[opendtv] Re: OTA
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: opendtv@xxxxxxxxxxxxx
- Date: Sun, 18 Mar 2012 13:28:31 -0400
At 7:16 PM -0400 3/17/12, Albert Manfredi wrote:
See, I've been saying exactly the opposite, so you clearly aren't
paying attention. If a TV broadcast utility is built, especially
something like LTE, the congloms will have **no reason** to use the
existing local broadcasters as middlemen. The congloms can deal
directly with whoever owns the utility - maybe one company or at
most two per market, JUST AS they now deal only with ISPs when
delivering their stuff on the Internet. No local broadcasters
involved there either, right?
Looks like you are the one who is NOT paying attention.
I just told you that there will likely be at least five broadcasters
sharing spectrum in larger markets, and that they may either
collaborate with the telco oligopoly (which typically has at least
three carriers per market), or compete with it.
The congloms "MAY" deal with both depending on the type of content,
and WHO owns the rights. For the typical prime time fare, there will
be a live audience (those watching at the time the program is
originally broadcast, and a demand audience, which may watch at ANY
time, but for the most part will watch on a fixed receiver at home,
or download an episode to a mobile device when traveling. For live
sporting events the audience is predominantly live, and may have a
significant mobile component.
If broadcasters build out the LTE broadcast infrastructure, then
content providers - whether they are the congloms or the sports
leagues who now deliver their content via the congolms - will likely
negotiate rights for carriage via the LTE broadcast infrastructure.
If the broadcasters do not build the LTE broadcast infrastructure,
the telcos will.
The reality here is that we have multiple oligopolies - congloms,
local broadcasters, telcos and sports leagues that are going to
figure out how to maximize revenues, either by working with or
bypassing current "partners," or by affiliating with a new partner.
So the following scenario "could play out:
The NFL decides that they can make more money by bypassing ESPN and
the broadcast networks, delivering their games directly to fixed
receivers via the wired Internet. But they still want to reach the
mobile audience, including everyone who is tailgating outside the
stadium AND those inside the stadium during the game, and others who
only have access to a mobile service. So the NFL may decide to work
directly with whoever owns the Broadcast LTE infrastructure. In this
case the congloms get cut out and the local broadcasters stay in the
picture if they invest in broadcast LTE.
If you want to see what this RF utility model looks like, just look
at OTA TV in Europe. Local broadcasters are few and far between. The
few there are get their local content on the RF utility. With such a
model, you only need one or two per market, if that many. Many
smaller markets have no local broadcaster, and maybe just a regional
net.
This is one possible outcome. But remember, in Europe "commercial TV"
was very late to the party, because the governments wanted to control
the content.
The smaller markets in Europe - where there is not local TV -
probably do have local newspapers and now local Internet sources.
There was a time when every major city in the U.S. had multiple
newspapers. Those days are now history, in large measure because of
the impact of local TV, and more recently because of the impact of
the Internet on classified and display advertising. Now local
newspapers are beginning to compete with local TV on an equal
footing, offering what in many cases is a superior "on demand"
product with photos and video.
So in a sense I can agree with Bert, that the potential exists for
Local TV in the U.S. to atrophy to only one or two stations per
market.
But that's the whole point here. Do broadcasters develop a new
business model that can survive the transition to an anywhere,
anytime mobile future or ride quietly into the sunset...
As long as the congloms have the content people want, and they do,
your business model had better include them, Craig. Just because you
have an RF utility doesn't mean anyone gives a rat's *ss, unless you
put content on there that they care about.
I agree completely on this point. But be careful about what content
you are talking about. The broadcast networks now have less than 40%
of the eyeballs in prime time (FAR LESS in other day parts). The
cable networks that the congloms bought or started in the '90s are
now what the majority watch. And then there is live sports, which is
the most important of all in terms of economics.
And here is an example of what can happen.
http://www.ncaa.com/march-madness?sr=college_basketball_tournament_online_MMLsearch
You can watch ANY game in the tournament online live, directly from
the NCAA. But it will cost you $3.99.
Nobody is saying that any of this content is going to disappear. What
people are saying is that the existing business models are being
disintermediated by the wired and now wireless Internet. What is
changing is the ability of the congloms to maintain 90% control over
all of the content we consume.
The point I was trying to make is that the TV business is bifurcating.
It is no longer necessary to schedule an appointment with your TV to watch
most of what broadcasters deliver.
Honestly, it's been 30 years now since people had to deal with TV by
appointment. Beyond VCRs, beyond automatic PVRs, beyond in-network
MVPD PVRs, the local broadcasters and the congloms have been putting
their stuff on the Internet FOR YEARS now. So why do you keep trying
to make it sound like you're divulging some brand new trend? WE KNOW
THIS, Craig. Broadcasters have been transmitting live streams, OTA
if not also on the Internet, AND allowing you to view their content
**on demand**, over the Internet. This is not new to broadcasters
and congloms!
Not much of this stuff is available live on the Internet. The first
runs and live sports events are typically NOT available on the
Internet. ESPN has been offering some of their stuff for free on
ESPN3, but in most cases the stuff you want to watch is blacked out
in the home markets to protect TV broadcasters. So if you live in the
Southeast, don't expect to see SEC and ACC games live on the
Internet, but if you live in Denver, or LA you probably can.
What is important here is that the limited amount of high quality
content that is offered by the congloms during Prime Time is no
longer a huge draw, and after the first broadcast is generally still
available. Compare this to the days when we only had 4-5 channels
(and nothing else to watch),and you had to wait until summer to see a
rerun of a program you missed.
A broadcast license is THE MOST valuable asset that a broadcasters has.
The value of things changes with events, Craig. Have you been paying
attention to home prices lately? The reason the broadcast license
was valuable is that broadcasters were required to distribute very
valuable conglom content. Failing that valuable conglom content,
once the single OTA RF utility takes on that role, the value of all
the other broadcast licenses vanishes. Or do you really think that
the one or maybe two daily local newscasts created the high value?
To an extent your point is valid. Station valuations have been on the
decline, and without retrans consent dollars the congloms and their
affiliates would be in more trouble than they already are. But that's
the nice thing about operating a government supported oligopoly...
There was huge growth in the number of TV stations during the '80s,
when cable was beginning to become a competitive force. There was a
time when spectrum was so valuable that Low Power TVs stations were
popping up everywhere. Many of the stations that went on the air in
the '80s are likely to take the money and run. We are about to go
back to the days when there were only a handful of stations in every
market.
The real question is whether the station groups can figure out how to
build a new infrastructure and business model that keeps them
relevant. I believe they will!
There are already local productions on OTA DTV, as well as on MVPD
networks. Just how popular do you think they are? If they ever did
get popular, they wouldn't remain local!
Clearly this is an important issue. But it is challenges like this
that lead to real innovation, which in turn replaces businesses that
fail to innovate.
Regards
Craig
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