HBO considering offering HBO GO w/o cable

[MUBillsTil2017]

I don't agree with you on the costs going lower.  As mentioned in a previous post, their liabilities are coming in spades in the next 18 months.  The media companies don't want to trade dollars for dimes.  So if people pull out of pay tv, the media companies will exact their pound of flesh from the OTT players (Netflix, Hulu, Amazon).  One way or the other, they are going to get their dollars.  Something has to give for them to pay out this $5.7billion, especially for a company that can barely turn a profit right now.  Big price increases coming for their subscribers most likely.

http://www.zerohedge.com/news/2013-04-22/does-netflix-34-billion-balance-sheet-liability-make-it-house-cards

http://www.tradingfloor.com/posts/the-importance-of-netflixs-growth-and-its-liability-time-bomb-263346944

Given that balance sheet I wouldn't buy their stock but they do put out an excellent product.  I think they have proven there is a market for ala carte programming where the consumer uses on demand to get their entertainment.  Maybe Amazon or Apple will do better.   All I know is my 18 year old daughter is addicted to Netflix.  Her crowd of friends are too.  I'm starting to see the cost savings of using Ruku or Apple TV since I've learned about Netflix.  Seems to me I can't be alone.  I pay about $1300/year to you guys, you're welcome, but Netflix at $7.95/mo gets my attention and thinking that something has to change.  Again, I can't be alone.  

[ChicosBailBonds]

There is going to be some major consolidation coming up.  All the tea leaves point to it.  Whether it is Directv buying Dish (or the other way around), or AT&T buying a satellite company, Charter and TimeWarner merging or perhaps Cablevision is bought out, it's likely to happen.  The media companies have too much leverage right now and the only way to combat them is with scale. 

[ChicosBailBonds]

Given that balance sheet I wouldn't buy their stock but they do put out an excellent product.  I think they have proven there is a market for ala carte programming where the consumer uses on demand to get their entertainment.  Maybe Amazon or Apple will do better.   All I know is my 18 year old daughter is addicted to Netflix.  Her crowd of friends are too.  I'm starting to see the cost savings of using Ruku or Apple TV since I've learned about Netflix.  Seems to me I can't be alone.  I pay about $1300/year to you guys, you're welcome, but Netflix at $7.95/mo gets my attention and thinking that something has to change.  Again, I can't be alone.  

Yes, but remember they aren't selling a la carte programming, their selling SVOD, or subscription VOD.  Basically one price gets you access to a bunch of stuff, most of it really old, but some peppered in there with newer stuff.  Don't get me wrong, I think they have a nice product, nice interface, but I'd be worried about what they plan on doing.  I say that as a shareholder that got in pretty low (I tend to buy companies that I'm most familiar with, many of which I either worked for in the past or their competitors) and I wonder where they are going.  Very cost conscious customer base that revolted over a few dollar increase a few years ago.  They are going to have to go that way in the near future to address these liabilities, IMO.

In terms of a la carte, no one has that here that isn't costing a ton of money.  If you want a recent movie, you have to pay iTunes or XBOX, or PS3 or DIRECTV $6 to $10 to view it and you don't even own it.  You can own it at usually $15 or so.  It's only until it becomes quite dated that it can slip into an affordable SVOD type offering. 

[ChicosBailBonds]

Chico - Netflix stock is up 500% in the last year. Should we buy some puts? Is it all a "House of Cards"?

I know, I got in at a very good number.  Of course I can think of a lot of companies that are miles ahead of them in quality, etc, etc that are taking a short term hit...Apple comes to mind....over $700 nearly a year ago, now in the $460's.  I own both stocks.  NFLX was at it's peak a few weeks ago until their most recent earnings report when it took a nice slide.  A lot of people are in love with them, certain stocks have a way of producing Greenspan's Irrational Exuberance from time to time.  Their balance sheet concerns me as a stockholder. 

I'm not saying it isn't a good company without a compelling product, of course it is.  I worry about what's coming around the corner because the piper is ready to be paid and how are they going to pay it?  Maybe they find a way, but as a shareholder I'd like to see them make a bit more than $17M on $1B in revenues and not have almost $6B in liabilities staring them down.

[ChicosBailBonds]

I recognize your expertise here and admit you know a lot more about these things.

But it seems like what is being said about Netflix is the same that was being said about YouTube just a few short years ago. Now, YouTube is raking in a ton of money for Google.

