paying for. Cutting channels they don’t watch would force the less popular channels to raise their a la carte rates, which in turn would cause more people to drop them which in turn would cause those channels to go bust.

      The current pricing model is an inducement to consume, like all your can eat buffets. Is this a good or a bad thing? People could be watching more TV than they would otherwise making them are worse off or this is the only way to coordinate the funding or niche content that makes everyone better off. The cable TV industry is acting much in the same vein as a government that valued diversity of content would. Cross subsidization isn’t bad per se. It’s how the Post Office lets you mail a letter to Alaska for 49 cents or how AT&T used its phone monopoly to subsudize basic research. Freedom of communications and transistors have certainly paid dividends to offset the inefficiency.

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    • Cory says:

      This is what I was going to post. The author has it exactly backwards. That’s why cable companies are fighting new channels. In fact, the Wall Street Journal just did a story about cable/satellite providers refusing to pay for a couple MLB teams’ specialty networks. The providers point out that an exceptionally low number of viewers watch these channels (even when they air games), so they aren’t going to pay for them.

      While you may see this as an option in a sports package, you can rest assured that you won’t be seeing it on any American TVs soon (unless you or your friends are willing to pony up).

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      • Steve Nations says:

        Imagine if in order to get the magazine Sports Illustrated you also had to subscribe to Field and Stream, Guns and Ammo, and Good Housekeeping. Crazy.

        Providers shouldn’t pay anything for any channel. They should just pass along the content and collect the subscription fee. They would also charge a service fee of course. I’m still anxiously awaiting cable a la carte.

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  3. Daniel G says:

    That, yes, is the conventional economic way of looking at things–more choice leads to greater utility, as people can choose products better suited to them. But without even getting in to the “paradox of choice” or the fact that all these “new” channels are only owned by a few large conglomerates, media provides a unique case study. In this case, increased choice enables filter bubbles and confirmation bias, as people are more likely seek out the stations that cater to their own particular worldview. That, in turn, has both negative personal consequences (bias can lead us to make bad choices) and externalities (a democracy depends on robust debate and an informed citizenry).

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  4. Peter Rezac says:

    I think sports which are popular at the collegiate and / or club level, but not pro, would come next (fencing, crew, etc.).

    To the point of homogenization: I feel that many of the marquee cable channels–which each used to serve a well defined niche–grew their niches so large that they became mainstream, and now appeal to new “mass markets” much like the original networks. However, I see plenty of new channels filling in more specific niches behind them (NatGeo Wild, The Military Channel, etc.).

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  5. Enter your name... says:

    One of the “specializations” that I’d like to see, and can’t find, is channels in very many foreign languages. You certainly see Spanish in Latino-heavy areas of the US, and you see French in Canada, but why not less common ones? Why not ones that are popular for students? If your family is from Vietnam, the Philippines, Russia, the Middle East, or another under-served community, I’d bet that you’d be willing to pay extra to get it, if only it were offered. Similarly, I’d bet that many of the millions of English speakers living abroad would be perfectly happy to pay extra to get an English-language channel.

    It seems like it would be basically free: You could run cheap shows that were produced for the home market, and maybe toss in a couple of “learn to speak ___” programs. (There are plenty of them out there, and many are subsidized by governments.) So why isn’t it happening?

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    • YP says:

      There are actually many of these channels already available, usually listed through most cable/satellite companies as “international packages”. Here, for example, is a list of the international offerings through AT&T U-Verse (only because that’s what I have at home–I don’t work for them or anything like that).

      http://uverseonline.att.net/uverse/premium-package-international

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      • Enter your name... says:

        Thanks for the link. What I’d like to find is one that works in Germany (Munich, to be specific, and not via satellite).

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  6. Dean says:

    Nope, you won’t see it on “US TV” any time soon, for the same reason that you can’t see BBC 4 on US TV. All you’re going to get is the Americanized version of the BBC, not the native one. And if there’s not enough audience in the US for an Americanized version of the Footy Channel, then you’re going to have to go to the internet and find a pirated stream in order to get your fix of bounce plays.

    As long as copyright laws permit exclusive distribution agreements, you’re going to see this kind of stupid monopolistic behavior where providers deliver something that the customers don’t really want, but will settle for as a second-best choice. This will continue until there are so many second choices on the internet that this model fails as provider lock-in becomes impossible. Instead of 250 channels with nothing on, but the cable company still gets its ad revenue because of your irresistible urge to watch *something*, there will be 1000 channels on Roku or 10 million channels on YouTube. Of course YouTube is already using anti-competitive tactics against Roku and Microsoft, so the monopolistic behavior just moves to a different place in the distribution flow.

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