[opendtv] Re: Differing interpretations of the same data

From: "Manfredi, Albert E" <albert.e.manfredi@xxxxxxxxxx>
To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
Date: Wed, 12 Nov 2014 23:09:53 +0000
Craig Birkmaier wrote:

> You can get a deal similar to the AT&T package from any MVPD -
> essentially basic/lifeline and HBO.

These are new packages, Craig, resulting from the erosion of "the bundle." 
That's why they make the news. And once again, $40/mo is a lot more than $8/mo, 
Craig. So HBO sold as an MVPD tier is still a lot more expensive than it would 
be if sold direct to consumer. The extra cost to consumers, to get HBO, do HBO 
no good.

> This is why it is so difficult to analyze changes to business models.
> The model may indicate that if you cut prices demand will increase
> and you will make more money - good ole capitalism at work. But the
> model may assume more people will buy than actually exist at any
> price point.

I think you're missing the biggest part of this. These direct to consumer 
models are of interest to content owners who see people dropping their bundle, 
or their tier, because of the demands of other competing channels. It's not as 
simple as lowering the price to get more customers. For the content owner, it's 
liberating oneself of impediments to their own success.

> That's like saying that it is expensive for Netflix to keep track
> of 50,000 programs.

IMO, I'm again merely stating the obvious. To use your analogy, I am saying 
that it is simpler and administratively cheaper for Netflix to charge a single 
monthly fee to subscribers, than it would be for Netflix to charge either a 
different price for every movie you watch, or to charge for multiple different 
monthly subscription types. We already went over the historical reasons why 
bundling was technically desirable, in the days of analog cable.

Yes, digital systems use computers, and computers have to be programmed, and 
the programs have to be maintained. These are recurring costs. It's never free 
to create an administratively complex scheme, Craig, even in the computer era.

> Let's just get the facts straight - the money collected as subscriber
> fees goes to the content congloms.

And to the MVPDs, as markup. It's really simple. The MVPDs rake in more 
revenues, for themselves, from subscribers getting extended basic plus all the 
premium tiers, than they take in from the guy wanting only lifeline service. So 
I'm not as coy as you seem to be about what a subscription fee does. And it 
should be no surprise that basic-basic lifeline service is never advertised. 

>> The simple fact continues to be that if a monopolistic pipe can
>> charge for a lot of unrequested channels, which they can do when
>> they are monopolies and independent, competitive OTT sites do
>> not exist, that monopolistic pipe will rake in more money.
>
> Exactly. Which is why they will not change the business model.

Aaaaargh!! Craig! You're hopelessly stuck in 1980! We aren't there anymore! The 
MVPDs do NOT have that luxury anymore! They are NOT the sole distribution pipe 
for TV content anymore. At least, NOT AS LONG AS their ISP role remains neutral.

> So the content congloms are getting the lion's share of the money I
> send to Netflix each month.

And rightfully so. That was never being debated. What is being debated here is 
how the congloms can get their revenues most efficiently, i.e. without adding 
in the costs of now-unnecessary middlemen. How do you keep missing this?

Bert


 
 
----------------------------------------------------------------------
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.
Follow-Ups:
- [opendtv] Re: Differing interpretations of the same data
  - From: Craig Birkmaier
[opendtv] Re: Differing interpretations of the same data

Other related posts:
