[opendtv] Re: Aereo handwringing
- From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
- To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
- Date: Thu, 23 Jan 2014 09:04:23 -0500
On Jan 22, 2014, at 11:02 PM, "Manfredi, Albert E"
<albert.e.manfredi@xxxxxxxxxx> wrote:
> Well, sometimes people get too focused on one aspect to miss the big picture.
> And, of course, networks can re-create the two revenue streams if they must,
> without p*ssing off so many of their customers by insisting on antiquated
> real-time broadcast techniques.
Without the real-time network, you have only programs. The need to sell your
content to a network to reach the mass market is finally being challenged by
the Internet. Content producers CAN go it alone and set up their own OTT sites.
But they lose the mass promotion that the networks and their blatantly
promotional shows (breakfast TV, late night talk/comedy, etc.) provide.
The truth is that linear networks are not necessary - they are part of a legacy
that is propped up by the MVPD bundles. And they are propped up by a political
system that protects their oligopoly.
> If the networks are so terrified of those who want to innovate, by giving
> people what they want (i.e. TV over IP), all these networks need to do is
> take the bull by the horns and respond themselves. What people want is not
> going to go away, TV networks. The customer ultimately holds the cards.
Why give the people what "THEY" want, when the oligopolies can keep forcing
what they want on the masses, and realize monopoly profits in the process.
Did you read that report on video competition?
From 2007–2011, a time when the American economy struggled mightily, the
multichannel distributors collectively increased the price of expanded basic
cable service by 22 percent.
From 2007–2011, total cable-programmer revenues grew by 36 percent, a result
analyst firm SNL Kagan characterized as “pretty impressive given the brutal
recession that we were in during this period.”
o From 1992–2011, the programming industry’s collective operating profit margin
increased from 24 percent to 41 percent. During this period, the industry’s
profits increased 10-fold in real value, to $20 billion at the end of 2011.
Why would these industries stop doing what is working (for them), or enable a
new distributor to "kill the goose that laid the golden egg."
> Not just the local broadcaster, but also the MVPDs with their pricing
> structure. Don't forget how Amazon and Netflix are becoming MVPD competitors.
> It makes sense, when new techniques are developed, that those who were
> essential players before may not be essential anymore. So the old roles have
> to be re-invented, to remain essential. The blacksmith needs to become the
> auto mechanic.
Amazon and Netflix cannot scale to replace the MVPDs without a huge investment.
Remember, the ISPs are also the MVPDs, unless Google decides to wire every city
in the U.S. The networks could keep the bundling model alive by ending FOTA
broadcasting and selling direct to the MVPDs.
But they would only do this if the courts used the Aereo case to throw out the
1992 cable act and retransmission consent. Remember, there is no legal mandate
for non broadcast channels to receive subscriber fees - the 1992 Cable Act just
gave broadcasters the ability to collect subscriber fees
> I don't understand the last part, but I agree that the networks cannot do
> without certain middlemen. In general, they need the ISP networks and they
> need to collect fees for subscription channels.
Yup. And they have no incentive to invest in these businesses when they can use
the infrastructure that is carrying bits for many other applications. .
> They don't need broadcast towers for IP distribution, and they don't need to
> rely exclusively on middlemen who own the infrastructure to be the ones with
> content rights. Because that's shooting themselves in the foot. The networks
> need to get their stuff out in ways consumers prefer, or they'll forever be
> sticking their fingers in new holes in the dam.
The networks could eventually charge directly for content from their portals,
but they will not change to this business model until the many advantages of
MVPD bundles have been exhausted.
The best way for new competitors to gain leverage is to create compelling
content that you cannot get in the bundles. Netflix, Amazon and others are
beginning to understand this and invest accordingly.
Regards
Craig
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