[opendtv] Re: CBS Offers Web Service as TV Unbundles Itself
- From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
- To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
- Date: Tue, 21 Oct 2014 07:42:11 -0400
Whoops. Accidental send before I finished...
Regards
Craig
On Oct 21, 2014, at 7:18 AM, Craig Birkmaier <craig@xxxxxxxxxxxxx> wrote:
> On Oct 20, 2014, at 8:07 PM, Manfredi, Albert E
> <albert.e.manfredi@xxxxxxxxxx> wrote:
>
> Craig Birkmaier wrote:
>
>> Only a small percentage of MVPD subscribers are cutting the cord. Those who
>> are cord cutters probably have little interest in ESPN;
>
> You can't talk out of both sides of your mouth, Craig. ESPN zealots amount to
> less than 50 percent of current cable subscribers, or so you have said in the
> past. Therefore, the potential exodus of subscribers is quite significant, if
> ESPN keeps driving up the cost of "the bundle" to all of these
> non-sports-fans. That's why that one article we saw recently predicted a drop
> to 78 percent by 2019. And that's why the congloms are looking at
> alternatives.
One more time:
Only a small percentage of MVPD subscribers are cutting the cord.
Even if the article you are citing is correct, 78% is still quite viable to
support the current extended basic bundle business model, especially if some of
the "lost subscribers" buy other services to replace their MVPD service. It is
FAR MOR LIKELY that we will see some new distribution businesses take a bit of
market share from the MVPDs, and coexist, with many homes (like mine) paying
for both a MVPD and an OTT service.
>
>> so ESPN is looking losing subscriber fee revenue, not viewers.
>
> They were shown to be losing both, revenues and viewers. And that article was
> written before the Fox sports package began competing against ESPN.
No doubt some cord cutters watched ESPN, especially among the people who cut
the cord for economic reasons (unemployed and can't find a job). and clearly,
with more sports networks buying up rights, there will be competition. But this
is more like the existing broadcast system - an oligopoly where you compete for
ratings. There is NOTHING here that will cause ESPN, or the other sports
networks, from relying on bundling and the associated subscriber fee revenue.
>
>> Any new paid ESPN business model would require a SIGNIFICANT increase
>> in monthly subscriber fee for real viewers, as the millions who currently
>> pay $5/mo or more - but do not watch - would no longer be providing
>> Disney with the billions required to pay for all of the sports rights
>> negotiated by ESPN.
>
> Sorry Craig, but, well, DUH!! What you are saying is that everyone has to pay
> more to help subsidize the sports fans and the huge salaries paid to the
> major league players. This is entirely obvious!! In fact, the government
> could even tax people for this purpose. It would amount to the same thing.
It's not just sports fans Bert. The whole concept of the extended basic bundle
is that everyone pays a little for everything, rather than the actual cost
(plus profit) for each service they actually watch. The reason the bundle model
has held up this long is that the content and distribution congloms have done a
good job of making the case that the bundle is cheaper than ala carte.
You could call this a tax, but unlike government taxes, everyone pays the same
- kinda reverse socialism.
>
> But MVPD subscribers get sick and tired of this game, and some bail out.
> Therefore, HBO itself is having to find alternatives.
Please STOP with the HBO crap. It is irrelevant to this discussion. They are in
a different business and a new technology has provided competitors with a
better business model based on VOD. They have no choice but to enhance their
business models to compete.
The same CANNOT be said about ESPN and other content that is centered around
live events. The channels in the extended basic bundle that are "threatened"
are those that are appointment TV based. And these channels can add TV
Everywhere access to their program libraries to survive and keep getting the
extended basic subscriber fees.
> One alternative is for HBO to sell direct to consumer. Let's say HBO now gets
> $4 from the MVPDs, per month per subscriber. And the MVPD charges, say, $6
> per month per subscriber. HBO could decide, if we sell direct to consumer, we
> could ask for $10 per month per subscriber, and come out way ahead. We get
> all those $10, and our sports fans, e.g. those who couldn't care less about
> the Food Network, can cut the cable.
Stop it Bert. HBO is a SEPARATE premium tier, not part of the extended basic
bundle. They have never had more than 30% of U.S. homes. And they charge
between $15 and $20 per month, a portion of which is shared with the MVPD.
As they add the direct-to-consumer OTT service, they will continue to work with
the MVPDs, who may actually sell the new service.
The only relevant statement you make is that a very small percentage of homes
that now get HBO "might" cut the cord and buy the new OTT service. This is not
likely to be a very big number, as there is content in both the basic and
extended tiers that people will continue to watch. The real question is "which
VOD service will I buy in addition to extended basic?" For now, the answer is
Netflix. HBO will need to bring its price down closer to Netflix to compete,
although Netflix will have no choice but to keep raising its monthly fee to pay
for the exclusive content that attracts subscribers.
>
> So HBO comes out ahead (even if Disney itself might not, depending how Disney
> manages their other distributions.) HBO still gets the old bundle hangers on,
> and they make even bigger bucks from those they sell direct to.
Perhaps. At least you understand that the old HBO business model coexists
alongside the new OTT service. To make more money they will need to keep the
price for the new service high, which is unlikely if they want to get people to
drop Netflix and subscribe to HBO.
Regards
Craig
Other related posts:
