[opendtv] Re: Cord Cutting? Sling TV Is a Great Concept, Just Not Ready For Prime Time Yet - TheStreet

  • From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
  • To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
  • Date: Fri, 30 Jan 2015 10:03:15 -0500

On Jan 29, 2015, at 9:13 PM, Manfredi, Albert E <albert.e.manfredi@xxxxxxxxxx> 
wrote:
> No, Craig. When you have OTT sites that anyone can access, not hampered by 
> old technology or by artificially-imposed TVE-like constraints, it makes no 
> sense for multiple such OTT sites to duplicate exactly each other's 
> offerings. They have to differentiate themselves from the competition now.

This makes no sense Bert. Today we have 3-4 competitors in every market 
offering essentially the same MVPD content - just some minor differences in the 
way the tiers are set up. The only real differentiation is that DirecTV offers 
the NFL Prime Ticket, and some of the cable systems have the rights to local 
sports franchises that form regional sports networks. Also some cable systems 
operate 24/7 local news channels, like the one I was watching in St. Petersburg 
Wednesday night.

You claim that the major advantage of OTT distribution will be increased 
competition, yet you say that competition makes no sense - you cannot have it 
both ways.

The reality is that there is a significant amount of content that most people 
want. You may only watch 1/3 to 1/2 of the channels you get, but every home has 
a bunch they do want, especially homes with families that may be watching 
several different channels at the same time on different screens. So it is to 
be expected that there will be many OTT services offering similar content 
packages.

It is also to be expected that new services will try to offer exclusive content 
to attract subscribers. Thus we see SVOD services like Netflix, Amazon Prime 
and HBO developing exclusive shows to attract subscribers. By the way, I 
included HBO in the SVOD group because that is what the market is demanding of 
them - their older, linear streaming business model is dying.

And in some cases we are seeing content owners creating OTT sites around the 
content they own - e.g. CBS All Access. The problem here is that this looks 
very much like an ala carte business model. There may be some people willing to 
pay for multiple ala carte subscriptions, but "bundles" will almost always be 
less expensive if you want the typical 10-15 channels that most people watch.

Your position ultimately leads to pay per view. No bundles, just pay for each 
program as you watch, or put up with the commercials. The reality is that there 
is a limited amount of fresh exclusive content, and huge libraries of movies 
and TV shows that anyone can license. So it is likely that we will see OTT 
services that integrate some of both, with a large amount of common programming 
made available by competing OTT sites.
> 
>> Clearly the Internet allows for multiple business models and
>> different kinds of services and bundles.
> 
> It not only "allows," but it encourages, or even forces.

The Internet is just a virtual overlay of our physical world Bert. It is a 
generic conduit for bits. Like the physical world, it can support markets for a 
wide range of products. The major difference is that these markets are 
accessible anywhere, anytime, although there are still many international 
boundaries, and some services are geo-fenced intentionally. 

In the real world you probably have five or more choices for grocery shopping. 
All of these stores carry mostly the same stuff. They differentiate mostly on 
quality and price, and try to offer some exclusive stuff, especially in the 
area of fresh foods and prepared foods.

But the Internet does not force any business model, nor does it encourage every 
competitor to be different. That's just the nature of business, and building a 
successful business model.
> 
>> Sling is a Multi Program Video Distribution service,
> 
> Yeah, and so is Netflix. Again, this amounts to banality.

Sorry, but by definition, Netflix is not a MVPD. they do not offer multiple 
linear streams of appointment TV networks. They are a Subscription Video on 
Demand service that happens to offer large libraries of shows that were 
originally created for linear TV channels, and some exclusive new shows that 
have never been streamed as linear appointment programming.
> 
> Think back about your previous insistence that your legacy "the bundle" was 
> too lucrative to let go, even though people are bailing out. That's what 
> we're talking about here. This lucrative "the bundle" is in fact NOT being 
> duplicated in these new OTT sites. New concepts are instead being developed.

Only a small percentage of subscribers have bailed Bert. And it looks like the 
rate of cord cutting is declining as the economy improves. Consider this: for 
many families, the drop in gas prices is enough to pay for MVPD service. 

The extended basic bundle is still where most of the money is spent. Sling is 
still using the bundling model with ESPN as the major draw. It remains to be 
seen how disruptive it will be to the traditional MVPD services, just as it 
remains to be seen how successful Sony will be by offering essentially the same 
extended basic bundle OTT.


Regards
Craig 
 
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