[opendtv] Re: Above The Crowd: When It Comes to Television Content, Affiliate Fees Make the World Go ‘Round
- From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
- To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
- Date: Thu, 13 Nov 2014 10:04:13 -0500
> On Nov 12, 2014, at 9:50 PM, Manfredi, Albert E
> <albert.e.manfredi@xxxxxxxxxx> wrote:
>
> This article, from 4 1/2 years ago, sounds the same as Craig today.
Yup. Because nothing has changed. The strategies of the congloms that the
author described are in fact moving forward.
>
> What it describes are strategies used by MVPDs and by congloms, which have
> resulted in ever-increasing subscription fees. Good for them, but ... what it
> misses completely, because it hadn't begun happening in earnest yet, is how
> the strategies of the congloms change when they are faced with a significant
> and growing consumer rebellion.
The " TV Rebellion" is a mole hill when compared to what happened to the music
industry. Even more important, the content congloms learned from that
experience and have called in their regulatory "partners" to beef up the
enforcement side of the equation.
> For example:
>
> "As a result of these maneuvers, the current trend in the market is for less
> rather than more prime-time content to be openly available for free on the
> Internet."
>
> True or false? From my own experience, this has become false, but maybe I'm
> not seeing an entire picture. What seems to be happening is that consumers
> have shown an ability to say no, especially the younger demographic. Faced
> with this new reality, the points made in the article, all of which totally
> ignored the demand side of the equation, need to be re-evaluated. And are
> being, by the content owners.
Yes Bert, the network shows that only 30% of us watch are now freely available
over the Internet. And they continue to be freely available OTA. Meanwhile,
more and more high value live content is moving behind the pay walls.
The author of the article made IMHO compelling arguments to support the
position we both share. These paragraphs are particularly noteworthy:
>> In addition to not appreciating these money flows, most of the digerati in
>> Silicon Valley have huge misperceptions about the content owner’s
>> preferences. They assume that content owners would like to distribute
>> directly to consumers precisely because the Internet allows them to do so.
>> They would no longer be in the “death grip” of the content packager (cable
>> and satellite companies) who take an unreasonable fee for their services.
>> This is simply not how these content owners view the world.
>>
>> Content owners absolutely prefer to be aggregated in a bundle of channels
>> and, as a result, to receive affiliate fees. They also have little interest
>> in “a la carte” packaging, a concept dreamed up by regulators in Washington
>> but not desired by the heads of the content studios. Simply put, there is
>> adequate value provided in distribution and revenue collection. To launch a
>> direct channel (and forgo these fees), and then attempt to regain your
>> customers one by one is a harrowing experience. Why earn your customers one
>> by one when you can get to mass volumes, and a fixed amount of recurring
>> revenue, through a distribution partner? If you create a new piece of
>> camping equipment would you sell it online or try to obtain distribution
>> through REI?
>
> When this article was written, from what I've been able to gather,
> subscriptions to "the bundle" were still on the increase. Until 2012.
Yes, but this article was ahead of its time in explaining why things are
changing much more slowly than you and the Silicon Valley disrupters would
like.
Thanks for bringing it to our attention!
Regards
Craig
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