[opendtv] Re: ESPN Scores Top Audiences in Cable History with Semis | Multichannel
- From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
- To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
- Date: Mon, 12 Jan 2015 09:46:08 -0500
On Jan 11, 2015, at 8:58 PM, Manfredi, Albert E <albert.e.manfredi@xxxxxxxxxx>
wrote:
>
> That's very funny, given that Craig has been arguing for just such a "one
> subscription" all along!
That's ridiculous Bert. I have never argued for one subscription for all
content.
I have spent considerable energy educating you about the different
subscription tiers offered by the MVPDs, especially the premium movie tiers
such as HBO. And I have tried in vain to educate you about the fact that the
content congloms license their content to additional middlemen that create
their own subscription bundles (e.g. Netflix), or offer content on an ala carte
basis for sale or rental.
There is a massive global market for entertainment content, with many layers of
distribution. This marketplace has evolved and grown thanks to technical
innovation. The Internet is yet another technology that is having a profound
effect on many industries.
Due to the fact that streaming high quality video content is very demanding in
terms of network bandwidth, the TV and movie industries have been insulated
from the kinds of traumatic shifts that other less bandwidth intensive
applications have cause to the affected industries. In particular, the music
industry experienced this kind of radical shift.
The TV and movie industries learned from this experience and have moved to
protect their business, both in terms of new business models, and by using
their political clout to protect their industries via legislation and
regulation. We have seen this play out via the DMCA, and the many iterations of
copy protection that have been developed to limit piracy. We are seeing it play
out today with the debate over network neutrality, the new regulations enabling
VMVPDs, and the pending broadcast spectrum auction.
> Agreed, which is why the FCC needs to do something about net neutrality,
> Craig. Unless, repeating myself again, perhaps 5G cellular might introduce
> some true ISP competition again (as we had in the dial-up era). I'm not too
> hopeful on that score, anytime soon.
See above.
> Absolutely, but not the highly restricted one-size-fits-all choice of
> bundles/tiers you've had until now.
It is way to early to predict how this will play out. Clearly there is pressure
on the content owners and the MVPDs to limit the amount of crap that they make
us pay for. As I stated yesterday, some of this will die naturally, as the
audiences for linear TV channels that depend on library content are
disappearing.
Even as we see the pressure building on the legacy extended basic bundle, we
see new bundles forming around library content enhanced by a limited number of
exclusive shows. Thus many homes now subscribe both to a MVPD service and
Netflix, or one of the other SVOD services.
We are both relatively educated observers of this transformation. We both are
able to offer our perspectives and opinions on where content distribution is
headed. I suspect that as much as we rehash some issues endlessly, there are a
significant number of industry leaders following our debate.
In truth, nobody has all the answers. In the end the consumer has the ultimate
vote. Much of the confusion today is based in the dramatic changes in behavior
of different demographic groups. We have the cord never Millennials at one end
of the spectrum, and the aging TV addicts at the other. One group is driving
change, while the other assures that the pace of change will be measured and
deliberate. Meanwhile the content owners are experimenting and learning how to
use the Internet to make even more money.
> First, I object to your term VMVPD, since that term implies nothing more than
> the legacy MVPD over IP. **Not** what's happening,
My bad. Netflix and Amazon Prime are SVOD subscription services, not VMVPDs.
Dish's Sling and Sony's Play Station Vue are VMVPD services.
The confusion about the differences is not exclusive to our discussions. It is
causing confusion among many analysts. This article focuses on the confusion:
http://www.streetinsider.com/Analyst+Comments/Amazon,+Verizon+New+TV+Service+May+Actually+Help+Netflix+%28NFLX%29+-+Janney+Capital/9075883.html
> Wible explains that while SVOD and VMVPD services may be confused for each
> other, each addresses a distinct market opportunity. "In short, we view SVOD
> services as similar to a premium cable network (e.g. HBO) while VMVPD
> services are more akin to cable/satellite operators that distribute
> networks," he said. "VMVPDs and SVOD are complementary services."
I believe I said much the same earlier in this message.
> Craig. Secondly, I have no idea what is problematic about this. If the OTT
> site wants to create content exclusive to their site, great. Why should I
> object? What I do object to is your contention that original content is all
> an OTT site would have to offer, that might compete against the legacy MVPD
> model. No. The OTT model offers all manner of flexibility, previously
> nonexistent, even without any of its own original content. Even nothing more
> than competition among different bundle types would make OTT site attractive.
