MUScoop
MUScoop => The Superbar => Topic started by: jesmu84 on October 15, 2014, 11:19:51 AM
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http://www.npr.org/blogs/monkeysee/2014/10/15/356388248/hbo-without-cable-coming-in-2015
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http://www.npr.org/blogs/monkeysee/2014/10/15/356388248/hbo-without-cable-coming-in-2015
wait... i thought Chico said this would never happen?
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wait... i thought Chico said this would never happen?
I feel like I've heard the same thing here before too. Man, sucks to be wrong
Hopefully this is a step towards paying only for the channels I want, not giant blocks of useless filler channels
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Big picture:
It's all just content, and if HBO (a content producer) can find a profitable way to distribute without a traditional cable provider (the distributor), they will do it.
Lots of layers of politics, contracts, relationships, tech., etc. etc. etc. Chico's has for more insight on that stuff.
But, big picture, they are just trying to cut out the middle man.
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Hopefully this is a step towards paying only for the channels I want, not giant blocks of useless filler channels
Agree. Always more channels, more features, more. Tell them you want to pay less and they'll offer you a ton more to pay a little more...which isn't less. I'm not willing to pay even $10 more per month for 500 or 5000 more channels that I don't care about. I actually would be willing to pay just $10 less per month to give up 195 of the 200 channels I have.
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Agree. Always more channels, more features, more. Tell them you want to pay less and they'll offer you a ton more to pay a little more...which isn't less. I'm not willing to pay even $10 more per month for 500 or 5000 more channels that I don't care about. I actually would be willing to pay just $10 less per month to give up 195 of the 200 channels I have.
I'm not sure Chico's doomsday scenarios of having to pay $20 per month for ESPN are realistic. For a business guy, he sure seems to misunderstand economics. If ESPN is forced to go alone and starts out at $20 per month, and no one pays it ... law of supply and demand suggests they are going to have to reduce their costs. Does that mean they will have to cut back on their own programming / extra channels (the Ocho)? Yeah, probably. The market will bear what people actually want, not what a few hyper wealthy monopolists on the coasts have created for the plebes.
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I'm not sure Chico's doomsday scenarios of having to pay $20 per month for ESPN are realistic. For a business guy, he sure seems to misunderstand economics. If ESPN is forced to go alone and starts out at $20 per month, and no one pays it ... law of supply and demand suggests they are going to have to reduce their costs. Does that mean they will have to cut back on their own programming / extra channels (the Ocho)? Yeah, probably. The market will bear what people actually want, not what a few hyper wealthy monopolists on the coasts have created for the plebes.
Correct, but so far the demand for live content by both advertisers and consumers has been relatively inelastic.
But, we know that it's not perfectly inelastic, and eventually there will be a market correction. The question is not if, but rather when.
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Correct, but so far the demand for live content by both advertisers and consumers has been relatively inelastic.
But, we know that it's not perfectly inelastic, and eventually there will be a market correction. The question is not if, but rather when.
Beware of the bubble. Live content is a bubble right now, and it is unsustainable long term.
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Beware of the bubble. Live content is a bubble right now, and it is unsustainable long term.
And I think the biggest consumers - boomers - of live content (i.e. sports), while today's biggest spending demographic, are going to crater in 10-20 years. What then?
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Beware of the bubble. Live content is a bubble right now, and it is unsustainable long term.
Why does an executive who is 45 care about the long term bubble? It's an honest question, they will cash out in in the next 10-15 years, and the job of someone else to clean up the mess.
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Correct, but so far the demand for live content by both advertisers and consumers has been relatively inelastic.
But, we know that it's not perfectly inelastic, and eventually there will be a market correction. The question is not if, but rather when.
I have been saying this for a long time. But then, so have you. And just like myself, you were told it couldn't be done. Content, contracts, etc.
It will be a slow process, but between this and Verizon's announcement last week, the wheels are starting to turn.
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I have been saying this for a long time. But then, so have you. And just like myself, you were told it couldn't be done. Content, contracts, etc.
It will be a slow process, but between this and Verizon's announcement last week, the wheels are starting to turn.
It will be slow, but there will be different catalyst points along the way, which will change the game.
There is a lot of money (and profit) in the "traditional" delivery/distribution system. Once an alternate system becomes profitable/competitive, things will evolve far more quickly.
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This is where I get to say "I told you so".
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Why does an executive who is 45 care about the long term bubble? It's an honest question, they will cash out in in the next 10-15 years, and the job of someone else to clean up the mess.
Because the bubble may not last that long. But the point is well taken, in this and most other corporations long term vision is sacrificed for short term gain.
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I don't know the specifics of ESPN's contract with the cable companies, but I believe they will be watching what happens very closely - if it is not specifically prohibited in said contract to make themselves available stand-alone.
Obviously they would be cutting their own throats to offer for less that cable companies pay, but even charging a small premium over that charge would create lots of $$$
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I don't know the specifics of ESPN's contract with the cable companies, but I believe they will be watching what happens very closely - if it is not specifically prohibited in said contract to make themselves available stand-alone.
Obviously they would be cutting their own throats to offer for less that cable companies pay, but even charging a small premium over that charge would create lots of $$$
I don't know that ESPN wants to expose what it actually charges to the average consumer. If ESPN went alone, I'm not sure that they could get from the consumers what they get from the cable providers. It's a game of Blind Man's Bluff...ESPN can hide it's costs behind the cable companies and the cable companies can keep saying rate increases are al ESPN's fault.
However, once live sports has a cable cutting option, cable companies are done...that's the only reason I stay with cable.
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I don't know that ESPN wants to expose what it actually charges to the average consumer. If ESPN went alone, I'm not sure that they could get from the consumers what they get from the cable providers. It's a game of Blind Man's Bluff...ESPN can hide it's costs behind the cable companies and the cable companies can keep saying rate increases are al ESPN's fault.
However, once live sports has a cable cutting option, cable companies are done...that's the only reason I stay with cable.
I agree, but this would be in addition to the cable offering - not replacing it.
There are millions without cable that would jump at the chance to get ESPN standalone.
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And I think the biggest consumers - boomers - of live content (i.e. sports), while today's biggest spending demographic, are going to crater in 10-20 years. What then?
Thank you. At least someone else is paying attention here.
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I agree, but this would be in addition to the cable offering - not replacing it.
There are millions without cable that would jump at the chance to get ESPN standalone.
I don't think with sports live streaming revenue would be additive to cable revenue. I think it replaces it. Once you can get an sports you want by paying for just that, I think most people leave cable. The irony is that over the air TV may become in vogue again because they have sports and its "free".
Here is how the bubble bursts. Consumers are exposed to what they actually pay for sports content, ergo some choose not to purchase it and live without it. Those that do choose to purchase end up killing cable eliminating a revenue stream for ESPN. The streaming revenue does not totally replace the cable revenue. This forces ESPN to scale back what it pays for content, cutting revenue streams for all sports content, forcing those sports to face the reality of budgeting and the fact that revenues don't go up every year. College sports suffer the most as they have out spent potential revenue in the new paradigm. Meanwhile all the boomers who had money to burn and an overwhelming appetite for sports content are dead and/or dying further reducing demand for the content at the prices presented, forcing ESPN to further reduce cost/decrease price. Combined with on-going social issues leagues shrink, valuations decrease, and big money investors and advertisers leave for more attractive grounds.
I'm using ESPN as a proxy for all sports media content providers, Fox Sports, NBC Sports, etc will all be in the same boat.
I actually think, in the grand scheme of things there is the possibility that 40 years from now basketball is the dominant revenue sport in America. Not saying it will happen, but it is the least risky of the current major sport platforms long term, ya know except for all that crazy multi-billion franchise valuation stuff.
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And now CBS launches their platform. But no sports.
http://www.cbsnews.com/news/cbs-launches-digital-subscription-service-cbs-all-access/
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When you factor in the fact you're still going to need to get internet from Comcast/ATT/TWC/etc, and all the services I'd actually want (Hulu,Netflix,Amazon Prime, HBO, etc.), I'd almost rather pay the premium to have it all in one package.
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When you factor in the fact you're still going to need to get internet from Comcast/ATT/TWC/etc, and all the services I'd actually want (Hulu,Netflix,Amazon Prime, HBO, etc.), I'd almost rather pay the premium to have it all in one package.
Pipes aren't the technology, that'll go away with time, especially as wi-fi expands. And someone will come up with an app or technology to do the ala carte for you....perhaps even one of the pipe owners.
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And now CBS launches their platform. But no sports.
http://www.cbsnews.com/news/cbs-launches-digital-subscription-service-cbs-all-access/
But this can't happen.....
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When you factor in the fact you're still going to need to get internet from Comcast/ATT/TWC/etc, and all the services I'd actually want (Hulu,Netflix,Amazon Prime, HBO, etc.), I'd almost rather pay the premium to have it all in one package.
Key words bolded. If you want a lot the package makes sense.
If I want Amazon Prime, MLB.TV, and Hulu, I can pay $350 per year. Bump it up to $500 to include Netflix or ad-hoc movie/TV show rentals. I'm currently paying about $1,350 annually for that lineup plus ESPN and 200 more channels I don't watch. Is the ESPN package and the other junk worth $850 per year since there is no alternative for ESPN? That's my decision point now. If the option were actually offered, a provider's option or a stream of just ESPN could get me at $50 per month without hesitation since the total cost for what I actually want would be less.
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DirecTV sucks. I don't know that for a fact but I'll throw it out there.
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I'm just waiting to see how much Chicos bait this thread needs before he actually responds. Is he in a coma or actually working?
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DirecTV sucks. I don't know that for a fact but I'll throw it out there.
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I'm just waiting to see how much Chicos bait this thread needs before he actually responds. Is he in a coma or actually working?
No. He posted over the weekend that he was going to be in France for work this week. I'm just guessing in an attempt to avoid sky-high international charges that he's had limited Wifi access or something.
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Key words bolded. If you want a lot the package makes sense.
If I want Amazon Prime, MLB.TV, and Hulu, I can pay $350 per year. Bump it up to $500 to include Netflix or ad-hoc movie/TV show rentals. I'm currently paying about $1,350 annually for that lineup plus ESPN and 200 more channels I don't watch. Is the ESPN package and the other junk worth $850 per year since there is no alternative for ESPN? That's my decision point now. If the option were actually offered, a provider's option or a stream of just ESPN could get me at $50 per month without hesitation since the total cost for what I actually want would be less.
Since cutting the cord 4.5 years ago, I estimate I've saved over $2500.... That's after paying for my HTPC and sub fees for Hulu, Netflix, Amazon and MLB.tv.
Oh, and I've missed something like 3 or 4 MU games that I wanted to watch on TV in those 4.5 years.
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No. He posted over the weekend that he was going to be in France for work this week. I'm just guessing in an attempt to avoid sky-high international charges that he's had limited Wifi access or something.
Probably takin' in a Gardner game as we type, aina?
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wait... i thought Chico said this would never happen?
Wait....I never said it wouldn't or couldn't happen. Seriously, read...it might help you.
Here's a few things I've said about it
"They've been "considering it" for a few years now and the math doesn't work.....
Now, down the road could it change....of course. But they know for it to change their expenses go through the roof in a way they cannot appreciate."
Also said if they do it, they will have to spend a ton of money to ramp up.....which is now what they have signed up to do. If rumors are true, can't wait to see the reactions here on the price point.
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I feel like I've heard the same thing here before too. Man, sucks to be wrong
Hopefully this is a step towards paying only for the channels I want, not giant blocks of useless filler channels
I also said this "I don't doubt it could happen and one day someone will say "I told you so". No need, one day it will happen."
Amazing how many of you simply don't read, but not surprising.
http://www.muscoop.com/index.php?topic=37740.0
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I'm not sure Chico's doomsday scenarios of having to pay $20 per month for ESPN are realistic. For a business guy, he sure seems to misunderstand economics. If ESPN is forced to go alone and starts out at $20 per month, and no one pays it ... law of supply and demand suggests they are going to have to reduce their costs. Does that mean they will have to cut back on their own programming / extra channels (the Ocho)? Yeah, probably. The market will bear what people actually want, not what a few hyper wealthy monopolists on the coasts have created for the plebes.
