[opendtv] Re: The rationale for retrans consent from local broadcasters

  • From: Craig Birkmaier <brewmastercraig@xxxxxxxxxx>
  • To: opendtv@xxxxxxxxxxxxx
  • Date: Sat, 10 Oct 2015 23:58:49 -0400


On Oct 10, 2015, at 7:47 PM, Albert Manfredi <albert.e.manfredi@xxxxxxxxxx>
wrote:

Ondigital went under just as USDTV did.

Pay attention. OnDigital paid too much for a sports package and went bankrupt.
The service was doing just fine, attracting a significant number of subscribers
across the UK. USDTV struggled to get subscribers.

But the US OTA option is very much like Freeview, in fact.

Not even close.

You get about 30% of what people watch in the U.S. They get 90%.

I wrote:

What Bert is missing completely is that U.S. broadcasters had the
opportunity
to compete with the rapidly growing cable industry in the early '90s rather
than choosing to join, then take over the MVPD industry using retransmission
consent

No way, in short. What Craig fails to understand is that in the era of
one-way-broadcast only, if you're going to dive into the by-subscription-TV
model, a handful of extra channels only simply don't cut it. Not long term.
That's what makes this OTT era so different. The new option offers far more
choice than the incumbents, not less, and the content is from competitive
outlets, available to everyone.

Sorry. The difference is that the broadcast industry in the UK chose to compete
with the MVPDs. As a result they have 50% of the market. In the U.S. The
broadcasters chose to take over the MVPDs to feast on two revenue streams.

As for your OTT competition, there is less choice. You cannot get most of what
the MVPDs offer without paying for a Slimmed down MVPD service. The choice you
are claiming is mostly on demand access to library content. And that stuff is
not free either; it is just a new form of bundling.

IMAGINE what could have happened if U.S. Broadcasters had decided to
withhold
their content from the cable industry and developed/purchased all the
channels
they now own - i.e. 90% of what we watch in the U.S.

First point: *If* station groups had had the option of growing to nationwide
footprint, *maybe* these would have been big enough to afford to buy a
conglom.

Station groups have nothing to do with it. The broadcast networks could have
worked with their affiliates and independent stations to offer 30 or more
channels FOTA; or they could have created an affordable paid tier. Instead of
content hardly anyone watches, these channels could have been filled with the
content they created to drive up the cost of MVPD service.

Second point: *If* six station groups, or whatever relatively small number,
had each bought a conglom, *then* we'd be right back where we are now.
Imagine *that*, Craig.

Huh?

If broadcasters had chosen to compete instead of taking over the MVPDs things
would be much different as I already explained. Water over the dam.

Do you honestly expect the Internet to change the tactics the media
conglomerates have used to maximize their profits?

It already has changed their tactics, Craig. Just as the article from many
moons ago explained.

Sorry, nothing has changed. The congloms are more profitable than ever, and
firmly in control.

Your vague words don't convince, Craig. OTA broadcast would always be at a
disadvantage compared with cable broadcast, simply because each OTA market
gets less spectrum than what a walled-in cable system can use.

In 1992 most cable systems has about 30 channels. The glut of rerun channels
did not exist, nor did many of the successful MVPD channels the broadcast
networks created.

There is no reason we could not have developed a system as capable as Freeview.

To become competitive, the infrastructure cost for OTA would have become too
expensive for FOTA service.

Bull.

It would have required, for example, a switch to a 2-way cellular system.
Then yes, absolutely, the broadcasters could have pooled their resources and
created a better by-subscription MVPD. But as long as they stay with
broadcast-only, the spectrum disadvantage cannot be ignored. We've been over
all of this many many times. Your vague words don't convince, because they
have no technical backing. They're just words.

Just words Bert. They had enough spectrum to do it 1992. They did not need
anything better than DVB-T.

Stuck in the past. You're going to see a migration to OTT services, Craig.
With the MVPDs morphing into OTT sites. The MVPDs won't just cut prices. That
would just drive them under. They have to reinvent themselves.

I agree that we are going to see new Virtual MVPD services. And the existing
MVPDs will migrate to IP delivery. Actually they are already using the Internet
to stay competitive - it's called TV Everywhere.

The existing MVPDs have plenty of room to cut prices. They are no longer
dependent on only one revenue stream from TV service. They will even make money
enabling the Virtual MVPDs.



Your stats only support a snapshot in time. As of this instant in time, many
are still connected to broadcast-only distribution media, and few have
streaming access to their big screens.

Really

You've been telling us that more than half of all TV viewing is over the
Internet. That's clearly not true, nor is it true that the legacy MVPDs are
broadcast only. TV Everywhere give the legacy MVPDs everything the Internet
offers to new competitors.

So sure, in this instant in time, when asked, they still use what they have
installed. So what? When people use their mobile devices to watch TV content,
the vast majority are already watching on demand. It should be obvious that
when their big screen is connected for easy online content retrieval, that's
what will get used.

They watch on demand because most of the live streams are not available OTT. ..
Yet.

But that is changing with TV Everywhere - the stats show major growth as
consumers become familiar with the new services, and more MVPD networks get on
board.

Luddite old timers are slow to change, no matter what the subject matter. But
this is where TV is headed. The stats prove THAT, big time. In the US, the
MAJORITY of TV content is already being watched on demand, and whether you
like it or not, the fraction of this on demand viewing is rapidly going to
online. If DVRs are still used a lot, it's simply because THESE FACILITIES
HAVE ALREADY EXISTED. They are in place today. In time, rapidly, the trends
are too obvious to miss.

Sorry but you are wrong. I have provided numerous stats that say more than half
of all TV is viewed live, and most on demand viewing is via the recording of
live streams on DVRs.

I've TV is not going away.

Social networking is keeping people, especially Millennials, connected to
live
linear TV.

You even forgot this part. Social networks also work with on demand viewing.
The linear TV aspect is ONLY BECAUSE IT'S ALREADY THERE. Not because it's
preferred.

Sorry. Wrong again. A significant share of the audience likes to watch the live
premieres, and then there is sports, news, and other shows that still attract
large audiences.

Many reasons. For one, the competition only succeeds if it makes its price
attractive. Meaning, lower than ESPN. For another, the competition might
offer more focused packages than the ESPN choice, so people with particular
interests only buy what they really want, rather than the whole enchilada. So
ESPN has to respond to this, Craig.

They just need to keep doing what they are doing, with an eye to the reality
that they cannot keep raising prices as fast as they have in the past.
There is no downward pressure on their prices.


That's basic Economics 101.

Not applicable here.

And sure, the hopeless addicts continue to pay more. But the stats show that
many who were previously forced to pay ARE NOT the hopeless addicts you think
they are, so they have been bailing out. Trend lines, Craig. Not just
snapshots in time.

Show me the money Bert.

The new competitors are trying to buy their way into the business, which makes
the congloms even more profitable.

Regards
Craig


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