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DirecTV Disses Broadcasters


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#26 OFFLINE   slice1900

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Posted 14 June 2013 - 11:01 AM

The laws as written today are really one-sided towards broadcast TV stations. Cable and satellite providers who lose a local station that's holding out in negotiations can't make arrangements directly with the networks to carry their feeds, or offer stations from other areas.

 

If providers were free to sub a network feed whenever there was a dispute that resulted in a station going off air that would seem to be a good middle ground. Some subscribers would be happy (the ones who just want to watch sports or Survivor) and some would still be unhappy (those who want that station for news or other local content) That way both sides would have some leverage, rather than the fairly one sided negotiations that happen now.


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#27 OFFLINE   inkahauts

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Posted 14 June 2013 - 03:43 PM

I don't buy it. That's only true if you want to have a similar number of channels to what you have now. I think for most of us, there are anywhere from a handful to a couple dozen at most of the packaged channels we watch (that excludes stuff you pay extra for like HBO, additional RSNs or whatever)

My cable company offers a basic tier with about two dozen channels, an expanded basic with about 100 (not including HD/SD duplicates or music) and a digital tier with about 200 or 250. I get the package with 100 even though the digital tier is only another $15/month or so, because when I looked through the channel list there was only one channel I knew for sure I'd watch (BBC America) and a few others that I might find something interesting on if I looked, but there are enough channels that already have "stuff I might find interesting if I looked" that I don't need more. If I could pick up and choose, I might grab 20 of them. If they tried to charge me the same for those 20 that I'm paying for 100 now, I'd trim the list further until I did save money.

The big companies like Viacom and Disney are going to make less money in the future. That's just a fact they're going to have to get used to. There are all kinds of new places for people to spend their dollars that didn't exist a decade ago (smartphones, for example) but the average person isn't making any more money than they did a decade ago. Something's gotta give, and it has been music and TV - music first, due to people being able to buy single songs for 99 cents or $1.29 instead of entire $15 CDs, and now TV, as people decide $100 is ridiculous to spend on TV each month and cut the cord.

They'll either lose money from a la carte and but still have contact with their audience (and have a much better idea what people really want to see, based on what people are willing to pay for) or they'll lose money due to people cutting the cord, and lose many of those customers, and their future families, forever. If they drag their feet on a la carte, it is only going to make their future look more bleak in the long run.

You are dreaming if you think stockholders making less money is acceptable. They will go out of business before they give up their income. And TV is one place where Hollywood is just to strong at this time to simply go to a format that won't pay them nearly as much money. If you go strait a la cart, they would lose hundreds of millions if they didn't raise the costs of each channel exponentially. You just wont save money. And the further you shave your list the higher the prices would get. There is a min amount they'd need to keep all their shows. The amount of money they get from advertising would have to be made up for, and that's just so much more than people think.

#28 OFFLINE   goinsleeper

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Posted 14 June 2013 - 05:41 PM

Strait a la cart we be way higher in cost. A hybrid form is the way to go IMHO.

100% agree!  Having some form of base package, then adding channels to it would be a better bet than full a la carte.


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#29 OFFLINE   slice1900

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Posted 14 June 2013 - 07:46 PM

You are dreaming if you think stockholders making less money is acceptable. They will go out of business before they give up their income. And TV is one place where Hollywood is just to strong at this time to simply go to a format that won't pay them nearly as much money. If you go strait a la cart, they would lose hundreds of millions if they didn't raise the costs of each channel exponentially. You just wont save money. And the further you shave your list the higher the prices would get. There is a min amount they'd need to keep all their shows. The amount of money they get from advertising would have to be made up for, and that's just so much more than people think.

 

 

I'm sure a lot of people said the same thing about the record labels, and look where their revenue & profit is now compared to 10 or 15 years ago. The same fate awaits the TV conglomerates. They can either embrace the change and control their future, or push to keep things the way they are now for as long as possible and have the future decided for them.