I don't doubt that Netflix will have a few more growing pains - but you have to remember that this is there first year for original programming and they have put 3 very good products out there. I don't know how much the public at large is aware of this. I know in my case, before I decided to subscribe, I thought it was a place for movies. I think that is probably still the general perception among non-members.

There is also the sea change over the last half dozen years where creative people are clamoring to get into television now because of the short-season series (10 - 13 episodes). Again I think that is something that will continue. Movies are no longer the only outlet for creative, enterprising minds.

Interesting post.  My comments would be that YouTube is making money off an ad driven model.  I don't think Netflix is going to go down this path, but if they do they could monetize further, though they would alienate folks as well.  On the original series of Netflix, they are good.  That isn't my concern, it's on the content they are buying elsewhere.  Some smart guys over there, hopefully they have a plan.  It will help my nest egg.

Agree on the ability for the amateur to break in through other means.  Whether they can monetize it is another story, but the platforms are there and there are eyeballs. 

[brandx]

Interesting post.  My comments would be that YouTube is making money off an ad driven model.  I don't think Netflix is going to go down this path, but if they do they could monetize further, though they would alienate folks as well.  On the original series of Netflix, they are good.  That isn't my concern, it's on the content they are buying elsewhere.  Some smart guys over there, hopefully they have a plan.  It will help my nest egg.

Agree on the ability for the amateur to break in through other means.  Whether they can monetize it is another story, but the platforms are there and there are eyeballs. 

The next couple years will definitely be interesting on these fronts. You look at the changes in viewing over the last 10 years - actually even earlier if you look at the hurdles ESPN had in their formative years - and it's unbelievable.

I vacation/travel a lot and it used to be that you'd try to find a motel on the road that had HBO. Now I throw the iPad in the bag and can watch Netflix or a ton of content on HBOGo on any motel TV.

[ChicosBailBonds]

Where else can you gt this kind of quality?  


http://bleacherreport.com/articles/1729287-peyton-and-eli-mannings-rap-song-is-the-greatest-thing-to-ever-hit-the-internet?utm_source=facebook.com&utm_medium=referral&utm_campaign=programming-national

 

<a href="http://www.youtube.com/v/jn5zytfm9No" target="_blank" rel="noopener noreferrer" class="bbc_link bbc_flash_disabled new_win">http://www.youtube.com/v/jn5zytfm9No</a>


TOUCHDOWN! ADWEEK's Gabriel Beltrone wrote, "At first you'll hate it, but then you won't be able to stop watching." After a couple minutes "of rubbernecking, you'll see Eli burst through a large portrait of Alexander Graham Bell and realize you've been beaten about the head with stupidity to the point that you can't help but laugh" (ADWEEK.com, 8/6). SI.com's Chris Burke wrote this spot "raised the bar ... putting 'Football on Your Phone' immediately into the pantheon of greatest commercials featuring athletes" (SI.com, 8/6). NFL.com's Dan Hanzus wrote, "Say this for Peyton and Eli Manning: They aren't afraid to be ridiculous for the sake of entertainment." Eli is "absolutely rocking a curly wig that summons memories of 1999-era Justin Timberlake." Peyton is "dressed like an aging European nightclub patron." They are both "woeful in their lyrical delivery." Hanzus: "Our favorite part is probably when Eli disrespects the memory of Alexander Graham Bell. But really, this is a tour de force all around" (NFL.com, 8/6).

TWITTER REAX: SI.com's Jimmy Traina wrote, "Don't want to oversell this, but this Peyton & Eli Manning rap/R&B video is the greatest thing you will see today." Blogger Steve DelVecchio: "Manning brothers have officially won the offseason with this amazing rap video." The Washington Post's Cindy Boren wrote, "The Mannings put football on your phone and football in your pants. It's for DirecTV and it's ... mesmerizing." Newsday Sports' official feed stated, "Peyton Manning already a commercial genius, but Eli's Will Ferrell hair in new RAP VIDEO is pure brilliance."

[jesmu84]

There is going to be some major consolidation coming up.  All the tea leaves point to it.  Whether it is Directv buying Dish (or the other way around), or AT&T buying a satellite company, Charter and TimeWarner merging or perhaps Cablevision is bought out, it's likely to happen.  The media companies have too much leverage right now and the only way to combat them is with scale. 

Oh goody. Nothing better for consumers than to have huge companies occupying large swaths of a single market. That always works out well for the little guy!