SMH....seriously SMH.
I hope the Atlantic can get some business sense....they say it would be $30 a month, but you're right. ::) http://www.theatlantic.com/business/archive/2013/07/how-watching-unbundled-espn-and-amc-could-cost-more-than-your-whole-cable-bill/277916/
Adweek...$30 for ESPN....I sure hope those guys can get away from their "misunderstanding of economics"
http://www.adweek.com/news/television/la-carte-worst-idea-anyone-has-ever-had-151814
Variety...$30 a month for ESPN....they need to do some economics learning. http://variety.com/2013/biz/news/would-you-pay-30-per-month-for-espn-1200563396/
Analysts say $30 a month...analysts no doubt...send them back to ECON 101. http://articles.philly.com/2013-07-17/business/40614790_1_sports-channels-la-carte-sports-fans
I get this business, I get the economics just fine.
Now, your paragraph above shows you just absolutely do not get what you are talking about. Absolutely ESPN would get north of $20. You fail to recognize that ESPN TODAY gets about $7 to $8 per month per subscriber from about 100 million paid tv homes. Do the math. They have liabilities in to the many many billions, added to it just the other day with the NBA. Do the math, this isn't hard....all it takes is someone with a business background. Oh the irony...give it a try.
For a business guy, I get the economics just fine because I understand the nuances of how it works, and honestly...you don't....and if I'm being snarky and condescending about it, too bad. You begged for a response a few times in this thread, I was busy working (where you were condescending yourself), so I'm giving you the answer. I'm tired, but your snarky tone deserved a snarky response. Clearly, you are out of your element in this space...completely.
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This is where I get to say "I told you so".
Wait until you get to see the price point of this HBO product. ;) Looking forward to the "I told you so".
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And now CBS launches their platform. But no sports.
http://www.cbsnews.com/news/cbs-launches-digital-subscription-service-cbs-all-access/
You should read the analysts at Morgan Stanley, Chase, etc that came out with their assessment today on this. Pretty funny stuff and I say that as someone now in the OTT space.
As one guy put it
$5.99 for CBS content, no sports, no live feeds
$7.99 for NBC and ABC and Fox (Hulu), no live feeds, no sports
$9.99 for Netflix
$24.99 to $29.99 for HBO
About $40, no ESPN, almost nothing live, no sports, limited to 2 streams max....etc. As the Morgan Stanley analyst said...can't see this service getting more than a few million subs in 5 years, the value isn't there.
Dramafever was sold earlier this week. Redbox OTT was scuttled last week.
A lot of people just don't get it.
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When you factor in the fact you're still going to need to get internet from Comcast/ATT/TWC/etc, and all the services I'd actually want (Hulu,Netflix,Amazon Prime, HBO, etc.), I'd almost rather pay the premium to have it all in one package.
And that's before the internet fees for gating come into it.
You're understanding the big picture. Well done.
As an HBO Sr. VP told me yesterday, they have an enormous task ahead of them. They get more than $4 billion a year from cable, satellite and telco pay television subscribers, they pay next to nothing in marketing fees, have no customer service costs. Now, they go OTT direct, which means they have to hire call center employees, do massive marketing, and try not to piss off their partners that are bringing in $4 billion a year for them so they can go after people that don't or can't pay $50 a month for TV. As she told me, they have a very big task ahead of them. Don't be surprised if this HBO stand alone is $25 to $30 a month. Or, they could try to sell it at what a cable company does today, and as she correctly pointed out, the cable company will say...bye bye, do it on your own HBO...and oh by the way, HBO which is owned by Time Warner...also owns TNT, TBS, CNN, etc....good luck....that side of the business needs cable and all those subscription dollars to survive.
Going to be fun, if only I had some business acumen in this area...maybe I can pick up a book on it. ;)
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Since cutting the cord 4.5 years ago, I estimate I've saved over $2500.... That's after paying for my HTPC and sub fees for Hulu, Netflix, Amazon and MLB.tv.
Oh, and I've missed something like 3 or 4 MU games that I wanted to watch on TV in those 4.5 years.
I just hired a gal from Hulu that started for me 2 weeks ago....everyday she thanks me for getting her off the ship. Interesting times. People have NO IDEA and you can tell just by the messages in this thread. Absolutely NO IDEA.
Whatever....I keep telling you where the answers are....go to the content companies, they drive the costs and because they have a free ride on customer care, delivery, and millions of people paying for their channels that don't want their channels because THEY force the distributors to do this, the pricing of a la carte will be through the roof and many choices will go bye bye. Can't wait to see the gov't scream bloody murder when BET goes away. Or Food Network. Or ESPN at $25 to $30 a month. Be careful what you wish for, which is also what I've told you guys the last few years.
Tick tock :o
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DirecTV sucks. I don't know that for a fact but I'll throw it out there.
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I'm just waiting to see how much Chicos bait this thread needs before he actually responds. Is he in a coma or actually working?
A lot of unfactual things you have been throwing out there, so this wouldn't be a first. I've got a new gig, but it's a free country you can tear down who you want.
Yes, Cannes, France. www.mipcom.com If you think anything is changing anytime soon, well you should have been at Mipcom. The content creators are going to charge more than ever, they don't care if you buy it through the internet, cable, satellite, fiber....they are going to charge. Everyone was here, Netflix, Hulu, Disney, Twentieth Century Fox, NBC Sports, CBS Sports, every major studio and television production company in the world....about 30,000 people in total. The amount of money for content is only getting worse, sports especially.
AMC....wait until you see their little battle in the next few days. But, whatever.....you guys can keep making up things that I didn't say....Hards, you, etc....it's fun to read.
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I just hired a gal from Hulu that started for me 2 weeks ago....everyday she thanks me for getting her off the ship. Interesting times. People have NO IDEA and you can tell just by the messages in this thread. Absolutely NO IDEA.
Whatever....I keep telling you where the answers are....go to the content companies, they drive the costs and because they have a free ride on customer care, delivery, and millions of people paying for their channels that don't want their channels because THEY force the distributors to do this, the pricing of a la carte will be through the roof and many choices will go bye bye. Can't wait to see the gov't scream bloody murder when BET goes away. Or Food Network. Or ESPN at $25 to $30 a month. Be careful what you wish for, which is also what I've told you guys the last few years.
Tick tock :o
It seems to me that you do not understand business also. ESPN cannot just charge $25-$30 a month, people have to be willing to pay it. I don't care what their obligations are etc, it is only worth what people will pay.
Right now as you state ESPN is getting $7-8 per subscriber up to 100 million subscribers. Of those 100 million, probably on the order of 30 million are willing to pay $7-8 for it. So obviously the price would have to go up to maintain the same $700-800 million.
Now the problem is, how many of those 30 million would pay $15 for it? If it is less than 15 million they are losing money by increasing the cost. I am a sports fan and wouldn't pay $15 a month for it, I likely wouldn't pay $10.
So what happens then if they have to go ala carte? They have to decrease costs or go bankrupt. That means the drastic increases in sports right will retreat, contracts with NBA/NFL etc would be renegotiated (they would have to be). The NFL/NBA may not want to do this, but they would also be forced to.
Similarly at network TV/HBO, costs will come down.
That is how business works. Right now content providers can do anything they want, because the public has little other options. As options increase, they must adapt (hence the move for some content providers HBO/CBS to modify strategy). Right now the system is being artificially supported by monopolies.
Will some channels vanish…absolutely and thank god. But the good content from each network will be preserved, because they have viewers. That may mean instead of 200 channels we have 50, but the average content on those 50 will increase in quality.
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Christ - shoot me in the face if I ever have to work with someone this pompous and in need of approval from a college BBall forum.
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It seems to me that you do not understand business also. ESPN cannot just charge $25-$30 a month, people have to be willing to pay it. I don't care what their obligations are etc, it is only worth what people will pay.
Right now as you state ESPN is getting $7-8 per subscriber up to 100 million subscribers. Of those 100 million, probably on the order of 30 million are willing to pay $7-8 for it. So obviously the price would have to go up to maintain the same $700-800 million.
Now the problem is, how many of those 30 million would pay $15 for it? If it is less than 15 million they are losing money by increasing the cost. I am a sports fan and wouldn't pay $15 a month for it, I likely wouldn't pay $10.
So what happens then if they have to go ala carte? They have to decrease costs or go bankrupt. That means the drastic increases in sports right will retreat, contracts with NBA/NFL etc would be renegotiated (they would have to be). The NFL/NBA may not want to do this, but they would also be forced to.
Similarly at network TV/HBO, costs will come down.
That is how business works. Right now content providers can do anything they want, because the public has little other options. As options increase, they must adapt (hence the move for some content providers HBO/CBS to modify strategy). Right now the system is being artificially supported by monopolies.
Will some channels vanish…absolutely and thank god. But the good content from each network will be preserved, because they have viewers. That may mean instead of 200 channels we have 50, but the average content on those 50 will increase in quality.
I understand it fully. You are technically correct, but not in the real world. They know full well that people will bitch and moan about the prices going up, but they also know that most people are going to pay it and they are still going to be able to cover off on their liens. That is why they signed up to pay for it in the first place to the NFL, NBA, MLB, etc....because they know the dollars are there. Just as AMC knows people want to see their shows, etc, etc.
Trust me, I understand it fully, I'm paid to understand it and to understand how people truly behave, not what people "say" they will behave like. There is a difference, a radical difference. It's like watching people say they hate Congress and throw the bums out, but they love "their guy" and incumbants get elected at record numbers.
I disagree with your monopoly statement. You're smarter than that, you know that isn't the definition at all. I also think you truly don't understand what CBS or HBO are doing right now or you wouldn't make those comments. Most of this is the media's fault in explaining the last few days, but that's because the media can't get out of their way fast enough while their stepping on their johnson. Many of the same mistakes were made when HBO did their deal with Amazon and the horrendous reporting there. Watch as the stories crystalize over the next few months and the realities come into play. People aren't going to like it, but it is what it is. Content isn't free, most content doesn't even succeed, which is why they have to invest heavily in the hopes of a few winners hitting. That isn't going to change, they aren't making widgets, thus they will continue to charge a ton of money.
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Christ - shoot me in the face if I ever have to work with someone this pompous and in need of approval from a college BBall forum.
Lord shoot me in the chest if I ever have to go on a website and say "but blah blah blah said it wouldn't happen" when the person I was trying to be a dick too never said what I claimed him to say, but I was hopeful I could get my pud flying at half staff to prove a point that ultimately I didn't prove because the guy I was trying to zing never actually said what I was trying to zing him with".....all so I could score points on a college BBall forum.
OH. THE. IRONY.
And please God, shoot me in both balls if I ever change my username after a 17 year old kid in the hopes that he comes to my school...maybe he'll read my username and come here because of me. You call someone out for being condescending when all you were from the start of this thread is be condescending ....when someone returns serve you get upset.
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I understand it fully. You are technically correct, but not in the real world. They know full well that people will bitch and moan about the prices going up, but they also know that most people are going to pay it and they are still going to be able to cover off on their liens. That is why they signed up to pay for it in the first place to the NFL, NBA, MLB, etc....because they know the dollars are there. Just as AMC knows people want to see their shows, etc, etc.
Trust me, I understand it fully, I'm paid to understand it and to understand how people truly behave, not what people "say" they will behave like. There is a difference, a radical difference. It's like watching people say they hate Congress and throw the bums out, but they love "their guy" and incumbants get elected at record numbers.
I disagree with your monopoly statement. You're smarter than that, you know that isn't the definition at all. I also think you truly don't understand what CBS or HBO are doing right now or you wouldn't make those comments. Most of this is the media's fault in explaining the last few days, but that's because the media can't get out of their way fast enough while their stepping on their johnson. Many of the same mistakes were made when HBO did their deal with Amazon and the horrendous reporting there. Watch as the stories crystalize over the next few months and the realities come into play. People aren't going to like it, but it is what it is. Content isn't free, most content doesn't even succeed, which is why they have to invest heavily in the hopes of a few winners hitting. That isn't going to change, they aren't making widgets, thus they will continue to charge a ton of money.
Monopoly is a strong word (and technically not correct), but I tend to think in most of the consolidation (which can get complicated to examine) we have created pseudo-monopolies that quietly collude to the detriment of the consumer. That is a personal opinion and I am fully aware that it can be countered. Maybe we can discuss it sometime over a beer.
As for the not understanding CBS/HBO's move. I certainly may not. I will eagerly watch how this plays out, but I think that a lot of people paid big money to understand how the tides move are missing the boat on this one.
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Monopoly is a strong word (and technically not correct), but I tend to think in most of the consolidation (which can get complicated to examine) we have created pseudo-monopolies that quietly collude to the detriment of the consumer. That is a personal opinion and I am fully aware that it can be countered. Maybe we can discuss it sometime over a beer.
As for the not understanding CBS/HBO's move. I certainly may not. I will eagerly watch how this plays out, but I think that a lot of people paid big money to understand how the tides move are missing the boat on this one.
No question, people paid big money and as I said two years ago, last year, etc (despite SixStrings BS), if one of them could do it and do it successfully, it would be HBO. I was responsible for HBO, Sports, Showtime, etc businesses the last 6 years. I know them like the back of my hand...they are one that "can" pull it off, but as you state it is going to take a lot of investment on their part and depending on how they price it, potentially a ton of risk. The CBS thing, it's nothing. Truly, it's nonsense noise right now, at least at this stage with that offering. It's in O&O markets only (14 markets), with massive restrictions all over the place. People are excited because everyone jumps to the conclusion on what it means. When you get down to it, they're offering a way to monetize old content which they couldn't because they didn't join up with Hulu. Will it expand and will they give additional rights? Sure, they'll keep pushing until it hurts the golden goose, which for a broadcaster is something known as Retrans Fees. The gov't, in their infinite wisdom, set it up so broadcasters can demand this from carriers DESPITE the fact anyone with a quality antenna within range of a signal can get it for free.
Those retrans fees and ad revenues keep broadcasters alive (NBC, FOX, ABC, CBS)...but that's also why so many of those broadcasters are diversified into cable (Comcast NBC, Fox Cable, Disney cable channels, etc). That golden goose for Retrans and carriage is what drives the whole thing. So honest, the CBS thing to me is fluff. Sure, they'll get some numbers, but it's primarily to monetize old content. Not a game changer. I have no doubt they will push Showtime out in this model which I personally think is incredibly risky for them to do. They don't have the brand, they have only 1 studio deal left and it sucks, and the money they make on carriage they cannot charge enough to cover the overhead of going OTT and get that price from the consumer. They know it, too, but Les Moonves is a stubborn man. Starz, it would be a deathknell if they tried it. Epix might make a go, but they are small potatoes.
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Probably takin' in a Gardner game as we type, aina?
Would be my guess too!
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I hope the Atlantic can get some business sense....they say it would be $30 a month
Adweek...$30 for ESPN
Variety...$30 a month for ESPN./
Analysts say $30 a month
I'm willing to pay $50 for just ESPN since the total cost of what I actually want would go down by about $35 per month. Where do I sign up for this $30 bargain?
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Chico's, you obviously knows the details better than everybody here, but is it possible you are too close to see the big picture?
5 years ago, cab companies never saw Uber coming. The idea that everybody would have smart phone and order from an app was insane.
Sometimes the "establishment" is too close and too established to truly see the big picture.
You're talking about contracts and financials for the networks/leagues/studios. We're all really approaching this from a consumer side.
(insert network/service) can charge whatever it would like, but the free market will determine what it's actually worth. Consumers say a lot of things, but we'll see what happens when the costs are cranked up. It's not inelastic.
I realize that content production (both live and recorded) is expensive. But, I also think that as consumer costs increase, it opens up a viable marketplace for alternative content. (we've already had that conversation though).
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I'm willing to pay $50 for just ESPN since the total cost of what I actually want would go down by about $35 per month. Where do I sign up for this $30 bargain?
You will get your chance with DISH Network's new OTT product in a few months. Here's the kicked, Disney put in a ceiling so they can only sell so many subscriptions to it because they need to preserve the revenue they make on the 97 million HH that they are in.
So I would suggest go and signup, it's perfect for someone that is single, or a sports only fan. For the vast majority of homes where people have different interests, it doesn't work and ESPN would take a bath, which is why they aren't opening it up.
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Chico's, you obviously knows the details better than everybody here, but is it possible you are too close to see the big picture?
5 years ago, cab companies never saw Uber coming. The idea that everybody would have smart phone and order from an app was insane.
Sometimes the "establishment" is too close and too established to truly see the big picture.
You're talking about contracts and financials for the networks/leagues/studios. We're all really approaching this from a consumer side.
(insert network/service) can charge whatever it would like, but the free market will determine what it's actually worth. Consumers say a lot of things, but we'll see what happens when the costs are cranked up. It's not inelastic.
I realize that content production (both live and recorded) is expensive. But, I also think that as consumer costs increase, it opens up a viable marketplace for alternative content. (we've already had that conversation though).
We've (my old gig) been approaching it from the consumer side for a long time as well. It is why we get into so many fights with Disney, AMC, Viacom, Fox, etc. Because #1, most consumers aren't intelligent enough (sorry, that's just the truth) to understand where the costs are coming from and they blame it on the distributor...people aren't out there saying @#$#@ ESPN, they're saying @#$#@ Time Warner, but it's ESPN holding Time Warner over the coals with insane pricing. So the distributors totally get the argument.
I don't think anyone has ever said it is inelastic, but the math is the math. If you can get 100 million homes to pay $100 a month of television but when you go to $120, you have 10 million say that's it, I've had it. The industry is going to take it every time.
100M * $100 = $10,000,000,000 a month
90M * $120 = $10,800,000,000 a month
10% loss in customers, but a huge gain in overall revenue. That's how they look at it and until that 10% loss in customers goes down to 40%, 50%, etc, things aren't changing and that is why Disney and Turner write a $25 billion check to the NBA. That is why AMC is playing games right now with various distributors trying to capitalize on their one hit, Walking Dead. So on and so forth.
Now, what to do with that 10%...which will grow....they bring in OTT products for Cord Nevers and Cord Shavers, but they do it as an accretive offering, not a cannibalistic one. That's at least the attempt. They don't want to exchange out dollars for digital dimes. If that starts to happen, they'll make the OTT offering weaker, or jack up the prices to stop the cannibalization.
Look at what your cell phone bill is like today vs 5 years ago. How about PC video games, which is a much better comparison than the one people trot out each year to compare video to the song download industry. PC Video games can be bought directly over the internet, just download and go...no need to go to Best Buy or Gamestop. Prices are still $60 a game, despite the "delivery" system being more efficient. Difference is they can also discount old games and still monetize them, much like video is today with old stuff on Netflix, Hulu, CBS All Access...new products coming out from Directv, Dish, etc.
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You should read the analysts at Morgan Stanley, Chase, etc that came out with their assessment today on this. Pretty funny stuff and I say that as someone now in the OTT space.
As one guy put it
$5.99 for CBS content, no sports, no live feeds
$7.99 for NBC and ABC and Fox (Hulu), no live feeds, no sports
$9.99 for Netflix
$24.99 to $29.99 for HBO
About $40, no ESPN, almost nothing live, no sports, limited to 2 streams max....etc. As the Morgan Stanley analyst said...can't see this service getting more than a few million subs in 5 years, the value isn't there.
I guess i'm in that few million. I'm actually ok with paying for the above since it's cheaper than the $110/mo cable would cost. I'm not enough of a sports guy to need to have access to every NHL/MLB/NBA game
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These are the likely options...no particular order
1) HBO rolls out win a diluted product that has new shows, none of the older content, limited streams, etc for a price around $15
2) HBO basically opens up HBO Go to everyone and prices it between $15 and $20 (similar to cable rates) and risks the huge marketing dollars currently spent by MVPDS for their product, has to ramp up on call center and marketing on their own, AND puts their TBS, TNT, Boomerang, Cartoon Network, CNN, etc businesses (ad revenue and carriage) at risk because they cannot survive on their own without broad distribution and if people bail on MVPDs just for HBO, they cripple their other businesses in the process
3) HBO Go open to everyone at a much higher price as a stand alone, $25 to $30...preserves their revenue with MVPDs for the most part, captures the upside from the Cord Nevers (who will be pissed off at the price and once again be reminded the world doesn't run on pixie dust)
There are other scenarios, obviously, but these three are the most likely in my view and my interactions. #2 is what entices HBO and also scares the crap out of their parent Time Warner Inc because of Turner Broadcasting. They could obviously try and spin off HBO separately, and that changes the dynamic. A very big HBO negotiation coming with two MVPDs in 2015.....tick tock....interesting times.
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We've (my old gig) been approaching it from the consumer side for a long time as well. It is why we get into so many fights with Disney, AMC, Viacom, Fox, etc. Because #1, most consumers aren't intelligent enough (sorry, that's just the truth) to understand where the costs are coming from and they blame it on the distributor...people aren't out there saying @#$#@ ESPN, they're saying @#$#@ Time Warner, but it's ESPN holding Time Warner over the coals with insane pricing. So the distributors totally get the argument.
I don't think anyone has ever said it is inelastic, but the math is the math. If you can get 100 million homes to pay $100 a month of television but when you go to $120, you have 10 million say that's it, I've had it. The industry is going to take it every time.
100M * $100 = $10,000,000,000 a month
90M * $120 = $10,800,000,000 a month
10% loss in customers, but a huge gain in overall revenue. That's how they look at it and until that 10% loss in customers goes down to 40%, 50%, etc, things aren't changing and that is why Disney and Turner write a $25 billion check to the NBA. That is why AMC is playing games right now with various distributors trying to capitalize on their one hit, Walking Dead. So on and so forth.
Now, what to do with that 10%...which will grow....they bring in OTT products for Cord Nevers and Cord Shavers, but they do it as an accretive offering, not a cannibalistic one. That's at least the attempt. They don't want to exchange out dollars for digital dimes. If that starts to happen, they'll make the OTT offering weaker, or jack up the prices to stop the cannibalization.
Look at what your cell phone bill is like today vs 5 years ago. How about PC video games, which is a much better comparison than the one people trot out each year to compare video to the song download industry. PC Video games can be bought directly over the internet, just download and go...no need to go to Best Buy or Gamestop. Prices are still $60 a game, despite the "delivery" system being more efficient. Difference is they can also discount old games and still monetize them, much like video is today with old stuff on Netflix, Hulu, CBS All Access...new products coming out from Directv, Dish, etc.
Sucks to be the middle man don't it?
Customers can be dumb, but part of it is because they don't have the information. They don't know that ESPN accounts for $9 a month of their cable bill. But as these ala cart services start to "expose" the cost to consumers they'll smarten up.
The change is happening, and while the dumb folks don't understand it....it will change their behavior and content providers and deliverers will have to adapt further as well. Not sure what the picture will look like 5 years from now but it will be very different from where we are.
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Great article in the WSJ today on this.....plus the quote I've used around here often...."Be Careful What You Wish For"....cost per channel will go through the roof and the massive variety we have today, hundreds of channels will go away. Now people usually say "I only watch 10 channels anyway"....problem is the same 10 isn't across the board, so many people will lose out on breadth and depth of programming. One person's "crap" is another person's "treasure", so niche and unique channels go bye bye.
"Programmers, meanwhile, are protective of the bundle because it allows for the pairing of weaker channels with strong ones. Content companies often offer discounts to distributors for taking weaker channels along with strong ones.
