[opendtv] Re: FW: Intel Will Lead Us to à la Carte Pay TV

  • From: Craig Birkmaier <craig@xxxxxxxxx>
  • To: opendtv@xxxxxxxxxxxxx
  • Date: Sat, 23 Feb 2013 16:04:47 -0500

At 2:13 AM +0000 2/23/13, Manfredi, Albert E wrote:
The question continues to be, why would the congloms look to Intel, or Apple, or CE manufacturers, or Chrysler, or Ford, to relent on this bundling question? When they can oh so easily offer smaller bundles, or unbundled content, at their own web sites, or at combined-ownership sites like Hulu, Amazon, Netflix? 
...
All I see is unnecessary middlemen once again trying to horn in on the action. If I can see this, why would the congloms be blind to it? Why would they want to once again depend on "deals" with third parties that will end up becoming problematic sooner or later?
If only the marketplace worked as well as Bert would like. For some reason he cannot see the value that today's middlemen add to the content the congloms create. Nor does he see the huge amount of money the congloms make by licensing their content to middlemen around the world.
And for some reason he thinks that the congloms actually compete with one another. Like politics, which often seems to be driven by public opinion polls, TV often seems to be driven by another kind of poll - ratings.
The reality, however, is that ratings are primarily driven by what you can watch. 

As Bert famously said in a recent message:
And yes, when/if there is something the congloms want to hide away in an MVPD, I simply shrug shoulders and watch something else.
So when Bert wants to watch "something else," he has the entire unwalled Internet to choose from.
For nearly 100 Million U.S. homes, however, that "something else" to watch is typically a program available inside the MVPD walled garden. Or perhaps a DVD. More homes are buying Smart TVs, using game consoles, streaming TV devices, and even PCs to watch content from the Internet. But the majority of THIS content is ALSO from the congloms; just offered via a secondary outlet after it has been shown in a MVPD bundle, or FOTA. But 85% of the FOTA viewers are watching via an MVPD bundle and paying a subscriber fee for the privilege.
So let's look at what advantage a conglom would have in setting up its own bundle of content and selling it via the web.
In order to make more money than they do with the current MVPD bundling system they will need to recoup all of the subscriber fees for all of the channels they own. And they will need to cover the cost of operating the servers and transaction systems. They "could" make each of their channels available on an ala carte basis, but this would probably be more expensive for the consumer. So in the end you would most likely be replacing the big MVPD bundle with several smaller conglom bundles, and would still be getting hundreds of channels you don't watch.
What is critical to the congloms is that you can push a button and watch their channels. As with any oligopoly, they know you are going to view content from the other congloms; what they DO NOT WANT, is for you to choose a bundle that they are not part of. This is why Hulu Plus has broad support from the congloms.
By the way, Netflix, Amazon, iTunes, and Google Play are not combined ownership sites. All of these sites license content from the congloms and operate either as streaming subscriber services or stores.
In a sense, Netflix is not much different than what Intel is proposing - it is just another subscription bundle of old content that the congloms are willing to license. The same old content they syndicate around the world and fill their cable network schedules with.
What Intel hopes to do is get some of the most desirable content that the congloms ONLY make available via MVPD bundles, and place it in smaller special interest bundles as the article Tom posted suggests. Frankly, I doubt they will get very far with this business model. 

As Ergen said in the article: "It's going to go there slowly."

And Huggers confirmed: "Rome wasn't built in a day, it'll take time,"

So here are a few questions for Bert:

1. What content is FREE on the Internet?
a. Do you need to subscribe to a service (e.g. Netflix or Hulu Plus) to get it? 
   b. Does the content contain commercials?
   c. Do the content providers subsidize your broadband connection charges?
2. Would you expect the congloms to make less than they are making today with any new Internet service?
Remember, the congloms pay nothing to the Broadcasters and MVPDs to deliver their content - they are paid for this content to the tune of $26 billion each year. And this does not include advertising revenues.
I humbly suggest that it will be impossible for the congloms to make as much as they do today in a truly competitive marketplace. This is typically the reality when an oligopoly is collecting monopoly rents. 

Regards
Craig










----------------------------------------------------------------------
You can UNSUBSCRIBE from the OpenDTV list in two ways:
- Using the UNSUBSCRIBE command in your user configuration settings at FreeLists.org 
- By sending a message to: opendtv-request@xxxxxxxxxxxxx with the word 
unsubscribe in the subject line.

Other related posts:

  1. Home
  2. opendtv
  3. Archive
  4. 02-2013