 

The constant price increases for cable and satellite are starting to push more and more to cut the cord and create their own a la carte plan by buying access to stuff they want over the internet (Netflix, MLB TV and so on) Especially younger viewers. That's gotta scare the living crap out of these guys, the 18-30 market used to be their biggest target, now it is the one leaving behind traditional cable/satellite in the largest numbers. Why should anyone believe they'll be back when they get older, after they get used to life without traditional TV?


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#30 OFFLINE   goinsleeper

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Posted 14 June 2013 - 07:54 PM

I'm sure a lot of people said the same thing about the record labels, and look where their revenue & profit is now compared to 10 or 15 years ago. The same fate awaits the TV conglomerates. They can either embrace the change and control their future, or push to keep things the way they are now for as long as possible and have the future decided for them.

 

The constant price increases for cable and satellite are starting to push more and more to cut the cord and create their own a la carte plan by buying access to stuff they want over the internet (Netflix, MLB TV and so on) Especially younger viewers. That's gotta scare the living crap out of these guys, the 18-30 market used to be their biggest target, now it is the one leaving behind traditional cable/satellite in the largest numbers. Why should anyone believe they'll be back when they get older, after they get used to life without traditional TV?

Because the price will only go up for internet content as well.  The more TV conglomerates that go under, the more expensive everything becomes for those cord cutters.  It would really need to be killed at the roots of it all, the content owners.  But as long people are out to make money, this cycle will churn on.


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#31 OFFLINE   slice1900

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Posted 15 June 2013 - 01:04 AM

People who cut the cord usually leave some content behind they wanted that was included in their cable/sat plan that they can't get once the cord is cut. Maybe they watched Game of Thrones and had to give it up, maybe they can't get their local NFL team so they go somewhere else to watch or decide their team wasn't going to win the Super Bowl anyway and do something else on Sunday afternoons. They make the decision to cut the cord despite losing access to a few things they'd like to keep. If the the price for accessing it on the Internet goes up too much as well, they'll just give it up entirely. There are very few people who must have Game of Thrones, or Honey Boo Boo, and even football can't sustain price increases forever.

 

The content owners can continue to be out to make more and more money all they want, but with the average consumer not seeing any real increase in their income over the past decade, and with other expenses they give a high priority to increasing also (internet and cell phone) something has to give. The money has to come from somewhere. The 1% who are seeing big income increases aren't going to subsidize everyone else's TV habit. The content owners are going to be the losers, because people can't cut back on their mortgage/rent, utilities, car payments, insurance, food etc. as easily as they can cut back on TV. The more people that do it, and report to their friends that it wasn't as bad as they thought, the more that will do it and not feel like they're missing out.

 

Twenty years ago my brother was that weirdo who doesn't own a TV. Now no one thinks that's weird anymore. If the content owners don't adjust to the future really damn quick, pretty soon people without TV will be no more odd than people without a landline telephone are today.


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#32 OFFLINE   jdspencer

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Posted 15 June 2013 - 04:51 AM

As was alluded to above, I think that the locals should PAY DirecTV to get their signals out to as many people as possible.

Afterall, DirecTV is offering a service and therefore should be paid for that service.


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#33 OFFLINE   unixguru

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Posted 15 June 2013 - 07:05 AM

Because the price will only go up for internet content as well.  The more TV conglomerates that go under, the more expensive everything becomes for those cord cutters.  It would really need to be killed at the roots of it all, the content owners.  But as long people are out to make money, this cycle will churn on.

 

I'm sorry but this is just mythology.

 

It's very simple.  Does anyone pay $10 a song on iTunes?  $5?  $3?

 

No doubt there are people in the music supply chain that don't make as much money as they used to or possibly don't even exist anymore.  And the problem with that is....?  If one doesn't add value to something - value recognized by the consumer - then they shouldn't exist.

 

Spare me any comments about the music industry being different.  That has been argued on this forum over and over and over.  Nobody has ever proven why it is different.



#34 OFFLINE   James Long

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Posted 15 June 2013 - 09:40 AM

Spare me any comments about the music industry being different.  That has been argued on this forum over and over and over.  Nobody has ever proven why it is different.

OK. You're wrong and there is no reason to waste words proving it to you. :D

As for the rest of the readers of this thread ... follow the money.

How does a person in the music industry get paid? They get paid royalties based on what role they played in the production. The writers of the words and music get paid a royalty. The artist that recorded the track gets paid a royalty. The producers get their cut as well. They get paid via ASCAP, BMI and SESAC for public performances such as radio and Internet plus the Internet has it's own payment structure. Most of this payment structure has been in place for decades ... tracing back to when songs were only sold on albums and eight tracks. The main change in the process coming from new fees when someone discovered they were not getting paid for a distribution channel.

How about video production and the movies? With linear distribution a channel is paying for rights to air based on the number of subscribers and expected audience. Subscribers are paying for the channels whether they watch or not. Someone who owns the rights to a production can make money simply by contracting with a channel to carry their content. Or they can create their own channel to sell to satellite and cable. In recent years content owners have been able to add this income by selling DVDs, BluRays, digital copies and streaming. But the backbone of their income is the linear channel.

A la carte attacks the backbone. If people are able to pick and choose their linear channels it is a given that less people will choose certain channels than are currently forced to subscribe via the tier system. (If people would subscribe to every channel willingly there would be no call for a la carte.) Reduce the number of subscribers to a channel and one reduces the expected audience. Producers selling content to linear distribution end up making less money. They don't like making less money. In order to make up for the less money they need to either charge linear channels more (which translates to higher costs for the linear channels which will certainly be passed on to the subscribers) or they will need to charge non-linear customers more. Does anyone believe a mainstream video producer wants LESS money for their work?

Anyone who thinks that a la carte can be put in place and magically all the prices remain the same per channel or per content is only deceiving themselves. And anyone who thinks a linear channel would go a la carte unless there was no other option is likewise deceived.

But, as you note, we've had this discussion before.
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#35 OFFLINE   JoeTheDragon

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Posted 15 June 2013 - 09:56 AM

OK. You're wrong and there is no reason to waste words proving it to you. :D

As for the rest of the readers of this thread ... follow the money.

How does a person in the music industry get paid? They get paid royalties based on what role they played in the production. The writers of the words and music get paid a royalty. The artist that recorded the track gets paid a royalty. The producers get their cut as well. They get paid via ASCAP, BMI and SESAC for public performances such as radio and Internet plus the Internet has it's own payment structure. Most of this payment structure has been in place for decades ... tracing back to when songs were only sold on albums and eight tracks. The main change in the process coming from new fees when someone discovered they were not getting paid for a distribution channel.

How about video production and the movies? With linear distribution a channel is paying for rights to air based on the number of subscribers and expected audience. Subscribers are paying for the channels whether they watch or not. Someone who owns the rights to a production can make money simply by contracting with a channel to carry their content. Or they can create their own channel to sell to satellite and cable. In recent years content owners have been able to add this income by selling DVDs, BluRays, digital copies and streaming. But the backbone of their income is the linear channel.

A la carte attacks the backbone. If people are able to pick and choose their linear channels it is a given that less people will choose certain channels than are currently forced to subscribe via the tier system. (If people would subscribe to every channel willingly there would be no call for a la carte.) Reduce the number of subscribers to a channel and one reduces the expected audience. Producers selling content to linear distribution end up making less money. They don't like making less money. In order to make up for the less money they need to either charge linear channels more (which translates to higher costs for the linear channels which will certainly be passed on to the subscribers) or they will need to charge non-linear customers more. Does anyone believe a mainstream video producer wants LESS money for their work?

Anyone who thinks that a la carte can be put in place and magically all the prices remain the same per channel or per content is only deceiving themselves. And anyone who thinks a linear channel would go a la carte unless there was no other option is likewise deceived.

But, as you note, we've had this discussion before.

What a part la carte system or at least spitting up the sports channels and the mainly non sports channels?

 

Out of side of the usa sports is in it's own packs.


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#36 OFFLINE   James Long

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Posted 15 June 2013 - 10:34 AM

What a part la carte system or at least spitting up the sports channels and the mainly non sports channels?


