[opendtv] Re: Differing interpretations of the same data

From: "Manfredi, Albert E" <albert.e.manfredi@xxxxxxxxxx>
To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
Date: Tue, 11 Nov 2014 02:44:34 +0000
Craig Birkmaier wrote:

> How twisted. The MVPDs have had to keep adding capacity to add
> new channels, because this is how they have circumvented regulatory
> control over their rates. With each rate increase they add new
> channels in a manner that maintains an AVERAGE cost per channel.
> That average cost includes the subscriber fees they pass along to
> the content congloms and additional revenues for themselves

Cut to the chase, Craig. It benefits the MVPDs to sell the largest bundles 
possible, in the fewest tiers possible. That's the bottom line. They get the 
most revenues for the lowest administrative overhead costs. Astounding how 
anyone would call this "twisted."

> But it is critical to understand that the MVPDs did not create
> this business model - the content owners convinced them to charge
> subscribers fees

Subscriber fees were needed to maintain the infrastructure regardless, at 
first. And of course, for ad-free content, the owners of content had to get 
paid somehow, right? These are orthogonal discussions, which have nothing to do 
with the simple fact that total revenues to MVPDs go up when they can charge 
customers for gobs of channels, whether consumers want them or not.

> The only argument that suggests this business model is threatened is
> that there are too many channels to watch.

No, Craig. The threat comes when there are alternative sources of TV content to 
people now, than the exclusive one-way funnel technology mandated previously. 
It's like instead of just one theater complex in town, now there is a huge 
number. EVEN IF the theater complexes show many of the same movies, they still 
must compete against one another. They offer a different mix of shows, they 
charge less markup, they offer side bennies, whatever. Netflix steals customers 
from HBO. A perfect example.

> So what does MVPD service look like five to ten years from now?

You only list what's true already. In the more long term future, they could 
well become both neutral ISP nets and OTT sites themselves, offering their 
lineup to whoever, wherever, instead of to only households physically connected 
to their own cables. In the closer term, they are trying to do little more than 
just create more flexible bundles, no doubt to the detriment of those channels 
that depend on subsistence. But as even John Skipper tells us, his approach to 
content distribution can change radically and quickly, with not too many 
percentage point changes.

>> All of this is happening why? Because CONSUMERS, having now a viable
>> option to the previous walled garden monopolistic source, are taking
>> matters into their own hands.
>
> But they don't.

Consumers do, and congloms pay attention to this fact. Craig, on the other 
hand, stands firm. That's how "the bundle" subscriptions are already under 80 
percent.

>> So now you make the congloms sound like Marxists.
>
> No. Monopolists!

Craig, when you claim that these different congloms stay with "the bundle" 
model in order to help the more needy channels among them, that's Marxism. Your 
words: "Each member of the oligopoly understands the importance of supporting 
each other to make these monopoly pricing tactics work."

With a neutral Internet available to them, those words carry little meaning. 
The congloms can now go for their own interests only. They don't need to lose 
customers to help out the competition.

> The stuff you keep quoting from Moonves and Skipper is targeted at
> the creation of niche subscription services that can fuel future
> revenue growth.

Not true. Moonves' new All Access is NOT for new, complimentary distribution. 
It is for anything CBS transmits, and stuff they no longer transmit. And 
Skipper is trying new ideas, only INITIALLY to not hurt the old model, but in 
the longer term, he and other pundits have said what might be in the cards.

> Sorry Bert. The Millennials are watching less TV. I posted these
> stats recently; you even said you liked the article.

And I also commented along exactly the same lines as this NYT article, Craig. 
They are watching less OF THE TV SET. I said that this did not translate to 
"they are watching less TV content."

Bert

 
 
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