[opendtv] Re: FCC Eliminates Simulcast Rules
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: opendtv@xxxxxxxxxxxxx
- Date: Thu, 23 Sep 2004 13:44:34 -0400
At 12:03 PM -0400 9/22/04, Manfredi, Albert E wrote:
>Let them decide, Craig. You seem to relish in predicting
>failure. By the way, the audience is 18.9 percent, and
>could easily grow. Not to mention that the 18.9 percent
>does not include those 2nd and 3rd sets that just might
>get more usage with a good DTT scheme in place.
They decided...a long time ago.
The networks and most large broadcasters are happy to let cable and
DBS "carry the water" for them. The remaining OTA audience is NOT the
economic driver any more.
The 18.9% number is just a number, produced by a research group FOR
broadcasters.
Here are the numbers published by the FCC in their 10th Annual Report
on Competition in the Video Markets, which you can download at:
http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-04-5A1.pdf
>7. The total number of subscribers to both cable and non-cable MVPDs
>has increased significantly over the last ten years and continues to
>increase incrementally each year. A total of 60.3 million households
>subscribed to multichannel video programming services as of year-end
>1993, where as of June 2003, 94.1 million households subscribed to
>MVPDs, an increase of more than 56% over the last ten years. Five
>years ago, 76.6 million households subscribed to MVPDs, an increase
>of more than 27% over 1993. This subscriber growth over the last
>five and ten years accompanied 14.2 and 21.26 percentage point
>increases respectively in MVPDs' penetration of television
>households to 88.29% as of
>June 2003. MVPD penetration of television households was at its
>highest in June 2001, when 86.42% of television households
>subscribed to an MVPD.
The last sentence seems to be a contradiction. The reason can be
found in a footnote which states:
>8 The number of MVPD households reported here, and the associated
>percentages, may overstate actual values
>because a household that subscribes to more than one MVPD (e.g.,
>cable and DBS) is included as a subscriber to
>both services. See 2001 Report, 17 FCC Rcd at 1247 n.6.
That note states;
>6 The number of MVPD households reported here, and the associated
>percentages, may be as much as two million
>households too high because a household that subscribes to more than
>one MVPD (e.g., cable and DBS) is included
>as a subscriber to both services. See Centris, Digital Cable
>Subscriber Order 4x as Many PPV Movies and 2x as
>Many PPV Events as Analog Households; 50% More Events than DBS
>Households (press release), Mar. 20, 2001, at
>http://www.centris.com/announcements/re1032001.htm.
The 2003 report states (in Appendix A) that there were 106,641,910 at
the time the report was issued.
88.29 % of total households is 94,154,142.
85% of total households is: 90,645,623
The difference is 3.5 million homes, which should be more than
adequate (based on note 6 above) to cover the number of homes that
subscribe to more than one MVPD. Thus I have NO difficulty in
stating that the OTA audience is only 15%.
Sorry, but 2nd and 3rd sets are not a significant factor. Most of
them are hooked up to cable or DBS. Most of these are older sets that
have been moved into secondary viewing locations. AND ALL of them
would require an ATSC tuner to be able to receive any new DTV
channels that might be added to a station's multiplex.
The odds that the addition of new channels would increase the OTA
audience appear to be slim from here, ESPECIALLY if they carry
nothing more that re-runs of the content on the primary analog
channel.
A "good DTT scheme" would deliver a significant cross section of the
most popular broadcast and cable networks (at least 30 channels), ALL
of which would be available in the free and clear. This MIGHT be an
adequate incentive for consumers to spend $150 or more to upgrade
each of their old analog sets.
>
>> And one more thing. You keep talking about larger
>> audiences for the network. They already HAVE 90% of
>> the audience.
>
>You mean, for example, ABC already has 90 percent of
>the audience on a given week night? I don't think so.
>What I'm saying is that a network which intelligently
>designs its multicasts can increase its share of the
>viewership. It's another knob for the network to twist,
>to optimize its revenues.
NO. I mean that the five major conglomerates OWN the networks and
programming that are watched by 90% of U.S. homes. More than half of
this viewing takes place on networks that are ONLY available today
via MVPD systems.
If what you are trying to say were true, then the conglomerates could
add more networks to the MVPD systems - where 85% of the viewers are
- and they would attract MORE eyeballs. Simply moving a set of
eyeballs from one network to another does little or nothing to
increase the audience; this is especially true when the oligopoly
already controls 90% of the eyeballs. You can only increase the
audience by getting people to spend more time watching TV.
Unfortunately we have already reached "that" saturation point; the
reality is that total viewing hours are beginning to decline, and
total viewing hours for advertiser supported programming is declining
even faster, as more time is spent viewing premium networks, VOD and
packaged media like DVDs.
So the only thing that is in play here is the possibility that
broadcasters could get a significant percentage of MVPD homes to drop
the service and put up an antenna. And this is not likely to happen
given the current market conditions in the U.S.
>
>> > Some folk would much rather watch a rerun of an old
>> > Outer Limits show than any Monday Night Football,
>> > hands down. Why should a network, or a local
>> > broadcaster, prefer to disenfranchise these people?
These people ARE NOT disenfranchised. How many different programs are
available to you on Monday nights? I am certain that you can choose
between one or two stations that carry ABC, CBS, NBC, Fox, PBS, and
possibly UPN and WB. In addition, you probably can receive syndicated
programming form several independent stations in your area. The
choices may be more limited in smaller markets, but its a big stretch
to say that these people are disenfranchised.
