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An important article on sports costs


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73 replies to this topic

#41 OFFLINE   Hoosier205

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Posted 05 December 2012 - 11:10 PM

Why is it blindly assumed that ala carte would be worse for ALL consumers than the current system?

It would be worse for some households -- most specifically those with very diverse interests.

But for the average consumer....I don't see how it would be any worse than today. Specifically, I don't believe the per-customer average bill for a provider like DirecTV would go up at all. Consumers would have fewer channels, but they would be the channels the consumer wanted to watch.

In fact....if ala carte would drive up the cost for the average consumer, we would already be there. Time Warner & Comcast & Viacom & Disney & DirecTV are out there to maximize profit -- which approximates maximizing revenue since many of their costs are fixed.

Clearly, the marketing gurus at these companies believe that bundling channels results in more profits than selling channels individually.

I understand the story about why ala carte would be bad. I just think that the first law of capitalism means that is a story and not reality.


...because it already failed.
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#42 OFFLINE   Tom Robertson

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Posted 05 December 2012 - 11:40 PM

Why is it blindly assumed that ala carte would be worse for ALL consumers than the current system?

It would be worse for some households -- most specifically those with very diverse interests.

But for the average consumer....I don't see how it would be any worse than today. Specifically, I don't believe the per-customer average bill for a provider like DirecTV would go up at all. Consumers would have fewer channels, but they would be the channels the consumer wanted to watch.

In fact....if ala carte would drive up the cost for the average consumer, we would already be there. Time Warner & Comcast & Viacom & Disney & DirecTV are out there to maximize profit -- which approximates maximizing revenue since many of their costs are fixed.

Clearly, the marketing gurus at these companies believe that bundling channels results in more profits than selling channels individually.

I understand the story about why ala carte would be bad. I just think that the first law of capitalism means that is a story and not reality.


Couple of key points:
1) The current channel providers rely upon a set income. The whole system is geared upon consumers paying roughly $90 per month. Ala Carte won't change that. It will adjust who gets what and who pays what, but the averages won't change.

2) The Extra costs with ala carte. Right now many channels cost you 1 penny per month. You know there will be no channels that are only 1 penny. They will charge more to recover costs and to set a minimum per user. I'm guessing the lowest a channel will be is $6/year. How does that help you?

The extra advertising costs. Imagine 200 channels running PBS telethons to get you to buy them... :)

The extra overhead to track by individual channel who is enabled to watch what. At least right now things are enabled by packages and groups of users. tons of overhead throughout the system.

3) it existed before. it failed. (it was a huge pain in the neck for consumers, by the way.) I didn't like it when I had it in C-Band. Now, since I would be paying my fees to only one provider, that might be a bit easier, but still a pain...

Peace,
Tom

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My real treasures: 5 Grandchildren - S, D, M, M, C ; Now 5! Great-Grandtibbers - B, H, J, A, and M (Born 7/31/2011)


#43 OFFLINE   mreposter

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Posted 06 December 2012 - 01:37 AM

The extra overhead to track by individual channel who is enabled to watch what. At least right now things are enabled by packages and groups of users. tons of overhead throughout the system.

3) it existed before. it failed. (it was a huge pain in the neck for consumers, by the way.) I didn't like it when I had it in C-Band. Now, since I would be paying my fees to only one provider, that might be a bit easier, but still a pain...


And yet Directv (and the others) have no problem delivering, tracking and billing for dozens of Pay-Per-View movie and event channels.

Things have changed significantly since the C-Band days. The boxes are smarter, many things could be handled via the web or smart devices, more and more of the boxes are connected to the internet. There's plenty of technology there that could simplify the entire process of ordering channels on demand.
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#44 OFFLINE   KyL416

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Posted 06 December 2012 - 02:31 AM

If they ever do implement it, there will be people subscribing and unsubscribing to channels based on what's currently on air like a lot of people do now with HBO or Showtime when it comes to their popular shows like True Blood and Dexter. Which brings in the issue of setting ad rates with no guarantee of a reliable subscriber count at the time of the ad buy. Channels will either have to really lower their ad rates or dump the ad supported model entirely, resulting in a lot more product placement in shows and jacked up prices for the channels that do survive. (Imagine instead of how it currently is with the companies like Viacom grouping all of their ad supported channels together for providers in a discounted combined rate, you'll have to pay HBO like costs for EACH of them since there's no guarantee the same homes who have Nickelodeon will also have Comedy Central, MTV and VH1 to spread the costs)