[ChicosBailBonds]

Oh goody. Nothing better for consumers than to have huge companies occupying large swaths of a single market. That always works out well for the little guy!

The hope is that it will be a counterweight against the Disney, CBS, NBC, Viacom, because they have all the leverage.  My company is spending more than $10 billion this year in programming costs.  It's insane. 

[ChicosBailBonds]

Chase Carey, #2 guy at NewsCorp (FOX) and my former CEO had this to say last week.

"A la carte is fantasy"

http://www.forbes.com/sites/jeffbercovici/2013/08/08/21st-century-foxs-chase-carey-a-la-carte-is-a-fantasy/


As I've been saying here for a long time, the content providers are the ones that control this, not the distributors.  They aren't going to kill their golden goose, not anytime soon anyway.  Many years down the road, maybe.

[mu_hilltopper]

This would be an interesting blow to cable/satellite ..

http://allthingsd.com/20130820/is-google-ready-to-buy-its-way-into-tv-with-an-nfl-deal/

[ChicosBailBonds]

This would be an interesting blow to cable/satellite ..

http://allthingsd.com/20130820/is-google-ready-to-buy-its-way-into-tv-with-an-nfl-deal/

Yup, it would mean a package we lose money on would go away (or shared is most likely) along with a huge cost and 15% of customers could get it elsewhere, like on YouTube instead of their 60" screen.  Customers will have to make that choice.  The ISPs will love it when people's data caps explode and they rake in the cash. Old news, surprised it took this long to get out.

Right now, Dish and Directv making about 10% profit annually, not exactly crazy money.  Not anywhere close to Apple or Google on net profit margins. 

[reinko]

Yup, it would mean a package we lose money on would go away (or shared is most likely) along with a huge cost and 15% of customers could get it elsewhere, like on YouTube instead of their 60" screen.  Customers will have to make that choice.  The ISPs will love it when people's data caps explode and they rake in the cash. Old news, surprised it took this long to get out.

Right now, Dish and Directv making about 10% profit annually, not exactly crazy money.  Not anywhere close to Apple or Google on net profit margins. 

I get 1080p with my Youtube app via my Chromecast right now.

[ChicosBailBonds]

I get 1080p with my Youtube app via my Chromecast right now.

Don't confuse 1080p with bit rate or necessary quality.  Bit rate is the key.  Lots of stuff in 1080p that is subpar to 1080i or even 720p if the bit rate isn't there.  1080p merely represents the lines of resolution at 1920 X 1080, but if the throughput isn't there in the bit rate (i.e. bit rate starved) then you suffer quality, especially on larger devices.

As an example, an uncompressed 1080p stream maxes out (I believe, it's been awhile) at 19mpbs to 20mbps.  Youtube's maxed out 1080p is 8mbps to 10mbps....that's maxed out.  Satellite is usually pumping it through at 13mbps and can go higher if need be, just a matter of capacity constraints.

Higher the bit rate, higher the file size \ streaming capacity.  That's where the data caps come into play

[Spotcheck Billy]

chicos is correct - not all 1080P is created equal as Netflix customers etc. should have noticed by now, it is all about the bit rate

true 1080P ala blu-ray disks can have 54Mbps (and could even be expanded in the future to 288Mbps)

[ChicosBailBonds]

chicos is correct - not all 1080P is created equal as Netflix customers etc. should have noticed by now, it is all about the bit rate

true 1080P ala blu-ray disks can have 54Mbps (and could even be expanded in the future to 288Mbps)

Yup.  A common marketing spin by television services (I include DTV, Netflix, etc in this) is to say they are providing 1080p broadcasts, same as BluRay.  Honestly, I shook my head when we did it.  It's technically true, but it's no where close to the story.  Most people don't understand bit rate or resolution or codecs, etc.  So when you go out and say things like 1080p format, just like BluRay and then a customer watches the show and says "this isn't as good as BluRay", you're asking for trouble.  To your point, there can be a huge difference if the content is bit starved, which is all a function of capacity.  Cable, satellite, broadband (Hulu, Netflix, etc) all have to compress streams, some much more than others.  It can make a big difference, especially on the device one is looking on. 

[ChicosBailBonds]

Basically what FOX CEO said last week...fantasy.


