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Intel to Offer A La Cart?

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

  1. Diana C

    Diana C Hall Of Fame DBSTalk Club

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    I know I said I was done, but seeing the research you did, inspired me to do some of my own. So, the current bundled wholesale price of the channels you highlighted is, as near as can be determined from public statements and sources, about $6.00. Being conservative, the unbundled retail price would be something in the neighborhood of $18.00. Since we've already determined that non-premium programming in the Premier tier is $40 at wholesale, that means buying ONLY the channels you highlight would save you $22 per month, plus whatever portion of the wholesale to retail markup on the "dropped" channels DirecTV chooses to pass along to you. This also assumes that you can buy the indicated channels in true al a carte fashion. If Fox, for example, sells their channels as a mini-bundle you might end up paying as much as $30 for a limited set of mini-bundles from Discovery, Fox, Comcast (owners of SyFy) and Time Warner (owners of CNN and Comedy Central).

    Big savings, huh?
     
  2. Satelliteracer

    Satelliteracer Hall Of Fame

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    Family Package has been around for years, more than a decade.

    As for cord cutting, many of the experts (Bernstein, Nielsen, etc) say it isn't happening or happening at such a small pace that is hasn't been noticeable. Pay television subscriptions actually up. Now, younger demographics this isn't the case, but these younger demos have been largely around in an economy the last half decade that has been abysmal. What remains to be seen is when things turn around (if), will they subscribe to more services or remain dependent on Netflix type services only.

    It may happen down the road, but at the end of the day customers want content and content owners are the key here. If they aren't doing deals with Apple, Intel, etc, then there is no change. If they do deals with them, it won't be for less money which means they become just another vehicle to watch content, another pay tv distributor. At that point it is merely a shift from one distributor to another.

    In my opinion.
     
  3. tulanejosh

    tulanejosh Godfather

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    I think it's folly to try to predict Gen Y future behavior based on what they are doing currently because it doesn't account for life style changes that they'll experience over the next decade. Over paying for lofts downtown and trying to queue up 10 year old episodes of their sponge bob isn't going to seem so appealing when today's 20 year old are 30 and have kids of their own to take care of. Think about how different you are today vs the 20 year old version of yourself and how different the things you do now vs then.
     
  4. unixguru

    unixguru Godfather

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    $22/mo is 18% of Premier. $264/yr. NOT chump change.

    Has someone done/published a spreadsheet with the wholesale estimates?

    The Premier step is $47. The a la carte premiums total $57. Obviously there is a lot of discounting of the premiums in the Premier tier. Pretty effective at pushing people into the Premier tier. I showed in earlier post that the savings for Entertainment + Premiums is small. Let's take a wild guess that Premiums are something like $37 of the $47 in Premier. Roughly Premier minus Premiums would be $115.

    So your $40 wholesale is $115 retail or $75 markup. $900/yr for infrastructure, operations, profit, etc PER account.

    This is why sat will go into decline. Internet (even upgraded) infrastructure and operations will cost a fraction of that.

    How is sat radio doing? Sat phone?
     
  5. James Long

    James Long Ready for Uplink! Staff Member Super Moderator DBSTalk Club

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    It is hard to separate the technological differences from the attitude change that comes with age. When I was 20 one could not do most of the stuff we take for granted today. Advanced mobile phones were bricks using 666 analog channels (the old system being shared channel radio dispatch type of systems). The internet was Gopher or AOL/Compuserve with unconnected BBSs being popular. Cable was a couple of dozen channels in a good city ... and mostly locals where it was available. DBS did not exist.

    If everything existed then as it does now I would have done different things.

    Satellite radio is doing fine with over 20 million subscribers. Satellite phone never got to a high level of popularity. Satellite television is doing well with both satellite providers being in the top three list of multi-channel video providers.

    Perhaps satellite television's share will decline as more areas are cabled for television or wired for IPTV. But the market is strong.
     
  6. fireponcoal

    fireponcoal Icon

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    Don't be so sure of that.. I know plenty of people with kids who download everything whether through legal or less then legal means and have no intention of returning to overpaying Direct TV or Comcast. Overpaying for lofts? Hah . Like you really have any real clue what these Gen Y people are truly up to? Keep assuming.
     
