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Intel to Offer A La Cart?

Discussion in 'DIRECTV Programming' started by ssm06, Jan 2, 2013.

  1. Satelliteracer

    Satelliteracer Hall Of Fame

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  2. Chuck W

    Chuck W Icon

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    Oh it would work. What doesn't work is the math in that article and the cable companies trying to shoehorn the old model pricing into a la carte. You can't use today's pricing to base your a la carte pricing on. People would never buy it and the cable companies would be forced to change. Read some of the comments. Some are quite good at explained the flawed logic in the article.
     
  3. pdxBeav

    pdxBeav Godfather

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    A lot of members of this forum agree with you that Business 101 principles would work with a forced a la carte model. But a lot of people here also think that pricing isn't based on what consumers will pay. It's almost like discussing politics or religion. :)
     
  4. Hoosier205

    Hoosier205 New Member

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    Content owners, not providers. If you want far less content with higher costs...go for it. I'm not worried about it since it hasn't worked and won't work.
     
  5. tonyd79

    tonyd79 Hall Of Fame

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    No, what a lot of us see is that there is no incentive for the model to change. Even if a large number of people drop cable/satellite, it doesn't mean that an a la carte model with numbers that would cheapen your bill are the way it will go.

    Basically, the a la carte fans are telling the pipeline to take less money for everything. So, they are telling ESPN to take less money. They are telling movie studios and sports teams/leagues to take less money. Why should they when they are still making a ton?

    At what point does it make sense for them? If 25% of people drop cable/satellite, does that still make more money for them than going a la carte and not selling at multiples of the cost today?

    The supposed folks who "understand" Business 101 are only looking at what works for the consumer. Sure, free TV would be great, if it still delivered what the consumer wants. First, the consumers are still speaking and they want what they have. Second, there is a lot more in the equation than "ESPN is causing my bill to be too high."

    I will ask once again. If a la carte works, why is NO ONE trying it/doing it? NO ONE. There is not one business in this land that thinks it is a good idea? If it is sustainable, someone would do it.

    The only way it happens by consumers driving the bus is if there is a mass rejection of the current model. At what point is that rejection big enough? You have to make up, not only for linear revenue, but advertising dollars, etc.
     
  6. pdxBeav

    pdxBeav Godfather

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    Everyone agrees that the content providers and programmers don't want to change the current model. Why would they want to change a system that has been very kind to them? That's why nobody is doing it today. Follow the $$$.

    All I'm saying is that it'll work if a la carte or mini-bundles are forced by law or something else.

    Let me ask you this. If a la carte became law would all programmers go out of business if they couldn't sustain the same revenue they had before a la carte?
     
  7. sigma1914

    sigma1914 Well-Known Member DBSTalk Club

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    There's no way your hypothetical law would ever happen.
     
  8. pdxBeav

    pdxBeav Godfather

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    That's why it's hypothetical. ;)
     
  9. Hoosier205

    Hoosier205 New Member

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    Work for who? Content owners? No. Service providers? No. Consumers? No.
     
  10. pdxBeav

    pdxBeav Godfather

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    Content owners? Yes. Service providers? Yes. Consumers? Yes.
     
  11. unixguru

    unixguru Godfather

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    Are you referring only to "TV entertainment" industry?
     
  12. Diana C

    Diana C Hall Of Fame DBSTalk Club

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    I can't believe this thread is still going. :)

    In the final analysis, it is really very simple...

    The original broadcast model was based upon advertising supported content. The networks were allowed to exist, and to buy stations and sign up affiliates, in exchange for delivering free content, supported by advertising. The high cost of producing the content was only met by the fact that since the broadcasters could deliver a VERY large audience, the advertising rates were very high.

    This model has been eroding for years as more narrowly focused channels (aka "cable" channels) have been siphoning off viewers. These channels, in turn, have been able to both get advertising revenue (although at rates FAR lower than the broadcasters) and charge cable and sartellite operators a fee per subscriber. While many of these channels have lower production costs than the broadcast networks, they are still substantial. In order to prop up their ad revenues, they need to reach the largest audience possible - hence the impetus to bundle. By including a niche channel in with some more popular channels, they can insure access to homes not otherwise available, which in turn allows for higher advertising rates.

