[opendtv] Re: "The TV model is broken," says ISP that stopped offering pay-TV

From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
Date: Mon, 6 Oct 2014 08:16:01 -0400
> On Oct 5, 2014, at 7:59 PM, Manfredi, Albert E <albert.e.manfredi@xxxxxxxxxx> 
> wrote:
> After the Comcast article on NYT, replete with industry players only looking 
> out for ways to maximize their own self-interests (sort of like much in 
> politics these days: who are the good guys??), this article finally shows the 
> way ahead. Craig should be paying attention.

I'm always paying attention BERT.

There are no good guys. The Ars Technical article has it exactly right:

> "We’re telling you this because cable subscribers often ask why they can’t 
> just buy the 12 or 15 channels they want, instead of a large bundle that 
> includes dozens of networks they never watch," Cedar Falls marketing manager 
> Betty Zeman wrote in a message to customers. "The answer is that bundling is 
> created and enforced not by distributors like CFU, but by the handful of huge 
> companies that own 90 percent of the channels you’ll find on any cable or 
> satellite TV service."
> 

As the article points out, for small and even a few mid sized operators, the 
margins for offering the TV bundle are very thin. It is easy to understand why 
a tiny operation with 400 TV subscribers would drop TV and focus on broadband. 
Those customers have at least two DBS options, and soon those 400 customers 
will be able to buy the bundle from an Internet MVPD.

The article does not show the way ahead. It simply shows that small MVPD 
players will either get out of the business or they will be acquired. It is 
worth noting that it is entirely feasible that facilities based MVPDs could all 
go away, with Internet MVPDs taking over the TV customers. Bert may look at 
this and say, "I was right!"

But he would still be wrong, as the content congloms would still be dealing 
with a few big Internet MVPDs, all still requiring subscription to "the bundle."

> 
> While reading the NYT Comcast article posted by Monty just before this one, 
> with all the hand-wringing about how programming costs are going up and up, 
> and how Comcast has to pay these back to greedy content owners and has to ask 
> more and more of its subscribers, and how Comcast was indignant when Netflix 
> didn't kiss their feet, I thought, either all these players are disingenuous, 
> or they have gone completely daft.

No they are running a lucrative oligopoly, and it becomes ever easier as the 
distribution oligopoly consolidates.
> 
> Luckily, this arstechnica article shows how sanity is restored. The answer 
> has always been obvious, but it is heartening that we don't have to depend on 
> the historically spineless (older generation) consumer now, even the service 
> providers are doing what Economics 101 teaches. At last.

Yup! Economics 101 teaches that weak competitors do not survive. And that 
monopolies that are protected and allowed to prevent market forces from working 
get bigger.
> 
> In case this hasn't been discussed enough here already, here's the sequence 
> of events, Craig. At least some of the ISP/MVPDs can't afford the 
> continuously rising programming costs of their walled garden old school 
> broadcast TV channels. Why? Because the content owners keep asking for 
> sweeter deals, while a "significant enough" percentage of subscribers say 
> "enough." So, these same MVPD/ISPs drop some or all of their MVPD business 
> model channels. From what the article says, this small MVPD/ISP may be doing 
> so anticipating much higher costs, rather than just waiting for its 
> subscribers for force the issue.

The content congloms always win this game BERT. Eventually the MVPD caves and 
raises rates. Truth is that this is just a game the content congloms and the 
MVPDs play. They take away a few channels, allowing the MVPD to look like it is 
trying to protect the subscribers, then the MVPD agrees to the increase. Next 
year the rates go up... Again.
> 
> Good deal for consumers. And thank goodness that giants like Comcast have not 
> yet swallowed up all of this smaller competition. Because now the content 
> owners are faced with having to deal with the new realities. How to stay 
> afloat in a market NOT dominated by walled garden anti-competitive 
> distribution pipes? The answer of course is obvious. Content owners go direct 
> to consumers, over neutral ISP pipes that have FINALLY made themselves 
> invulnerable to the demands of content owners. This also encourages the ISPs 
> to remain neutral, so that they can concentrate on selling different grades 
> of premium high speed service to subscribers, without having to get involved 
> in any negotiation with any owners of content. You let the consumers fuss 
> with that part. And content creators have to create valuable content, not 
> content which is only fodder for some MVPD bundle, allowing the owner to make 
> excuses for asking high monthly rates.

Not gonna happen. The real value is in making everyone pay a little for 
everything. The alternative is to allow people to buy the channels they want. 
Could happen, but it'll cost you more!

Why. Because the content owners will raise the channel prices to get the same 
revenues from the customers willing to pay. The industry has been saying this 
for years. 
> 
> Amazing how anyone can pretend that so-called "TV Everywhere" is an 
> interesting model, for the consumer. What this article describes is 
> infinitely more interesting, especially because it has started happening.

It IS an interesting model for consumers that pay for the bundle Bert. 

Obviously it is not interesting to you, but you are a cord never.


Regards
Craig
References:
- [opendtv] Re: "The TV model is broken," says ISP that stopped offering pay-TV
  - From: Manfredi, Albert E
[opendtv] Re: "The TV model is broken," says ISP that stopped offering pay-TV

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