[opendtv] Re: Broadcasters vs. MVPDs: Economic effects of digital transition on television program supply
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: opendtv@xxxxxxxxxxxxx
- Date: Tue, 12 Jan 2010 08:09:43 -0500
At 3:20 PM -0600 1/11/10, Manfredi, Albert E wrote:
MVPDs have been able to benefit more from the digital transition
than have OTA broadcasters. Why? Simple. They have been able to
increase their rates, for the digital tier, for HDTV delivery, for
VOD and PPV (although these last two are barely a blip on the
radar). And cable also gets broadband and telephone subscribers.
NO Bert. The shifty to digital has made it possible for Cable and DBS
to deliver more channels and more services. The cable industry will
be happy to show you that you are paying about the same, or maybe a
little bit less per channel than you did in 1990. But you now get
more than 100 channels instead of 30, so you now send them
significantly more each month.
But in addition, cable has been able to increase the rate they
charge for their analog basic tiers, faster than the rate of
inflation.
The price has gone up faster than inflation because of one thing: per
channel subscriber fees.
Cable is regulate both by the FCC and local cable franchise
agreements. Because of these regulations it is very difficult to
increase the cost of a tier by more than the inflation rate. But if
you add more channels you can charge more; so the cost of the tier is
increased to reflect the new channels, their subscriber fees, and a
little more profit for the cable company rides in on the coat tails
of the new channel choices.
So, this increased profitability is simply a function of MVPDs being
capable of charging more, even when their costs are not increased to
deliver a given service, and of consumers being willing to pay more,
even when they get no improvement in service. Examples of this are
HDTV, a small increase in cost but large increase in the digital and
premium tier fees, and in the increase in revenues for the basic
analog tier.
The cable industry invested more than $75 billion (mostly in the
'90s) to build out the digital infrastructure. Cable systems have
been upgraded multiple times, and the DBS services keep launching
expensive satellites to add more channels. None of this would have
been possible if the MVPDs were "static."
They are charging more because they are delivering more and
collecting more money for the content owners.
I guess that's the point I've been trying to make about subscribers
seeing themselves as "victims."
We are only victims in that we are forced to pay for stuff we do not
watch. This is the reason the FCC has been so interested in an ala
carte pricing scheme.
Regards
Craig
----------------------------------------------------------------------
You can UNSUBSCRIBE from the OpenDTV list in two ways:
- Using the UNSUBSCRIBE command in your user configuration settings at FreeLists.org
- By sending a message to: opendtv-request@xxxxxxxxxxxxx with the word
unsubscribe in the subject line.
Other related posts:
