I do think OTT is going to win out in the long run. But that's really just the underlying technology.
The tough part is getting rid of the bundle. I'm not so sure that'll happen, although I really hope it does.
All of these giant media companies would much rather sell you 10 channels for $20 than a single channel for $5.
If a la carte starts happening in a serious way, it's going to be a huge win for consumers. But almost nobody on the other side really wants it. They're going to fight tooth and nail to keep the bundles.
It's only a win for the consumer if the shows they're interested in are subsidized enough by others being forced to pay for them that it offsets the amount that the consumer is forced to pay for the shows they're not interested in.
Basically it's a zero-sum game for the consumers amongst themselves while being a win for the seller.
It's only a win-win if in aggregate, people put a value on everything that is bundled. By that I mean that enough singular people put a value on a large subset of all channels.
If too many people put a value 0 on too many bundled items, it's most definitely a consumer loss. The author admits this, but claims that collectively it is a win. There's no basis provided for this assumption though, other than that it is the market. I have no problem believing the cable market is flawed though (local monopolies).
This is anecdata, but if true hits the core:
Traditionally people I know always bought (happy meal or) big mac/quarterpounder & co (this could be inaccurate dollars, because it's not the local currency) for $6, because the sandwich was $4 a la carte, and the fries an additional $2. So sure, even if my value on soda was as low as $0.1 I would still make out ahead.
But then the previously unavailable double cheeseburger arrived, which had as much meat and tasted about the same as a quarterpounder, for $2. And the Big Mac sandwich occassionally sold for $2.5.
And me who genuinelly always put a negative value on soda (really, I did however trade it for a smaller milkshake) and always drink water, would now instead save 67% since I generally could do without the fries as well.
I'm sure I'm an aberration in wanting just a double cheeseburger with water, but I'm not so sure I'm an aberration in getting a raw deal out of bundling.
The analogy with a buffét is interesting in both its similarities and its differences. People eat different amounts, sure, but there is a finite amount one could eat, and it's not everything at the buffét. Some will eat more expensive stuff (HBO, ESPN), and some will eat cheaper stuff, but the cost to the restaurant is a finite amount of food.
The analogy fails when in bundling TV it would be like sending every buffét customer 10 full dishes, of which they can only eat 1-2 full ones.
Another issue is viewer count and measurement. In traditional TV you've got the Nielsen box and all its flaws, as well as scheduled TV giving a LOT of power to broadcasters to dictate popularity by air time (and ads).
When I pay for a Netflix bundle, in aggregate with every other customer, our money is directly mapped to exactly what shows we watch, and while they can try to push some shows, they have a lot less power in dictating what people watch. This means that shows no one wants no one pays for, because they will simply not produce it. In traditional TV this was different for a myriad of reasons, including less consumer choice in the bundle (you choose a channel, not a program), no control over air times, etc.
TL;DR: I don't disagree with the economics/maths in that link, but I disagree with the premise of the input consumer value, and available choices.
Study the ownership charts and it all becomes clear. There are not 10 companies producing 10 channels. There are like 3 to 5 companies producing everything you watch. So in your scaled down example, there's only perhaps two companies each producing 5 channels, and using the miracle of economy of scale they only each collect $10. You might very superficially think each channel costs $2 but because of economy of scale and intentional government regulation it costs like $9.50 to produce one channel, $9.75 to produce 2 to 4 channels, and $10 to produce 5 channels. The lights go out on the whole system if they don't get their $10 of revenue so they have to charge "around" $10 for one channel, you can forget $2 or even $5. Well, not everyones viewing patterns are going to match one corporation, so most people are going to end up needing to buy from both companies which is $20 so a la carte is dead. In an artisinal world of bespoke channels made by individual companies or people, a la carte would work, but economy of scale and financial pressures means everything you see comes from a very narrow funnel. And that narrow funnel is why its culturally changing from broadcasting to extreme narrowcasting and revenue is collapsing, but thats another issue.
Another analysis mistake is thinking channels are all equal and of equal value. Most channels are filler taking up bandwidth to keep competitors at bay. It is exactly like retail brick and mortar software sales in the 90s where you'd have a gigantic cardboard box containing a half sheet of paper and a CD in a sleeve rattling around in there. The fillers make little to no money but they make sure that a competitor doesn't have the space to set up something that could be a hit (its quite a downward spiral).
Eventually the cable companies are going to give up on trying to manage a system that delivers every channel to every station all the time, and then the game will really be on, and its a game of logistics and scaling and financialization that the cable co has already won, so best of luck to the new entrants, but other than provoking some short term innovation...
I do think OTT is going to win out in the long run. But that's really just the underlying technology.
The tough part is getting rid of the bundle. I'm not so sure that'll happen, although I really hope it does.
All of these giant media companies would much rather sell you 10 channels for $20 than a single channel for $5.
If a la carte starts happening in a serious way, it's going to be a huge win for consumers. But almost nobody on the other side really wants it. They're going to fight tooth and nail to keep the bundles.