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Pay TV is changing rapidly

9K views 177 replies 24 participants last post by  slice1900 
#1 ·
It's important to pay attention to the innovative leaders in every industry -- the companies with new ideas that are transforming old technologies. It's not so long ago that Blockbuster was the leader in the video rental space. Not that much time has passed since Kodak was the leader in the camera space. Many of us have experienced the shift in music listening media from vinyl records to cassette tapes, CDs, and then downloadable digital files. Things often change very quickly. Pay TV is changing rapidly as well.
They talked about creating three bundles of services using DirecTV -- for low, medium and heavy users.
Three bundles? What/How would this work?

http://www.technewsworld.com/story/84104.html?google_editors_picks=true
 
#28 ·
lparsons21 said:
Your assumption is not necessarily correct. While the cost of sat/cable is a bit higher than many would like, the younger folks aren't sitting in front of the TV at home, instead choosing to watch on various devices if they watch at all. So even lower rates might not attract them to cable/sat.
By the time streaming actually becomes truly popular and dominant (it's not even close yet contrary to what some will have you believe) its costs will be the same as cable or satellite and then people will see the old way as more bang for the buck since you'll get streaming and traditional for the same price.
 
#29 ·
inkahauts said:
By the time streaming actually becomes truly popular and dominant (it's not even close yet contrary to what some will have you believe) its costs will be the same as cable or satellite and then people will see the old way as more bang for the buck since you'll get streaming and traditional for the same price.
I have to disagree again, streaming is even growing with many cable companies converting over to IPTV technology because its cheaper with less overhead than traditional systems. Nationwide streaming is also becoming more popular and will be equal to if not pass traditional transmission within a few short years.
 
#30 ·
camo said:
I have to disagree again, streaming is even growing with many cable companies converting over to IPTV technology because its cheaper with less overhead than traditional systems. Nationwide streaming is also becoming more popular and will be equal to if not pass traditional transmission within a few short years.
For the context of this thread "streaming" is paying for your tv to be watched over the internet only. Like HBO now or Netflix.

That has nothing to do with cable companies converting to ip technology. That should sweep through in a few years depending on how fast they want to upgrade their infrastructure. Big cities fast where there is lots of competition... middle of nowhere it could be a money waster in some areas.. either way has nothing to do with the intent of what I was talking about.

Check out how many subscribers have sling tv and vue. Not even a million. And there's 118 million homes with a tv.

Streaming as your main source of tv is nowhere near popular at this point as a standalone option.

Netflix has big subscribers because it's more of an add on like HBO. It's not your entire service. Maybe for a few people but that's not its goal and direction.

And how many people who stream a lot of tv shows from services other than Netflix and HBO now are simply using a log in from a cable company? Almost all of them. Literally more than 100 times those who pay (or only watch ota) only for streaming tv. And most of them are probably using their parents logins. And guess what, the companies are fine with that! Because they are getting paid via traditional cable and can sell more targeted ads.
 
#32 ·
lparsons21 said:
Your assumption is not necessarily correct. While the cost of sat/cable is a bit higher than many would like, the younger folks aren't sitting in front of the TV at home, instead choosing to watch on various devices if they watch at all. So even lower rates might not attract them to cable/sat.
You are getting CLOSE.
Younger folks don't have time for TV or even know what it is.
Toooooooooooooooo BUSY TEXTING.
 
#34 ·
The big difference IP providers will make is expanding competition in areas that would traditionally see one cable company and the satellite offerings. There are many that have no interest in having a dish on their house leaving the local cable co. The entire market is going to get turned on it's head here much like the music industry did when the first streaming options came about.

The days of $140 Directv bill seeming fairly normal (after taxes and equipment, fees) are going to come to an end as will the high margins that go with it. It may take 15 years for the landscape to fully change but it will change. There is plenty of fat to trim once competition starts to heat up. Just wait until Netflix, Amazon, Apple, Verizon, Google etc all start jumping into the mix. We are still in baby steps compared to what is coming.

Sling's DVR is useless to me unless they have ALL channels included with the capability. Since that isn't the case Vue is the only service I'm interested in if my situation with D* ever changes.
 