“All these things are so much more expensive when you separate them out,” said David Bank, an analyst at RBC Capital Markets. “You are going to have to pay more for less choice.”"
http://online.wsj.com/articles/prices-add-up-with-a-la-carte-tv-1413501679
I noticed in this article, they talk about ESPN being $30 a la carte....damn...I would hope a publication like the Wall Street Journal would understand economics and business more. Cough cough...Chicago Inferiority complex...cough cough
"Sports networks could be most at risk in an unbundled world. About half of the subscriber fees paid each month by consumers go to channels with sports, even though these channels account for less than a quarter of viewership, according to Nielsen data analyzed by Needham.
If ESPN were taken out of the bundle, for example, it might need to cost as much as $30—instead of the roughly $6 per subscriber it currently charges as part of the bundle, according to SNL Kagan—to recoup its losses from reduced distribution and continue to afford its content.
“We believe that only 20 million ‘super fan’ homes would pay $30/month for ESPN’s group of channels”—not enough for ESPN to have a meaningful advertising business, Ms. Martin wrote."
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Sucks to be the middle man don't it?
Customers can be dumb, but part of it is because they don't have the information. They don't know that ESPN accounts for $9 a month of their cable bill. But as these ala cart services start to "expose" the cost to consumers they'll smarten up.
The change is happening, and while the dumb folks don't understand it....it will change their behavior and content providers and deliverers will have to adapt further as well. Not sure what the picture will look like 5 years from now but it will be very different from where we are.
Actually, no....it doesn't suck to be the middleman. I'd recommend reading today's WSJ article. What sucks is to be a programmer that has really good content but is paid for it by 50% of the people that don't want it, plus having not so great content that is wanted by niche customers that they are also paid on....that's how they get paid. If they now have to sell it individually, their $$$ will be sucked out so fast it will make their head spin, that's why they don't want to break up the bundle. The bundle is driven by them, not the middleman.
I'd read the article.....should be required reading of everyone as soon as they mention the word a la carte...should be a primer.
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Wait....I never said it wouldn't or couldn't happen. Seriously, read...it might help you.
Here's a few things I've said about it
"They've been "considering it" for a few years now and the math doesn't work.....
Now, down the road could it change....of course. But they know for it to change their expenses go through the roof in a way they cannot appreciate."
Also said if they do it, they will have to spend a ton of money to ramp up.....which is now what they have signed up to do. If rumors are true, can't wait to see the reactions here on the price point.
The backtracking has begun - actually looks like Chicos is racing backward.
Akmarq: Something that has been discussed often here (though usually in relation to sports content). HBO is considering allowing people to pay for HBO GO independent of a cable subscription.
Chicos: They've been "considering it" for a few years now and the math doesn't work.
Quite unequivocal - "THE MATH DOESN'T WORK". Oops.... yes it does.
Now you will use semantics and your carpet bomb approach to convince everyone that you never said what we all know that you did say.
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Christ - shoot me in the face if I ever have to work with someone this pompous and in need of approval from a college BBall forum.
+1,000,000
You have to recognize that his heroes are anyone who has power or money. So if any one of those people say it can't be done, Chicos will trumpet from the rooftops that it can't be done. Then, once it happens, he will carpet-bomb the thread denying he ever said what he said.
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I understand it fully.
Trust me, I understand it fully,
I'm paid to understand it
Most of this is the media's fault
This stuff is truly hilarious!! (and that is just from one post).
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Chicos - it seems like a lot of the a la carte projections you mention are based on ESPN maintaining their current revenues based on the # of households that are cable subscribers. ie, if everything went a la carte there would be people who drop ESPN in favor of other programming, and therefore ESPN would have to jack up the price in order to break even. Do any of these projections take into account the number of people (which i think is a significant number, particularly in the 20-40 year old generation) who got rid of cable years ago but would happily pay $10-15 for ESPN programming? Those people aren't a part of the current 'cable based' equation, but would become part of the 'a la carte' equation and help balance things out. just a thought.
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Actually, no....it doesn't suck to be the middleman. I'd recommend reading today's WSJ article. What sucks is to be a programmer that has really good content but is paid for it by 50% of the people that don't want it, plus having not so great content that is wanted by niche customers that they are also paid on....that's how they get paid. If they now have to sell it individually, their $$$ will be sucked out so fast it will make their head spin, that's why they don't want to break up the bundle. The bundle is driven by them, not the middleman.
I'd read the article.....should be required reading of everyone as soon as they mention the word a la carte...should be a primer.
I've read it, and a lot more on the topic beside. Don't confuse dissent opinion with ignorance. While I may not have access to all the data you have, I do understand the metrics, economic levers, and behavioral drivers at work here. Could your version play out? It is certainly a possibility, but I think there are a handful of other possibilities that could play out as well and I think them more likely than your scenario.
The cable market is ripe for disruptive change and the lead revenue stream in the current model is likely a risky bubble proposition. If you look at it from the outside in, I think there are big things a foot that aren't going the direct you think. Agree to disagree I suppose until one of us is proven right.
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SMH....seriously SMH.
I hope the Atlantic can get some business sense....they say it would be $30 a month, but you're right. ::) http://www.theatlantic.com/business/archive/2013/07/how-watching-unbundled-espn-and-amc-could-cost-more-than-your-whole-cable-bill/277916/
Adweek...$30 for ESPN....I sure hope those guys can get away from their "misunderstanding of economics"
http://www.adweek.com/news/television/la-carte-worst-idea-anyone-has-ever-had-151814
Variety...$30 a month for ESPN....they need to do some economics learning. http://variety.com/2013/biz/news/would-you-pay-30-per-month-for-espn-1200563396/
Analysts say $30 a month...analysts no doubt...send them back to ECON 101. http://articles.philly.com/2013-07-17/business/40614790_1_sports-channels-la-carte-sports-fans
Four articles and they all say $30. Coincidence?
Just remember... Nobody in the media prints anything about ESPN without the mouse's permission.
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Just my two cents...
Everyone clamors about the free market, supply and demand, etc, until it threatens their business/sector/livelihood. As well, many situations are status quo and accepted norms right up to the point until they aren't.
Companies aren't going to ever make changes for the benefit of consumers if it causes them to reduce profits or lose consumers. But, I think, in this situation, there are opportunities for change to occur.
Having said that, it takes a hell of a lot of consumers and a hell of a lot of time to change purchase habits and therefore influence companies to change the way they function.
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Four articles and they all say $30. Coincidence?
Just remember... Nobody in the media prints anything about ESPN without the mouse's permission.
You're right. They are putting it out to gauge reaction. Probably using the highest possible price point.
My guess is that they would like to offer it a la carte for close to double what cable companies are charged. ESPN currently is far and away the biggest recipient - getting a little over $6 per subscriber. That will probably go up a couple bucks over the next 3 years. I think they would really hope to be able to offer it for $16 - $20 a month a la carte.
I would jump at that if some other sports networks also go this route - FS1 and MLB. I only have cable for sports and HBO and would love to pull the plug.
But the fact they are putting any numbers at all out there is an indication that it has been talked about and IS being considered.
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Just my two cents...
Everyone clamors about the free market, supply and demand, etc, until it threatens their business/sector/livelihood. As well, many situations are status quo and accepted norms right up to the point until they aren't.
Companies aren't going to ever make changes for the benefit of consumers if it causes them to reduce profits or lose consumers. But, I think, in this situation, there are opportunities for change to occur.
Having said that, it takes a hell of a lot of consumers and a hell of a lot of time to change purchase habits and therefore influence companies to change the way they function.
Well put.
The only change is that I would add "start to" after "a lot of time" in your last paragraph. Change always starts agonizingly slow (see gay marriage) and then tends to take off like a banshee once it reaches a certain point.
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If you're interested and have 30 minutes, John Skipper talks somewhat openly about a stand alone ESPN product, cord-cutting, Google and more:
http://recode.net/2014/10/05/why-espn-thinks-it-can-sell-nba-games-on-the-web-without-breaking-up-its-pay-tv-bundle/?utm_source=newsletter#038;utm_medium=email&038;utm_campaign=rc_email_daily&038;utm_content=why-espn-thinks-it-can-sell-nba-games-on-the-web-without-breaking-up-its-pay-tv-bundle (http://recode.net/2014/10/05/why-espn-thinks-it-can-sell-nba-games-on-the-web-without-breaking-up-its-pay-tv-bundle/?utm_source=newsletter#038;utm_medium=email&038;utm_campaign=rc_email_daily&038;utm_content=why-espn-thinks-it-can-sell-nba-games-on-the-web-without-breaking-up-its-pay-tv-bundle)
Scroll down to bottom for video.
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If you're interested and have 30 minutes, John Skipper talks somewhat openly about a stand alone ESPN product, cord-cutting, Google and more:
http://recode.net/2014/10/05/why-espn-thinks-it-can-sell-nba-games-on-the-web-without-breaking-up-its-pay-tv-bundle/?utm_source=newsletter#038;utm_medium=email&038;utm_campaign=rc_email_daily&038;utm_content=why-espn-thinks-it-can-sell-nba-games-on-the-web-without-breaking-up-its-pay-tv-bundle (http://recode.net/2014/10/05/why-espn-thinks-it-can-sell-nba-games-on-the-web-without-breaking-up-its-pay-tv-bundle/?utm_source=newsletter#038;utm_medium=email&038;utm_campaign=rc_email_daily&038;utm_content=why-espn-thinks-it-can-sell-nba-games-on-the-web-without-breaking-up-its-pay-tv-bundle)
Scroll down to bottom for video.
Skipper is an interesting guy, though the problem I have with John is he says one thing and does something totally different. Their new deal with DISH and capping it is exhibit 1A, of course 99.9% of the people out there have no idea what they have done in that deal with the ESPN cap. But he's smart enough to know who pays his bills, and it isn't going to be a la carte anytime before I retire.
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Skipper is an interesting guy, though the problem I have with John is he says one thing and does something totally different. Their new deal with DISH and capping it is exhibit 1A, of course 99.9% of the people out there have no idea what they have done in that deal with the ESPN cap. But he's smart enough to know who pays his bills, and it isn't going to be a la carte anytime before I retire.
I suppose technically, you can't retire if you get laid off first because DTV failed to adapt to the new model.
So with that said, +1.
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There are huge numbers of consumers looking to spend less on TV. As soon as that option becomes available, ESPN needs to change their MO.
I think their are significant numbers of viewers that would pay ala carte for ESPN. I don't think ESPN revenue would be as high as it is now.
Lower player salaries?
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There are huge numbers of consumers looking to spend less on TV. As soon as that option becomes available, ESPN needs to change their MO.
I think their are significant numbers of viewers that would pay ala carte for ESPN. I don't think ESPN revenue would be as high as it is now.
Lower player salaries?
This is quite possibly one of the dumbest things I have ever read on this board. First off, does nothing about college athletes. Secondly, the inference that players should have lower salaries so you can have a cheaper cable bill is laughable. If owners and GM want to stack their rosters with minimum pay level guys, that's on them. If we sheep want to pay big bad cable company lots of $ for sports, that's on us. But put the onus on players?
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This is quite possibly one of the dumbest things I have ever read on this board. First off, does nothing about college athletes. Secondly, the inference that players should have lower salaries so you can have a cheaper cable bill is laughable. If owners and GM want to stack their rosters with minimum pay level guys, that's on them. If we sheep want to pay big bad cable company lots of $ for sports, that's on us. But put the onus on players?
wtf?
Not sure what you're issue is, but you need some meds.
Player salaries are driven, in large part by TV revenue. If sports programming revenue ( I used ESPN specifically, but all sports revenue would be affected) is reduced, it logically follows that it will affect player salaries. Players have negotiated a % of team revenue for salaries. Team Revenue Lower = Player Salary Lower. Anyone with a basic understanding of economic principles should follow that.
I used the form of a question at the end so this could be discussed. I wasn't making a statement. How you jumped to your conclusion is lost on me.
I'm sorry your ignorance of basic economic principles did not allow you to discuss rationally.
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We've (my old gig) been approaching it from the consumer side for a long time as well. It is why we get into so many fights with Disney, AMC, Viacom, Fox, etc. Because #1, most consumers aren't intelligent enough (sorry, that's just the truth) to understand where the costs are coming from and they blame it on the distributor...people aren't out there saying @#$#@ ESPN, they're saying @#$#@ Time Warner, but it's ESPN holding Time Warner over the coals with insane pricing. So the distributors totally get the argument.
I don't think anyone has ever said it is inelastic, but the math is the math. If you can get 100 million homes to pay $100 a month of television but when you go to $120, you have 10 million say that's it, I've had it. The industry is going to take it every time.
100M * $100 = $10,000,000,000 a month
90M * $120 = $10,800,000,000 a month
10% loss in customers, but a huge gain in overall revenue. That's how they look at it and until that 10% loss in customers goes down to 40%, 50%, etc, things aren't changing and that is why Disney and Turner write a $25 billion check to the NBA. That is why AMC is playing games right now with various distributors trying to capitalize on their one hit, Walking Dead. So on and so forth.
Now, what to do with that 10%...which will grow....they bring in OTT products for Cord Nevers and Cord Shavers, but they do it as an accretive offering, not a cannibalistic one. That's at least the attempt. They don't want to exchange out dollars for digital dimes. If that starts to happen, they'll make the OTT offering weaker, or jack up the prices to stop the cannibalization.
Look at what your cell phone bill is like today vs 5 years ago. How about PC video games, which is a much better comparison than the one people trot out each year to compare video to the song download industry. PC Video games can be bought directly over the internet, just download and go...no need to go to Best Buy or Gamestop. Prices are still $60 a game, despite the "delivery" system being more efficient. Difference is they can also discount old games and still monetize them, much like video is today with old stuff on Netflix, Hulu, CBS All Access...new products coming out from Directv, Dish, etc.
What you're suggesting is a premium or super-premium pricing model/strategy. It clearly works for some brands and products. Apple, BMW, Cadillac, Marlboro to name a few.
Big picture, the risk is this:
If "traditional" cable moves to a premium pricing model (with less penetration, but better profit per customer), it creates a gap in the marketplace.
Examples:
- iphone is a great product that has high demand, and people are willing to pay a premium. However, if you look at marketshare, Apple left a hole at the middle/bottom end of the global market, and Android and google filled it with more reasonably priced products.
- BMW makes a fantastic car, but Toyota and Honda sell waaaaay more cars in the mid and bottom tiers.
- "traditional" video games are sold for a premium price (takes a lot of overhead to develop a game), but games like "Angry Birds" are far more popular and are profitable for their developers.
So, I think you are probably correct, "traditional cable" is not going to go away, but you might see far less market penetration at a premium pricing model, which would ultimately hurt ratings and/or ad revenue, as well as leave a pretty big hole at the bottom of the marketplace for cheaper/alternate content creators as well as alternate providers.
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Lord shoot me in the chest if I ever have to go on a website and say "but blah blah blah said it wouldn't happen" when the person I was trying to be a dick too never said what I claimed him to say, but I was hopeful I could get my pud flying at half staff to prove a point that ultimately I didn't prove because the guy I was trying to zing never actually said what I was trying to zing him with".....all so I could score points on a college BBall forum.
Nobody is trying to zing you as hard as you think they are. It's light teasing. Relax. I still don't believe you're very good at your job or enjoyable to be around.
And please God, shoot me in both balls if I ever change my username after a 17 year old kid in the hopes that he comes to my school...maybe he'll read my username and come here because of me. You call someone out for being condescending when all you were from the start of this thread is be condescending ....when someone returns serve you get upset.
I changed my handle after HE had already committed. Mind paying as close attention to my MUSCOOP activity as you expect from me?
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Just my two cents...
Everyone clamors about the free market, supply and demand, etc, until it threatens their business/sector/livelihood. As well, many situations are status quo and accepted norms right up to the point until they aren't.
I have no idea what this means? Clamoring about the free market? Are you trying to say that people like it when they're making money and don't when they aren't? I'd agree with that.
Well put.
The only change is that I would add "start to" after "a lot of time" in your last paragraph. Change always starts agonizingly slow (see gay marriage) and then tends to take off like a banshee once it reaches a certain point.
Gay marriage isn't really a market topic... It was brought up earlier, but Uber is a great example of fast change taking a huge chunk of revenue from established players. Same with the iPhone (RIM), or Netflix (Blockbuster).
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What you're suggesting is a premium or super-premium pricing model/strategy. It clearly works for some brands and products. Apple, BMW, Cadillac, Marlboro to name a few.
Big picture, the risk is this:
If "traditional" cable moves to a premium pricing model (with less penetration, but better profit per customer), it creates a gap in the marketplace.
Examples:
- iphone is a great product that has high demand, and people are willing to pay a premium. However, if you look at marketshare, Apple left a hole at the middle/bottom end of the global market, and Android and google filled it with more reasonably priced products.
- BMW makes a fantastic car, but Toyota and Honda sell waaaaay more cars in the mid and bottom tiers.
- "traditional" video games are sold for a premium price (takes a lot of overhead to develop a game), but games like "Angry Birds" are far more popular and are profitable for their developers.
So, I think you are probably correct, "traditional cable" is not going to go away, but you might see far less market penetration at a premium pricing model, which would ultimately hurt ratings and/or ad revenue, as well as leave a pretty big hole at the bottom of the marketplace for cheaper/alternate content creators as well as alternate providers.
I agree this is likely for cable to move along the cost curve.... I, for one, watch way less TV than I did in college. I'll catch 30-60min per week, if at all.
It just doesn't make sense for me to pay for 200 channels (144,000 hours of content per month) for ~$100. While that's a great "deal" at effectively <$0.01 per hour of content, I only watch 4 hours per month... that comes to $25 per hour.
However, if I can get just that content that I really want to watch a la carte, for $5/hour (for example), that's a great value. Someone will come into the marketplace to grab that opportunity to grab more cash.
I am not unique - more entertainment options are grabbing leisure hours, and TV is less and less of the equation for many younger than 35.
This may not be the death blow, but cable subscriptions make no sense to either the content provider or consumer, and will eventually be phased out.
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I agree this is likely for cable to move along the cost curve.... I, for one, watch way less TV than I did in college. I'll catch 30-60min per week, if at all.
It just doesn't make sense for me to pay for 200 channels (144,000 hours of content per month) for ~$100. While that's a great "deal" at effectively <$0.01 per hour of content, I only watch 4 hours per month... that comes to $25 per hour.
However, if I can get just that content that I really want to watch a la carte, for $5/hour (for example), that's a great value. Someone will come into the marketplace to grab that opportunity to grab more cash.
I am not unique - more entertainment options are grabbing leisure hours, and TV is less and less of the equation for many younger than 35.
This may not be the death blow, but cable subscriptions make no sense to either the content provider or consumer, and will eventually be phased out.
Right.
As it stand, cable is priced for the masses, but if that $ continues to inflate, it will open up a hole for a lower cost alternative option.
Also, if you really want to extrapolate it, you might find content creators who feel they can create and even distribute content more efficiently than the current model. It's the "angry birds" effect. Could the next "Seinfeld" be developed and distributed via a cheap app, instead of somebody paying $X to a provider, studio, producer and distributor to get a bunch of content they don't actually use?
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Right.
As it stand, cable is priced for the masses, but if that $ continues to inflate, it will open up a hole for a lower cost alternative option.
Also, if you really want to extrapolate it, you might find content creators who feel they can create and even distribute content more efficiently than the current model. It's the "angry birds" effect. Could the next "Seinfeld" be developed and distributed via a cheap app, instead of somebody paying $X to a provider, studio, producer and distributor to get a bunch of content they don't actually use?
That is essentially under way.
http://www.businessweek.com/articles/2014-08-28/youtube-hollywoods-hit-factory-for-teen-entertainment (http://www.businessweek.com/articles/2014-08-28/youtube-hollywoods-hit-factory-for-teen-entertainment)
Content creation and distribution is getting less expensive and more accessible every year.
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Content creation and distribution is getting less expensive and more accessible every year.
(http://3.bp.blogspot.com/-ogwtVdHQJg4/UB5s8WoZXKI/AAAAAAAACG0/hRqV9X4hnAo/s320/star-trek-nodding.gif)
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That is essentially under way.
http://www.businessweek.com/articles/2014-08-28/youtube-hollywoods-hit-factory-for-teen-entertainment (http://www.businessweek.com/articles/2014-08-28/youtube-hollywoods-hit-factory-for-teen-entertainment)
Content creation and distribution is getting less expensive and more accessible every year.
Another interesting one, Pluto.TV. As someone who viewed almost all of my channels as filler garbage that I only cycled through when terribly bored, it's basically a free replacement of 100 of them.
http://www.forbes.com/sites/jjcolao/2014/03/31/hey-cord-cutters-pluto-tv-launches-with-85-channels-of-free-tv-style-internet-video/
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There are huge numbers of consumers looking to spend less on TV. As soon as that option becomes available, ESPN needs to change their MO.
I think their are significant numbers of viewers that would pay ala carte for ESPN. I don't think ESPN revenue would be as high as it is now.
Lower player salaries?
The TV contracts are guaranteed until 2026. ESPN will get theirs for many many many years to come.
ESPN has done the math, they know there aren't significant numbers that will pay for ESPN a la carte at the rate they need them to be paid in order to stay profitable. Otherwise, they would have already done it. I know one provider that is in a major negotiation with them right now and has been for the last year....lots and lots and lots of $$$$ is going to prevent straight a la carte for a long long time. You'll see "skinnier" bundles, but with subscriber caps on them.
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This is quite possibly one of the dumbest things I have ever read on this board. First off, does nothing about college athletes. Secondly, the inference that players should have lower salaries so you can have a cheaper cable bill is laughable. If owners and GM want to stack their rosters with minimum pay level guys, that's on them. If we sheep want to pay big bad cable company lots of $ for sports, that's on us. But put the onus on players?
Good Lord, I still laugh. "big bad cable".....why do so many of you not understand what drives the price? "Big bad cable" has about 10% in profit margin...10%!!! Go look at the profit margins of the content creators.
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Right.
As it stand, cable is priced for the masses, but if that $ continues to inflate, it will open up a hole for a lower cost alternative option.
Also, if you really want to extrapolate it, you might find content creators who feel they can create and even distribute content more efficiently than the current model. It's the "angry birds" effect. Could the next "Seinfeld" be developed and distributed via a cheap app, instead of somebody paying $X to a provider, studio, producer and distributor to get a bunch of content they don't actually use?
Again, the comparison to a game app or a song...... ::) Something that costs very little to make. I was at a conference last year where Angry Birds cost to create was stated at $165K total. An album is created for half that.
Ironic that you used Seinfeld, which got big because of mass distribution which is needed to get big. Costs huge money to create the content for tv and many of them don't make it with the public. If a game app doesn't make it, you're out a little money. Much different than television. To this day, never understand why people make these comparisons.
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That is essentially under way.
http://www.businessweek.com/articles/2014-08-28/youtube-hollywoods-hit-factory-for-teen-entertainment (http://www.businessweek.com/articles/2014-08-28/youtube-hollywoods-hit-factory-for-teen-entertainment)
Content creation and distribution is getting less expensive and more accessible every year.
MCNs....if I go through another MCN presentation begging for money I am going to scream. The media loves to say how great they are, and about 5 to 7 of them have been purchased by major conglomerates, but most of them are surviving on YouTube ad dollars and begging for $$$ to stay afloat. Lots of pixie dust fandom out there that are realizing that having a bunch of users (young folks) that don't want to pay for anything or believe stuff should be free doesn't drive their business models....I can tell you more than a few that are young guys who have told me "this stuff costs real money, it's hard to run a business". Gee, no kidding...that's the problem with your model, your customers don't want to pay for anything.