And if your a fan of a niche channel you can forget them. If you thought SciFi becoming SyFy, Video Hits One becoming VH1, CourtTV becoming TruTV, The History Channel becoming History, Arts & Entertainment becoming A&E, Bravo! becoming Bravo, Headline News becoming HLN, American Movie Classics becoming AMC, or The Learning Channel becoming TLC was bad, wait to you see what happens to channels like DIY, Chiller, Cloo, Style, BBC America, TCM and the Discovery digital nets if they do survive and not only they have to worry about ratings, they also have to worry about putting on programming that will get people to subscribe to them. They can't just rely on being packed with popular channels like MTV, TNT, TBS and USA and drawing in a new audience from the channel surfing crowd.

And people who say they will just dump cable for Netlfix, Hulu Plus and Amazon Prime? With every TV channel only greenlighting new programs that appeal to the widest possible audience (the Honey Boo Boo and Jersey Shore viewer), there will be no alternate programming available there either.

Edited by KyL416, 06 December 2012 - 05:02 AM.


#45 OFFLINE   TheRatPatrol

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Posted 06 December 2012 - 06:42 AM

I wonder how this will affect things?

Sports TV Class Action Against Comcast, DirecTV, MLB & NHL Still In Play

Antitrust Challenge to TV Sports Deals Allowed to Move Forward

Edited by TheRatPatrol, 06 December 2012 - 06:55 AM.


#46 OFFLINE   jmpfaff

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Posted 06 December 2012 - 07:35 AM

Couple of key points:
1) The current channel providers rely upon a set income. The whole system is geared upon consumers paying roughly $90 per month. Ala Carte won't change that. It will adjust who gets what and who pays what, but the averages won't change.

2) The Extra costs with ala carte. Right now many channels cost you 1 penny per month. You know there will be no channels that are only 1 penny. They will charge more to recover costs and to set a minimum per user. I'm guessing the lowest a channel will be is $6/year. How does that help you?

The extra advertising costs. Imagine 200 channels running PBS telethons to get you to buy them... :)

The extra overhead to track by individual channel who is enabled to watch what. At least right now things are enabled by packages and groups of users. tons of overhead throughout the system.

3) it existed before. it failed. (it was a huge pain in the neck for consumers, by the way.) I didn't like it when I had it in C-Band. Now, since I would be paying my fees to only one provider, that might be a bit easier, but still a pain...

Peace,
Tom


Regarding #1 & #2....Right, I'll still pay $90 per month. But instead of 200 channels at 45 cents each (on average), I'll be paying the 20 channels I want to watch $4.50 each (on average). Channels I like make more money (from me), channels I don't like don't get my money. What's the problem?

Regarding #3....mreposter already stated my thoughts more eloquently than I can.

#47 OFFLINE   tonyd79

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Posted 06 December 2012 - 07:46 AM

Regarding #1 & #2....Right, I'll still pay $90 per month. But instead of 200 channels at 45 cents each (on average), I'll be paying the 20 channels I want to watch $4.50 each (on average). Channels I like make more money (from me), channels I don't like don't get my money. What's the problem?

Regarding #3....mreposter already stated my thoughts more eloquently than I can.


The problem is that one show you might want to watch because everyone is talking about it at work.

The other problem is that handles change and there are programs on them that you will never know about them.

Why would you EVER want to pay the same amount of money for less product?
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#48 OFFLINE   Hoosier205

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Posted 06 December 2012 - 07:48 AM

Regarding #1 & #2....Right, I'll still pay $90 per month. But instead of 200 channels at 45 cents each (on average), I'll be paying the 20 channels I want to watch $4.50 each (on average). Channels I like make more money (from me), channels I don't like don't get my money. What's the problem?

Regarding #3....mreposter already stated my thoughts more eloquently than I can.


