[opendtv] Re: TV Ratings Have Hurt Creative Side of Television, Says Netflix Content Boss Sarandos | Variety

  • From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
  • To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
  • Date: Tue, 16 Dec 2014 11:16:51 -0500

On Dec 15, 2014, at 10:03 PM, Manfredi, Albert E <albert.e.manfredi@xxxxxxxxxx> 
wrote:
> We saw, Craig, that 80 percent of the increase is caused by sports. We also 
> saw that these CEOs acknowledge that fact, and one of them (I think Leslie 
> Moonves) said that there wasn't a lot of wiggle room for increasing fees, 
> when sports takes all the oxygen out of the room.

Apparently he found some wiggle room with Dish.
> 
> In any event, once again, they will continue to raise fees even faced with 
> membership decline. As of now, that makes up for the revenues lost from those 
> dropping out. I've posted that fact many times now. And, I've also said many 
> times, and so have the CEOs, that they want to reach those who dropped out.

Depending on the nature of the increase, in most cases it will exceed any 
losses caused by cord cutting. Cord cutting is still less than 1%, and that is 
being generous. Rate increases are typically more than 5%. 

They want to reach any market they can Bert. That's what they do. What they are 
NOT DOING is making exclusive content in the bundle available without a 
subscription, or a significant delay. Don't bother telling us about the network 
portals - they are not part of the extended basic bundle and are available 
everywhere.

> Many people, Craig, are simply not sitting by doing what the content owners 
> and the MVPDs (and apparently you) want them to do. That is what cord cutting 
> and shaving means. The consumer doesn't care how lucrative some business 
> model is for the service provider or the content owner. You seem to keep 
> missing that basic fact of life.

You seem to be missing the fact that the losses are small compared to the 
profits from the many. And most cord cutters and shavers are still paying for 
content. Netflix is paying more than $3 billion for content in 2014, with the 
lions share going to the content congloms.

> At least, I don't change their words to fit some new political agenda I'm 
> trying to defend, Craig. Even John Skipper said that a 10 percent decline 
> would cause ESPN to make big changes, and he was talking about addicts with 
> no demand elasticity! For some reason, you seem to think nothing is changing.

But you do! You bend and stretch to fit your agenda. No doubt a 10% decline 
could prove challenging to ESPN, given the amount they pay for licensing 
rights. Fortunately for ESPN, the rate of decline is small - it could take a 
decade to lose 10%.

Clearly things are changing Bert. But these changes can take decades to play 
out. Look how long broadcasters have held on in the face of losing the majority 
of their audience.
> 
>> You are correct about the dip in 2013. The data is not available
>> - yet - to claim it is accelerating this year.
> 
> You are wrong. The figure for 2014, as of October, was already bigger than 
> 2013. Read back in the archives. I posted that more than once.

The results for the fourth quarter are not in - subscriptions usually increase 
in the fourth quarter, as stated in the articles you posted. Even if the number 
is larger than 2013, what is important is the percentage of the total market 
and the rate of change. If the total and the rate of change remain below 1%, 
the MVPDs will deal with it.

>> Last time, you asked that same question with 80 percent, and I obliged 
>> pretty fast.

Yes you did. But your analysis was less than convincing. I found evidence that 
the number is closer to 85%. But why quibble. Let me know when the number is 
70%.

>> These guys aren't dumb, Craig. They aren't going to allow 30 percent of 
>> their viewers to bail out without taking remedial measures, or even 15 
>> percent. How is it you keep missing this point?

Because they are a monopoly, feasting on a lucrative revenue model. The total 
spending on entertainment is not declining; profits are growing, not declining. 
These businesses have adapted and grown with each shift in technology. No 
reason to expect this to be any different, as they have the political and 
business clout to keep the Internet from eating their lunch, as it has done to 
other industries.


Regards
Craig 
 
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