A LA CARTE NOT PRACTICAL: Skipper addressed several other topics during a 90-minute meeting with the assembled media. He said an a la carte pricing system for cable channels "is not a good solution for whatever the issue is here." Skipper: "It is not particularly beneficial to anybody. Right now there is an issue of price pressure. But the $73 for 200-plus channels kind of works for almost everybody, other than some people for whom it’s a financial burden. It subsidizes a big system of content. There is better content now to consume on video than there’s ever been. There’s a discussion about the golden age of television -- this is the only golden age of television. ... This ecosystem works to provide lots and lots of choice for a very insignificant cost on any sort of metric. If you break it up and charge it on a per-program basis or per-network basis -- which by the way has very little chance of happening, despite there being a couple senators floating this around -- it just won’t work.” Skipper said 83% of households that get ESPN watch the network. He added of a la carte ever becoming a reality: “Because of the rights we hold, we’d be fine. ... But channels 65 through 250 are going to go out business, or start producing inexpensive content, which will be lousy. There won’t be this beautiful content that you have this opportunity to pick from, because they won’t be able to afford it.” Skipper said, “Specialty channels, serving specialty interests, will not survive in an a la carte world. However, we’re talking hypotheticals. That’s just not getting ready to happen.”

[ChicosBailBonds]

CBS is the winner.

Customers won't complain about CBS, they complain about who they have to pay the bill to.  Basically, Time Warner bills just went up a whole bunch to cover this, but CBS won't care.  Programmers have most, if not all, of the leverage in this stuff.

http://articles.chicagotribune.com/2013-09-02/business/sns-rt-us-cbs-timewarner-20130902_1_cbs-corp-cable-operator-cbs-content

[mu_hilltopper]

I wonder if you chalk that up to .. the value of football.

CBB, you might not know .. TWC in Milwaukee is fighting the local NBC affiliate .. been off the air for 30+ days now.  Every few days, one side takes out a full page ad in the paper, saying how evil the other side is. 

Meanwhile, a month has gone by and .. I think most people are thinking .. Channel 4?  Never heard of it.   Sure, there were a couple of Packer pre-season games that people had to scramble to see, but that's over now.   The value of WTMJ is evaporating each day.  I would foresee them completely losing this dispute since people have just .. moved on.  In a month or two, they'll be begging TWC to accept any offer.

But CBS .. has the NFL.  No way TWC could drop them forever.

[GGGG]

I wonder if you chalk that up to .. the value of football.

CBB, you might not know .. TWC in Milwaukee is fighting the local NBC affiliate .. been off the air for 30+ days now.  Every few days, one side takes out a full page ad in the paper, saying how evil the other side is. 

Meanwhile, a month has gone by and .. I think most people are thinking .. Channel 4?  Never heard of it.   Sure, there were a couple of Packer pre-season games that people had to scramble to see, but that's over now.   The value of WTMJ is evaporating each day.  I would foresee them completely losing this dispute since people have just .. moved on.  In a month or two, they'll be begging TWC to accept any offer.

But CBS .. has the NFL.  No way TWC could drop them forever.

I don't disagree with you in general, but NBC has the NFL too...granted it is just one game per week.

[Chicago_inferiority_complexes]

I don't disagree with you in general, but NBC has the NFL too...granted it is just one game per week.

Might be interesting to see how this would turn out after the football season.

[Spotcheck Billy]

I don't disagree with you in general, but NBC has the NFL too...granted it is just one game per week.

but now WTMJ has until October 27th before they really have to worry about that (GB vs. MN on NBC)

[mu_hilltopper]

but now WTMJ has until October 27th before they really have to worry about that (GB vs. MN on NBC)

I booked Pat McCurdy for our festival right during that game.  It'd be helpful if people were unable to watch...!

(Yes, McCurdy is still performing.  He is exactly the same guy you saw at the Brooks Union 25 years ago.)

[brandx]

For 1 Packer game a year, it's not worth it to me. I never watch the local programming on WTMJ.

They wouldn't know what news is if someone slapped them in the face with it. If I want to watch that crap (which I don't), I'd watch TMZ or read People magazine. Probably more news value there than at WTMJ.

[Benny B]

but now WTMJ has until October 27th before they really have to worry about that (GB vs. MN on NBC)

Has TWC contemplated giving away vouchers for TV antennas recently?  You can get an antenna off the shelf at Wally World for less than $15... TWC could save face and money if they just bought antennas for people.

That said, I'm in northern Illinois - 51 miles from the WTMJ-DT antenna, to be exact - and WTMJ comes in crystal clear on my TV antenna I fashioned from two coat hangers and a 2x4.  If I can do that, a simple set-top antenna in metro Milwaukee should be more than sufficient.