#35 ·
Where we are headed. All these entrants into the market all want to be your "go to" portal.
Link below wraps it up.
DirectTV Now, Sling TV, Google, Amazon,Netflix, Apple, Tmobile, Verizon Sony, Even Walmart with their online VuDu service and many, many more to come.
It only cost a provider 1/2 cent, .5 to deliver 1 hours worth of video over the internet.
If the average person watches 5 hours a day, that would cost the provider only 2.5 cents a day.
Compare that to satellite cost and it's a no brainer.
Where do you guys/girls stand on AT&T's and the many other coming entrants controlling the gates?
Google is going to suprise with their TV package and Fixed Wireless/spectrum buys/rent.

The big difference IP providers will make is expanding competition in areas that would traditionally see one cable company and the satellite offerings
Just wait until Netflix, Amazon, Apple, Verizon, Google etc all start jumping into the mix.
AT&T's among others to come fixed wireless offerings will bring a BIG change to the TV/Internet market.
They are literally turning internet packages into cable bundles
http://www.theverge.com/2016/11/29/13774648/fcc-att-zero-rating-directv-net-neutrality-vs-tmobile

http://www.cnbc.com/2016/11/16/john-malone-thinks-cable-and-wireless-networks-are-destined-to-consolidate.html

https://consumerist.com/2016/11/29/giddy-investors-already-shipping-comcast-verizon-sprint-t-mobile-mergers-under-trump-administration/
 
#36 ·
Where we are headed. All these entrants into the market all want to be your "go to" portal.
Link below wraps it up.
DirectTV Now, Sling TV, Google, Amazon,Netflix, Apple, Tmobile, Verizon Sony, Even Walmart with their online VuDu service and many, many more to come.
It only cost a provider 1/2 cent, .5 to deliver 1 hours worth of video over the internet.
If the average person watches 5 hours a day, that would cost the provider only 2.5 cents a day.
Compare that to satellite cost and it's a no brainer.
Where do you guys/girls stand on AT&T's and the many other coming entrants controlling the gates?
Google is going to suprise with their TV package and Fixed Wireless/spectrum buys/rent.

AT&T's among others to come fixed wireless offerings will bring a BIG change to the TV/Internet market.

AT&T just declared war on an open internet (and us)

Why Liberty Media's John Malone thinks cable and wireless networks are destined to consolidate

Giddy Investors Already 'shipping Comcast, Verizon, Sprint, T-Mobile Mergers Under Trump Administration
You are kidding right? You don't actually believe that's what it costs to deliver a station online? That's not at all even close to true. Heck free stations cost more than that! Where did you even get that idea?
 
#38 ·
Sure, bandwidth is cheap. Let's say it is true that it costs 1/2 cent to deliver an hour of video. If the average customer watches 50 hours a week (counting everyone in the household who watches something different) that would be 25 cents/week or about $12/year. Directv has 20 million customers, so that's a quarter billion dollars a year. Still think the comparison with satellite delivery is a "no brainer"? That cost will drop over time, but it will be years before it is less than the cost of maintaining (and replacing as needed) Directv's satellite fleet.

Obviously there are big savings not having installers or providing hardware like DVRs, but the tradeoff is that support is much more expensive. Assuming it is properly installed, a satellite setup will generally keep working for years without any trouble (other than rain fade) until you have a hardware failure like a drive going out on a DVR. That's definitely not true for streaming - servers can get overloaded, there can be issues along the internet path from Directv to your ISP, your ISP can have issues, your home network can have problems or interference if it is wireless, and so forth. People will be calling a streaming provider ALL THE TIME for issues that they have no control over, and their ability to diagnose problems will be extremely limited. I wouldn't be surprised if Directv needs 10x as many CSRs per streaming customer as they do per satellite customer, because of how much more often there will be problems affecting streaming. That cost must be balanced against the savings in equipment.
 
#39 ·
Chiming in randomly, because of checking out things after the forum upgrade...

My take on his cost post was the same as Aridon's... I can't speak to the monetary values... but it has to be LOTS cheaper to transmit via IP than to have to maintain satellites and uplink sites. So while other costs of creating/transmitting programming would be the same... there would be a substantial savings for a company to transmit the same content via streaming vs a satellite service. So I can see that being a thing that might drive development in that direction. I think there are other hurdles, though, not the least of which being lack of availability nationwide of quality/reliable high-speed Internet access within the US that will stall this being an immediate threat to satellite services.
 
#40 ·
"The pay-TV ecosystem could be "chopped up" into a paradigm that is "truly an à la carte experience."

"The barriers to entry are not great, so pretty much anybody could enter into the marketplace,"

" I've always been concerned that the content creators are going to end up in a place that's maybe not so good for them. But it should be good for consumers. So the business will definitely grow."

Link
Dish Network's Ergen: OTT will 'chop up' the pay-TV ecosystem | FierceCable

"OTT could be bigger than satellite but carries risks for content"
Link
Ergen: OTT could be bigger than satellite but carries risks for content » Digital TV Europe
 
#41 · (Edited)
AT&T's new fixed and mobile internet portal was expected to launch this quarter but has been delayed until some time in early 2017, according to AT&T's multiscreen authentication partner Synacor. The ad-supported multiplatform portal will provide content with a user driven functionality. Synacor CEO Himesh Bhise defended the delay by saying, "given the size and expanded scope of this project and after our recent joint planning we've pushed back the official launch date."
Link
OTT Video News, Deals, Launches and Products - Rethink


CDN costs are around half a penny.
"It's not immaterial, but it is not a cost that we worry about because the costs have continued to come down so significantly
Link
Analyst: 'If Sling wasn't owned by Dish, it'd be out of business' | FierceCable
 
#43 ·
it may be cheaper to deliver content over IP. but do you folks honestly believe that these companies will pass these savings on to us in the long run? another factor is that most of the companies that currently deliver the content via tradiional means are also your ISP. you really think they will let streaming services affect their profits once the current pay tv model finally dies? Better get ready for jacked up internet prices and punitive data caps
 
#44 ·
it may be cheaper to deliver content over IP.
I don't accept that premise. Despite the cost of uplinks, backhauls and customer equipment, traditional broadcast delivery (satellite and cable are broadcast) is fairly cheap.

Perhaps the "Millennials" will be more DIY tech savvy ... Home satellite has moved from large dishes that were self installed or installed by a local dealer to "pizza size dishes" self installed or installed by what is now two companies (others have come and gone). The current state of satellite has gone to primarily professional install (DISH and DIRECTV want the systems to work and installs are not as easy as single satellite dishes).

Streaming TV requires the user to do their own installation (similar to the early days of big dish satellite or OTA reception). Customers need to provide their own equipment, networks and internet connectivity. Add that to the cost of service.

For the device crowd that has figured out how to stream to their 80" 4K TV (probably through an app on the TV or a third party device) adding additional streaming services is just a matter of finding services that are available and then paying for them. There are free services ... and they are probably worth every penny that people pay for them. The better content will not be free.
 
#48 ·
"DirecTV has the equivalent of four satellites under construction that will cost a total of $1.729 billion including launch and insurance, plus $74 million paid already in 2011, the company said in its SEC filing."

With an approx. cost of 800 bucks just to set up a sat customer verses just the click of a button to signup for immediate online TV service thru DirectTV Now.

My, how times have changed. Notice the article is from 2011.
"DirecTV Chief Executive Michael D. White said during the call that the company is open to partnering with anyone - including rival Dish Network and its EchoStar hardware supplier - to provide a wireless broadband service in the United States. But he said the wireless broadband market situation remains difficult to read."
Link
Astrium Picked To Build DirecTV 15 Telecom Satellite - SpaceNews.com
 
#49 ·
Today it costs about $200 million to build and $100 million to launch a DirecTV satellite, said a DirecTV spokesman. The company owns 11 satellites and leases one, according to a financial filing earlier this year.
Dallas Morning News
So $3.3 billion in satellites (assuming their lease covers all of the lessor's cost) with a 15 year life span ... $220 million per year. Spread across 20 million subscribers is $11 per subscriber or about $1 per month. At .5 cents per hour $1 would cover 200 hours of viewing. Less than seven hours per day.

Even at .5 cents per hour I do not believe one can beat the efficiency of satellite transmission.

The down side is that there is no savings when customers are not watching ... all the satellites need to be up and working 24/365 regardless of how many viewers there are. But the up side is that each feed can reach from zero to all subscribers without adding bandwidth per subscriber. And the customer does not have to buy their own bandwidth in addition to what they are paying their TV provider.
 
#54 ·
A better quote would have been:
Those don't account for costs such as marketing, customer service, data transport and storage or set-top box installation for satellite service. MoffettNathanson puts those at $3 per subscriber per month for the internet service and $18 per subscriber per month for satellite. That leaves satellite margins at $42 and pushes DirecTV Now margins to slim, or even negative.
Then we would have known what you were talking about.

So according to his calculation satellite costs $15 more per month to deliver but DIRECTV is charging $42 more for the service (and making near zero or negative on streaming). Satellite subsidizing the start up streaming service cannot last forever ... AT&T|DIRECTV need to make it profitable on its own.

For reference, the last time I did the math DIRECTV was making $20 per subscriber per month in profit. Cut rate pricing will work for the introduction ... but the stockholders won't let AT&T|DIRECTV lose money on DIRECTV Now forever. Expect the prices to increase.
 
#55 · (Edited)
Go back thru this thread and read the links on AT&T and all the other coming services wanting to be your "GO TO" Portal.
How do you think Google has become the 800 pound gorilla? (with Billions and Billions in Profit) in the Portal market.
Advertising, that's how.
AT&T can subsidize their TV service thru advertising dollars they make when someone goes thru their portal and clicks on links.
This is the Holy Grail for these coming services and the future of your low cost TV.
And to think Google itself is readying a low cost streaming TV package.

Go back on this thread and read about the research that shows the average viewer only watches 19 channels or less, The days of the bloated/expensive TV packages are over for the average viewer. There will be a multitude of low cost varied skinny bundles coming from the onslaught of providers entering the market.
Competition is Good, This is a revolution and prices will stay low.
 
#56 ·
Content owners are king. There is NO streaming provider offering or expected to offer the customers choice of any 19 channels out of the hundreds of channels available via satellite. One might get lucky if one does not watch ANY of the major channels ... but the content providers with the best content know how to market their content - in packages where people are forced to pay for more than they watch. Packages such as DISH's SlingTV and DIRECTV Now.

Out of context quoting and irrelevant links will not change the marketplace.
 
#57 · (Edited)
"No, Content Isn't King"
"The distributors like Comcast, AT&T and whatever replaces them have won. Distribution -- not content -- is the new king."
Link

No, Content Isn't King


"Content is king" is no longer the major factor with the upcoming mass competition in the market. When you just had four or so providers it was true.
Now whoever owns the last mile pipe (upcoming fixed wireless for millions) and the Portal owners will share the kingdom if not be the outright Kings.

There will be sooo many cheap and varied skinny packages out there that many will hit the sweet spot for the average consumer.

"Time Warner Sale To AT&T Shows Distribution, Not Content, Is King"

The old adage is, "Content is king." But owning all three is the king's empire.

Link
Time Warner Sale To AT&T Shows Distribution, Not Content, Is King

Link
If 'content is king,' owning content, distribution, and data is the king's empire
 
#66 ·
"Content is king" is no longer the major factor with the upcoming mass competition in the market.
Failure to read is not helping your argument. My statement was "content owners are king". Which part of the quoted headline at the end of your post agrees with:
If 'content is king,' owning content, distribution, and data is the king's empire
OWNING CONTENT - CONTROLLING DISTRIBUTION ... that is the kingdom that I speak of when I say "Content owners are king."

sorry bedford but you are living in a fantasy world that is never going to become reality.

ultimately, streaming services and the internet needed to access them will become just as expensive as current pay tv packages are now in one way or another. stockholders will make sure of that
I agree. Right now streaming is the new frontier. Companies are willing to lose a little money while exploring the new frontier. But they cannot lose money forever. Streaming prices WILL catch up with non streaming delivery. If we are lucky the new streaming content distributors will be $15 less than via satellite (so we can apply that $15 per month toward the $30+ per month ISP service needed to receive the service). I do not expect to be that lucky.

