[opendtv] Re: óFwindows-1252?Q?NCTA:_“Netflix_is_beating_cable”?
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: opendtv@xxxxxxxxxxxxx
- Date: Wed, 15 May 2013 11:21:08 -0400
On May 14, 2013, at 2:09 PM, dan.grimes@xxxxxxxx wrote:
> Is Powell arguing that Netflix is a threat to our media society? Is he
> suggesting that the government take action to do something to protect it?
>
> It seems to me that cable companies are collecting more money than ever from
> their subscribers, there has been no reduction in cable subscriptions, media
> conglomerates are collecting more dollars per channel than ever before, and
> most Netflix subscribers are MVPD subscribers.
And Netflix generate in excess of $2 BILLION for the Media conglomerates each
year.
> And yet, doesn't it appear here that the NCTA is testifying that the
> programming people want will go away if someone doesn't step in and regulate
> the OTT services? That is what I take from it but perhaps I am reading into
> it.
There is a larger argument here that the public is either unaware of, or does
not care about.
As Dan correctly asserts, the media industries are making more money that ever.
Who benefits from this?
1. The owners of the media congloms and the MVPD congloms;
2. Governments at every level of the food chain;
3. The producers and talent that enjoy huge incomes thanks to the many to few
economic funnel - this includes professional athletes, college athletic
programs, actors and actresses, politicians and all of the industries that
serve them.
One need only look at how subscriber fees have helped to fuel the growth of
incomes for everyone in these industries. Now the NCTA is saying that this
threatens the ability of the media congloms to create high value content. One
wonders how a decent TV program was ever created during the "Golden Age of TV,"
when 26 episodes of a program cost less than one episode today...
> "Senior execs have used the NCTA in Chicago to play down the cord cutting
> threat that Netflix poses. 'Our industry has always been about new content.
> Netflix is primarily a service that provides library programming,' said
> Philippe Dauman, chief executive of Viacom. Robert Marcus, chief operating
> officer of Time Warner Cable was even more bullish, declaring, 'we’re all in
> favour of any application, Netflix included, that increases the value of our
> fast Internet connection.'"
>
> Do these arguments seem disingenuous, or is it just me?
Perhaps conflicted is a better term. Clearly the paragraph above is correct.
The conflict is between the ability of an MVPD to make money off of a library
service (e.g. VOD or Comcast's catch-up service) versus using their broadband
service to access Netflix. Netflix does not threaten the monthly subscription
bundle.
> Or does the NCTA (MVPD industry) and the media conglomerates really believe
> that OTT services are a true threat to their industry as a whole? I can't
> seem to tell. And if people really do like OTT and the benefits it offers,
> why don't they capitalize on it rather than oppose it?
The threat is when high quality content moves to direct Internet distribution
rather than using the media and distribution congloms to reach viewers.
As for people capitalizing on OTT, the issue is accessing the stuff they want.
The congloms are using the monthly MVPD subscription to control the migration
to OTTY services.
> I have come to the following conclusions:
>
> -People really want OTT services that offer VOD and low advertising
> interruptions.
Agreed; we are moving from "What You See Is What They Want" to What You Want Is
What You See. Just for fun I am sending in a separate message a column I wrote
for Videography in July of 1992 - WYWIWYS
> -People are willing to pay big dollars for their media consumption.
According to the bureau of labor statistics, the average consumer unit (home)
spent more than $2,500 on entertainment in 2011.
> -Media conglomerates only see one way to generate sufficient income and that
> is through linear channels delivered through an MVPD, with lots of
> advertising.
I disagree. This is typically the first use case for any program content. But
the media industry operates like a waterfall. The first use does not even cover
the cost of most programs. Downstream there are many vehicles to generate
additional revenues; premium channels and VOD, Packaged media, Netflix, Hulu
Plus, U.S. and International program syndication, etc.
It is the ability to collect subscriber fees - in addition to advertising
revenue - that has changed the media landscape; and this has been made possible
by requiring MVPD subscriptions to access most high value TV content.
> -Media conglomerates cannot figure out a way to capitalize their programming
> except through MVPD subscriptions.
Not true - see above.
> -Media conglomerates do not want capitalism to make changes to their industry
Agreed. They want to be the choke point, requiring all content creators to work
through them to make a living.
> -Media conglomerates and MVPDs look to government controls to keep their
> industry paradigms, and thus, not have to look to future paradigms for their
> income.
Close. They look to government to help them control the future paradigms.
> -MVPDs are stuck between trying to provide the services their customers want
> while satisfying the appetite of their product suppliers.
They are partners in crime, working together to control access to the content
they create and distribute.
> Do you think my conclusions are off? And will government prop up the old
> paradigms or let capitalism do it's work?
Your conclusions are mostly on the mark. One need only look at the TV auctions
to take place next year, and the background of the nominee for FCC Chairman, to
understand that both the government and the media are focused on controlling
the transition to new paradigms, and limiting the impact of disintermediation
(i.e. capitalism), to bypass this government/oligopoly partnership.
Regards
Craig
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