[opendtv] Re: News: The death of Cable TV

At 4:27 PM -0500 10/26/10, Manfredi, Albert E wrote:
By the way, Craig, here's a quote from the article Kon posted. Another example of something you seem unable to accept:
"The cable industry has resisted 'a la carte' pricing, allowing customers to pick and choose which channels they watch and pay for. Cable networks make part of their money from subscription fees paid by customers to the cable operators and then to the networks. So smaller networks could go out of business under such a pricing plan."
Specifically, the last sentence. You often mention how starving producers have a difficult time getting onto MVPDs, yet paradoxically you won't see that "robbing Peter to pay Paul" is the only chance for that unknown content distributed. A la carte pricing prevents that.
You are citing an argument made by the foxes that are in control of the hen house.
Nobody really knows what would really happen if the MVPDs modified their business model to support ala carte pricing versus the current bundling model. So we are left with nothing but the usual scare tactics...
But there are excellent real world examples of what is likely to happen. Just look at Freeview. Viewers do not pay subscriber fees for the equivalent of "extended basic;" they can pay for the additional top off service. So what did the content providers do in the U.K.? They paid for the right to get their content on Freeview. Somehow they are able to do this and still make money ONLY from advertising (like it used to be here in the U.S.). 

What can we learn from this?
In my opinion, if the MVPDs were forced to offer ala carte pricing we would see MOST of the networks in the extended basic tier DROP their subscriber fees to avoid being DROPPED by potential viewers. No doubt some services like ESPN would be able to continue to charge their fees, maybe even raise them to deal with the loss of revenues from people who do care about sports.
But, most networks would not risk having to get potential viewers to sign up for their channels. They would simply forego the second revenue stream to avoid losing potential viewers.
Better yet, this would create more pressure to make content that is only accessible via an MVPD today accessible via other distribution channels. Without the need to collect subscriber fees, broadcasters would be in a far better position to bid for this content. So the cable systems would have to pay these networks to keep their exclusivity, or a real marketplace for content might be created.
Bottom line, the ability to depend on a second revenue stream is the reason we do not have an open competitive marketplace for content today. 

Regards
Craig


----------------------------------------------------------------------
You can UNSUBSCRIBE from the OpenDTV list in two ways:
- Using the UNSUBSCRIBE command in your user configuration settings at FreeLists.org 
- By sending a message to: opendtv-request@xxxxxxxxxxxxx with the word 
unsubscribe in the subject line.

Other related posts: