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Is Google and the Internet a serious 'threat' to DirecTV?

Discussion in 'DIRECTV General Discussion' started by Athlon646464, Aug 28, 2013.

  1. Athlon646464

    Athlon646464 Gold Members DBSTalk Gold Club

    Feb 23, 2007
    Uxbridge, MA
    Is Google and the Internet a serious 'threat' to DirecTV?


    Another Sign the Internet Is Going to Kill DIRECTV

    As it stands today, the NFL Sunday Ticket allows DIRECTV's subscribers to watch any NFL game. It's expensive -- it costs an extra $300 per year -- but it's popular among NFL junkies, those obsessed with fantasy football, and fans that happen to live in different cities than their favorite team.

    The right to carry NFL Sunday Ticket does not come cheap. Right now, DIRECTV pays the NFL $1 billion per year for the priviledge -- a figure that's expected to increase once the current deal expires.

    Google, with about $50 billion in the bank, definitely has the resources to make the deal. At the same time, DIRECTV's shareholders might not be sad to see it go -- analysts at Citi believe that the deal costs DIRECTV some $300 million each year.

    Like DIRECTV, Google could use the NFL Sunday Ticket as a loss-leader, offering it over YouTube as a way to push deeper into the TV realm. The company's latest gadget, the Chromecast, has been somewhat of an overnight success, selling out nearly instantaneously.

    The Chromecast, like its rival Apple TV, acts as a way to beam Internet content to a user's TV set. By paring the Chromecast with the NFL, Google would bolster its TV efforts.

    But more than that, it's actually better positioned to offer NFL Sunday Ticket.

    It wouldn't be unreasonable to assume that there are NFL fans out there that would be interested in such a package, but can't buy it because they aren't DIRECTV subscribers. Perhaps they've signed a contract with their local cable company, or find that bundling the Internet with cable makes more sense than buying DIRECTV.

    By freeing NFL Sunday Ticket from a provider -- and offering it up to anyone with an Internet connection -- it should be able to attract more subscribers. Should that occur, it will be yet another example of content moving online.

    This overarching trend -- the move to bring content online -- should frighten DIRECTV shareholders. On paper, the company is a tremendous value: It trades with a below-market multiple, generates cash, and buys back stock aggressively. It's even one of Warren Buffett's picks.

    Yet, the potential long-term ramifications of paid-TV's move to the Internet could be catastrophic. Unlike a rival such as Comcast or Time Warner Cable, DIRECTV's Internet offerings are largely non-existent. Thus, it's extremely susceptible to Internet-based competition.

    Should a Comcast TV subscriber ditch his cable package for Intel's offering, Comcast would still retain that subscriber's business for Internet access. DIRECTV, on the other hand, lacks that luxury.

    DIRECTV's management understands the threat. It tried to buy Hulu last quarter, and on the company's last earnings call, said it was disappointed that Hulu's owners wouldn't sell. DIRECTV might've made Hulu into its own Internet-based service, but without it, the company remains vulnerable.

    Should Google acquire the rights to NFL Sunday Ticket, it would be yet another example of the Internet becoming the preferred distribution method for content. YouTube is already a dominant video portal, but by pairing it with the NFL, Google could position itself as a major player in the digital TV world.

    At the same time, while the loss of the NFL might be seen as a net positive for DIRECTV, the overarching trend is decisively negative. As it has no Internet offerings, DIRECTV is extremely susceptible to online-based competition, like the service Intel is preparing to launch in the near future. Overall, this trend remains in its infancy, but it's something DIRECTV shareholders need to keep an eye on.

    Full Story Here


    DIRECTV, Google: The Nitty-Gritty

    Google execs may have been meeting with officials from the NFL in a bid to bring NFL Sunday Ticket to Google after the league's current contract with DIRECTV expires in 2014. While the conversation, which is not officially confirmed, would represent little other than a preliminary exploration, it is no secret that the NFL has been seeing significant revenue increases from other broadcasting partners at the same time as DIRECTV is looking to tighten its belt. NFL Sunday Ticket has not been profitable on a stand-alone basis for the satellite provider, but I believe that even with a hefty price tag, Google could make it a moneymaker.

