[opendtv] Re: U.S. NEEDS A CLEAR PICTURE OF WIRELESS
- From: "Manfredi, Albert E" <albert.e.manfredi@xxxxxxxxxx>
- To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
- Date: Fri, 15 Jan 2010 16:21:37 -0600
Craig Birkmaier wrote:
>> Actually, I think Cliff is correct too. The only reason MVPDs pay
>> for the content is that MVPDs get the bulk of ad revenues (and
>> subscriber fees), right?
>
> Wrong.
>
> Please install a permanent disconnect in your brain between
> subscriber fees and the total monthly bill for an MVPD service.
> The MVPD charges monthly fees for all kinds of things, not just
> the content. The revenue for programming tiers is shared with
> the content suppliers, since this is where "subscriber fees" for
> each channel are actually collected.
Would it help you if I said, "The only reason MVPDs pay for content is that the
money flows from subscribers and from advertizers to MVPDs (as ad revenues and
combined monthly connection fees). The money flow is not from the subscribers
and advertizers to the content owners"?
This can't so hard. The MVPDs are the ones who collect and channel the money.
And there is no reason to assume that this is the only way the money can flow.
That monthly fee charged by MVPDs has to cover a whole lot of expenses that an
OTA broadcaster doesn't have, including additional expenses that cable
companies take upon themselves, which drive up their overhead costs. Such as,
depending on their proprietary hardware to be installed in customer premises.
The sort of thing that the IETF and ISPs go to great lengths to **AVOID**. The
sort of thing the electrical, water, and sewer utilities also avoid. (When was
the last time the water company installed toilets and sinks in your house, for
example?)
> The reason the MVPDs collect these subscriber fees is to enable
> content providers to have the financial resources to pay for
> the content they carry - rights fees are very expensive for
> sports and high quality off network programming.
>
> The MVPDs do keep all of the revenues they generate from ad
> insertions into the non-broadcast networks; but these revenues
> are often "off the books" of the cable company - i.e. they have
> local advertising sales companies that control these revenues so
> that they do not impact cable franchise agreements.
I don't get that last part. If those ad revenues, mainly from just one OTA
stream, were enough to keep OTA stations going when their programs are very
expensive, how is it that the ad revenues sucked in by the MVPDs are more or
less ignored by you?
>> But ... the MVPD pays only for homes passed by THAT MVPD. Not
>> for all homes in the market. Therefore, the OTA station would
>> pay only for homes that use OTA. This would be a great model,
>> actually, in that it would benefit OTA broadcasters when the
>> MVPDs brag about how many households they have in TV markets.
>
> Bert. This cannot happen because it would undermine the
> foundation of the MVPD business model. The reason they can act
> as the collection agent for subscriber fees is that they are
> the exclusive outlet for these channels. If you take away that
> exclusivity by making it available to FOTA households, then
> there is no reason to pay for an MVPD service.
>
> I agree that it would be great for broadcasters, and that is
> exactly why it won't happen.
Wow. I almost can't believe I'm reading this. So, who exactly is it that is in
bed with MVPDs, preventing fair competition?
MVPDs always have the capacity advantage and the ease of reception advantage,
so I don't see how what I'm proposing would be a great threat to MVPDs anyway.
> The reason is that the FOTA market is finite and small. In
> order for more channels to pay for themselves you need more
> eyeballs - otherwise you are just sub-dividing the existing
> audience.
You could have used that argument also in 1950 or 1960.
What really happens when more choice is made available is that people watch
more on the whole. That spokeswoman for the Food Netwoork claimed that TV
viewing was still going up. Well, it goes up when more choice is provided. Even
if more OTA households are NOT created, the existing OTA households would watch
more TV. Simple example. When we got the ten 24-hour news stations from around
the world OTA, *I* watch more TV, because anytime day or night, I can get the
latest news FROM TV. Where perhaps before, I would have turned on the 24-hour
news station on the radio, or simply accepted the fact that I'd have to wait to
get the news.
Honestly, I think you are putting way too much emphasis on subscription fees as
the cure for all evils.
> If ad revenues were enough to populate these sub channels
> with higher quality content, you can be certain that this
> would be happening.
Oh? You just finished telling me how that would threaten the MVPD model.
Couldn't have that happen.
Bert
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