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Rate increases coming, could be worse

Discussion in 'DIRECTV General Discussion' started by ChicagoBlue, Sep 11, 2012.

  1. Sep 13, 2012 #41 of 134
    lokar

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    I do blame ESPN. If the world was a la carte, ESPN could not get away with what they get away with now. I think ESPN's highest ever recorded rating was somewhere around a 10.0, meaning that 90% of people probably don't care about ESPN yet are paying a high price for it every month.

    I completely agree with all of this. Add in the fact that channels like A&E, History, Bravo, etc. have abandoned their original missions and gone to reality TV crap which makes the choice of which channels I would keep even easier. I would like a package that would give me the following: NBCSN, BEIN Sports, USA, Sci-Fi, Cartoon Network, NHL Network, BBC America, TNT, Discovery Science and my locals in HD. I occasionally watch ESPN but could live without it just fine. If the above came to $50-$60 a month with a la carte I would be surprised but would be OK with it.
     
  2. Sep 13, 2012 #42 of 134
    Diana C

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    Exactly the issue. Right now, the only thing ESPN can deliver to, say, the Yankees that they can't get via their own YES channel is a national audience. So, for a "big" game (like a late season game between teams in a division title race) they turn to ESPN. But that could easily change. There was a time when MLB Extra Innings was available only on DirecTV. Now most viewers have at least 2 options, some have 3. Soon, Extra Innings and every other sports package (with the possible exception of Sunday Ticket) will be as available to viewers as CBS or HBO. How long do you think any sports league or college association will watch ESPN collect $4 or $5 or more per household without thinking they should be getting $2 or $3 themselves. After all, without the athletes, what does ESPN have to sell? If ESPN won't pay it, they'll eliminate the "middleman" and sell it themselves.

    I can't predict how long it will take, but eventually Rat Patrol is 100% correct - every sports event will be on a premium subscription channel. It won't happen overnight, and that is ESPN's downfall. Gradually their content will erode, and their value will decline. Then they will have a huge overhead with diminishing revenue.

    Long term, sports will look like the current landscape of entertainment programming. Dozens of channels, each of which have 1 or 2 or 3 good shows (or, in a sports context, events) all fighting for enough subscriber and advertising revenue to survive. It's not pretty, but I think it is inevitable.
     
  3. Sep 13, 2012 #43 of 134
    Diana C

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    You would be surprised. Take SyFy...

    SyFy collects an average of $0.21 per subscriber (slightly higher than the industry average of 20 cents), and is currently available in 98 million homes. That's roughly $20 million dollars per month. Meanwhile, SyFy gets about 1.2 million viewers. To break even, if offered a la carte, and purchased only by people that watch it, they would need to collect over $16 per month.

    If we use that value as an average, your "package" of 9 cable channels and 4 locals would cost you well over $200 per month.
     
  4. Sep 13, 2012 #44 of 134
    tomski35

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    What I don't understand is how the cable companies and satellite providers ended up paying the broadcasters for content. The cable channels had no way to get their content out without the providers. Viacomm, et al should be paying DTV, Cablevsion, TWC, etc to get access to their households. Let them make their money off the commercial air time they sell. Lord knows the two political parties and their PACs are spending enough.
     
  5. Sep 13, 2012 #45 of 134
    mreposter

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    To generate $20m from 1.2m subs would require $16.67/month. Or am I missing part of the math?
     
  6. Sep 13, 2012 #46 of 134
    Diana C

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    It is all just a supply chain. The content providers (producers for entertainment, teams, leagues, associations, etc. for sports) are the manufacturers. They make the content we want to see. The broadcasters (both OTA and cable) front the money for the manufacturing process. They then collect all of the resulting product and bundle it for distribution. The cable and satellite operators deliver it to the retail consumer.

    In the days before cable, advertisers paid the broadcasters to insert their advertising inside the "desirable" content and the broadcasters delivered it all to the viewers. Cable just added another layer to the supply chain...they and the satellite companies invested the money to build broadband distribution systems that could deliver many more channel choices than OTA broadcasting. To make money, they needed content the viewers could not get elsewhere.

    At first, it was exactly as you describe - the viewer paid for the service of multichannel delivery and cable operators simply rebroadcast the channels. Very quickly, however, the broadcasters realized that they had a valuable commodity and, in the free enterprise spirit, demanded to be paid for it. Once viewers had more than one option (i.e. once satellite starting competing with cable) no one could afford to not carry certain channels for fear of viewers switching providers.

    So, originally, power was balanced between the broadcasters and the producers. Producers shopped their shows around for the best deal, and broadcasters competed to provide the most desirable (most watched) content, so as to earn the highest ad rates. The multi-channel operators (MCO) unbalanced this equation. They now faced the viewer and the broadcaster became a sort of middleman. They could now get paid directly from both sides...from the advertiser on the front end and the MCO on the back end. They are simply exploiting the market.

    The real point is that without the MCOs, we would all still be watching a handful of OTA channels. The 200 plus channel world we live in is a direct result of the same circumstances that allows ESPN to get $4 per subscriber per month. You couldn't have one without the other.
     
  7. Sep 13, 2012 #47 of 134
    Diana C

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    Oops...you are correct. That's what happens when I do division in my head.

    Corrected my earlier post.
     
