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Discussion in 'DIRECTV Programming' started by ssm06, Jan 2, 2013.
For completeness, I've merged that info into the spreadsheet.
There was a time when it WAS free, back again circa 1965, when you had ABC, NBC, and CBS plus a smattering of independent stations. Then things started to erode the economic model of free TV...cable channels started siphoning off viewers and competing for advertising, then DVRs started reducing the value of advertising, and the internet caused cord cutting and people to watch via Hulu, Netflix, etc. Not all market driven changes will benefit the viewer.
And no, you are not a customer of the broadcasters, you are a customer of the distributor (i.e. DirecTV, Dish, Comcast, etc.), and you are not paying for the content, you are paying for ACCESS to the content, whether you actually watch it or not. If you buy more channels than there are people in the house and/or you don't watch TV 24 hours a day, you are buying access to programming you don't watch. All we are really discussing is how much stuff you don't watch you are willing to pay for. This is an important distinction. Your DirecTV or cable bill is buying access to X number of hours of content per month. It's up to you to shop around and buy the package that best meets your needs. However, you can only buy what is offered.
Another imperfect analogy: for years, people that used, say, a maximum of 100 minutes of cell phone usage were forced to buy the smallest package the cell companies offered (usually 400 minutes). Then along came pay-as-you-go plans and they had an alternative. The same situation applies here. Right now, the only way to buy access to programming is via a bundle that may give you more than you want. Maybe Intel will be the "pay-as-you-go" option for TV. Maybe the more general IPTV offerings will do that. If someone can figure out a way to make money doing it, then it will be done. If no one can turn a profit, then it won't. That IS the free market in action.
I disagree. You can cut back on the number of channels, eliminate the "added value" services like Whole Home DVR, DVRs themselves, and HD content. If there were no market for those services, they wouldn't be offered and we would all still be watching SD on our CRT TVs with RCA DRD480 receivers, and the cost of service would be much lower. But again, the market demanded more, so the MCOs delivered it. It comes at a cost.
Of course, as we have discussed earlier, you can opt out all together and go back to just OTA broadcasts...totally free TV. It is your choice.
Yes you do. If you buy a computer with Windows pre-installed you are paying for the OS even if you immediately wipe the hard drive and install Debian Linux. Your options are to find a vendor that sells computers without an OS (and yes, they do exist) or build a system yourself with components. Again, the free market has spoken and it said that nearly everyone that buys a PC wants Windows on it, so that is what the vendors produce and promote. That's how the market works.
Yes, America leads the world in computer software...my employer being one such firm. We are a relatively small company (around 100 employees) yet we compete against the giants of the industry. We compete through innovation and agility that the big firms can't match. There is PLENTY of competition in the software industry, just as there is in the entertainment industry.
It seems that your real complaint is that your particular needs are not being met to your satisfaction. Well, as Mick Jagger once said, "you can't always get what you want, but if you try sometimes, you just might find, you get what you need."
Sorry, won't ever agree with that. There is far too much hangup on specific words ignoring the underlying meaning and effect.
Take a premium channel. I buy or not buy depending on what the premium channel itself provides. The fact that I send the money to DirecTV and they pass it on is irrelevant. I am a "customer" of that channel.
My local phone company would like to sell me a complete bundle of phone, internet, and DirecTV. I would pay them and it would pass through to DirecTV. Your concept means I'm not a customer of DirecTV in that case.
When I buy anything I apply my vote to the company I'm buying from and that, in turn, applies to every company they buy from. When Broadcom makes a new chip they are directly responding to the requirements of any company that will buy it - which, in turn, is driven by requirements of the consumer that ultimately buys the end product. EVERY industry is like that.
Then we must agree to disagree. Sure, the consumer is the ultimate customer in everything, but the influence the consumer has diminishes as a function of distance from the firm in question. While what Broadcom makes is driven by the needs of (say) Pace Electronics, which are driven by the needs of DirecTV, which are driven by the needs of it's software programers, which are driven by the needs of the consumer, how much direct influence do you have over the business practices (which is what we are discussing here) of Broadcom? Can you reasonably insist that they sell lots of 20 chips for the same price per chip as lots of 20,000? Yet that is what you are trying to assert here - that as a customer of DirecTV you should be able to demand that their suppliers make it possible for you to buy TV content at a finer grain than it is currently offered.
In fact, you are not even saying that a given supplier must unbundle their offerings, but rather that you should be able to choose which supplier you get content from. That would be like telling DirecTV you want to only buy HD DVRs with components from Broadcom or Samsung and not from Sharp or Intel. Good luck with that.
This is the way it is because the Windows tax is relatively low and within reason for the vast majority of people.
When a $350 notebook with Windows starts costing $450 because Microsoft cranked up the price you can bet the market will change fast and there will be no more bundling. Microsoft knows this and balances that risk (tradeoff less per-unit for more units).