It's an interesting space, one that my 12 year old loves. Whether it's Machinima, Maker, Vevo, Fullscreen, etc. Some of these guys have a value play, but way too many simply do not. A number of the "artists" that have agreed to deals with these MCNs are now wishing they hadn't. It's interesting to watch, to say the least.
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Again, the comparison to a game app or a song...... ::) Something that costs very little to make. I was at a conference last year where Angry Birds cost to create was stated at $165K total. An album is created for half that.
Ironic that you used Seinfeld, which got big because of mass distribution which is needed to get big. Costs huge money to create the content for tv and many of them don't make it with the public. If a game app doesn't make it, you're out a little money. Much different than television. To this day, never understand why people make these comparisons.
#1 You brought up video games as a good comparison, not me.
Look at what your cell phone bill is like today vs 5 years ago. How about PC video games, which is a much better comparison than the one people trot out each year to compare video to the song download industry. PC Video games can be bought directly over the internet, just download and go...no need to go to Best Buy or Gamestop. Prices are still $60 a game, despite the "delivery" system being more efficient. Difference is they can also discount old games and still monetize them, much like video is today with old stuff on Netflix, Hulu, CBS All Access...new products coming out from Directv, Dish, etc.
Angry Birds is an excellent example. It competes with PC games. Its a cheaper alternative that came into play because of the new handsets and delivery model. They didn't need a large studio and years and years to develop it. It's low investment, low cost, high volume.
Not every television show is going to be "True Detective". And, as the premium shows continue to increase in cost, it does leave a place in the market for a lower cost alternative.
#2 Don't be so literal. I don't mean the next "Seinfeld" literally. I simply mean that instead of a traditional sitcom becoming a social icon (MASH, Cheers, Seinfeld, Friends, etc.), maybe it's something through alternate distribution. The marketplace is so segmented now, that nothing is going to reach as much mass appeal, and that only supports a more targeted, efficient approach.
#3 Honestly, I just think your too close to this subject matter to see the larger picture. You keep talking in contracts and red tape, and that's fine (it's what you know), but big picture, how consumers receive content, how content is distributed, and ultimately how content is created is all evolving right now. Networks and distributors can sign all of the contracts they want, but consumer economics will determine who wins and who loses.
It won't happen tomorrow. It won't happen overnight, but it's going to change. That's all everybody in this thread is talking about. CHANGE.
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Good Lord, I still laugh. "big bad cable".....why do so many of you not understand what drives the price? "Big bad cable" has about 10% in profit margin...10%!!! Go look at the profit margins of the content creators.
Again, the comparison to a game app or a song...... ::) Costs huge money to create the content for tv and many of them don't make it with the public. If a game app doesn't make it, you're out a little money. Much different than television. To this day, never understand why people make these comparisons.
Are you telling us the content creators make less than 10% or more?
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Are you telling us the content creators make less than 10% or more?
interesting to see if he ever reaches the point of embarrassment...
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#1 You brought up video games as a good comparison, not me.
Angry Birds is an excellent example. It competes with PC games. Its a cheaper alternative that came into play because of the new handsets and delivery model. They didn't need a large studio and years and years to develop it. It's low investment, low cost, high volume.
Not every television show is going to be "True Detective". And, as the premium shows continue to increase in cost, it does leave a place in the market for a lower cost alternative.
#2 Don't be so literal. I don't mean the next "Seinfeld" literally. I simply mean that instead of a traditional sitcom becoming a social icon (MASH, Cheers, Seinfeld, Friends, etc.), maybe it's something through alternate distribution. The marketplace is so segmented now, that nothing is going to reach as much mass appeal, and that only supports a more targeted, efficient approach.
#3 Honestly, I just think your too close to this subject matter to see the larger picture. You keep talking in contracts and red tape, and that's fine (it's what you know), but big picture, how consumers receive content, how content is distributed, and ultimately how content is created is all evolving right now. Networks and distributors can sign all of the contracts they want, but consumer economics will determine who wins and who loses.
It won't happen tomorrow. It won't happen overnight, but it's going to change. That's all everybody in this thread is talking about. CHANGE.
Once again, your post makes perfect sense. Chicos comes at this from one angle - and ONLY one angle. What do the rich and powerful say is going to happen? That is all that he sees.
Change will come. At times it will be very slow and at others it will be sudden. We see this with HBO's announcement (something they would never do because of content or whatever). I am sure that just a short time ago, they never thought they would do this, but markets change.
And the success of Netflix was a huge driver in that change. They were able to deliver quality content directly to consumers. They are the competition that HBO is preparing to battle with.
It also was not too many years ago where the Networks would never dream of having a 3rd-party deliver their "content". But because of changes in technology and society, they do it to survive. A hit show now will generate maybe half the audience that a Seinfeld did not too many years ago. There are too many choices now.
We still don't know what the landscape will look like, but it will absolutely not be as CBB envisions. Despite what he (or ESPN) says, there will be a standalone ESPN product. It is evolution and it cannot be stopped by the powers that be. We just aren't sure what that evolution will look like.
The power brokers (and wannabe power brokers) resist change because they don't know what their place will be in a changed world. Change will come regardless.
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SMH....seriously SMH.
I hope the Atlantic can get some business sense....they say it would be $30 a month, but you're right. ::) http://www.theatlantic.com/business/archive/2013/07/how-watching-unbundled-espn-and-amc-could-cost-more-than-your-whole-cable-bill/277916/
Adweek...$30 for ESPN....I sure hope those guys can get away from their "misunderstanding of economics"
http://www.adweek.com/news/television/la-carte-worst-idea-anyone-has-ever-had-151814
Variety...$30 a month for ESPN....they need to do some economics learning. http://variety.com/2013/biz/news/would-you-pay-30-per-month-for-espn-1200563396/
Analysts say $30 a month...analysts no doubt...send them back to ECON 101. http://articles.philly.com/2013-07-17/business/40614790_1_sports-channels-la-carte-sports-fans
I get this business, I get the economics just fine.
Now, your paragraph above shows you just absolutely do not get what you are talking about. Absolutely ESPN would get north of $20. You fail to recognize that ESPN TODAY gets about $7 to $8 per month per subscriber from about 100 million paid tv homes. Do the math. They have liabilities in to the many many billions, added to it just the other day with the NBA. Do the math, this isn't hard....all it takes is someone with a business background. Oh the irony...give it a try.
For a business guy, I get the economics just fine because I understand the nuances of how it works, and honestly...you don't....and if I'm being snarky and condescending about it, too bad. You begged for a response a few times in this thread, I was busy working (where you were condescending yourself), so I'm giving you the answer. I'm tired, but your snarky tone deserved a snarky response. Clearly, you are out of your element in this space...completely.
Wow, Chicos, take a deep breath. No snark or condescension intended at all. Just some good-natured ribbing.
For a guy who assures us (depending on the day) that it will either never happen or could never work out, you sure are pretty defensive about something that isn't going to happen.
Sure, ESPN can get $30/mo. And it will have an incredibly small base of viewers who actually pay it. But, hey, if you're right and they can get back every dollar they're currently getting, why worry?
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Once again, your post makes perfect sense. Chicos comes at this from one angle - and ONLY one angle. What do the rich and powerful say is going to happen? That is all that he sees.
Change will come. At times it will be very slow and at others it will be sudden. We see this with HBO's announcement (something they would never do because of content or whatever). I am sure that just a short time ago, they never thought they would do this, but markets change.
And the success of Netflix was a huge driver in that change. They were able to deliver quality content directly to consumers. They are the competition that HBO is preparing to battle with.
It also was not too many years ago where the Networks would never dream of having a 3rd-party deliver their "content". But because of changes in technology and society, they do it to survive. A hit show now will generate maybe half the audience that a Seinfeld did not too many years ago. There are too many choices now.
We still don't know what the landscape will look like, but it will absolutely not be as CBB envisions. Despite what he (or ESPN) says, there will be a standalone ESPN product. It is evolution and it cannot be stopped by the powers that be. We just aren't sure what that evolution will look like.
The power brokers (and wannabe power brokers) resist change because they don't know what their place will be in a changed world. Change will come regardless.
Well, to be fair to Chico's, I don't think we're going to see the destruction/demise of traditional cable next week or next month.
He's correctly pointed out that there is too much profit/money invested in the "traditional" model. They may lose marketshare, but that doesn't mean they will lose profit. Totally valid.
But, I think it's been said over and over again, change is afoot. The "premium pricing" for entertainment leaves a hole in the market for something that is "value priced".
That doesn't mean bundled cable is going to go away, but there is a risk that market penetration will eventually be eroded to the point where the networks cannot create the necessary ad revenue to afford their expensive content.
The networks need viewership... that makes the premium pricing model a risky proposition, especially if/when lower priced options get created (right now people view recycled content on Netflix, but how long before there is decent "value priced" content available?).
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Getting rid of cable is the first step. After you give it up, you will see the light :D And since you won't have ESPN you will have more time with the family, kids, walks, etc ;D Sitting around watching sports is no way to live, especially since they usually go hand in hand with eating junk food and weight gain. :P
Sorry, I'm just in a jovial mood today and my work PC is with the IT guy so I have too much time on my hands.
But until there is a major shake out with people saying no to cable, Chico's is right, the system will keep turning AS IS. The cost now for standalone products for HBO and ESPN is probably too high to go it alone.. which tells us that the cable TV market is inefficient and giving too much money to a few such as ESPN in order to give service to a vocal minority. Inefficiencies tend to be weeded out over time. I do believe it is a bubble who's time has not come yet. The propping up of ESPN by the many for the few won't last forever. So if you love ESPN and it keeps you with cable, you should send a thank you note to the other subscribers who help pay for your ESPN.
The house of cards will come down, but just not yet.... I think the big thing that could happen, is if the 4 broadcast networks got together and offered their stations and sub stations for a flat fee over the internet, apple tv, google tv, etc for $25 or less. CBS alone at $6 won't do it, especially when it is available over the air (and then anywhere with a Tivo). Getting the major networks away from cable... everything would change. HBO and ESPN would have to offer their services standalone at a reasonable price (even if they lose money) as people flee cable and add netflix, etc.
Chico's can tell me why the networks won't do it. But I'm not talking now, I'm thinking the next 10 years.
Also, if an Apple or Google really wanted to get in the game and offered the networks some sort of loss share to offer their stations over their devices, that could speed things up.
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Another interesting one, Pluto.TV. As someone who viewed almost all of my channels as filler garbage that I only cycled through when terribly bored, it's basically a free replacement of 100 of them.
http://www.forbes.com/sites/jjcolao/2014/03/31/hey-cord-cutters-pluto-tv-launches-with-85-channels-of-free-tv-style-internet-video/
From the article:
In addition to the expected categories of content like news, sports, music and kids, Pluto.TV presents a collection of niches unique to the digital age. The “Pwned FPS” channel shows a stream of first-player shooter clips from video games like Call of Duty and TitanFall. There are four channels devoted exclusively to TED Talks and one for “Fail.” Currently streaming on “Fail”: a show called “Fails Nutpunch Faceplant Wipeoutz.” (emphasis mine)
How does this not infringe on "Ow, My Balls?"
I don't know whether to think Mike Judge a creative genius or Nostradamus.
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Are you telling us the content creators make less than 10% or more?
No, that's my point, they are making a ton more but the distributors are the ones that get the blame. No one blames ESPN for their cable bill, or HBO, or Cartoon Network....they blame the cable company. That's the irony of it all. The profit margin on video is around 10%, which is nothing to crazy....especially compared to many other industries.
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Right.
As it stand, cable is priced for the masses, but if that $ continues to inflate, it will open up a hole for a lower cost alternative option.
Also, if you really want to extrapolate it, you might find content creators who feel they can create and even distribute content more efficiently than the current model. It's the "angry birds" effect. Could the next "Seinfeld" be developed and distributed via a cheap app, instead of somebody paying $X to a provider, studio, producer and distributor to get a bunch of content they don't actually use?
