[opendtv] Re: Sony To Take Viacom Over-The-Top | Multichannel

  • From: "Manfredi, Albert E" <albert.e.manfredi@xxxxxxxxxx>
  • To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
  • Date: Sun, 21 Sep 2014 22:55:50 +0000

Craig Birkmaier wrote:

> Yes cord cutters exist Bert. Nobody is claiming otherwise.
> There are several important questions to ask with respect this
> phenomenon.
> 1. Why are they cutting the cord?

Because the value proposition of the cord is degraded, with the Internet 
offerings, supplemented by OTA TV for live TV and news.

> 2. Are there enough cord cutters to undermine the financial
> underpinnings of the MVPD business model?

John Skipper seems to think so. It's a little absurd to ask when 50 percent 
have cut the cord. Only a business fool would hang on and make no changes, 
until 50 percent of his business has vanished. Like I said, the first 
derivative is all that really matters here. According to that recent article I 
posted, the prediction by its authors was 78 percent use of MVPD subscriptions, 
by 2019. That's more than enough for the congloms and other content owners to 
be evaluating and testing new distribution options. (I'm sure I've already said 
all of that. You counter as if there were no erosion in MVPD subscriptions.) 

> 3. Are there any signs that the practice of tying high value
> content to the bundle is changing?

Yes, certainly. I picked two long-term MVPD exclusives to prove that point, 
with more than one article, in recent times: HBO and ESPN. The reason I picked 
those two is, if these guys are considering their future options, everyone else 
tied to MVPD distribution is almost certainly doing likewise. You seem to dance 
around this, but at least you have finally come to accept that ESPN viewership 
has declined.

> But more important, the availability of content from the bundle
> via IP streaming is the first step in an inevitable transition
> for the MVPDs.

It goes way beyond that, Craig. It goes way beyond "the bundle." **When you 
have more options** for competing solutions, consumers will demand different 
solutions from the solution they were forced into, during analog MVPD broadcast 
times. So smart congloms and smart Internet entrepreneurs will offer people 
what they actually want, and the laggards will lose out. That's the way 
competition works.

> Unlike ESPN, HBO is the victim of rapidly evolving technology.

I'd say, 50 percent success. It took some doing to have you see how HBO is 
changing its business model, and now you'll simply have to wait for John 
Skipper to convince you that he means what he says.

> As I have said repeatedly. Please let me know when less than
> 50% of U.S. Homes subscribe to an MVPD service.

Ah, yes, the absurd question. That's where I remembered it from.


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