Would you/they like more choice? Certainly, if it is free.
If you were willing to pay, you/they could get greatly improved
choice from cable or DBS now.
Or to put it another way, would YOU pay $19.95/mo for USDTV to get
improved choice?
> >
>> In major cities they can do this already. There are
>> typically 2-4 independent stations that do nothing but
>> counter-programming with old syndicated content.
>
>Which completely misses the point. Why should NBC
>happily let viewership go off to some other station?
>If they were to compete for these other eyeballs, they
>could increase their revenues at next to no cost to
>themselves.
Sorry Bert, but it is clear that you do not understand the economics
of programming. Both the networks and local broadcasters must pay for
the programs they run. They make a profit when they can charge more
for advertising then they pay for the programming. So the question
boils down to whether you can get enough additional eyeballs to watch
the additional programs you offer. And further, whether you can get
enough people to buy DTV receivers to access these programs.
Remember, that NBC, ABC, CBS, et al ALREADY offer 85% of the audience
a wide range of alternative programming via MVPDs. So this
discussion boils down to how much more can you get from the other 15%
of the audience that has far less program choice. As I keep saying,
the numbers don't add up.
Here's another way of looking at these issues.
Let's assume that U.S. broadcasters could provide a free service with
30 popular networks. Logic suggests that this would cause some
percentage of U.,S. homes to choose the free service. These homes
would no longer have access to 50-60 channels, so there would be some
loss of audience for networks that are not in the broadcast
multiplex, and a corresponding increase in audience for the networks
that are in the multiplex.
But would such an approach significantly change the number of hours
that people watch TV?
I think not.
>
>> If the broadcasters offer more choices in their OTA
>> multiplex the audience can only grow it two ways:
>>
>> 1. More people put up antennas and watch OTA shows;
>> 2. Existing OTA viewers spend more time watching TV.
>
>3. Some people decide to move off cable or DBS, because
>now choice available OTA is adequate.
This is just moving people from one delivery system to another. It
does not represent an increase in audience. The only change is what I
outlined above, favoring the smaller number of networks in the
broadcast multiplex, at the expense of the greater number of networks
available via MVPDs.
>
>4. People watch TV in places where they don't have a
>cable feed, because the programming is interesting
>enough and the rabbit ears can pick up a good signal.
Yup... I'll bet the beaches will be covered with portable DTV receivers.
;-(
>5. People who were previously spending time browsing
>the web spend less time at that and more time
>watching some obscure multicast program they have
>become fond of.
This is possible. Of course, it depends on the ability of the content
producers to create these new, obscure programs. As you have noted,
the Internet may be the best place to deliver programming that is
aimed at tiny niche audiences. The very definition of broadcasting is
to reach a broad audience.
How did you define it the other day?
>A unicast, two-way private comms
>system is completely different from a system designed
>for broad distribution of copywritten content.
It's about delivering an audience to advertisers.
>
>And so on. People went to urban cable PRIMARILY
>because it offered much more choice. I'm baffled why
>it's so hard to accept that more choice OTA could
>equally draw more viewers.
It is a question of price, convenience and choice. And it is a
question of motivating such a change.
We AGREE that a properly designed OTA system could attract a
significantly larger audience than the 15-18% that exists today. But
the devil is in the details.
We have already seen in the U.K. that a lower cost subscription
service with limited choice is a marginal proposition. it did little
to change the market dynamics. We will see exactly the same thing
here as USDTV expands into more markets.
The U.K. proposition improved significantly when the subscription fee
was removed (along with some of the channels).
I see NOTHING to suggest that U.S. broadcasters are going to learn
from the U.K. experience. The reason is simple - there is no
consensus among broadcasters to work together to develop a FREE OTA
MVPD service.
> > It is a no brainer to understand why the media
>> conglomerates/networks are buying up cable networks.
>> They are buying back their audience. But that's just
>> the tip of the iceberg...
>
>Of course the networks want to buy the distribution
>media. But in any given location, you're always going
>to have more networks than cable systems. So it still
>makes sense for each network to care about its own
>OTA system too.
More confusion. I was talking about the content, not the
distribution. The difference is that most of these networks ARE NOT
available to OTA viewers.
Cable is a distribution network.
DBS is a distribution network.
OTA broadcasting is a distribution network.
DVDs sold in stores are a distribution network.
ABC is a content network distributed by ALL of the above distribution networks.
Discovery is a content network distributed by all of the distribution
networks above EXCEPT broadcasters. Dittos for HBO, ESPN etc.
How is it that the vast majority of "content networks" are able to
exist without carriage by broadcasters? Could it have something to do
with the fact that they DO reach 85% of U.S. homes?
> > If the networks offer more choice to the OTA audience,
>> what benefit flows to them or their affiliates?
>
>More viewership means more ad revenues.
Network viewership has been declining steadily for a decade. Ad
revenues have been increasing steadily during the same time frame.
What you are talking about is displacement of viewing from one
distribution network to another. The audience (total U.S. homes) is
finite, but growing. Getting the audience to watch MORE TV is the
only way to significantly increase overall ratings. Nothing you have
stated in this entire thread has the potential to get more people to
watch more TV. What we are really talking about is how to capture a
higher percentage of the revenues associated with distribution - the
conglomerates already control the content.
Regards
Craig
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