The problem is access Bert. It is the need for multiple subscriptions to gain
access to the content one wishes to see on a regular basis. And the problem is
further exacerbated by the desire to view truly live content or to see the
premiere of pre-produced content.
Access to live events will continue to drive (V)MVPD subscriptions. The
simultaneous release of entire seasons of exclusive shows by Netflix and Amazon
is changing the the way serialized entertainment is consumed.
We may see more hybrid services like CBS All Access, that combine the live
streams traditionally offered by MVPDs together with SVOD content. The larger
question for this business model is how many subscriptions consumers will
tolerate. This is likely to keep bundles that include content from multiple
content owners viable for the foreseeable future.
So yes, the opportunity exists to develop new OTT services that offer more
choice, and in some cases lower price. But it is unlikely that this is going to
bring about dramatic changes in the next few years. We will need to see what
works, and how consumers react.
> Doubtful outcome. The more likely outcome is that the previously
> heavily-subsidized but unpopular productions will disappear, which saves the
> previously hapless subscriber some money. Competition hardly ever hurts the
> consumer, Craig. You're trying real hard to show how competition is bad.
Please give us an example of heavily subsidized but unpopular content.
I believe this is an oxymoron. The level of subsidies is driven by the
popularity of the content.
> That doesn't mean the nationwide TV nets have to be owned and operated by
> the government. If you read the FCC rules on local and especially national
> caps, they pretend that stations and station groups are the content creators.
I never said anything about who owns. The networks. The evolution of
broadcasting in the U.S. Is unique among the more established economies of the
world. We made spectrum available to commercial broadcasters - something that
has been a recent phenomenon in Europe especially.
But it is not fair to say that the government does not play a major role in the
operation of our FOTA broadcast oligopoly. Our government ignores the
anti-trust implication of this business model and in some cases (the NFL)
grants an anti-trust exemption via legislation. Protection of the market based
system has been extended to cable and DBS, and may be required of VMVPDs - it's
too early to tell.
And the most egregious evidence of the role that government plays in
broadcasting is that they allowed commercial broadcasters to sell the spectrum
they use, virtually for free, and will now pay broadcasters to vacate this
spectrum.
>> The FCC could do exactly what it did with the DBS systems ;
>> force VMVPDs to offer the local affiliates.
>
> Never happen. But in principle, this would be technically doable, yes.
Now you are using an absolute, much like those you criticize me for. Let's see
how this plays out.
>
>> The fact that Dish has not been able to license the broadcast
>> networks for the new Sling service is highly informative. It appears
>> that Disney is willing to license ABC, but the other networks are
>> holding out for...something.
>
> Craig, what is "highly informative" about this is simply this: the new Sling
> TV is NOT A VMVPD! It is a new OTT site.
Sorry Bert, but Sling is absolutely a VMVPD.
> It does not need to follow any legacy MVPD rules or traditions, including any
> quaint geographic monopolies.
True. But that does not mean it is not a multichannel video program
distributor. They still need to license the content they offer from the content
oligopoly, just like the facility based MVPDs.
> The other TV networks can offer their own OTT sites, as Moonves is doing.
> Surely, you can't call CBS All Access a VMVPD either, right? The only
> resemblance of either of these services to MVPD services, is that they both
> carry TV content.
As I said above, CBS All Access is a hybrid - it looks a little like a MVPD and
a little like an SVOD service. It offers multiple programs, but only from one
content owner.
And the network OTT sites do not offer access to live streams - they are
catch-up and SVOD library sites.
>
> Potentially, the TV networks could also agree to have someone like Dish
> eventually put its old MVPD bundles and tiers model over the Internet, for
> anyone to subscribe to. That might qualify as a VMVPD, without the local
> geographic restriction. It might get subscribers from the nostalgic set, but
> it will not be the one exclusive choice for everyone.
What's the difference? It's just a question of what is in a bundle and what it
costs. By the time Dish gets all of the content lined up for Sling, it will
likely be possible to duplicate what they offer via satellite, AND access to
SVOD libraries from all of the companies they license content from.
So the question is what difference, if any, will there be in terms of cost? One
could argue that Sling should cost more since it will offer SVOD and anywhere,
any device access. Then again it only supports a single stream at a time, which
is arguably a reduction in capability relative to a MVPD service with TV
Everywhere.
You might consider the reality that MVPDs offer many different bundles, and
they have two prices lists - one for retail, and one to limit cord cutting.
Regards
Craig
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