[opendtv] Re: Fw: Re: Post on alt.tv.tech.hdtv of interest today

  • From: Craig Birkmaier <craig@xxxxxxxxx>
  • To: opendtv@xxxxxxxxxxxxx
  • Date: Sun, 10 Apr 2005 09:48:03 -0400

At 11:00 AM -0400 4/9/05, Tom Barry wrote:
>  > 1. Can the system support mobile and portable reception? This is the
>>  ONLY major competitive advantage for broadcasters.
>No, I do not believe it is.  If the other ease of use elements you
>mentioned were in place then the major advantage would be that OTA
>broadcasting could competitively be delivered FREE, without
>registration, as advertiser supported material.

Good Point.

But competition does not exist in a vacuum. If broadcasters provide 
the equivalent of extended basic cable for free, the competitors will 
be forced to respond. This is exactly what is happening in the U.K., 
where Freeview is taking market share from BSkyB. As a result, Sky is 
preparing to offer a service tier for free, if the customer buys a 

Thus, in the long run, broadcasters would not have a MAJOR 
competitive advantage in terms of the service being free, but the 
ability to serve mobile and portable receivers WOULD continue to be a 
competitive advantage.

>Other premium channels and services are just icing on the cake.  But the
>ability to move into a new apartment and just plug in your TV is still
>the driver if the new digital world does not contrive to forbid that.  I
>really cannot imagine how broadcasters are willing to voluntarily give
>up that major advantage and just get lost in a maze of must-carry

I agree that a simple plug&play service in the free and clear would 
be attractive. As you say, the ability to add premium content on top 
of the free service is the icing on the cake - cakes without icing 
can be boring. Broadcasters can do both, just as the multi-channel 
services do today. What I would hope for is that all services would 
move to a model where advertiser supported content would be available 
in the free and clear, and you would only pay for premium content. 
There might be a few services like ESPN where you have to pay a 
subscriber fee and still get inundated with ads, but this would be 
the exception, not the rule.

As for the perceive advantage for broadcasters, clearly they think 
that the current system is the most profitable. But this may be 
changing as the audience continues to fragment and ratings for the 
major networks continue to decline. The problem is not so much with 
the broadcasters (the stations that have licenses) but the media 
conglomerates that control all of the content. They get to double 
dip, collecting ad revenues AND subscriber fees. With the kind of 
REAL competition we are talking about, they would lose those 
subscriber fees.

>Even if the broadcasters get multi-must-carry how the heck are the local
>broadcasters going to bargain with the networks for prime content if
>they offer no value added?  The network stations are already not relying
>on must-carry.  Why would any network need an affiliate if the prime
>content would be carried anyway by the cable companies once local
>affiliates were dropped?

Yup. The local stations are caught between a rock and a hard place. 
That's why they like the status quo. With real competition many would 
not survive.

>I think the nets could go straight to cable as contracts expired.  There
>would still be no shortage of local content to fill whatever existing
>demand. And in a many-channel cable world I don't think most local
>broadcasters have enough desirable non-network content that they could
>attract many advertising $$$ at all.

Probably true, but they still can make money with syndicated shows, 
especially in the late afternoon and prime access time periods. This 
is especially true in larger markets where there is much more demand 
for TV ad space then there is inventory. That's the other side of 
this coin; by limiting competition among broadcasters (only a handful 
of stations per market), they all do fairly well. If you unleash them 
as competitors with cable and CBS, some will learn how to thrive, 
some will learn how to survive, and some will cut and run.

>I still feel there are viable business models for broadcasters.  But
>only if they care about the business of broadcasting instead of being
>led down the rosy path.

It's not rosy. it's paved with greenbacks. 30-50% profit margins in 
MANY markets.

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