[opendtv] Barry Diller: Pay-TV Program Margins 'Decimated' by Amazon Prime
- From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
- To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
- Date: Sat, 17 Jan 2015 08:45:01 -0500
Leave it to Barry Diller to state an obvious truth. The executive said the days
of MVPDs extracting “pricing power” on advertisers and, to a lesser extent,
consumers via ratings are over. And so is their growth.
For years I have claimed that there is no such thing as "Free TV;" that we pay
for ad supported programming at the check-out counter. For months, Bert and I
have been arguing about the "fairness" of subscriber fees for content that we
(well me and millions of MVPD subscribers) don't watch. The reality is that
both of these forms of payment have much in common:
- You may buy the products that are being advertised in any program you watch,
but many other people do, and the cost of those ads is rolled into the price
they pay.
- You may not watch many of the channels that you pay for in a MVPD bundle, but
millions of other viewers do. Like ad supported "free programming," everyone
pays a little for everything, and the cost is strongly linked to the popularity
of the program or network via ratings.
It has been a nice ride for the content and distribution oligopolies, but
Diller says the ride is over, and to some extent he may be right. Consumers are
avoiding ads, and some are cutting the cord to avoid paying for the bundles of
realtime streams, that are ALSO filled with ads.
Diller is concerned because Amazon has come up with a new way to get people to
pay for programs that have no ads, by buying stuff. Seems Barry is unaware that
we have all been paying for TV by buying stuff, since Dinah Shore closed her
show singing "see the USA in your Chevrolet..."
The real problem is that the ads Diller loves are not very effective - the
advertiser mostly for ad impressions on those who are unimpressed - or to be
more accurate, uninterested in buying most of the stuff being advertised. And
then there is the reality that most everyone would prefer to be entertained
without the constant ad interruptions.
So Amazon has put a new twist on an old idea. Free TV, without the ads, if you
buy stuff from us.
Diller has good reason to be concerned. Consumers are fed up with ad filled,
appointment TV streams, especially for content that can be put on a server and
viewed on demand. Live events are the last bastion of ad supported programming.
It seems the tables are turned. Instead of cluttering our lives with ads that
are largely ineffective, in hope that we may buy stuff, the future of TV may be
driven by giving viewers content as a "reward" for actually buying stuff.
Regards
Craig
Barry Diller: Pay-TV Program Margins 'Decimated' by Amazon Prime
15 Jan, 2015
By: Erik Gruenwedel
With the pending rollout of four new original Prime Instant Video series, and
Amazon trumpeting its collaboration with Woody Allen for the Oscar-winning
director’s first TV show production, conventional wisdom would suggest the
e-commerce behemoth is looking for the same thing multichannel video program
distributors are: viewers.
Not so, according to Barry Diller, former head of Paramount Pictures and now
chairman of media company InterActiveCorp (IAC), who contends Amazon is merely
using streaming video to lure and sustain Prime members more interested in
e-commerce.
To Diller, who financially backed recently shuttered Aereo TV, it’s no
coincidence Amazon last month disclosed adding 10 million new Prime members
during its 20th winter holiday retail period — underscoring the focus more on
what consumers bought than watched.
“Amazon is not doing [Prime Instant Video] to benefit advertisers. Essentially,
the programing in this case is the advertising,” Diller told CNBC.
In a sense, according to Diller, Prime Instant Video is a Trojan Horse that
entices members with all-you-can-stream movies and TV shows, while subtly
generating revenue and profit from myriad online purchases by millions of
members eyeing free two-day shipping, among other perks.
“If they sign up to Prime, they get a whole slew of things, some of which is
fresh new video. That’s a [business] model no one has ever heard of,” Diller
said.
For multichannel video program distributors predisposed to generating and
selling viewer ratings to advertisers, Amazon Prime is a business model they
can’t compete against, according to Diller. Indeed, the executive said the days
of MVPDs extracting “pricing power” on advertisers and, to a lesser extent,
consumers via ratings are over. And so is their growth.
“You’re not going to get the kind of [retransmission] increases programmers
got, and if you’re a cable operator, your margins are being decimated on the
programing side,” he said.
Regards
Craig
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