Any channel that is in a tier would be foolish giving up its tier position to move to a higher tier or a la carte. It is the old adage, "a bird in the hand is worth two in the bush". Why would a channel like ESPN want to give up ~20 million DirecTV subscribers for a lesser unknown number? Some hope that ~20 million would still choose to subscribe? Some hope that the lesser number would be willing to pay more to have ESPN than they currently do just so ESPN can break even? It is too a big a risk.

Staying in the lowest tier is best for ESPN ... and if DirecTV or some other company plays hardball and says "no, we will sell you a la carte or in a sports tier" ESPN has the clout to respond "no, lowest tier or no carriage".

Every other sports channel wants to be ESPN. Pulling that off at a national level is difficult. For regional sports it is easier for DirecTV to push back and say "no, we'll place you in Choice regionally and the sports pack nationally" and DirecTV can live without any RSN who rejects that placement.

Regardless of what the customers want or the carriers want, the control is in the hands of the channel provider. And they want as many subscribers as possible - even if they have to risk having no subscribers to get a better tier placement. ESPN in the lowest tier and local RSNs in the next tier has become the defacto standard. As long as all RSNs are treated equally others are unlikely to demand the lowest tier.
 

Out of side of the usa sports is in it's own packs.


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#37 OFFLINE   unixguru

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Posted 15 June 2013 - 01:20 PM

How does a person in the music industry get paid? They get paid royalties based on what role they played in the production. The writers of the words and music get paid a royalty. The artist that recorded the track gets paid a royalty. The producers get their cut as well. They get paid via ASCAP, BMI and SESAC for public performances such as radio and Internet plus the Internet has it's own payment structure. Most of this payment structure has been in place for decades ... tracing back to when songs were only sold on albums and eight tracks. The main change in the process coming from new fees when someone discovered they were not getting paid for a distribution channel.

 

 

This explains the process up to the point where the pile of bits comes out of the production company as finished product.  Let's leave the distribution of the product out of it for a moment.

 

Is this not essentially the same as a movie or TV series up to the same point?

 

Lots of people contribute in various ways - one produces a pile of bits with nothing but sound; the other produces a pile of bits with sound and picture.

 

It's the distribution channels that are currently different.  One was recently disrupted and the other is still entrenched.

 

 

How about video production and the movies? With linear distribution a channel is paying for rights to air based on the number of subscribers and expected audience. Subscribers are paying for the channels whether they watch or not. Someone who owns the rights to a production can make money simply by contracting with a channel to carry their content. Or they can create their own channel to sell to satellite and cable. In recent years content owners have been able to add this income by selling DVDs, BluRays, digital copies and streaming. But the backbone of their income is the linear channel.

 

TV channels buy content from a production company that it may or may not have a minority ownership in.  Exclusive rights to distribute, at least in a geographic area (for example, US vs UK).  Then bundle a bunch of this stuff to make a stream, often repeating over and over, called a channel.  They then super bundle these channels and induce (to varying degrees) proxies/carriers to distribute to consumers.

 

Very similar to music being bundled onto a CD, distributed through a label, packaged into super bundles, and pushed onto retail stores to distribute to consumers.

 

Many hold the view that the TV supply chain has to be this way.  I do not.  No more than the music industry had to be the way it was.  Most retail music stores are gone.  Places still selling music do so as a minor part of their floor space as an incentive to get people in - and I'd wager that is fading quickly and won't be around much longer.  Music labels are likewise becoming less and less useful as the artist/production company can just go straight to iTunes or whatever.

 

 

A la carte attacks the backbone. If people are able to pick and choose their linear channels it is a given that less people will choose certain channels than are currently forced to subscribe via the tier system. (If people would subscribe to every channel willingly there would be no call for a la carte.) Reduce the number of subscribers to a channel and one reduces the expected audience. Producers selling content to linear distribution end up making less money. They don't like making less money. In order to make up for the less money they need to either charge linear channels more (which translates to higher costs for the linear channels which will certainly be passed on to the subscribers) or they will need to charge non-linear customers more. Does anyone believe a mainstream video producer wants LESS money for their work?