Cable is priced based on what content companies force cable to be priced at. A cable company might only want ESPN and ESPN2, no Disney content. Too bad. Disney forces it all on the cable company and guess what, you'll take Longhorn Network as well and like it. OH, and distribution, guess what cable company...ESPN has to be in 90% of your customer's homes, if not....you don't get to carry it.
So on and so forth.
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Cable is priced based on what content companies force cable to be priced at. A cable company might only want ESPN and ESPN2, no Disney content. Too bad. Disney forces it all on the cable company and guess what, you'll take Longhorn Network as well and like it. OH, and distribution, guess what cable company...ESPN has to be in 90% of your customer's homes, if not....you don't get to carry it.
So on and so forth.
Correct, but if ESPN wants $400 per month, the market penetration would drop, right?
Right now, cable is at a price point where a lot of people are willing to pay. I don't know how elastic or inelastic the demand is.
If content creators and distributors move to a premium pricing strategy, I think we'll find out.
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What you're suggesting is a premium or super-premium pricing model/strategy. It clearly works for some brands and products. Apple, BMW, Cadillac, Marlboro to name a few.
Big picture, the risk is this:
If "traditional" cable moves to a premium pricing model (with less penetration, but better profit per customer), it creates a gap in the marketplace.
Examples:
- iphone is a great product that has high demand, and people are willing to pay a premium. However, if you look at marketshare, Apple left a hole at the middle/bottom end of the global market, and Android and google filled it with more reasonably priced products.
- BMW makes a fantastic car, but Toyota and Honda sell waaaaay more cars in the mid and bottom tiers.
- "traditional" video games are sold for a premium price (takes a lot of overhead to develop a game), but games like "Angry Birds" are far more popular and are profitable for their developers.
So, I think you are probably correct, "traditional cable" is not going to go away, but you might see far less market penetration at a premium pricing model, which would ultimately hurt ratings and/or ad revenue, as well as leave a pretty big hole at the bottom of the marketplace for cheaper/alternate content creators as well as alternate providers.
You're not totally wrong on the conceptual part. Though I would use different words. The pricing for cable \ etc isn't necessarily a premium play, it's the cost of doing business to pay for all the content the content creators or forcing.
Yes, I agree that will create a separation and OTT will fill that gap. You'll see more and more of the networks trying to fill that void. Here's where it gets interesting, however. The networks are trying to capture the cord never dollars without jeopardizing the huge revenues they get from pay tv. They will use price as their lever to do that. That's why CBS the other day came out at $5.99....that's a rip off for that content you are getting and very few people will ditch pay tv for that kind of product, but it's enough of a lure for those that had no gumption to buy pay tv in the first place to take it for a spin.
Where it gets interesting is when too many people leave pay tv for the alternative, then their (the content creators) golden goose is in major jeopardy, including all the $$$ needed to create their content in a model in which a lot of stuff never makes it or doesn't last long. If that starts happening, most analysts in this space will tell you they will jack up the OTT rates so much to basically get the missing revenue there, and at that point you're back to square one. They can't give up their revenues needed to produce the content, but conceptually you are correct.
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You're not totally wrong on the conceptual part. Though I would use different words. The pricing for cable \ etc isn't necessarily a premium play, it's the cost of doing business to pay for all the content the content creators or forcing.
Yes, I agree that will create a separation and OTT will fill that gap. You'll see more and more of the networks trying to fill that void. Here's where it gets interesting, however. The networks are trying to capture the cord never dollars without jeopardizing the huge revenues they get from pay tv. They will use price as their lever to do that. That's why CBS the other day came out at $5.99....that's a rip off for that content you are getting and very few people will ditch pay tv for that kind of product, but it's enough of a lure for those that had no gumption to buy pay tv in the first place to take it for a spin.
Where it gets interesting is when too many people leave pay tv for the alternative, then their (the content creators) golden goose is in major jeopardy, including all the $$$ needed to create their content in a model in which a lot of stuff never makes it or doesn't last long. If that starts happening, most analysts in this space will tell you they will jack up the OTT rates so much to basically get the missing revenue there, and at that point you're back to square one. They can't give up their revenues needed to produce the content, but conceptually you are correct.
Well, now we're getting someplace!
I completely understand content creators and cable companies trying to capture different segments of the market. Totally makes sense. It's a teeter totter that they are riding right now.
How do viewership #'s and ad revenue come into play?
If I understand you correctly, it sounds like networks are looking for usage fees more than ad revenue.
Could an alternate/cheaper business model concentrate on ad revenue instead of usage fees? Maybe the ads are built in and can't be skipped? Maybe the ad content is custom for each viewer? (similar to google).
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What is OTT? Do you mean the same as OTA (over the air)?
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No, that's my point, they are making a ton more but the distributors are the ones that get the blame. No one blames ESPN for their cable bill, or HBO, or Cartoon Network....they blame the cable company. That's the irony of it all. The profit margin on video is around 10%, which is nothing to crazy....especially compared to many other industries.
My point was your 1st quoted post telling us that content creators get all the $$$ not Big Cable but your 2nd post I quoted you state how high the costs in creating content are (and logically why that is), if their margins are so much higher than the 10% Big Cable gets perhaps it is too high to sustain.
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If I understand you correctly, it sounds like networks are looking for usage fees more than ad revenue.
I think that is what they would like. As network viewership goes down drastically (as it has), they will need to look for other revenue streams.
That the is Catch-22. More usage fees mean higher cable prices. Higher cable prices means fewer customers. Fewer customers means lower usage fees.
It's going to take a few years for the market to figure itself out. That's why the HBO experiment is going to be so interesting.
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Correct, but if ESPN wants $400 per month, the market penetration would drop, right?
Right now, cable is at a price point where a lot of people are willing to pay. I don't know how elastic or inelastic the demand is.
If content creators and distributors move to a premium pricing strategy, I think we'll find out.
Correct. My point was that the pricing is mostly driven by the bundling forced on distributors. As far as price elasticity, that argument has been going on for the last 15 years about television, tickets to Disneyland, tickets to the ballgame, etc, etc. There's a ceiling, sure, but those discussions have been going on for decades.
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My point was your 1st quoted post telling us that content creators get all the $$$ not Big Cable but your 2nd post I quoted you state how high the costs in creating content are (and logically why that is), if their margins are so much higher than the 10% Big Cable gets perhaps it is too high to sustain.
OTT = Over the Top. Netflix, Hulu, Dramafever, Crackle, etc are OTT providers. It's an industry term, but is coming more into the mainstream now. My world was the linear satellite side for many years, but I have changed gigs to be in the OTT space now. Essentially providing video "over the top" from a managed network (which has it's own share of issues) and without a decoder piece of hardware like a set top box.
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My point was your 1st quoted post telling us that content creators get all the $$$ not Big Cable but your 2nd post I quoted you state how high the costs in creating content are (and logically why that is), if their margins are so much higher than the 10% Big Cable gets perhaps it is too high to sustain.
I don't believe I ever said content creators get all the $$$.
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Correct. My point was that the pricing is mostly driven by the bundling forced on distributors. As far as price elasticity, that argument has been going on for the last 15 years about television, tickets to Disneyland, tickets to the ballgame, etc, etc. There's a ceiling, sure, but those discussions have been going on for decades.
You're not wrong, but part of elasticity is a reasonable alternative.
As pricing continues to grow, it does create a vacuum that could be filled by PROFITABLE alternatives.
As you have correctly pointed out, the alternative space will have to be profitable to work. Netflix is still figuring out their business model.
But, once the alternative model is established as profitable, the ball will roll very quickly.
JUST TO ADD:
Tesla couldn't compete when fuel was $.99. Internal combustion vehicles were too reliable, and fuel was too cheap to justify the cost of an electric car.
Alternate content creators and providers couldn't really compete when cable was $40 per month. But, now that cable is reaching $100-$150 per month, there is room for an alternative option to make $ with an alternate plan.
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The house of cards will come down, but just not yet....
Actually, House of Cards is a step in the right direction since it's on Netflix :D
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Glad someone finally wrote what I've been saying for years. People confuse OTT and a la carte as if that is the start of the show, but those are shows that have already been monetized and created off the incoming dollars to fund the creation.
http://www.digitaltrends.com/home-theater/mad-men-and-other-shows-wouldnt-exist-with-a-la-carte-cable/
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Glad someone finally wrote what I've been saying for years. People confuse OTT and a la carte as if that is the start of the show, but those are shows that have already been monetized and created off the incoming dollars to fund the creation.
http://www.digitaltrends.com/home-theater/mad-men-and-other-shows-wouldnt-exist-with-a-la-carte-cable/
It's the same clichés over and over and over.
According to Chicos and his Hollywood friends, no innovation should happen anywhere without subsidies from others.you wonder how he thinks we made any progress as a civilization at all.
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Glad someone finally wrote what I've been saying for years. People confuse OTT and a la carte as if that is the start of the show, but those are shows that have already been monetized and created off the incoming dollars to fund the creation.
http://www.digitaltrends.com/home-theater/mad-men-and-other-shows-wouldnt-exist-with-a-la-carte-cable/
Netflix sells used content.
Netflix now sells new content as well.
The question is: Can Netflix figure out how to be profitable?
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Everything will change as far as delivery (3 years, 5 years, who knows).
This is about platform more than anything else. That is the sole reason for HBO's move. And others will follow quickly if they are successful. HBO is NOT competing against cable companies (who will eventually fall into a delivery role rather than be a platform). They are competing against Netflix and Amazon.
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It's the same clichés over and over and over.
According to Chicos and his Hollywood friends, no innovation should happen anywhere without subsidies from others.you wonder how he thinks we made any progress as a civilization at all.
Funny, when you were given 5 separate articles about ESPN at north of $20 after you said I didn't know what I was talking about, you haven't responded to any of them.
I'm curious why?
I'm all for innovation, I currently work in one of the most innovative technology companies in the country. I'm all about risk, when it is appropriate. The problem you and so many keep making is you want a grab bag to suggest everything is apples to apples, and it isn't. The content guys aren't creating widgets, or for that matter songs. Totally different world, but for some reason you continue not to process it.
So yes, please get back to me on the ESPN call out, you didn't believe me maybe you will believe the various analysts, or Wall Street Journal, etc. But hey, whatever.
Hollywood friends...LOL. That was a good one.
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Netflix sells used content.
Netflix now sells new content as well.
The question is: Can Netflix figure out how to be profitable?
Actually, Netflix subsidizes new content on the backs of old content, one of the reasons it refuses to release ratings on its new content. They aren't selling their new content by itself, for a reason. They are profitable now, but barely....which is probably your point. Volume growth has allowed them to do this, but as volume growth slows, which it is, then things become problematic. That's why they lost 23% of their value last week. That $1 increase had that much impact on subscriber growth...ouch. That much price elasticity for $1. Now, the stock has grabbed back some of that value as people (Mark Cuban among them) see it as a buying opportunity, but they still have a ton of debt and massive competition coming their way as all these MVPDs enter the OTT space to grab that market share.
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The content guys aren't creating widgets, or for that matter songs. Totally different world, but for some reason you continue not to process it.
It's this kind of thinking that is going to run some "content guys" right out of business.
They are ABSOLUTELY creating widgets. It's just entertainment. This isn't the space program.
Seinfeld creates a show about driving cars and getting coffee. It's not that hard. There are talented people out there that know how to create content. It's not a mystery.
How it's distributed and monetized is the big challenge.
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Who woulda thunk it? This is why things have to change!!
Internet Providers Were Throttling Traffic During Netflix Negotiations
Imagine that. If only we had some kind of government agency that was supposed to prevent things like telecom monopolies!
Plenty of Comcast and Verizon customers know just how bad Internet service was on major ISPs during the months-long battle over who should pay to deliver Netflix traffic.
