[opendtv] Re: Distribution outside the bundle
- From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
- To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
- Date: Sun, 28 Dec 2014 10:50:14 -0500
On Dec 28, 2014, at 5:11 AM, Albert Manfredi <albert.e.manfredi@xxxxxxxxxxx>
wrote:
> And your point is?
That the 1992 Cable Act did not merely allow the broadcast networks to gain
compensation for content they were making available for free over the air. It
provided the leverage they needed to build their own new cable networks, for
which they ALSO received compensation.
> As we all know, Craig, companies have to show growth in this economy. A
> strategy that might have worked in the early days, to get them well
> established in MVPD nets, cannot be expected to remain stagnant. Sooner or
> later, whatever content was being given away to these MVPDs would not be
> given away anymore.
The intent was NEVER to give it away. In fact, most of these new channels
received subscriber fees from the beginning. The intent was to develop new
outlets for their content, for which they would receive dual revenue streams -
i.e. advertising AND subscriber fees.
There was one case where a broadcast network paid the cable companies for
carriage in order to get into the bundle. Fox, which started building the
broadcast network in 1985, did not have as much leverage as the other broadcast
networks. In 1996 they created the Fox News Channel. wiki tells us:
> To accelerate its adoption by cable providers, Fox News paid systems up to
> $11 per subscriber to distribute the channel. This contrasted with the normal
> practice, in which cable operators paid stations carriage fees for
> programming.
>
Fox has more than recovered this investment, as it now is the most watched
cable news network and is approaching $1/mo as its average subscriber fee.
> Craig seems unable to grasp that the distributors are not competing against
> one another. In fact, in most locations, a consumer has only one choice of
> cabled MVPD/ISP. So it's misleading to say they compete.
Bull*#*^ - almost every market has access to one cable system and two DBS
systems. Many markets also have a telco MVPD. The following is from the 15th
Annual FCC report on Video Competition:
> MVPDs. Between year-end 2010 and June 2012, the number of subscribers to MVPD
> service grew from 100.8 million to 101.0 million households. Over that
> period, however, cable MVPDs lost market share, falling from 59.3 percent of
> all MVPD video subscribers at the end of 2010 to 57.4 percent at the end of
> 2011, and 55.7 percent at the end of June 2012. During this period, DBS MVPDs
> and telephone MVPDs gained both video subscribers and market share. DBS MVPDs
> had 33.4 million video subscribers, accounting for 33.1 percent of all MVPD
> subscribers in 2010, increasing to 33.9 million, representing 33.6 percent in
> 2011, and 34 million, representing an estimated 33.6 percent at the end of
> June 2012. Telephone MVPDs had approximately 6.9 million video subscribers,
> representing 6.9 percent of all MVPD subscribers in 2010, increasing to 8.5
> million, representing for 8.4 percent in 2011. At the end of June 2012,
> AT&T’s U-verse and Verizon’s FiOS services combined had 8.6 million video
> subscribers.6
>
> OTT sites compete. MVPDs do not, in reality.
>
In general I can agree that there is not much price competition, and that the
bundles tend to be quite similar. But there are multiple options and consumers
CAN and DO play one against the other, and threaten to cut the cord to get the
discounted price on the UNPUBLISHED price lists.
> Not as far as the CONSUMER is concerned. It's a hassle, at best, to change
> MVPD. DBS only competes for the legacy broadcast type of service. For the
> rest, they are morphing into Internet delivery, which means they require some
> other ISP.
Yes, it's a hassle to change providers, but the FCC report shows clearly that
there is a shift away from the legacy cable providers. The DBS services are at
a disadvantage in terms of VOD. But they are using their installed base and
brands to develop OTT services.
There will always be a place for live streams, especially for sports and news.
And it will take years for live streams of traditional entertainment
programming to become completely irrelevant. The more important trend to watch
is the move toward simultaneous release across multiple mediums, as we saw this
week with Sony's "The Interview."
>
> So let's quit this pretense. Once again, the only interesting thing to watch
> is what new models the content owners are devising. Not the warmed over
> legacy models force-fit on the Internet.
That is your opinion. The only "new models" of interest to you seem to be those
that give you access to content you previously did not have access to. Many of
the legacy models continue to work just fine. Creating a Virtual MVPD is not
force fitting a legacy business model to the Internet. It is using the Internet
to deliver bits that the consumer is willing to pay for, nothing more. Keep in
mind that facilities based MVPDs are ALSO in the business of selling bits.
Did Amazon force fit the legacy brick & mortar shopping experience to the
Internet? Obviously not; they developed a far superior "mail order catalog."
Now brick and mortar stores are competing with Amazon online - instead of UPS
or Fed X, they use their existing distribution network to deliver your purchase
to their stores or use the commercial carriers to deliver to your door.
> Pretty remarkable, eh? Wasn't possible a few years ago.The MVPD model was the
> only viable distribution medium, other than OTA.
More pure crap. There has been a viable market for selling content since VHS
Enabled home video. DVD and Blu-Ray are still going strong. You could say the
same about the growth of cable - OTA was the only option before billions were
invested in satellites, cable and fiber to the home.
> This is what I'm talking about. Not some wannabe MVPD doing the same old
> thing on the Internet, but a conglom deciding to use the Internet for
> delivery, even in parallel I with the old "exclusive" "the bundle."
Could happen. What we are talking about here is accessibility (windowing) and
price. With new technology we get new options. I would simply mention that the
content owners have been selling their products to multiple middlemen since
they started producing content.
At least you acknowledge that there will be many options operating in parallel.
Perhaps you will come around and acknowledge that exclusivity (even if just a
few days or hours) is used to attract subscribers.
>
> Rubbish, Craig. I again remind you how many years ago, you thought this was
> already possible. And now that it is becoming possible, you obtusely pretend
> it's far in the future. What was the point of that Alcatel advertising piece,
> Craig? It was that edge servers need to be deployed, that it is relatively
> cheap to do this, and they were projecting this over a span from 2012 to
> 2017. A gradual expansion. It has been happening already, Craig. Even your
> darling Apple has been deploying such edge servers, Craig. Look it up. Akamai
> has been in business for years, doing this sort of thing.
The report covered more than edge servers. Yes some of this has been going on
for years; that does not mean it is ready to scale for the masses. It will take
years.
Regards
Craig
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