[opendtv] Re: News: The death of Cable TV

  • From: Craig Birkmaier <craig@xxxxxxxxx>
  • To: opendtv@xxxxxxxxxxxxx
  • Date: Mon, 1 Nov 2010 08:04:11 -0400

At 7:37 PM -0500 10/31/10, Manfredi, Albert E wrote:
Maybe. Having so many people dependent of the umbillical certainly does bring that risk with it. Whatever the details are, my bet is that the unpopular programming would become a lot lower quality with a la carte, assuming it survives at all, because they would no longer benefit from the subcription fee marxism they enjoy now.

The original use of subscriber fees was to fund cable programming when the medium was just getting started and unable to collect enough ad revenue to cover the cost of the programming. For example, Turner lost money for years with CNN.

But that was then. Cble networks now have little problem attracting as revenue, ESPECIALLY the niche networks that draw smaller audiences; audiences with a tight focus on a particular activity AND the stuff you need for that activity. So a fishing channel is a MUCH BETTER place for a small company that sells lures and other fishing tackle than say USA Networks.

Another factor that is overlooked is that much of this niche programming is now subsidized by advertisers in return for product placement and even more overt advertorial. The Home Depot,Lowes, Dewalt and other construction equipment vendors sponsor many of the programs on HGTV. Most of the fishing shows are sponsored; dittos for performance car products on Speed.

And it is important to note that most of this programming is NOT expensive to produce. Actual production costs per half hour can be less than $20,000. The large cost is often the products that are used/given away in the program, as when an HGTV show remodels a kitchen or landscapes a yard.

So this niche programming is not in danger.

Here's an article that explains how everything would "change" with Internet distribution. As far as the article's explanation goes, the role of the MVPD will disappear and Internet TV aggregation sites will take over that role. Not a big difference for consumers, if you ask me. Just look at how Hulu is planning to operate, for example.

Yup... Just cut out the middlemen.

Not so fast. The MVPD-morphed-into-just-ISP may just reinvent itself as an IP delivery MVPD. For Internet delivery, EVERYONE has to depend on the ISPs. Why won't they play exactly the same subscription fee games they are playing now, bundles and all? If you take into account the large investments ISPs will have to make, to deliver TV quality programming on that large scale, I would not be a bit surprised to see this re-happening.

I seriously doubt that they MVPDs will be able to get in the middle of Internet portal transactions. That's one of the major reasons the congloms are moving to build these portals. The MVPDs will simply become big pipes and compete to provide ISP service.

And it will not cost the MVPDs much to upgrade their systems to carry this traffic, as most of the infrastructure is already there. They have a huge chunk of bandwidth that can easily be dedicated to switched digital services - the existing analog tiers. All that is needed is to add some switching in the neighborhoods and they will be able to deliver up to 50 Mbps to each home.

PERHAPS they will be able to offer a premium ISP service with guaranteed delivery versus the chaotic ISP quality they offer today. But this will be a tough battle with the proponents of "Net neutrality."

That's what will keep OTA delivery unique. No dependency on the two-way umbillical. No problem with multiple distribution pipes sharing the same real estate. In theory, wireless broadband could compete in this. In practice, people won't be able to afford multiple wireless broadband providers.

Sorry Bert, but there is no way a broadcast service can compete with an over-the-top service that offers tons of programming on demand. Broadcast's future is in delivering real time and cached services to devices that move.


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