But now we have more numbers on the performance declines, thanks to a new report from the Measurement Lab Consortium (M-Lab). M-Lab hosts measuring equipment at Internet exchange points to analyze connections between network operators and has more than five years' worth of measurements. A report released today examines connections between consumer Internet service providers ("Access ISPs" in M-Lab parlance) and backbone operators ("Transit ISPs"), including the ones that sent traffic from Netflix to ISPs while the money fights were still going on.Netflix eventually agreed to pay Comcast, Verizon, Time Warner Cable, and AT&T for direct connections to their networks, but until that happened there was severe degradation in links carrying traffic from Netflix and many other Web services to consumers.
Connections were particularly bad between ISPs and Cogent, one of the backbone operators that Netflix paid to carry its traffic.
"Using Measurement Lab (M-Lab) data, and constraining our research to the United States, we observed sustained performance degradation experienced by customers of Access ISPs AT&T, Comcast, CenturyLink, Time Warner Cable, and Verizon when their traffic passed over interconnections with Transit ISPs Cogent Communications (Cogent), Level 3 Communications (Level 3), and XO Communications (XO)," researchers wrote.
"In a large number of cases we observed similar patterns of performance degradation whenever and wherever specific pairs of Access/Transit ISPs interconnected. From this we conclude that ISP interconnection has a substantial impact on consumer internet performance—sometimes a severely negative impact—and that business relationships between ISPs, and not major technical problems, are at the root of the problems we observed.
"M-Lab was founded by the New America Foundation's Open Technology Institute, the PlanetLab Consortium, Google, and academic researchers. M-Lab made its full dataset available online and encouraged further research.
New Yorkers suffered most
While M-Lab observed degraded performance across the country, the worst it found was in the New York City connections between Cogent and ISPs. Cogent exchanges traffic with ISPs without payment, but the ISPs demanded money when Cogent was sending more traffic than it received. The dispute continued until Netflix started delivering traffic to ISPs directly, taking the stress off Cogent's connections with ISPs.
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Funny, when you were given 5 separate articles about ESPN at north of $20 after you said I didn't know what I was talking about, you haven't responded to any of them.
I'm curious why?
I'm all for innovation, I currently work in one of the most innovative technology companies in the country. I'm all about risk, when it is appropriate. The problem you and so many keep making is you want a grab bag to suggest everything is apples to apples, and it isn't. The content guys aren't creating widgets, or for that matter songs. Totally different world, but for some reason you continue not to process it.
So yes, please get back to me on the ESPN call out, you didn't believe me maybe you will believe the various analysts, or Wall Street Journal, etc. But hey, whatever.
Hollywood friends...LOL. That was a good one.
Seems like you had a math problem this day.
2 T^3 Sweet Sixteens = few
4 articles = 5
All four of your articles quote the exact same industry-sponsored "report," from Needham Insights.
What is the point of posting four stories about the same exact report?
I hope they enjoy trying to get $30. In for a rude awakening.
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Seems like you had a math problem this day.
2 T^3 Sweet Sixteens = few
4 articles = 5
All four of your articles quote the exact same industry-sponsored "report," from Needham Insights.
What is the point of posting four stories about the same exact report?
I hope they enjoy trying to get $30. In for a rude awakening.
That par for the course for him. Usually it's an opinion from one black guy or one Indian that absolutely proves his point.
With ESPN getting $6+ right now from cable companies, you are absolutely right. The cost will be nowhere near $30.00. That is a number thrown out there to gauge interest.
IMO, it will be in the $15-$18 dollar range including an ESPN Insider subscription.
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With ESPN getting $6+ right now from cable companies, you are absolutely right. The cost will be nowhere near $30.00. That is a number thrown out there to gauge interest.
IMO, it will be in the $15-$18 dollar range including an ESPN Insider subscription.
You're probably about right. It's thrown out there to scare people, and then when it comes in at $14.95 with all sorts of extras, people will breath a sigh of relief.
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Seems like you had a math problem this day.
2 T^3 Sweet Sixteens = few
4 articles = 5
All four of your articles quote the exact same industry-sponsored "report," from Needham Insights.
What is the point of posting four stories about the same exact report?
I hope they enjoy trying to get $30. In for a rude awakening.
Sigh. You're right, you and your vast experience in this space vs their expertise in this space. What was I thinking. No, you're right,....BrandX too.... it will be closer to $15....I mean, of course you guys are right. For the record, I said north of $20, but presented you with an analysts opinion of $30.
Do the math gents. Here are the variables
$8 for ESPN by 2016.
$1 for ESPN 2 by 2016
$.50 for ESPNews & ESPNU by 2016
100M ESPN and ESPN2 paying customers
75M ESPNews & ESPNU customers
About 60% of customers don't watch ESPN today, but are paying for it anyway.
Now, how many more drop off if the price goes up so that they can hit their nut. Don't forget, they are committed to billions through the years 2027 on NFL, NCAA, NBA, etc. They must get the revenues to pay for those liabilities.
Do the math.
Oh, here are a few more. John Malone, you might have heard of him...if you haven't, I'd suggest a google search. He thinks $20. What does he know, should be $14.95 according to you. http://ipcarrier.blogspot.com/2013/04/espn-could-cost-20-month-la-carte.html
Another prediction, $20 to $30 a month. http://www.thewire.com/technology/2013/07/true-cost-la-carte-tv-high/67289/
And another....http://go.bloomberg.com/tech-blog/2013-01-31-your-cable-bills-going-up-again-but-forget-a-la-carte-pricing/
So on and so forth. What was the language you used....clearly doesn't understand economics or business? Uhm, ok. Tell that to John Malone. Or Bloomberg. Etc.
Meanwhile, back to HBO...here's a new analyst, agrees with me that HBO will likely be $20 to $25, I know you two experts thought it would be cheaper, but what do we know. Maybe it does come in cheaper, if it does, they'll lose on the back end with CNN, TNT, TBS, etc. Make sure you factor in the COMPLETE costs.
http://www.bostonglobe.com/business/2014/10/29/despite-cord-cutting-cable-future-looks-very-familiar/L0SeHkhPVKxonu646PQhmI/story.html
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Sigh. You're right, you and your vast experience in this space vs their expertise in this space. What was I thinking. No, you're right,....BrandX too.... it will be closer to $15....I mean, of course you guys are right. For the record, I said north of $20, but presented you with an analysts opinion of $30.
Do the math gents. Here are the variables
$8 for ESPN by 2016.
$1 for ESPN 2 by 2016
$.50 for ESPNews & ESPNU by 2016
100M ESPN and ESPN2 paying customers
75M ESPNews & ESPNU customers
About 60% of customers don't watch ESPN today, but are paying for it anyway.
Now, how many more drop off if the price goes up so that they can hit their nut. Don't forget, they are committed to billions through the years 2027 on NFL, NCAA, NBA, etc. They must get the revenues to pay for those liabilities.
Do the math.
Oh, here are a few more. John Malone, you might have heard of him...if you haven't, I'd suggest a google search. He thinks $20. What does he know, should be $14.95 according to you. http://ipcarrier.blogspot.com/2013/04/espn-could-cost-20-month-la-carte.html
Another prediction, $20 to $30 a month. http://www.thewire.com/technology/2013/07/true-cost-la-carte-tv-high/67289/
And another....http://go.bloomberg.com/tech-blog/2013-01-31-your-cable-bills-going-up-again-but-forget-a-la-carte-pricing/
So on and so forth. What was the language you used....clearly doesn't understand economics or business? Uhm, ok. Tell that to John Malone. Or Bloomberg. Etc.
Meanwhile, back to HBO...here's a new analyst, agrees with me that HBO will likely be $20 to $25, I know you two experts thought it would be cheaper, but what do we know. Maybe it does come in cheaper, if it does, they'll lose on the back end with CNN, TNT, TBS, etc. Make sure you factor in the COMPLETE costs.
http://www.bostonglobe.com/business/2014/10/29/despite-cord-cutting-cable-future-looks-very-familiar/L0SeHkhPVKxonu646PQhmI/story.html
Doesn't matter what your opinion is. And for that matter, it doesn't matter what their opinion is NOW. IF they go a la carte, it will be at a price that they know will sell.
These opinions change all the time depending on the current atmosphere. Years back, probably because of Seinfeld and Friends (among others), network execs decided they didn't want the hassles of high-priced talent. It was cheaper to go with reality shows. So, the smart, creative people went to the cable channels. And the networks are still paying the price.
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Sigh. You're right, you and your vast experience in this space vs their expertise in this space. What was I thinking. No, you're right,....BrandX too.... it will be closer to $15....I mean, of course you guys are right. For the record, I said north of $20, but presented you with an analysts opinion of $30.
Do the math gents. Here are the variables
$8 for ESPN by 2016.
$1 for ESPN 2 by 2016
$.50 for ESPNews & ESPNU by 2016
100M ESPN and ESPN2 paying customers
75M ESPNews & ESPNU customers
About 60% of customers don't watch ESPN today, but are paying for it anyway.
Now, how many more drop off if the price goes up so that they can hit their nut. Don't forget, they are committed to billions through the years 2027 on NFL, NCAA, NBA, etc. They must get the revenues to pay for those liabilities.
Do the math.
Oh, here are a few more. John Malone, you might have heard of him...if you haven't, I'd suggest a google search. He thinks $20. What does he know, should be $14.95 according to you. http://ipcarrier.blogspot.com/2013/04/espn-could-cost-20-month-la-carte.html
Another prediction, $20 to $30 a month. http://www.thewire.com/technology/2013/07/true-cost-la-carte-tv-high/67289/
And another....http://go.bloomberg.com/tech-blog/2013-01-31-your-cable-bills-going-up-again-but-forget-a-la-carte-pricing/
So on and so forth. What was the language you used....clearly doesn't understand economics or business? Uhm, ok. Tell that to John Malone. Or Bloomberg. Etc.
Meanwhile, back to HBO...here's a new analyst, agrees with me that HBO will likely be $20 to $25, I know you two experts thought it would be cheaper, but what do we know. Maybe it does come in cheaper, if it does, they'll lose on the back end with CNN, TNT, TBS, etc. Make sure you factor in the COMPLETE costs.
http://www.bostonglobe.com/business/2014/10/29/despite-cord-cutting-cable-future-looks-very-familiar/L0SeHkhPVKxonu646PQhmI/story.html
Great, Chicos. Best of luck to you and yours. It sounds like you can't lose. Though I do wonder why you then feel the need to be so defensive about it on anonymous message boards.
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Great, Chicos. Best of luck to you and yours. It sounds like you can't lose. Though I do wonder why you then feel the need to be so defensive about it on anonymous message boards.
I get defensive when some clown says I don't understand business or basic economics around an industry I've been part of for many years. Just as I won't tolerate some clown calling my wife a liar and not apologizing. I could be dead wrong on this stuff, but that means many experts in the field are also dead wrong....be it billionaires, business journalists, industry analysts, etc. It can happen.
No one can predict the future, not you or me...many things can happen, I'm merely pointing out that just because you want something to be that way doesn't make it so when it comes to business. The lack of fundamental business understanding on this board is alarming at times, quite frankly. MU should make every student enroll in several business classes because too many graduates either believe fairy dust is running the world or they just don't get it.
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https://www.yahoo.com/tech/showtime-to-launch-streaming-service-for-non-cable-101955056489.html
Showtime follows suit with HBO, and its parent CBS.
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I'm merely pointing out that just because you want something to be that way doesn't make it so when it comes to business.
On this we can agree.
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https://www.yahoo.com/tech/showtime-to-launch-streaming-service-for-non-cable-101955056489.html
Showtime follows suit with HBO, and its parent CBS.
They will all do this - in due time.
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IF IT MAKES MONEY, They will all do this - in due time.
FIFY.
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FIFY.
Good catch!!
There will be some misses as well as hits. As well as assets being bought and sold.
There will probably end up being about three or four major players with several more still in play. It will be interesting to see how it shakes out. Amazon and Google will be players, as well as Netflix, Hulu, HBO and the networks. And of course the cable companies. I think the networks will end up with the short end of the stick eventually - especially based on their track record concerning big decisions.