[opendtv] Re: Internet pay-TV is coming. Will you care?

  • From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
  • To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
  • Date: Sat, 1 Feb 2014 23:14:40 -0500

> On Feb 1, 2014, at 7:02 PM, Albert Manfredi <albert.e.manfredi@xxxxxxxxxx> 
> wrote:
> Wow, how do you keep getting this backwards? The article simply confirms what 
> I've been saying forever. Which is, the congloms are NOT held to the MVPD 
> model as you think they are, and will use Internet distribution in whatever 
> way that will ultimately benefit THEM.

NO BERT. The article said:

> One thing that Internet-based TV likely won't be -- at least at first -- is 
> cheaper than what you can get from the current distributors, such as cable 
> and satellite companies. Content costs are on the rise for all providers.

It went on to point out that entrenched MVPDs like Comcast already enjoy a cost 
advantage over newer competitors like Verizon and AT&T, and that new OTT 
services would likely pay more. 

You are correct in asserting that the congloms will use the Internet in ways 
that will ultimately benefit them. You are WRONG to believe that they will let 
new Internet based competitors undermine the MVPD model; the article explained 
in detail why. The fact is that they are using the Internet to STRENGTHEN the 
MVPD model, by requiring a MVPD subscription to view TV Everywhere. 

> And why on earth would they want more middlemen? That only takes money away 
> from the conglom. This is obvious, Craig. The only middlemen they will use 
> are those that add value to their cause.

More middlemen do not take a dime away from the congloms. Worst case the 
eyeballs willing to pay for a MVPD service are just distributed among more 
middlemen. The article suggested that the new middlemen will pay MORE for the 
same content than established MVPD services. 

That means the congloms make more Bert. not less.

And every dime they get from Netflix, Apple, Hulu, Google and Amazon is "over 
the top" so to speak. More revenue from more middlemen. With 34 million 
subscribers, Netflix adds to the monthly bill for many MVPD subscribers, as is 
the case for our home. The number of homes that DO NOT subscribe to a MVPD 
service is less than 34 million. Obviously many U.S. Homes subscribe to both. 
Do you think that every home that relies on FOTA TV service can afford a high 
speed broadband service AND a Netflix subscription?

Obviously Hulu, Netflix and the broadcast network sites "add value to their 
cause." What these sites DO NOT do is undermine the value of a MVPD service. 
Obviously, YOU can watch the broadcast network programs when they air on your 
local stations - the network OTT sites and Hulu generate additional views of 
their programs, not only from the MVPD never's and cord cutters, but from MVPD 
subscribers too. More revenue for the congloms from more middlemen.

> As I've said countless times, Internet TV can be ad-supported or 
> subscription-supported. It already is, in fact, and it needs no old-time MVPD 
> for any of this. Once again, I watch pay-Internet TV from Amazon, not an 
> MVPD. I watch FOTI TV from the congloms' own portals, or from third part 
> portals like wwitv.com, not MVPDs, not even local broadcasters. (And I watch 
> live TV from local broadcasters, not MVPDs.)

And you choose NOT to watch a huge amount of content that is ONLY available 
from a MVPD.

Nobody is questioning whether the Internet can deliver both ad supported and 
pay services. The question this article addressed is "what will you pay?"

The bottom line is that the congloms are NOT going to allow a new service to 
undermine the MVPD services, and initially you will pay more for an Internet 
based MVPD. AND you will also pay for a high speed broadband service as well; a 
service likely owned and operated by an existing MVPD service provider. 

> None of these are walled gardens, contrary to what you claim. Why? Because my 
> ISP gives me access to any number of TV portals, free or for pay. This is 
> nothing like the old model, where the TV distribution network hardware tied 
> one to a specific choice of content and specific fee structure.

And none of these services offer the most valuable content delivered by the 
walled garden MVPD services. The article concludes that any OTT service that 
licenses and delivers the content that is only available via a MVPD will be 
MORE expensive than the entrenched MVPD services. Just another new walled 

> Okay, let me repeat this:
> This is nothing like the old model, where the TV distribution network 
> hardware tied one to a specific choice of content and specific fee structure. 
> The content owners aren't so stupid that they don't get this, Craig.

It is EXACTLY like the old model. Another MVPD service using a new 

This is no different than two decades ago, when DBS made it possible to deliver 
a MVPD service via a satellite dish. The increased "competition" has actually 
helped the congloms make MORE money. From the article:

> Content costs are on the rise for all providers. According to SNL Kagan, the 
> top three public cable operators -- Comcast, Time Warner Cable, and Charter 
> -- saw their programming costs grow at about six times the pace of video 
> revenues between 2008 and 2012. And cable operators, as the distributors with 
> the longest negotiating history in the industry, have lower rates than newer 
> entrants like Verizon Fios and AT&T U-verse.

> I agree only with the first sentence. We don't know yet where "net 
> neutrality" is heading. However I know for a fact that my ISP is not 
> preventing me from finding any upstart TV portal, or other content source on 
> the Internet, as quickly as these upstarts show up.

Your ISP is currently irrelevant, although things could change in some of the 
worst case scenarios for what the end of net neutrality could mean. 

Short of borrowing someone's MVPD username and password, you cannot access 
Walled Garden content via ANY ISP. Your unwillingness to pay for a MVPD service 
is what is preventing you from accessing this content, not the ISP.

> HBO needs to compete against Netflix, Craig. They would be stubbornly-stupid 
> if they attempted to do so by adding more middlemen than they needed. So, 
> they had better break away from archaic distribution models, and compete with 
> new technology. Yes, as you say, like Amazon has done wrt other retail models.

HBO does not compete with Netflix, nor do they license their exclusive content 
to Netflix or any other OTT service. 

The movie selection on the Netflix streaming service SUCKS.

HBO gets new movies after DVD release, but well ahead of other services. The 
Netflix DVD service may offer movies before HBO, but they don't make it to the 
streaming service until well after HBO has run them. 

There are many ways to see recent movies; HBO stopped relying on movies to 
attract subscribers a long time ago. They kept the service viable by producing 
their own exclusive content...

From the Sopranos to Game of Thrones, HBO has leveraged the fact that they are 
owned by a conglom that produces content to stay relevant. They also have 
exclusive sporting events and concerts. None of this is licensed to Netflix or 
other Internet services.

The only question is whether the HBO channels are worth an extra $10 a month on 
your bill; apparently people are finding other options. 

And then there is HBO GO. Subscribe to HBO via your MVPD, and you can take it 

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