  7. Diana C

    Diana C Hall Of Fame DBSTalk Club

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    The only comprehensive list is from 2009 (http://allthingsd.com/20100308/hate-paying-for-cable-heres-the-reason-why/)...add 25% for a rough current estimate, or spend a lot of time searching for individual channels.

    And yes, it is reasonable to guess that the MCOs (this calculus is no different for cable) make about 60% or so beyond the cost of goods (ie. the content). This is why new hardware requires a 2 year commitment.

    However, while the money involved may not be chump change, it is also not the massive savings that many assume would be realized. And, keep in mind, you are giving up access (rare and occasional as it may be) to dozens of other channels.
     
  8. Diana C

    Diana C Hall Of Fame DBSTalk Club

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    Don't be so sure...to support 100 million households streaming all their evening entertainment over the Internet would require MASSIVE upgrades in infrastructure. We're talking numbers a magnitude greater than all the money spent by both satellite companies on satellites combined.
     
  9. Tom Robertson

    Tom Robertson Lifetime Achiever DBSTalk Club

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    And think of the usage caps the ISPs will nail, extort, and charge us for. :)

    Peace,
    Tom
     
  10. bakerfall

    bakerfall Godfather

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    There are a few problems with the theory that internet streaming services are going to become direct competition for cable/satellite providers.

    1.) Existing streaming services (Hulu, Netflix specifically) while compelling, are not providing the live TV experience. Making that leap is a HuGE change and challenge. Prerecorded, streaming content can be compressed higher and is far less content compared to the non-stop live TV of 700 channels

    2.) Internet providers, at least in the US, are almost always also TV providers. While they no doubt understand that supporting streaming services is a large reason why people want broadband, they're not going to let a direct competitor (i.e. a live TV internet based provider) beat them at their own game. Caps and other restrictions would be inevitable.

    3.) This theoretical company who is going to provide internet streamed live TV is not going to be some altruistic company charging wholesale, they'd be in it to make money. Intel, Apple, (insert company name) would only be interested in this space (if they were at all) to sell hardware and would be subject to the same contract negotiations and deals all other providers are. Those costs may start lower, but not substantially lower. The only real example we've seen of this is Google Fiber service which is cheaper and quite frankly is awesome, but that's such a small sample size and we don't know what their margins are. It will be interesting to see what happens, if they expand.

    4.) Cord cutters that I know, of which there are many to be honest, do so to save money with an understanding that their experience will not be equal. You can get a very compelling product pairing antenna with hulu/netflix, but it is not an equal one. If I was single I might even consider it. At this point in my life with a wife and 3 kids all with different viewing habits, having a convenient whole home DVR service with everything in one place makes my life easier and quite frankly, paying DIrecTV every month doesn't impact my finances. Most people I know that have "cut the cord" have done so to save money because they're students, they have lost an income, bought a house, etc. Those circumstances will no doubt change for most, and I would bet most will chose convenience in the long term.
     
  11. Tom Robertson

    Tom Robertson Lifetime Achiever DBSTalk Club

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    Bakerfall,

    Excellent piece of analysis! Very important parts of the Big Picture.

    Peace,
    Tom
     
  12. unixguru

    unixguru Godfather

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    http://www.ieee802.org/3/ad_hoc/bwa/public/sep11/cloonan_01a_0911.pdf

    See slide 12:
    If a 20 Mbps, 3D-HD, H.264 video feed is sent to (on average) 2.3 people per home, then each home should be satiated with an average bandwidth offer
    of (20 Mbps)*(2.3)=46 Mbps.... which we predict we will hit by ~2023

    You have stated in other posts that the DirecTV bitrate is 6-12 Mbps so the average is less than 10. H.265 will reduce this another 40% to around 6 Mbps average.

    That's 1/3 of what that quote references. That pulls in the date from 10 years to what, 5 or less? Do 2.3 people per home watch TV 24 hours a day? We watch about 6 hours so with a DVR that's a quarter of the load per day (spread out over entire day).

    Slide 29:
    The Downstream growth rate has been roughly 1.5x per year... Web-Surfing was the driver of growth in 2000... P2P was the driver of growth in 2008... IP Video is the driver of growth today

    Intel would not be entering this market, whether it is ultimately successful or not, if there wasn't infrastructure and growth projections to support it.
     