    If bundling were to be prohibited, then advertising rates would fall back to a "natural" level. The channel operators would then have to make a hard decision: do they try and raise subscription fees to "make up" the "lost" revenue or do they cut costs? Cutting costs means spending less on content acquisition (i.e. more reruns) and operations (i.e. less HD). It is that or cease operation all together.

    So, an al-a-carte model means less programming quality (both in terms of content and technology) or less diversity in channels, or both. If someone can explain how it will be otherwise, please enlighten me.

    The ultimate example of an al-a-carte model is OTA broadcasting - if viewers watch, the advertisers pay and the network makes money. If viewers don't watch, advertising doesn't cover costs and the show is cancelled. But, I hasten to point out, this supports only 4 strong contenders...attempts to start up a 5th and a 6th failed. Again, please explain how "cable" networks are subject to some different economic model, if you can.
     
  13. pdxBeav

    pdxBeav Godfather

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    I look at it from an even higher level: If the rules of the game change no matter what the game is there'll be some who don't adapt and can't play the game any longer. There will be new players in the game and old players who do adapt. All the players will now compete within the new rules and will figure out ways to beat the other guys. This will cause them to get better over time. It's been happening forever.

    It doesn't matter what the industry or product is, if there's demand smart people will figure out how to make it work. The TV industry is no different.
     
  14. pdxBeav

    pdxBeav Godfather

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    But it's so fun! :)
     
  15. Pepe Sylvia

    Pepe Sylvia Legend

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    It's like what happened to the banks. There are a few giant companies that control a lot of content. On top of that, the content providers are also the content creators. Take a look at what Comcast is doing. They own NBC Universal now. It's a seller's market still.

    I used to think that sports teams were crazy by raising the ticket prices so high. People will stop coming, I thought. People are still buying season tickets.
     
  16. Justin23

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    ^ Very well written & explains it perfectly!
     
  17. Satelliteracer

    Satelliteracer Hall Of Fame

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    How?

    You'll have less content. You'll have less choice. You'll have content providers not taking chances on risky, creative programming.

    I'm just curious how what you state above you believe is a win for those three entities, or even ONE of those entities.
     
  18. Satelliteracer

    Satelliteracer Hall Of Fame

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    This is where the fundamental miss is, in my opinion. The TV industry IS different. WILDLY different. This isn't about making widgets, or processors, or cars. It is VASTLY different. The amount of money that the studios, networks, sports channels, etc, has to work with determines what kind of product they can make. The cost of a chip gets cheaper to manufacture. The cost of widget gets cheaper. The cost of sports, does not. The cost of a good series, does not...because you're talking human capital. Actors, crew, stages, athletes, etc. Until you can curb those human capital costs, which no one has been able to, then the costs are going one way...in my opinion. ESPN needs that guaranteed revenue number to pay the NFL, MLB, NBA. HBO needs that guaranteed revenue number to do things like True Blood, Game of Thrones, Boardwalk Empire, etc. Starz needs that money to pay Sony, Disney, etc. On and on.
     
  19. pdxBeav

    pdxBeav Godfather

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    This is speculation. Everybody seems to believe the TV industry is somehow this special thing that can never have a disruption or the whole thing will collapse. Simply not true. Sure, maybe there'll be less content, but if that's an issue then do you want higher prices to get MORE content? Why is the current amount the optimal amount? Should we have more content than we have now? Should the programmers be making more money than they get now in order to fund more content?

    No company is guaranteed a certain revenue number. If that was the case then why don't they lower prices when they increase revenue?

    And when I say it's a win I'm talking about for the companies who successfully adapt to the change. If they are making money then it'll work. And the companies who adapt will make it work.
     
  20. pdxBeav

    pdxBeav Godfather

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    The human capital costs would be reduced if there isn't as much money to go around. But don't misunderstand what I'm saying either. I fully agree that there's no sign of this happening with the current model. My entire argument is predicated on an a la carte model being implemented for whatever reason.

    If actor X got paid $1000 for a unit of work and now there's only $800 available for a unit of work then he'll either do the job for $800 or someone else will.

    Also, the manufacturing cost of a chip is only part of the cost to bring it to market. There are human capital costs too.
     

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