Anyone who thinks that a la carte can be put in place and magically all the prices remain the same per channel or per content is only deceiving themselves. And anyone who thinks a linear channel would go a la carte unless there was no other option is likewise deceived.

 

A similar argument was made about music and it hasn't cost the consumer more.  It's probably true some are making less money in music.  It's also probably true that some are no longer working in that business (like retail music stores).  Why is that a problem?  Consumers voted on how they viewed the value of the product and it is what it is.

 

Understandable that the TV biz doesn't want to kill it's cash cow.  Too bad.  The TV biz brought this on themselves with greed and waste.  These trends won't be stopped.  Adapt or die.

 

Your argument just states the way it is - not the way it must be.  It's nothing but speculation regarding what affect a change would cause.  We have an example of a drastic change in the music industry that is a whole lot more convincing than speculation.



#38 OFFLINE   pdxBeav

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Posted 15 June 2013 - 01:27 PM

The price a programmer charges is what the market will bear. I don't know why so many people fail to comprehend this simple concept. It doesn't matter if it's an a la carte model or bundling. The market sets the price, not the programmer.



#39 OFFLINE   unixguru

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Posted 15 June 2013 - 01:36 PM

The price a programmer charges is what the market will bear. I don't know why so many people fail to comprehend this simple concept. It doesn't matter if it's an a la carte model or bundling. The market sets the price, not the programmer.

 

I'm assuming by programmer you mean something like the group of ESPN channels?

 

Are you saying that the price ESPN could get would be the same if it was offered a la carte as it is bundled with a tier?  How is that possible?  Lots of people could care less about ESPN and surely wouldn't pay for it - via their tier - if they didn't have to.  But if they don't have any choice - other than not having lots of other programming - then they will grudgingly pay for it.  For now anyway.



#40 OFFLINE   Gloria_Chavez

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Posted 15 June 2013 - 02:17 PM

The price a programmer charges is what the market will bear. I don't know why so many people fail to comprehend this simple concept. It doesn't matter if it's an a la carte model or bundling. The market sets the price, not the programmer.

 

That's not true.  Look up Price Maker vs Price Taker.

 

ESPN, by virtue of its dominance, is a price maker.  It's extracting monopoly-like rents from the Pay-Tv consumer.  In fact, over 50% of Disney's market value of 115B is attributable to ESPN.


Since 1995 the average cable bill has increased 122%, while TV consumption per household just 13%.

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#41 OFFLINE   James Long

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Posted 15 June 2013 - 08:39 PM

This explains the process up to the point where the pile of bits comes out of the production company as finished product.  Let's leave the distribution of the product out of it for a moment.


That is where you make your mistake. My description includes distribution. It is only in distributing the product that most of the players in the game get paid.

It is true that there is bulk distribution via compilations. Grouping songs together for sale has been common long before there were any piles of bits to discuss. But a two sided 45 or an album is not a monthly TV subscription.

The worlds are colliding. People can subscribe monthly to linear music channels that provide access to the songs they want to hear instead of buying the albums (some very specific to the listener). And people can buy television programming by season or by program as an option to watching a linear channel. But to say what works for music MUST work for television and the traditional way of selling TV will die is overly optimistic. Music moving to include channel subscription as a distribution model SUPPORTS television's method of selling content.

TV content producers can use the non-linear model but the real money comes from getting on a channel and getting your show sold to millions of viewers whether or not they want to watch the show. It makes it much easier to be seen by that audience if the content is delivered pre-paid to their homes instead of needing to convince people to pay to watch each program.

As an example, lets look at the 1980's sitcom Alf. If you know you want to watch it you could buy the DVDs. Or you could buy episodes or other subscriptions via a streaming provider. But with a per show price tag for viewing would you buy Alf? If so, great! The owner gets paid! But it is much easier for that owner to offer the program via a linear channel (currently airing on HUB). The owner gets paid based on the millions of people subscribing to Hub and subscribers can watch without rationalizing the individual purchase price for each show. 50c per month to Hub delivers several episodes of Alf plus dozens of similar programs. And Hub can afford to charge only 50c for their network because they have millions of subscribers they can leverage for advertising.

Take a way the bulk purchasing ... take away the advertiser support ... and explain how a content owner makes money without charging a lot more for their product.
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#42 OFFLINE   inkahauts

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Posted 15 June 2013 - 08:56 PM

I'm sure a lot of people said the same thing about the record labels, and look where their revenue & profit is now compared to 10 or 15 years ago. The same fate awaits the TV conglomerates. They can either embrace the change and control their future, or push to keep things the way they are now for as long as possible and have the future decided for them.

The constant price increases for cable and satellite are starting to push more and more to cut the cord and create their own a la carte plan by buying access to stuff they want over the internet (Netflix, MLB TV and so on) Especially younger viewers. That's gotta scare the living crap out of these guys, the 18-30 market used to be their biggest target, now it is the one leaving behind traditional cable/satellite in the largest numbers. Why should anyone believe they'll be back when they get older, after they get used to life without traditional TV?


Again, look at the economics of channels and the packages of channels the big companies like Viacom have. They don't want a la cart because it destroy their profits.

MTV would cost as much as espn or more if they where only offered a la cart. Who would buy MTV at that point?

And streaming just isn't viable right now overall. In some areas and some markets, but as a replacement, that's not going to happen for decades, and as it does become more popular its prices will increase to where today's cable prices are now or even higher, for several reasons.

Its all driven by money, and going strait a la cart would be suicide for all channels. They control all the content where as the music industry for a while had lost all control of its content. This means stations will simply raises prices in other areas to make up for losses in fading ones. Music industry had no way todo that when Napster and others came online and destroyed the entire industry and forced it to redo its entire business model, which by the way included massive consolidation, which likely allowed those shareholders to get back to their profits again.

The consolidation happening now in Hollywood is more along the lines of Comcast and universal getting together so they can control the entire chain so that they don't ever come up against the challenges music did.
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#43 OFFLINE   slice1900

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Posted 16 June 2013 - 01:11 AM

That's not true.  Look up Price Maker vs Price Taker.

 

ESPN, by virtue of its dominance, is a price maker.  It's extracting monopoly-like rents from the Pay-Tv consumer.  In fact, over 50% of Disney's market value of 115B is attributable to ESPN.

 

 

Exactly. The problem is, ESPN and other channels that are considered "must have" by a lot of people these days like AMC, can be used as leverage by their owners to extract more money each time they renegotiate with a provider. The provider doesn't have much room to refuse them, what are they going to do, tell their subscribers that they can't watch Monday Night Football or Mad Men? Be a great way to lose a lot of subscribers quickly!

 

However, by driving up the rates that providers must charge, while the owners of ESPN and AMC are making a lot of money today, they are also killing the goose that laid the golden egg, because these continual price increases are why people have started cutting the cord. The price increases will keep coming, and the trickle of cord cutters will become a flood until media conglomerates realize what they've done. The money they make now, or maybe a few years from now, will be the high point of their earnings/profit. At some point the number of people cutting the cord and paying nothing to them will outweigh the extra revenue they get from raising prices on those who stick around. Any attempt to make up for the cord cutters by raising prices more on those left behind will cause even more people to cut the cord.


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#44 OFFLINE   inkahauts

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Posted 16 June 2013 - 01:30 AM

Unless cord cutters are no longer watching any TV at all, they will just raise rates for the streaming versions and blu ray series, etc, till they make up their loses form people cutting the cord. That's the missing part of your equation. They control all their contents distribution. Truth is, I expect most companies to get into deals for streaming accessed via providers for fees, as I see the day of free streaming of programs going away very soon. Many need subscriptions now, and I expect someday that to be a separate line item, much like Netflix split its streaming and disc fees. If thy start charging more and more for that, they can ease off increase to tradition distribution. I am sure they plan on balancing those two things out that will result in overall increases of profits. And until providers start seeing regular losses across the board, they won't have the leverage to push back at broadcasters for lower rates unless the government forbids free channels from demanding fees, must carry laws change, and bundling is outlawed. Ok, those gov regulations are dreams...