  13. Tom Robertson

    Tom Robertson Lifetime Achiever DBSTalk Club

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    Capacity planning is not just about averages. It is also about peaks with locations.

    It doesn't matter if I get 40Mbs at 3am. It matters when most of the families are watching TV in primetime. We often have 3 or 4 tuners recording in the evening.

    Ok, so how many are being watched at one time? When the grandkids visit--4 or 5.

    Lastly, at the same time h.265 will further compress signals (though I do not believe another 40% of a live signal), there will be things expanding that bitstream...

    Peace,
    Tom
     
  14. wmb

    wmb Godfather

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    Very little of the cable market is dependent on the live experience. On most networks, programming is prerecorded and shown in heavy rotation. Many people record the first run of the show to time shift or watch later and skip commercials. The "live experience" is overrated, except in very specific cases. Many people would not care whether these shows were live or streamed.

    The biggest exception to this is sports programming. Sports are typically watched live.

    This is odd because most the largest justification for a la carte is to avoid high cost sports programming.

    True, but the margins for the broadband portion of the business is huge, and they don't have to deal with content providers jacking their costs every chance they get. Given the recent history of last second deals and stoppages of retransmission due to failed recarriage agreements, I think that it is only a matter of time before cable companies tell networks to sell a la carte if they want that higher rate. Look at Dish and Disney. Viacom and DirecTV.

    So, it wouldn't surprise me if in the near future, we see a cable company drop a group of channels and these channels offer themselves as a subscription service.

    The hardware aspect is intriguing. So far, Apple and Microsoft have not put tuners in their systems. I could see an Xbox augmented as a set top box allowing access to both streaming content and OTA/cable content. It would also allow game play and internet access.

    I would see Netflix/Hulus/ESPN/Disneys/Viacoms of the world partnering with Microsoft/Apple/Google to be part of their ecosystems. This could provide a reasonable content universe for a viable a la carte streaming experience in a single location.

    Of course, this will be dependent upon cable companies allowing the high margin, low grief broadband business to operate unencumbered by their lower margin content provision portion of the business.

    I don't see myself cutting the cord in the near future, mostly because of live sports. I have the programming level I do for Fox Soccer and NBC Sports network. Believe it or not, the kids aren't the issue. They are for the most part happy with Youtube and Netflicks. There is some timeshifting of shows, but there are a number of shows on the DVR that don't get watched.

    As time goes by, we are getting more used to accessing content when and where we want it. There are some things about the current business model that makes cord cutting difficult, but the trend is toward the types of things that will make it possible.
     
  15. unixguru

    unixguru Godfather

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    Hulu and Netflix are not the only players. Check out Vudu. Their highest tier PPV is no different than DirecTV.

    Yes, one can correctly state that streaming has some issues. When Vudu programs can be stored on a DVR then there will be NO difference. There is no box at the moment but that is not because it can't be done. The Channel Master OTA DVR has Vudu and the next incarnation of it could do this. Or any others. This is a market that is just starting and it will explode at internet pace.

    As for "live", 700 channels of which 600+ are playing reruns. Take a look at the Premium channels in the guide. They should have the least reruns. How many shows in a given day are playing for the first time? I just randomly picked HBOe for Wed 1/20 and looked through the guide; I don't see anything there that is being broadcast for the first time.

    The truly "live" channels are a small fraction. How often does a new story appear on HLN?

    They won't care in the least. They will get money either through TV or internet bandwidth. Which is cheaper for them to buy, programming or bandwidth? Yep, bandwidth... by far.

    Ask the phone company how well this theory worked for them. They have to sell internet without phone service. They have to sell the pipe wholesale to other companies that sell you internet. The same will happen with cable.

    These companies are not stupid. There must be a compelling argument to buy their service. If it's exactly the same bundling, tiering, and pricing as cable and sat then I agree they will be DOA. It won't be.

    If the next generation of the Channel Master DVR fixes the design/quality problems (or another product like it comes out) then OTA and movies (via Vudu) will be the same experience. My household will then ask the question of whether the cost of traditional TV services justifies the additional low-quality programming.

    Our finances can afford substantial TV costs. We've thrown a lot of money into the fireplace over the years with no value in return. The rate of growth is the problem.

    February 7, 2013: 4.5%
    February 8, 2012: 4%
    February 10, 2011: 4%
    February 2, 2010: 4.5%
    March 4, 2009: 4.7%

    Far above inflation and average raises.
     
