[opendtv] Re: Digiday.com: What comes after HBO cuts the cord
- From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
- To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
- Date: Thu, 20 Nov 2014 11:06:48 -0500
> On Nov 18, 2014, at 9:28 PM, Manfredi, Albert E
> <albert.e.manfredi@xxxxxxxxxx> wrote:
> This months-long thread started because I could not believe the actual owners
> of content had quite the fascination for this "the bundle" that you seem to
> hold, Craig, although I *will* agree that the MVPDs most likely do. So that's
> when I took it upon myself to see what these owners were thinking, including
> ESPN.
I hold no more fascination with "the bundle" than other analysts. I've said it
many times, but I will say it again:
Like most Americans I DO NOT like oligopoly and monopoly business models.
I DO NOT like the fact that the political class props up these oligopolies.
But the fact remains, that they do, and have passed legislation that has
enhanced the ability of content owners to build these bundles and keep
increasing the cost at higher than inflation rates.
Our positions differ only in that you think the Internet and OTT video services
will bring the old business model to its knees, while I think the content
owners have the ability to control this technology transition, protect their
lucrative bundling practices, and find ways to create new niche services
targeted at consumers who have more money than sense.
> I also had to find the most current stats on trends for households that
> subscribe to this "the bundle," because that would be the clear motivation
> for owners of content to think ahead, instead of behind. Fascination for a
> business model that is particularly good for a walled garden certainly does
> NOT translate to something beneficial to the content owners. Not anymore.
We totally disagree on this - IMHO the benefits of extending the current model
to the Internet clearly outweigh a competitive market based model where each
content owner would sell direct to consumers.
>
> And what I found is that indeed, the owners of content are not obsessing over
> whether or not something might hurt this "the bundle." Not in the least. Just
> because they won't drop "the bundle" does not mean that they aren't busily
> working to create parallel paths, to get their content out. If "the bundle"
> is hurt by this, as you have repeated on countless occasions, that pain won't
> reflect back to the owners. Assuming the owners aren't hopelessly stubborn,
> of course, which they are not.
We disagree.
>
> Yes, it turns out that ESPN is the channel most hurt by this "the bundle"
> exodus, as a couple of links I already posted tell us (I quoted one example
> in the post just before this one). So it makes sense that they would be very
> motivated to explore new outlets, and they are doing so.
The biggest have the most to lose. But the exodus is not large compared to the
money they pull in from people who do not watch ESPN. The Bloomberg article you
posted confirms this.
>
> And it makes no difference whether ESPN has more subscribers than HBO. This
> DOES NOT change the dynamic. Owners of these TV channels are all facing a
> drop in viewership, caused by the fact that their only distribution pipes
> were inside of walled gardens. That's why they are creating new pipes.
No business can grow beyond 100% market share. This does not mean that 80% is
not highly profitable. Apple takes the lions share of smartphone profits with
far less than 50% market share.
>
> So Craig, when you argue that something might "hurt the bundle," my constant
> reaction is, "WHO CARES!!" My suggestion would be, quote directly from
> **content owners** who claim they care, who claim they won't bypass "the
> bundle."
I do not argue whether something will hurt the bundle. I simply ask that you
show how changing the business model to direct to consumer will produce as much
revenue as the current model.
Everything you post either says it won't (e.g. The Bloomberg article), or is
based on pure speculation.
Regards
Craig
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