Verizon is putting its FiOS TV service on a crash diet.
The upstart operator on Sunday will begin offering subscribers what it's characterizing as a "skinny bundle" of cable network packages, a new wrinkle that will allow consumers to choose from seven pre-fab options. A person familiar with the offering confirmed reports reported the service earlier.
Each of Verizon's "Custom TV" channel packs is composed of cable networks that are stacked together in a genre-specific silo. For example, the Entertainment pack includes ratings-heavy outlets like TNT, USA Network, FX and Discovery Channel, while a Kids offering is composed of the top draws among the footy-pajamas set (Cartoon Network, Nickelodeon, Disney Channel, etc.).
The Custom TV promotion is designed to appeal to viewers who are weary of paying for channels that they don't watch. Call it A La Carte Lite™.
The full bundle costs a modest $74.99 per month and includes internet, phone, a suite of base networks (all local broadcast affiliates plus basic-cable nets like AMC and CNN) and two channel packs. Each additional package costs an extra $10 per month. A signing contract locks in the monthly rate for the entire bundle for two years.
By way of comparison, a Time Warner Cable "triple play" in the operator's metro New York footprint costs more than twice what Custom TV subs can expect to pay for the pared-down service.
Verizon will promote the new service with a national ad campaign that includes TV, radio and a microsite. Interpublic's McCann is the agency of record for the Fios business.
Per Nielsen, the average U.S. household in 2013 received 189 channels and watched 18 of them.
As much as consumers believe that true a la carte will save them a bundle, the economic underpinnings of the cable TV business suggest otherwise. Analysts estimate that ESPN could cost as much as $40 per month in a choose-as-you-go universe; at present, the Worldwide Leader in Sports costs you $6.10 per month, or a little more than 20 cents per day. Compare that to the $1.33 per day you'd pay for ESPN under the hypothetical model, and at least in this case you're looking at a bum deal.
According to SNL Kagan estimates, the median monthly affiliate fee per ad-supported channel is 14 cents per month. By and large, most of the unwatched third-tier cable channels you pay for every month cost mere pennies.