[opendtv] Re: Punching Above Its Weight, Upstart Netflix Pokes at HBO - NYTimes.com

  • From: "Manfredi, Albert E" <albert.e.manfredi@xxxxxxxxxx>
  • To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
  • Date: Thu, 20 Feb 2014 21:23:26 +0000

Craig Birkmaier wrote:

> The MVPDs already ARE  the primary distributors of OTT TV services
> OUTSIDE their walled gardens.

Which makes one wonder why the pundits don't seem to get this. E.g, that recent 
article that made a big deal of TWC maybe offering Netflix.

> and you need a MVPD subscription to use many of the best OTT services.

No, all you need is a double play (or single play?) package, Internet and 
telephone, say. I don't consider that to be an MVPD subscription, because you 
aren't getting their traditional MVPD TV channel offerings.

> In essence, their broadcast affiliates get the first showing of a program,
> then it moves immediately to iTunes, and Hulu Plus. A few days later it
> moves to their portals, Hulu, and other free sites.

Depends. A few networks got greedy that way, but others not yet. A couple of 
years ago, Fox began the practice of delaying the show on fox.com by 8 days. I 
think ABC is doing something similar, starting this fall season. Mostly, I 
watch prime time shows from CBS. They post the show on cbs.com only hours after 
it aired OTA. Of course, delaying by a week is a losing proposition for anyone 
using the online show for catch-up. For those like me, who use the online for 
virtually all prime time shows, it makes no difference. This is not 
time-sensitive material, after all.

> In 2005, incoming AT&T CEO Ed Whitacre famously remarked that upstarts like
> Google would like to "use my pipes free, but I ain't going to let them do
> that because we have spent this capital and we have to have a return on
> it."

Fair enough, if these prices for bandwidth are set the same for everyone. The 
problem happens only if the MVPD/ISP arbitrarily block OTT services that they 
think are competing against their own MVPD broadcast tier offerings. The FCC 
could step in there, classifying Internet access as a telco service and force 
neutrality that way. So the MVPD/ISPs would be plaing that game at their own 

> If a conglom like Viacom decides to create a comparable bundle of their
> channels, will they make as much money as they do today when you add
> together the ad revenues and subscriber fee revenues for these
> channels?

The same? No, more. For people who mostly watch CBS content, for example, 
Viacom could come out ahead if OTT sites offer bundles that emphasize their 
content. They increase the percentage of views of their content, and reduce the 
views of other networks. Of course, the other networks will retaliate with 
their own bundles. The end result will be more finely tuned bundles and more of 
a win for the better networks.

> And there will be a fraction of the existing audience willing to pay for
> the Viacom bundle, compared to the huge MVPD audience where everyone
> pays for every channel.

You mean, the huge but dwindling audience? All you need for this to happen is 
for the CE vendors to quit colluding with MVPDs and content owners, and finally 
sell some intelligently designed connected TV appliances. That's it. No need 
for any begging hat in hand, no need for under the table "agreements," no need 
for any funny business. Nor would there be any risk of any law suits.


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