#45 OFFLINE   n3vino

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Posted 16 June 2013 - 07:01 AM

I've said this for years. It doesn't make sense that providers expose broadcasters to millions of more people than they can reach on their own yet the providers have to pay for the privilege.

That's because subscribers start crying and jumping ship when a provider lets them go dark.   Subscribers are their own worst enemy when it comes to provider fees going up.


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#46 OFFLINE   James Long

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Posted 16 June 2013 - 07:16 AM

Unless cord cutters are no longer watching any TV at all, they will just raise rates for the streaming versions and blu ray series, etc, till they make up their loses form people cutting the cord. That's the missing part of your equation.


Yep ... they will get their money somehow. That is the folly of thinking that a la carte will offer per subscriber costs at the same rates as the content providers charge today.

We're buying in bulk with the buying power of millions ... and even though some are shocked at the $2 and $5 per channel per month price tags for the higher price tier placed channels we only get that rate because we are part of the millions. When we become individuals picking and choosing our content and channels we lose that buying power.
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#47 OFFLINE   slice1900

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Posted 16 June 2013 - 08:25 AM

Unless cord cutters are no longer watching any TV at all, they will just raise rates for the streaming versions and blu ray series, etc, till they make up their loses form people cutting the cord. That's the missing part of your equation. They control all their contents distribution. Truth is, I expect most companies to get into deals for streaming accessed via providers for fees, as I see the day of free streaming of programs going away very soon. Many need subscriptions now, and I expect someday that to be a separate line item, much like Netflix split its streaming and disc fees. If thy start charging more and more for that, they can ease off increase to tradition distribution. I am sure they plan on balancing those two things out that will result in overall increases of profits. And until providers start seeing regular losses across the board, they won't have the leverage to push back at broadcasters for lower rates unless the government forbids free channels from demanding fees, must carry laws change, and bundling is outlawed. Ok, those gov regulations are dreams...

 

 

You're ignoring the basic laws of economics. They can't just raise their prices as much as they want because the more they raise their prices the less demand there will be. Especially for the 98% of programming that is mostly interchangeable with other similar stuff. There aren't very many Mad Men type series out there that people would be willing to pay real money for. Do you really think that they can raise the prices of streaming reality TV? I doubt most people would pay even a penny to watch something like Storage Wars via streaming. Shows like that will have to live and die with advertising sales.


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#48 OFFLINE   unixguru

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Posted 16 June 2013 - 08:28 AM

That is where you make your mistake. My description includes distribution. It is only in distributing the product that most of the players in the game get paid.

It is true that there is bulk distribution via compilations. Grouping songs together for sale has been common long before there were any piles of bits to discuss. But a two sided 45 or an album is not a monthly TV subscription.

The worlds are colliding. People can subscribe monthly to linear music channels that provide access to the songs they want to hear instead of buying the albums (some very specific to the listener). And people can buy television programming by season or by program as an option to watching a linear channel. But to say what works for music MUST work for television and the traditional way of selling TV will die is overly optimistic. Music moving to include channel subscription as a distribution model SUPPORTS television's method of selling content.

TV content producers can use the non-linear model but the real money comes from getting on a channel and getting your show sold to millions of viewers whether or not they want to watch the show. It makes it much easier to be seen by that audience if the content is delivered pre-paid to their homes instead of needing to convince people to pay to watch each program.

As an example, lets look at the 1980's sitcom Alf. If you know you want to watch it you could buy the DVDs. Or you could buy episodes or other subscriptions via a streaming provider. But with a per show price tag for viewing would you buy Alf? If so, great! The owner gets paid! But it is much easier for that owner to offer the program via a linear channel (currently airing on HUB). The owner gets paid based on the millions of people subscribing to Hub and subscribers can watch without rationalizing the individual purchase price for each show. 50c per month to Hub delivers several episodes of Alf plus dozens of similar programs. And Hub can afford to charge only 50c for their network because they have millions of subscribers they can leverage for advertising.

Take a way the bulk purchasing ... take away the advertiser support ... and explain how a content owner makes money without charging a lot more for their product.