The chances of the 20 channels you like actually surviving are slim. Production budgets would plummet as well.
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#49 OFFLINE   TJNash

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Posted 06 December 2012 - 10:16 AM

Regarding #1 & #2....Right, I'll still pay $90 per month. But instead of 200 channels at 45 cents each (on average), I'll be paying the 20 channels I want to watch $4.50 each (on average). Channels I like make more money (from me), channels I don't like don't get my money. What's the problem?


Still trying to wrap my head around this one. :confused:

#50 OFFLINE   Tom Robertson

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Posted 06 December 2012 - 08:38 PM

And yet Directv (and the others) have no problem delivering, tracking and billing for dozens of Pay-Per-View movie and event channels.

Things have changed significantly since the C-Band days. The boxes are smarter, many things could be handled via the web or smart devices, more and more of the boxes are connected to the internet. There's plenty of technology there that could simplify the entire process of ordering channels on demand.


Things on the receiver end have changed--but that was never the problem. The boxes have always looked for their number and their access codes. Not a problem on their end.

The cost is on the ordering and billing side. PPV pays for its billing via $4 per or more. Imagine if every channel is at least $4. How does that become cheaper for the customers?

My point is that there are channels that cost you about 1 penny per month right now. With ala carte there would not be any...

Peace,
Tom

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My real treasures: 5 Grandchildren - S, D, M, M, C ; Now 5! Great-Grandtibbers - B, H, J, A, and M (Born 7/31/2011)


#51 OFFLINE   Tom Robertson

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Posted 06 December 2012 - 08:52 PM

Regarding #1 & #2....Right, I'll still pay $90 per month. But instead of 200 channels at 45 cents each (on average), I'll be paying the 20 channels I want to watch $4.50 each (on average). Channels I like make more money (from me), channels I don't like don't get my money. What's the problem?

Regarding #3....mreposter already stated my thoughts more eloquently than I can.


The 20 channels will only make more money if you pick the popular channels that everyone wants. If you pick unwisely, they get less money than now, close shop, and we all have fewer channels to watch. And still pay more than now...

Peace,
Tom

Go Packers!

My real treasures: 5 Grandchildren - S, D, M, M, C ; Now 5! Great-Grandtibbers - B, H, J, A, and M (Born 7/31/2011)


#52 OFFLINE   Joe Spears

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Posted 07 December 2012 - 12:09 AM

The most recent survey that DirecTV asked select customers to take had this question on it:

Attached Thumbnails

  • Directv survey question 1.PNG


#53 OFFLINE   DodgerKing

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Posted 07 December 2012 - 07:53 AM

As was mentioned in the Lakers thread, pretty much everyone pays but not that many watch. I know that is hard for sports fans of their team to grasp because they are so avid for their team, but the vast majority of consumers do not watch sports....yet that is the content that is driving the costs.

A good article on this from the L.A. perspective, but it's not limited to Los Angeles.

http://www.latimes.c...0,2955837.story

Isn't that the case for ALL channels?

Pick any channel, even the most popular one, and you will find there are more people do not watch that particular channel than there are those that do.

#54 OFFLINE   DodgerKing

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Posted 07 December 2012 - 08:01 AM

Not necessarily. I love sports but do not feel like everyone should be forced to pay for them if they have no interest. If the channels didn't demand so much, if individual leagues, conferences, and teams didn't create their own channels perhaps I wouldn't feel the same way. But I do understand how ridiculous the costs are.


How is this different from any other channel?

One can make the argument that the 85% of the cable subscribers that do not watch the Disney channel (the most viewed channel in cable) should not have to pay for the 15% that do watch it.

Most viewers watch about 5 to 10 channels regularly and yet pay for the hundreds of others. RSNs are no different.

#55 OFFLINE   fleckrj

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Posted 07 December 2012 - 09:15 AM

How is this different from any other channel?

One can make the argument that the 85% of the cable subscribers that do not watch the Disney channel (the most viewed channel in cable) should not have to pay for the 15% that do watch it.

Most viewers watch about 5 to 10 channels regularly and yet pay for the hundreds of others. RSNs are no different.


What is different is the cost. Most non-sports channels are in the $0.20 to $0.30 per viewer per month range, and ESPN and the new sports channels are in the $3.00 to $5.00 per month range. If there was not such a cost discrepency between non-sports and sports channels I would agree with you.

#56 OFFLINE   maartena

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Posted 07 December 2012 - 09:30 AM

Why is it blindly assumed that ala carte would be worse for ALL consumers than the current system?


This is not a blind assumption. You and me both get probably at least 50 channels (besides the shopping/religious ones) that we rarely watch at all, and could actually do without if we had to make a-la-carte choices.

The owners of those channels are usually also ones that own bigger, more popular channels. They do not want to see their bottom line hurt, so if they were forced to do a-la-carte, they will prices the channels in such a way, that they will not lose profit, but actually GAIN profit. They are not going to go a-la-carte without a financial benefit, that much is CERTAIN in capitalism. And if the financial benefit is greater than selling the channels bundled, it simply means that we, the customer, shovel MORE money their way.

If you are an avid TV watcher, and watch all the popular channels, you may end up paying more than what you are paying now by having them bundled.

Bundled deals are always cheaper, not just with TV channels but in any retail situation where multiple things are packaged together as a whole. They are at the interest of BOTH the consumer, and the producer.
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#57 OFFLINE   lparsons21

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Posted 07 December 2012 - 10:11 AM

Bundled deals are always cheaper if they have predominately what you want in them, and that is the reason the current pricing/packaging structure works for cable and sat services. And of course, there is the perceived value of having all those channels.

But if/when the cost of those rises to the point that a significant number of subscribers decide to lower or eliminate their packages, then the structure will change. It is only because we haven't reached that point that the way things are bundled now hasn't changed.

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#58 OFFLINE   mreposter

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Posted 07 December 2012 - 11:09 AM

It's odd that some of these channels survive. There are a number of channels that have fewer than 100,000 viewers during primetime. Do the fees and ad revenues actually make these things profitable? And if you were an advertiser, why would you pay money to advertise on one of these?
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#59 OFFLINE   lokar

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Posted 07 December 2012 - 02:41 PM

And if your a fan of a niche channel you can forget them. If you thought SciFi becoming SyFy, Video Hits One becoming VH1, CourtTV becoming TruTV, The History Channel becoming History, Arts & Entertainment becoming A&E, Bravo! becoming Bravo, Headline News becoming HLN, American Movie Classics becoming AMC, or The Learning Channel becoming TLC was bad, wait to you see what happens to channels like DIY, Chiller, Cloo, Style, BBC America, TCM and the Discovery digital nets if they do survive


I would disagree. I think a la carte would go like this. Many channels have already gone to the lowest common denominator abandoning their initial mission even without a la carte. These channels would be priced relatively low because they now make money selling more ads. Lower viewed channels like BBCA, TCM, Ovation, etc. would probably have to charge higher rates. If they charge too high a rate and don't get a lot of subscribers, they will fail, same as any other channel. Channels need to be held accountable for their content. HBO proves that people will pay for quality content.

I realize channels would have a tough time selling ads when the number of subscribers is in flux so much so I propose moving to a small bundle system like Canada with sports not mandatory at all. Make the bundles have a six month minimum subscription period.

#60 OFFLINE   maartena

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Posted 07 December 2012 - 02:44 PM

It's odd that some of these channels survive. There are a number of channels that have fewer than 100,000 viewers during primetime. Do the fees and ad revenues actually make these things profitable? And if you were an advertiser, why would you pay money to advertise on one of these?


There's two sides to that.... first, these channels are included in a larger deal, where the more popular channels "carry" the impopular niche channels along. That way the channels get the same exposure as their more popular brother channels.

Second, if a channel is profitable, it doesn't matter how many viewers there are. If you can make a "watch paint dry" show for $3,000, and have the 1 hour show repeat 24/7 for a cost of $10k a month, and you sell $9k a month in advertising, (which is incredibly, stupendously low, but a a few paint manufacturers might bite) plus $5k a month from carriers who are forced to pay the $0.01 this channel sells for as part of a greater package.... the company will walk away with $1,000 a month. Put $500 back in the channel, so that after 1 year you can produce a NEW "watch paint dry" show with a different color, and you still add $500 to the kitty.

These channels are mostly being leveraged by their bigger brothers. And I have tuned in to obscure, never-watched channels before because something caught my attention, and that is what channels are hoping for.
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