TV is also a balancing act. Like the computer example it hasn't gone too far for most people - yet.
You could compare the number of cord cutters to those that won't buy a computer with a Windows tax. Microsoft is hurting. PC makers are hurting. And then there is Apple. No reason to believe that a similar disruption won't happen to the TV industry.
Can you buy a Macbook Air without the Apple OS on it? Yet I can run Windows on it if I choose. So is that a OSX tax?
But you are right. If prices exceed what people are willing to pay things will change. That is how pay-as-you-go cell phone plans came to exist.
But pay-as-you-go happened without goverment intervention and new laws. It happened because the market wanted it. If the market wants an alternative to the current TV model they will get it.
I've never said I expected smaller lots to be at the same price as larger. I didn't intend to tie Broadcom into this primarily relative to DirecTV.
Broadcom also makes cell phone chips and competes with Qualcomm. They both sell to multiple phone manufacturers. If one or the other gets ahead in features that, in turn, makes phones based on it ahead of features, which in turn drives more consumers to that. So how in the world does that not affect the chip supplier?
Intel vs AMD.
Again, if it were like TV, I would buy an Intel computer from a manufacturer and part of that money would go to AMD because the manufacturer also sells AMD computers.
Yes, it is. Can't imagine why anyone would buy an Apple if they weren't going to run OSX at all.
If I wanted to run only Linsux or Solaris or ... on a notebook, my options for not paying the Microsoft or Apple tax are very low.
Actually, didn't pay as you go come more from the phone companies wanting to sell to people who were credit risks or at least short of cash?
The point is that the market drove it. The market for people willing or able to pay for 400 minutes monthly, whether they used that much or not, was saturated. Whether it was because of credit risk, cash shortages, whatever, the MARKET developed a solution.
If and when the number of cord cutters, or young people unwilling or unable to pay for bundled video services, reaches critical mass (and I don't pretend to know what that number is) the market will produce a new solution, as it did for cell phones.
At this point, I think we are arguing semantics. Let me try to summarize the two positions...
Givens for both sides of the discussion are several points:
- The cost of programming, particularly sports programming, is growing much faster than the rate of inflation
- Many factors drive the rise in prices, from increasing cost of production to athlete salaries
- The price paid by the average consumer for TV service is not unlimited
Where we differ:
The "pro al-a-carte" position...
- The current model is anti-consumer and anti-competitive and amounts to a cartel
- Government should intervene and force a particular model onto the industry
- The best "solution" is the option to buy only certain services, without any linkage whatsoever between them
The "pro status quo" position...
- The current model is the inevitable result of market pressures and consumer habits and demands
- The market will offer an different model when there is profit to someone to do so
- The best "solution" will be determined by viewer acceptance and adoption, and will likely involve a variety of technologies, some of which may not yet exist
That about sum it up?
I agree. With cord cutting happening at a very slow rate and pay TV subscribers on the rise...we are nowhere near that point. If and when that happens, as you said, the market will develop a solution. It won't be forced in the market like the failed theory of nirvana that some see in a la carte.
I can show you study after study that shows people with DVR still watch plenty of live tv, not just sports. In our house, we have three DVRs including the Genie. We watch some recorded content, we watch a ton of live sports, and we also just surf and watch what's on.
When you think about the number of homes that don't have a DVR, or ones that do but also still watch live tv, it really puts the perception back to reality. Remember, most people at DBS Talk are high end users, you are not the norm. I mean that in a good way.
44% of homes have a DVR according to Nielsen...I'll bet it's 90% for DBS Talk.
As an example in viewership, for American Idol about 5 million of their 17 million viewers came on days 2 through 6, or the DVR window. Now, is that significant? Absolutely, but it's still less than 30%.
Still a very long way to go on this stuff.
Further fodder. Here is a hypothetical mind experiment.
*) I run a computer manufacturing company
*) I sell Intel-based computers because they have the majority of the market due to customer demand
*) I also sell AMD-based computers because a minority of customers want for numerical/supercomputer applications
*) Intel is a bully and demands a fee for every computer I sell no matter what processor; no fee, no ACCESS to any Intel part
*) Intel also demands I must sell product with every series of Intel CPU
*) One way or another AMD buyers are paying for this extra access fee even though they never use an Intel part
*) Intel buyers don't care that AMD buyers have to support their purchase
*) AMD buyers have no choice; every computer manufacturer has the same deal with Intel
*) As a consumer I have very few options to not pay the Intel tax and those options will be poor due to cost (materials [lack of similar volume - SPARC, for example] or time) or lack of features (if I need certain applications that only work on x86 for example)
Intel in this fantasy world is similar to ESPN (parent company).
Can this happen? Is it legal?
It's easy to defend this kind of situation when you benefit from the model. Does majority rule - in everything? After all, the market got to this place. Of course not. Many laws protect the minority. If you aren't one in any way now you no doubt will be somewhere along the line.
I'm sorry, I don't buy this analogy at all.
Disney doesn't REQUIRE that a MCO deliver all the ESPN channels to EVERY subscriber, they just set their fees much higher if the MCO doesn't include it in the base tier. It is their right to price their product in any way that the market will accept.
DirecTV, to use them as an example, COULD choose to put ESPN in only the Premier tier. However, if they did so, the cost to them for ESPN would be much higher. Couple that with DirecTV's business plan (to be the place to go for sports) and it becomes a no-brainer business decision to give ESPN what they want. Likewise, if you only carry ESPN, versus ESPNU, ESPN2, etc., you pay more for ESPN than if you carry the whole suite (IOW, you get a package deal). Again, the MCOs make a business decision whether or not they will carry them all (and many cable companies in the country don't carry them all).
There is no conspiracy, and very little bullying, involved here. You have a variety of businesses negotiating with each other, each trying to achieve the greatest advantage they can while maximizing the revenue they generate and keep. That is the capitalism at its finest.
The reality is that 3 MCOs (Comcast, DirecTV and Dish Network) control access to something on the order of 60% of all US households. If any of them really wanted to bring al-a-carte to the market, they could. The problem is they can't figure out how to make any money doing it (Charlie Ergen's public statements notwithstanding). No company is going to undertake anything without some idea of how they will turn a profit doing it.
As I've watched more streaming that includes commercials that I can't skip I've gotten to thinking about that trade-off. Would I be willing to again watch programming with commercials if there was no other cost to view (I am assuming that my internet access is a sunk cost because it is used for other purposes as well)? My current answer is "not yet", primarily due to the bandwidth I have available (DSL) and the quality of streamed content. But change those 2 variables and I think I could live with commercials for $100+ a month.
One of the things about this debate that is interesting is the idea that a la carte is about channels. Channels are a nearly century-old concept that came about because of physical realities/limitations of analog broadcast. Today, even broadcast channels are convenient relics in the form of virtual collections of digital content. This is where streamed content becomes a mechanism for offering a la carte. There is no reason someone couldn't self create a personal channel given content availability.
In your post about bees and honey, you indicated that the content is a product sold to advertisers in exchange for the belief that it will deliver a certain number of impressions of a desired demographic. With internet deliver, you can micro target demographics and interests in a way that you can't with program content alone. At this point, people have not figured out how to do this and make money at it, but it seems hard to believe someone won't.
Part of what I don't get is why someone somewhere couldn't figure out that instead of offering me $0.29 per month AMC that I don't watch because of the commercials, they could save $0.09 and let me have $0.20 per month Fox Soccer instead. Advertisers would be happier, they would get actual impressions, I would be happier, I could save $6 and get a lower package.
Lord forbid they let me swap Lifetime (at $0.35 per month) for Fox Soccer... I could save $16. We don't watch Lifetime either. Heck, aside from the sports additions, I could drop two tiers and save the money. So, does anyone believe DirecTV offers tiers for the good of the customer?
Oh, one more thing, I pay $18 per month for additional receivers and $23 for HD, DVR and Whole Home. That's what, about a third of my cost. That alone would cover a significant portion of my broadband fees, or other content delivery models.
Last year, they said the average cable bill was $86 (http://www.huffingtonpost.com/2012/04/11/cable-bill-200-dollars-2020-study_n_1418779.html). There are about 100 million households paying that every month. That is about $100 billion, expected to grow significantly in the next few years. Currently, there are about 5 million cord cutters, which is a $5 billion business (IBM jumped into the PC business when it hit $1 billion in 1980). Cord cutters, and potential cord cutters (like me) are putting that money into play for someone to figure this out. Advertisers will follow people on this.
Part of the challenge is understanding that AMC is only $0.29 because millions of people subscribe to it. Fox Soccer is only $0.20 because millions of people subscribe to it. Take away the millions of subscribers and the money the channels get goes away.
Advertising is sold by ratings ... the people who actually tune in and watch a show ... but it is also sold by the the number of households the channel reaches. AMC being in more households allows them to charge more for their advertising ... and the higher rated shows on AMC would get more because of actual ratings. But being in millions of homes ... even millions of homes that never regularly watch helps the channel with advertising as well as collecting subscription fees from millions of subscribing non-viewers.
With the support of those millions of subscribers they can afford to have limited distribution via the Internet. The certainly can afford to have paid distribution (similar to selling DVDs of their programming). But as the Internet distribution cuts into their linear subscribers they will need to raise their rates to compensate. One will find less free content ... more online advertising tied to content and higher prices.
At the end of the day they need the millions of dollars that the tens of millions of linear subscribers (across all providers) are bringing them. If they don't get the money via linear subscribers they will get it somewhere.
I'd just rather see that pile of money get us MORE content by working together instead of less content for more money ... which is the eventual result of a la carte.