 

Nothing wrong with linear music as an option.  We need the same kind of alternatives for TV.  Let the consumer choose if they want the linear approach or a la carte channels or PPV or any other packaging - even offer the same program with or without ads for different $.

 

Even if Alf cost less than 1c per month the problem remains that the approach multiplies hundreds or thousands of times and then we're talking real money.  Personally, they would have to pay me - a lot - to watch Alf.

 

All-you-can-eat is available in other domains but is a very small factor.  When we go to a Chinese buffet we can only eat so much.  A few dozen things to choose from.  They don't serve expensive steak which would increase the price for everyone - and put them out of business.  Nor do they have 100's of different things to choose from with many that few or nobody would consume causing them to have to throw it away - and increase the price for everyone.

 

I have no problem with a show I pay 1c for now costing a lot more under a different model.  We watch lots of those expensive original series on the pay movie channels - like Game of Thrones.  If the price of those channels rises much more we're going to toss them and buy those series directly (and any movies we want).  There will be a delay and each one will cost a lot more.  What matters is the overall cost for what we watch.  That is what the industry doesn't want to acknowledge.  Nobody goes into an all-you-can-eat buffet and eats 20lbs of food!


Edited by unixguru, 16 June 2013 - 08:33 AM.


#49 OFFLINE   James Long

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Posted 16 June 2013 - 09:57 AM

Nothing wrong with linear music as an option.  We need the same kind of alternatives for TV.  Let the consumer choose if they want the linear approach or a la carte channels or PPV or any other packaging - even offer the same program with or without ads for different $.


How something is sold is up to the owner. Most owners are allowing non-linear channel distribution of their product as sideline - but the successful ones rely on linear channel distribution as the backbone. Most protect their backbone to the point of delaying other distribution until after they have made their money from the linear channels.

When you say "let the consumer choose" the first choice comes from the owner. Are you suggesting that the government should intervene and FORCE content owners to sell their content the way? That is what many a la carte advocates want. I don't like the government telling private businesses how to operate. They rarely get it right.

 

I have no problem with a show I pay 1c for now costing a lot more under a different model.  We watch lots of those expensive original series on the pay movie channels - like Game of Thrones.  If the price of those channels rises much more we're going to toss them and buy those series directly (and any movies we want).  There will be a delay and each one will cost a lot more.  What matters is the overall cost for what we watch.  That is what the industry doesn't want to acknowledge.  Nobody goes into an all-you-can-eat buffet and eats 20lbs of food!


If you watched more of the tier channels the higher price of a la carte would have a greater impact on you.

The tier system isn't perfect ... but it is better than the alternative. Less content at a higher price.
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#50 OFFLINE   unixguru

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Posted 16 June 2013 - 03:44 PM

How something is sold is up to the owner. Most owners are allowing non-linear channel distribution of their product as sideline - but the successful ones rely on linear channel distribution as the backbone. Most protect their backbone to the point of delaying other distribution until after they have made their money from the linear channels.

When you say "let the consumer choose" the first choice comes from the owner. Are you suggesting that the government should intervene and FORCE content owners to sell their content the way? That is what many a la carte advocates want. I don't like the government telling private businesses how to operate. They rarely get it right.

 

The government must intervene and clean out everything that gives unfair anti-competitive favors to some in the current system.  That is how this thread started and clearly DirecTV wants this cleaning to happen.

 

For example, "ESPN" should not be able to force an all or nothing onto distributors and consumers.  As I've said many many times before - that's tying and it's part of antitrust law and it's illegal for most things.

 

Break that and then the consumer can choose which, if any, of the delivery mechanisms (and prices) "ESPN" wishes to use.  The feedback loop of normal markets will then set the value at a balance that both owner and consumer can live with.

 

I recently read that Steven Spielberg warned that movie prices could rise to $25.  That's their right.  It's my right to not pay it and not see the movie.  If enough people won't pay it then they will have to get reasonable.  As it should be.  What a crazy world it would be if I had to swallow that expense because I wanted some other product.  Yet that is how "TV" works today.






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