  16. bakerfall

    bakerfall Godfather

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    You make some interesting points, but this is almost all conjecture. What evidence do you have that "very little" of the cable market is dependent on live tv? You mention sports, which is huge, but you are leaving off a large segment of the population that doesn't even have DVR. I have DVRs in every room and still watch live TV in at least some fasion, daily. News, sports, movies, etc. While DVRs are prevalent, live TV is still critical to the cable experience.

    Cable can't decide to drop channels and then offer them as subscription. What packages channels are in, how their grouped, what they cost, is all dictated by very lucrative programming agreements. In order for the cable (or satellite) provider to make these changes, they'd have to have the cooperation of the channels/networks. That isn't going to come because one cable/satellite provider wants it, they'd have to ALL want it.

    The Microsoft model has been using an XBOX as a media center extender for live TV, one that works very well I might add. The biggest issue is consolidating all the content into a single view. Using Media center for live/dvr'd TV, hulu for streaming, netflix for streaming, etc. is not intuitive or easy. The streaming providers want their content on everything they can, it's hard to find a cost structure where it makes sense for them to partner with a single hardware provider. The only way that works is for the hardware provider to have an exclusive service (i.e., Apple creating an internet TV provider) and that likely makes little business sense. Instead you'll see something where the cable/satellite gateways allow you to use whatever hardware you want as the user interface, but this changes no cost structure and is a totally different discussion.

    Timeshifting is a far bigger deal for the networks in terms of ad revenue than for the the cable/sat providers. The providers love DVR, it's increased their revenue by making a value add a must have. People pay more to have DVR, they pay more for hardware, they pay more per month, all of this is good.

    The biggest hurdle in my cord cutting, aside from WAF, is sports. I care primarily about my local teams (Bears, Cubs, Blackhawks, Bulls) and aside from the handful of games on WGN, I need to have a pay TV provider for games. The only way this changes is if streaming agreements remove local blackouts. That would be a huge game changer, and is exactly why it won't happen anytime soon.
     
  17. unixguru

    unixguru Godfather

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    With a DVR it doesn't matter what time you watch. http://www.dbstalk.com/showthread.php?p=3067523#post3067523

    Our household, like many others, rarely watches anything live.
     
  18. bakerfall

    bakerfall Godfather

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    Why do you think that the # of reruns, how many times a story reairs, etc. has ANY bearing on how much bandwidth it needs. If things are being broadcast live, they need bandwidth. It doesn't matter if it was aired before, it's being aired again. This is completely irrelevant. Now how much of that content matters to you, or to most people for that matter, is a different story.

    I use Vudu, but it's one of MANY PPV movie services. You can also use: Amazon, xbox movies, PS3 network, apple TV, etc etc. If that's the content you are looking for there is no reason to wait, it's full available.

    Companies use # of subscribers in channel negotiations. Comcast is not going to allow a company to come in and provide the same channels they are at a cheaper cost because they're using Comcast as the delivery method. Netflix, Hulu, vudu, etc. are augmentations of their primary service, not direct competitors.

    If the OTA + Netflix/Vudu model is what you want and meets your needs, why wait at all? That product has been there for years and people on this board have already chosen that route and been happy to do so. It does not meet my needs and I don't see it meeting my needs anytime soon, primarily because of sports.
     
  19. bakerfall

    bakerfall Godfather

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    Again, when you watch it means nothing. Unless you are convincing networks to change when they are airing primetime TV, you are still recording it during those hours, which means the bandwidth is being utilized during those hours at a higher rate.

    If you're recording shows at 7PM on NBC, ABC, FOX, CBS, CW then you are using 5 tuners worth of bandwidth. Agreed, watching that the next day or later than night doesn't use more bandwidth, it still needed that bandwidth at 7 PM. The only way to change this is to stream that content, but most people will still consume content during those primetime hours, so bandwidth peaks would be higher then.
     
  20. sigma1914

    sigma1914 Well-Known Member DBSTalk Club

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    Over half the homes in America with TV don't have a DVR...so they're live viewers. Now, factor in those with a DVR who still watch live and the numbers increase. You make it seem like it's the norm when it's not.


    http://rbr.com/dvr-penetration-raising-eyebrows/
     

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