    Currently, DIRECTV pays $1 billion per year, but has fewer than 3 million subscribers, who pay between $225 and $300 per year ; the package is costing the company hundreds of millions per year, although it is a key differentiator that attracts business.

    There have been absolutely no indications from Google, if it were to take over NFL Sunday Ticket, as to how it might price the service. What we do know is that Google reports having 1 billion unique visitors to YouTube each month who watch more than 6 billion hours of video. That means that if 0.5% of YouTube visitors were willing to pay $200 for a season of NFL Sunday Ticket, Google could break even on a $1 billion price tag, while cementing a place of legitimacy for its platform.

    One of the realities of the package is that local games are not available -- meaning you have to turn to cable to watch your home team, Monday Night Football, and games on the NFL network. Where I think the true power of the Google option comes into play is the ease with which it could offer multiple options. Google could continue to offer the full package as it currently exists, but because of the programming flexibility it likely enjoys, could offer alternate options as well.

    Consumers who do not want to pay for a full year would likely be willing to buy a few games when they are traveling, so as not to miss their home team, or when there are games that have added significance for them. Single-game or single-team options are a fairly complex proposition when talking about satellite, but become far more straightforward when you include the power of Internet programming. While other networks are likely strongly opposed to the NFL allowing fans to "cut the cord," the benefit to consumers and Google could be significant. While this story is in its infancy, Google investors should pay close attention, because nothing will put YouTube on the map as a cable competitor faster than the NFL.

    Full Story Here
  2. TheRatPatrol

    TheRatPatrol Hall Of Fame

    Oct 1, 2003
    Phoenix, AZ
    I don't get how they would have provided internet service by buying Hulu? What they should have done is bought, or partnered with a cell company for their 4G bandwidth. Weren't they going to do this with Verizon by having a small antenna attached to the dish?

    I don't see how this is complex, D* could have done this all along, just tell the receiver to turn on a certain game or certain team.
  3. lparsons21

    lparsons21 Hall Of Fame DBSTalk Club

    Mar 4, 2006
    Herrin, IL
    The elephant in the room is bandwidth caps and overage charges when exceeded. They are here already with some providers and coming from others.

    So the question then becomes which will be cheaper in the long run. Cable/sat or IPTV and pay more for the internet bandwidth?? Assuming the difference in price turns out to not be as great as many want to assume, is it worth it to fiddle with the various set top boxes as you go from one IPTV streamer to another? So far IPTV just hasn't gotten anywhere close to the simplicity and elegance of a single box that gets it all as in the case of cable/sat boxes.
  4. Richard

    Richard Legend

    Apr 23, 2002
    South Texas
    This article seems to leave out the biggest customer for Sunday Ticket, it's not individual customers, it's commercial businesses.

    YouTube is one of the worst streaming providers on the internet, it's hilarious that someone wrote an article suggesting this.
  5. Nighthawk68

    Nighthawk68 Godfather

    Oct 14, 2004
    That's what I was thinking, all the Sports Bars
  6. lparsons21

    lparsons21 Hall Of Fame DBSTalk Club

    Mar 4, 2006
    Herrin, IL
    I hadn't thought about the commercial customers. Think about the bandwidth they would have to have to run a day of NFL on all their screens!!

    YIKES!! :)
  7. sdk009

    sdk009 Icon

    Jan 19, 2007
    Kihei, Maui, HI
    I only have one option where I live. As a Hughesnet sub, we are limited to 20GB a month as opposed to 150GB when we had DSL service before we moved. One D* On Demand program drains our usage for a month. We are constantly juggling between cell and satellite service trying to stay within the monthly limits of both services. We would be totally hamstrung if we had to watch ST from the Internet.
    Of course, the NFL is about the money.
  8. joshjr

    joshjr Hall Of Fame

    Aug 2, 2008
    NE Oklahoma
    I hate the way the title is worded. The only current threat Google poses would be for Sunday Ticket and I doubt that really. There is already several other threads on this. Why start another one over the same stupid thing. When does this topic not come up when DirecTV's contract nears renewal? Each time Cable and Dish say now. In my opinion, internet is not a very good option at least not if it is the sole option. It has to remain with a provider.
  9. joshjr

    joshjr Hall Of Fame

    Aug 2, 2008
    NE Oklahoma
    This is a perfect example of why this is a terrible idea. At some point the NFL can piss fans off if they get to greedy. Everyone know's what it takes to get Sunday Ticket now. I can only imagine how this would casue ISP's to raise rates even more or the complaining from individuals about overages and the sports bars that cant get Sunday Ticket. What a mess. How about thanks but no thanks. There is a perfect setup for Sunday Ticket now. Work with DirecTV to allow an internet option while still being available to its existing customers.
  10. lparsons21

    lparsons21 Hall Of Fame DBSTalk Club

    Mar 4, 2006
    Herrin, IL
    I would agree. If I wanted NFLST, then I'd be with Direct because it is the simplest way to have it.

    Fortunately for me and my wallet, I'm not that big of a football fan! :)
  11. PCampbell

    PCampbell Icon

    Nov 18, 2006
    You can get Directv any place that has LOS. There is a lot of rural areas with slow or no internet. As for Google TV it is just another way to get the same thing like a new cable co etc.
  12. slice1900

    slice1900 Well-Known Member

    Feb 14, 2013
    ST over the internet is just not practical today. Streaming live content that people want and expect to watch live is totally different than streaming movies or videos ala Netflix or Youtube. Football fans expect to watch the games live to the second. If it was even 30 seconds behind, think about all the "spoilers" there would be for your ST game(s) if you have a game on cable/sat/OTA at the same time, or are talking/texting with a friend who is at the game.

    Netflix and Youtube work as well as they do because they buffer content ahead of where you're watching, so you don't see the minor and major hiccups that are a fact of life for the internet. If you're watching live, you can't buffer, so you'll be exposed to all those hiccups. When they happen you either have to miss some action or it has to pause and then you're no longer watching live.

    No one has ever attempted to do something like this with live content, and there's no way the NFL is going to take the risk of being the first, no matter how much money Google dangles in front of them. It would do tremendous damage to the league if their most ardent football fans were forced off a solution that works pretty well for one that would work less well even for those with a 100Mb FIOS connection, let alone the people with poor or no broadband options.

    I could see Google trying to make some deal where they have the rights to sell single games, but I doubt they'd be interested in selling the full ST package the NFL does over the Internet, or that if they are the NFL is willing risk the backlash if it doesn't work as well as Google might hope. It doesn't matter how many smart people Google gets to work on it, they can only control what happens up to the time the packets leave their control. Once it is out on the Internet, it may pass through a half dozen different providers on its way to your house. But the angry guy who is having problems watching his team is still going to blame the NFL for being greedy and making the deal. The NFL doesn't take risks like that.
  13. longrider

    longrider Well-Known Member DBSTalk Club

    Apr 21, 2007
    Elizabeth, CO
    I have to agree that IPTV is still not ready for the masses. First you have the fact that while maybe 80% of the country has broadband probably only 10% of that is good enough to stream live TV. Then you have the fact that if that 10% all used their capability at the same time it would kill the providers. I can use my service as a perfect example, I live in the country but am lucky enough to have a 10MB fixed WiMax service. However the backhaul off the tower/access point is maybe 50 - 100 MB but there are several hundred subscribers served off that tower. This works as usually only a very small percentage are using heavy bandwidth at any one time. You get a hundred people watching a game and you are now down to 1MB per person.

    On the non technical side, I 100% agree that there is no way the NFL would risk angering that many customers
  14. RAD

    RAD Well-Known Member

    Aug 5, 2002
    When I see these articles mention how many residential customers have NFL-ST and the pricing they always seem to ignore the commercial customer. Here's the pricing from the DIRECTV web site:

    Link http://www.directv.com/DTVAPP/content/business/bars_restaurants/sports

    So how many sports bars are out there in the US paying these prices? What are all the casino's and sports books paying? Those commercial accounts have to contribute to what they're paying the NFL.

    And as others have mentioned, not every place has an internet connection available to them that would allow for them to stream 6 or 7 games in HD at the same time, and if they did could a small mom and pop sports bar afford a connection like that if they can get it?

    I can see Google paying to be the online NFL-ST content delivery company while DIRECTV or whomever handles the non internet distrubution.
  15. Diana C

    Diana C Hall Of Fame DBSTalk Club

    Mar 30, 2007
    New Jersey
    A $300 million dollar loss on Sunday Ticket is based solely on the direct ST revenue versus the $1 billion license fee to the NFL. Once you add in the basic subscription fees paid by residential and commercial customers that subscribe to DirecTV specifically for ST the results are very different. Sunday Ticket is a gold mine for DirecTV. There is no way they will let it go.

    Secondly, the reports of the death of linear TV service are greatly exaggerated. Sure, lots of 18 to 28 year olds don't subscribe to PayTV services, and get their entertainment via the Internet and video games. However, MANY of them are mooching off their parents accounts. They get access to HBO-Go, Hulu, Netflix and other services because they login with their parents' credentials. Once they have to pay for all these services on their own, they will find that a traditional pay TV subscription looks a lot more attractive.

    Finally, the real price of entertainment is controlled by the content owners. Just look at the conversations going on between people like Apple, Intel, Google and ESPN...ESPN will be happy to sell them their content for an Internet based service - but it has to be part of a bundle, just like their current deals with cable and satellite. If there is no cost savings, or at least a way to avoid big ticket items like ESPN, then the delivery inconsistencies of Internet distribution will make these services unattractive.

    It will be a decade at least before Internet delivery of entertainment is really viable, and even then I think it will have an uphill battle to displace cable and satellite.
  16. SledgeHammer

    SledgeHammer Icon

    Dec 28, 2007
    Can't comment on sports since I don't watch 'em. The internet has LONG AGO killed pay channels, movies and adult. Only a moron would pay $7 for an HD PPV they have to watch in 24 hours, or $20 for an hour of porn when there are SO MANY other (legal and "illegal") options. Then again, there are people who pay for free porn on the internet, so what do I know? :).

    In terms of movies, you can watch unlimited movies "legally" from Netflix for the price of one DirecTV PPV movie. That alone killed it.
  17. sdk009

    sdk009 Icon

    Jan 19, 2007
    Kihei, Maui, HI
    I would strongly disagree. Please refer to my comment earlier in this thread. I would use all of my monthly allotment by watching one Netflix movie. Not everyone lives in an area with DSL and/or fiber service with virtually unlimited Internet usage available.
  18. Satelliteracer

    Satelliteracer Hall Of Fame

    Dec 6, 2006
    Well, definitely didn't kill it. Netflix has more tv than movies. PPV business is a strong force for most distributors because it provides the titles sooner, higher quality (better bit rate, etc) to their large screen tv. If someone is willing to wait, is ok with smaller device or softer image on a larger device and had the bandwidth, then certainly there are solid competitors out there.
  19. sregener

    sregener Godfather

    Apr 17, 2012
    Um... That doesn't happen now with NFL Sunday Ticket. It's a 3/4-second hop up and down to a geosynchronous satellite. And encoding the game into MPEG2/4 and decoding it on the other end isn't instantaneous either. I remember talking to my parents on the phone and having them say, "Oh no!" and on my screen, the ball hadn't even been snapped yet. 3-5 seconds delay. Google might be able to beat that with Internet-based delivery.

    But we're at a practical issue here, which is why Internet streaming is so popular and broadcast hasn't gone away. The problem that exists for most people is that they don't want to all watch the same thing at the same time, or at least so few that even a couple hundred channels does not cover the vast majority of viewers. Hence, streaming makes the most sense because it gives you access to a lot of programming choices, and you control which one you watch when. However, few people watch sports programming after the fact. I do, but that's beside the point. What you have is 8 or fewer games that a large population wants to watch at the same time. This is exactly what broadcast does best - deliver one product to a large number of people simultaneously.

    Streaming doesn't make sense for football compared to satellite delivery, because the sheer bandwidth required to send the same bits out to a few hundred thousand customers at the same time is huge. Even with distributed computing, you're talking about sending a huge load of duplicate data.

    I agree with others who say pay-per-game would be trivially easy for satellite. Easier, in fact, than it would be with Internet streaming.
  20. Athlon646464

    Athlon646464 Gold Members DBSTalk Gold Club

    Feb 23, 2007
    Uxbridge, MA
    How much of your 20gb does one Netflix movie use? We're using Netflix & Amazon Prime more and more here and have yet to hit our 250gb cap. I'm talking between the three of us at least 60 minutes per day, and usually more. Also throw in at least 6 to 10 VOD's from D*.

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