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

  • From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
  • To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
  • Date: Mon, 3 Feb 2014 09:13:55 -0500

On Feb 2, 2014, at 7:54 PM, "Manfredi, Albert E" <albert.e.manfredi@xxxxxxxxxx> 
> Totally different issue. The cost of individual content, and whether or not 
> the content owners stick with the now-archaic MVPD model, are two entirely 
> different discussions, Craig. As is also the ultimate cost to the consumer.

Sorry Bert, but these issues are directly coupled. The MVPD bundling model 
allow the congloms to regularly increase the revenues of the second subscriber 
fee revenue stream for ALL of their channels in the bundle. ESPN is "the club" 
that Disney uses to control subscriber fee negotiations, and it always gets a 
sizable increase with each new contract. But the ABC O&O's, ABC Family, Soap 
Net and the rest of the Disney channels come along for the ride, all getting 
increases as well.

> Once again, it stretches credulity to think that the content owners would 
> insist on the same assortment of program choices that the MVPD tiers offer 
> now, when they can control their own Internet-based distribution (either from 
> their own site, or a proxy of their choosing). So it's only a matter of time 
> when the content owners will figure out models more lucrative to them. 
> Viacom, for instance, couldn't care less whether more people are forced to 
> pay for ESPN. They want more people forced to pay for CBS content, not ABC 
> content.

It stretches credulity to see that you still do not understand why the congloms 
prop up the MVPD  bundles. This despite the fact that articles like the one 
that started this thread provide compelling arguments, both for the reasons why 
the congloms like the current arrangement, AND why they are using it to 
leverage their way into control of Internet distribution.

You are wrong about Viacom. They fully understand that ALL of their "crops" 
grow better and produce more revenue inside the walled gardens. If subscriber 
fees go up for Disney, Viacom uses this fact to demand the same for their 
channels. Without the bundle, or to be more precise, in a real marketplace 
where viewers could select channels ala carte, the most popular 
channels/programs would still do well, but the rest would lose most, if not 
all, of the revenues from subscriber fees. 

> Already not the case, Craig. The MVPD subscription is an interim step, and 
> even then, the congloms are offering some of their stuff on non-MVPD sites 
> **ALREADY**. Hulu Plus, Amazon, Netflix. You have to catch up with the times, 
> Craig.

MVPD subscriptions are a cash cow, not an interim step, at least until the Feds 
bust the oligopolies, or consumers can no longer afford their entertainment 
fixes. Every service you list above is running on retreads; content already 
offered either in the clear ( like broadcast TV programming), or content that 
has enjoyed its run on premium services. These "middlemen" are just part of the 
content life cycle, as programs move into global distribution.

> More middlemen raise the price to the consumer and encourage cord cutting. 
> Only the hopeless addicts are certainty, Craig. So more middlemen can only 
> mean that the content owners have to lower their price, or that they will 
> lose viewership. They can't be stubborn-stupid enough to not know this.

The content industries have ALWAYS milked their programs for every possible 
nickel of revenue as programs move from first run into global syndication. 
There is nothing new here; the "trucks" transporting the programs to the 
viewers continue to evolve. More middlemen mean more opportunities to license 
retread content, and more revenues to the congloms.

> As does the younger generation. These things happen gradually, in degrees, 
> not as a big binary function, Craig. Hopeless addicts may still be counted 
> upon to prop up the MVPD model, but the declining subscriptions to HBO and 
> other premium MVPD channels are something that only you can ignore.


Was the publishing industry not transformed by the Internet in less than a 
decade? Craig's list and other "classified ad services," drove a stake through 
the hearts of local newspapers.

Was the music business not transformed by the Internet in less than a decade? 

The list goes on and on. But for some reason the same has not happened to the 
movie and TV businesses. Why?

These industries are too valuable to the politicians, who have enabled the 
content and distribution oligopolies. They are now enabling them to use the 
Internet to continue this domination.

>> HBO does not compete with Netflix,
> Ridiculous. Of course they do, Craig. People buy HBO to watch movies. Maybe 
> there are SOME addicts to HBO-unique shows, but the majority simply want to 
> have movies to watch anytime.

This was true in the 90s, but not today; HBO stayed relevant because of 
original programming. And as I said, the Netflix streaming service sucks if you 
want to watch movies.

> Again, you have to understand that these things are gradual, not binary 
> functions. If HBO is declining, and Netflix is increasing sharply, you can 
> bet the congloms are not oblivious to this trend as you seem to be.
The congloms are laughing all the way to the bank.

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