Cable companies are not in the business to lose money. The more the loss of video customers affects the bottom line the more they will adjust their fees to cover the cost of staying in business. And no, it isn't just the cost of the cable company's connection to the Internet that will need to be adjusted. All of the infrastructure costs that are currently spread out across video customers will need to be shifted to data only customers.

I have been around long enough to know that cheap and free is (at best) worth every penny one pays for service. At worst one ends up with an inferior product that costs more per "unit" (whatever unit applies). I could buy a $32 pair of pants that would last two or three years ... now I can buy a $22 pair of pants that lasts six months. Which is the better bargain?

How many simultaneous streams can be viewed or recorded by a via satellite customer? DISH's newest receiver sets the bar for "conflict free" TV at 16 satellite tuners on a single whole home box (effectively 20 with PTAT and OTA ... see DISH forum for discussion). DIRECTV can be configured for as many if not more simultaneous streams. Will any streaming service allow 16 streams? All HD or better? Or will they be an inferior product that offers less than the current distribution? Four simultaneous streams? How many in HD?

Make sure you're not buying four cheap pair of pants for $88 and bragging that you're saving money over a better $32 pair that would last as long as the four.
 
#58 ·
Keep in mind when you're talking about the affordability of building/launching satellites and amortizing that over 20 years and 20 million DirecTV subscribers... that the math you're using would only work for DirecTV.

For another company to start from scratch and offer their own satellite service, it is a daunting thing indeed to come up with billions in cash up front to build/launch those satellites and hope to get that money back over those 20 years OR get someone to lend you that kind of credit given the marketplace today.

VS.

Starting up a new streaming service that doesn't have all of those costs up front and doesn't require 20 million subscribers instantaneously (which won't happen) to help amortize that cost down to a manageable level.

So... there's the cost of the satellites... and how a company like DirecTV can afford it vs how almost anyone else (besides Dish) can't.
 
#67 ·
Keep in mind when you're talking about the affordability of building/launching satellites and amortizing that over 20 years and 20 million DirecTV subscribers... that the math you're using would only work for DirecTV.
Starting up a new streaming service that doesn't have all of those costs up front and doesn't require 20 million subscribers instantaneously (which won't happen) to help amortize that cost down to a manageable level.
If you have content that you want to deliver to the maximum number of people the best way to deliver it is to find a distribution partner that already reaches millions of people. DIRECTV (and DISH and the cable companies) are partners who can deliver to the most number of homes for the least amount of money.

It would be difficult to start a third satellite based service in the US ... 20 years ago we had multiple companies entering the satellite business. Only five ended up launching a satellite distribution company (the rest sold their space to DISH or DIRECTV). Only three companies ever launched a DBS satellite (USSB leased from DIRECTV, Dominion leased from DISH). The lesser three sold out to the two big companies.

There isn't a need for a third DBS company. It is easy enough to get carriage (and delivery to tens of millions of homes) on the existing systems. Just set a decent price for your service or pay a low monthly cost for the satellite bandwidth.

Even in the digital world one would be better off partnering with an existing distribution system (Netflix, Amazon, Roku, YouTube, etc) than trying to start yet another streaming service. Unless one has deep pockets like DISH and AT&T|DIRECTV and can afford the start up costs for a standalone service.
 
#59 ·
As mentioned in earlier post in this thread that the music industry went to the internet, the video industry will follow the same.
Look at all the NEW content creators out there that have already captured the young viewers eyeballs. The current major content creators know this and are forced to play ball.

"Streaming services may have started out as technological trends, but we can't ignore that the actual release of music has become synonymous with the music industry as a whole. Labels may still have the monopoly on the recording industry, but it is the distribution that holds sway"

"In a very real sense, streaming services could well be moving towards the usurping of the record label's traditional place in the industry. Competing across so many areas, their position as the point of contact with the consumer is incredibly powerful"
Link
Are Streaming Services The New Record Labels? • Howl & Echoes
 
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