[opendtv] Re: Cutting the High Cost of Digital Living
- From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
- To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
- Date: Sun, 10 Aug 2014 08:38:47 -0400
On Aug 9, 2014, at 8:10 PM, Albert Manfredi <albert.e.manfredi@xxxxxxxxxx>
wrote:
>
> Craig Birkmaier wrote:
>> Sorry, Craig, but that's irrelevant. What matters is the first derivative.
>> Is that percentage going up or down? It's going down.
Trends are well worth studying, and CAN be important. But they are only
critically important when they signal a fundamental shift in consumer behavior.
And even then, market leaders can adapt to these trends, often making even more
money.
The broadcast networks, and the entertainment media congloms that own them, are
a great example. Broadcast network ratings have been trending down since the
1980's. The average audience size is a small fraction of what it was in the
'80s. The same is true for the theatric release of movies, the audience for
which started declining with the introduction of broadcast television in the
'60s.
What HAS NOT been trending downward is the revenues and profits of the
entertainment media congloms. They have adapted to technology changes and used
some of these shifts to increase their control of high value entertainment.
You have yet to show us that the cord cutter "trend" is causing a fundamental
shift in consumer behavior that is threatening the MVPD bundle. On the other
hand, there is strong evidence that consumers are ADDING new OTT subscription
services to their MVPD bundles:
http://www.techzone360.com/topics/techzone/articles/2014/03/19/373800-what-cord-cutting-ott-multichannel-service-complementary-good.htm
What Cord-Cutting? OTT, Multichannel Service is Complementary to Good
Old-Fashioned Pay-TV
“With advances in cloud storage and broad availability of new devices with
higher-resolution screens and longer battery life becoming the norm, we expect
the appeal of downloading content to portable devices to increase,” the report
noted. “We also expect viewing of TV content to increase overall as people
access video from multiple devices. As a result, ARPU and usage trends are
making pay-TV subscribers higher-value than ever before, presenting exciting
new opportunities for MVPDs.”
...
In fact, a majority of video service subscribers (58 percent) found the ability
to download current TV content to a tablet appealing. Sixty-three percent of
those also said that they would be willing to pay $1 to $5 to either stream or
download content—a big opportunity for operators. These "downloaders" are
watching more content across all platforms when compared to the total sample
and are currently paying for a variety of streaming services as well as premium
channels. For those who indicated a concern with downloading, device storage
and battery life emerged as barriers to entry.
...
The survey also uncovered that subscriptions to OTT services, such as Amazon
Prime and Netflix, are growing, as an adjunct to rather than replacement for
traditional Pay-TV services. While 67 percent of 18-34 year olds report
subscribing to OTT services, 80 percent subscribe to a traditional set-top box
service. Among 35-49 year olds, 55 percent subscribe to OTT services, while 87
percent have traditional pay-TV subscriptions.
The upshot of the research seems to be that cord-cutting isn't happening on a
large scale. Rather, OTT services are additive, especially for the high-value
MVPD customers who are also subscribing to premium channels. These are also the
high-value customers that are interested in downloading content to which they
subscribe.
>
>> The only loser I see here is you Bert.
>
> I don't see how, given that there's so much more TV out there for the viewing
> than there used to be.
There is more access to the programming you already had access to AND more
access to content from outside the U.S.
But you do not have access to the large amount of content that lives behind the
pay walls.
>
> You seem to keep missing the obvious. If the percentage of MVPD subscribers
> is dropping, and Internet streaming is tied to MVPD membership, then the
> content owners will lose. Lose-lose. The walled gardens might try to delay
> the inevitable, with this new trick, but if people still opt out, it ain't
> going to do the content owners any good.
The evidence suggests just the opposite.
The big loss for the congloms would be the end to the "illegal tying" that
causes the vast majority of viewers to pay (a little bit) for content they do
not watch. Obviously they are now willing to pay a little bit more for an
improved viewing experience - on demand without commercials.
>
> On the other hand, one can also argue that if the addicts are made to pay
> ever higher fees, the content owners might be satisfied with that anyway. So
> maybe that's how I'm "losing this argument." Heh heh.
They have been increasing the cost for TV entertainment at rates higher than
inflation for more than two decades.
I suspect that they LIKE that trend.
Regards
Craig
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