[opendtv] Re: TV is increasingly for old people

  • From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
  • To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
  • Date: Fri, 12 Sep 2014 08:52:57 -0400

On Sep 11, 2014, at 7:48 PM, "Manfredi, Albert E" 
<albert.e.manfredi@xxxxxxxxxx> wrote:
> Craig Birkmaier wrote:
>> What is important to understand in all of this is that NOTHING HAS CHANGED
>> with respect to the monetization of entertainment content except for the
>> number of middlemen willing to get into the game.
> Not "willing to get in the game," but rather that can get in the game and 
> provide added value. As these new players get into the game, the old players 
> either have to reinvent themselves, or they risk becoming irrelevant. A LOT 
> has changed.

The nature of entertainment has been evolving for centuries. Before "mechanical 
reproduction," all entertainment was live. From street players, the Globe 
Theater, opera houses, and the piano player in a saloon, we have seen 
entertainment evolve with technology. The player piano started us down a new 
path where mechanical reproduction changed the face of copyrights and placed 
politicians and the Creative Commons in the public square. 

We have evolved through waves of technology that have enabled the film and 
music industries, radio and TV broadcasting, the consumer electronics industry 
the computer industry. And we have seen networking grow from the telephone to 
the Internet.

The common thread through all of this has been the Constitutional protection of 
copyrights and a cozy relationship between the politicians and "big media," 
that has allowed a small number of companies to control a large percentage of 
the entertainment economy. 

As technology enables new distribution opportunities, the content conglomerates 
react in predictable ways:

1. Run to the courts and the politicians to proclaim the technology a threat.

The classic example is the famous Jack Valenti quote:
"I say to you that the VCR is to the American film producer and the American 
public as the Boston strangler is to the woman home alone."

2. Seek legal protections that secure copyright and provide a degree of control 
over the technology.

3. Embrace the technology and develop new channels of distribution (and new 
middlemen), to increase the economic benefit to the content owners.

4. Manage the evolution of the technology and it's applications to migrate 
"franchises" that are disintermediated to the new technology. For example:

Radio comedy and drama to episodic TV 


Broadcast TV to cable and DBS to Internet content portals

VCR to DVD to OTT streaming

Yes a lot has changed. AND a lot remains the same. 

>> The Internet is not a threat to pay TV.
> The Internet is a threat to old pay TV models. I've already said a ton of 
> times that the Internet can offer both pay and ad-supported TV models. But 
> what makes the difference is, there is a lot more competition among portals, 
> even pay portals, when using the Internet. This competition was almost 
> totally absent in the days of walled garden MVPDs. So, EVEN the pay TV models 
> have to compete among themselves, more so than the one local cable company 
> competing against DBS.

Not as much as you suggest. The number of homes that have dropped cable or DBS 
service has not dropped significantly. And these services are migrating their 
business models to the Internet and using the Internet to extend the perceived 
value of of the content bundle.

Ironically, new services like Netflix are growing because consumers are willing 
to PAY MORE for the benefits of having both an MVPD service and a VOD service. 

There is nothing new here. Consumers embraced both the VCR AND MVPDs in the 
'80s. This led to the corner video rental store and Blockbusters. The DVD 
brought near HDTV quality movies into the home and begat Netflix (mail 
service). Netflix evolved and Blockbuster died. 

I won't bore you with the parallels in the music industry, which also continues 
to evolve to the detriment of radio broadcasters. I'll just note that the music 
congloms waited too long to take control of Internet distribution and lost 
their lucrative ability to bundle music. The movie/TV congloms did not make the 
same mistake. 

So now we see them permitting "one of their own," Sony, to create an Internet 
MVPD, to deliver THE BUNDLE.

>> "The question now is how the most valuable companies in traditional 
>> television will respond. ESPN, which is slowly putting some of its content 
>> online, hopes millennials will eventually see the value in paying for their 
>> sports programming."
> Did you get the "eventually"? The paragraph does NOT say that ESPN is only 
> available for an extra fee (besides the ads).

I GOT IT Bert. Apparently you still don't.

If you want the content ESPN controls you pay for it. Most of their content is 
ALREADY available via the Internet, IF you pay for the bundle. 

The "eventually" part refers to the Millennials being ABLE to pay for ESPN. 
Today they are using the authentication credentials of their parents or a 

And ESPN has shown no sign that they are willing to offer their content WITHOUT 
subscribing to the bundle; no surprise here, as they are the lynchpin of the 

> What I read is, ESPN is looking beyond the dependency on that single tethered 
> medium to reach viewers, and they are acknowledging that it ain't so easy to 
> create addicts these days, as it used to be. The millenials just aren't 
> feeling compelled, because they don't see the monopolistic tether as their 
> only possible avenue. So, ESPN is evidently trying to lure them in with 
> ad-supported material, over the unwalled Internet. Used to be, people would 
> beg the cable truck to stop by, to hook them up real quick. Times have 
> changed. Don't live in the past, Craig.


ESPN IS NOT offering their TV content to anyone via any distribution media 
unless you subscribe to the bundle ( or use the authorization credentials of 
someone who does). They do have a radio service that is available free via the 
Internet and via radio broadcasters, and their web portal where you can watch 
some video highlights for free.

Millennials have given up on appointment TV. What they want is what they see. 
The demographics for appointment TV are aging and dying.

The obvious solution, for channels that "schedule" pre produced content, is to 
shift from the appointment model to the VOD model. Instead of watching what is 
on Discovery right now, you access the Discovery Channel portal, choose from 
their library, and watch on demand. This can work for the channels in "the 
bundle," as they shift to Internet distribution, but local TV broadcasters are 

Appointment TV is dying except for live events, and these are migrating to 
mobile too.

> And what could be wrong with that? It's one way to reduce the 
> disproportionate incomes these pro athletes make, just as it will regulate 
> the incomes of TV actors.

Dream on Bert. Rights fees keep increasing, even as new technologies and 
companies  help expand our choices for viewing TV content. 

Advertising is now the problem, as consumers move to pay services without the 
ads. Live TV will still be filled with ads, but even here you can use a DVR to 
avoid them. Ad dollars will move to the technologies that add value. Targets 
ads are already a major feature of the Internet. As we move to Internet TV 
distribution you can expect to see this trend expand.

Who knows, you may even start getting ad free content as an incentive if an 
advertiser can get you to buy something. There are MANY ways to monetize 

Amazon is certainly "primed" for this.


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