  8. Sep 13, 2012 #48 of 134
    wingrider01

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    so 20 minutes of show and 40 minutes of paying commercials?
     
  9. Sep 13, 2012 #49 of 134
    celticpride

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    I would also agree with ratpatrol ,but that will never happen because disney wouldnt allow it. they would say if you want ESPN then you also have to pay for the disney channels and ABC networkl!I wish they would allow us to pay for up to 3 out of market channels,Although in my case i would only want comcast sportsnet new england.
     
  10. Sep 13, 2012 #50 of 134
    inkahauts

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    You have to be careful with espn when you look at numbers. ,they likely have more unique viewers in a day than any other station. Why? They probably have x million for each different game, but it's highly possible that not to many of those people are the same from one sport to the next, possibly even for the same sport but different teams. You are more Likely to have the same groups of people at least in some large % watching the different show on other networks like USA. So while others may have higher ratings, I doubt that many others have more unique viewers overall, in fact I wouldn't be surprised if more different people watch espn over the course of a month as a % to the channels total viewers for any one game, than any other channel for any one show. I'm sure the numbers are out there, but I'm not going to look for them. But it makes some sense, as many people only watch certain sports and certain teams.
     
  11. Sep 13, 2012 #51 of 134
    lokar

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    Interesting numbers but I think you should say "maintain their current subscriber income" instead of "break even" since we don't know what their profits are and they are getting money from commercials as well. If they have to lower their price to remain competitive and maybe produce a few less Sharktopus movies per year to stay within their budget, I am OK with that.

    HBO shows that you can be a la carte and successful. All I know is a world where sports networks pay escalating sums of money for rights fees that they expect MSOs to then take out of everyone's pockets is eventually doomed to failure. I heard on the news that the number of cable/satellite subscribers continues to drop and while the percentage is still high, I am sure it will continue to drop as rates keep increasing. I think D* is realizing this too as they are becoming slow to add new sports nets like the Pac-12 and the new TWC Lakers channel. Sports at least need to be a la carted immediately and I say this as a sports fan. If ESPN is going to charge HBO like subscriber fees, then they need to be a la carted the same way.
     
  12. Sep 13, 2012 #52 of 134
    JoeTheDragon

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    maybe not full la carte but at the very lest we can move sports to a HBO like add on pack.

    Sports is a big part of the costs and maybe my makeing that a add on you can pick people who are willing to pay for TV but not all the big sports channels that they do not want to have.

    Also maybe even have some sports only packs + TBS / TNT and the CNBC / MSNBC / FX / trutv / WGN / other main channels that some time show big sports events on them.
     
  13. Sep 13, 2012 #53 of 134
    Satelliteracer

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    Easy to say, very difficult to do.
     
  14. Sep 13, 2012 #54 of 134
    tonyd79

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    Actually, they do get money from commercials, so with fewer eyeballs per month, their income there diminishes as well. They can charge more per eyeball as they are self-choosing customers but if their potential audience drops to a fraction, so does their ad revenue. And don't expect the ratings to mean much. If I watch one show on TVLand because I already get it, unless it is my favorite show, I would not pay a whole month for that one show. Viewership would drop.

    As for income versus break even. Unless a third party who viewers pay (like now, which does what we have now with the added expense of tracking, billing, ordering, troubleshooting a more complex system) does the distribution, the channels costs go UP because they have to provide the delivery mechanism themselves or via a third party. So, saying break even makes the price go even higher.

    Only the most popular and must have channels work a la carte.

    You use HBO. What is the price of HBO? Use it for your model. It is not the pennies you pay for channels like the Viacom channels.

    There is not a scenario that a la carte is cheaper on a per unit basis. It would only work for the very select few that really don't watch much tv.
     
  15. Sep 14, 2012 #55 of 134
    Satelliteracer

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    That's exactly what Directv is trying to do

    http://www.insidesocal.com/tomhoffarth/archives/2012/09/going-forward-d.html

    Of course, that brings out a number of customers that don't care about the cost and want it no matter what. Puts Directv and every other distributor in a tough spot.
     
  16. Sep 14, 2012 #56 of 134
    Satelliteracer

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    We will agree to disagree on this. The sports channels are a product of many things, including huge salaries for players, etc. They need eyeballs for ad revenue and subscribers to drive ratings for that ad revenue. On the flip side, they also need high subscription fees to pay for the rights fees that pay for the salaries, etc.

    Many distributors right now are trying to put Pac 12 into a "premium" package, or a sports tier, same with Longhorn Network, etc. You see what happens as a result. No matter what, someone isn't going to be happy. The sports fan that feels all sports should be included and costs be damned, or the non sports fan that could not care less about sports and has to bear huge portion of their monthly bill to support the very sports they do not want. Where's the middle ground?
     
  17. Sep 14, 2012 #57 of 134
    TheRatPatrol

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    But what if all providers stood up to these high priced sports channels and said enough is enough, sports needs its own package, wouldn't that help the cause? Movie stars have high salaries too, yet movie channels can be put together in their own package.

    The true sports fans are willing to pay to get their sports. I know I would pay more to get the Pac 12 Network, as well as many others on here.
     
  18. Sep 14, 2012 #58 of 134
    Carl Spock

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    Wait a minute, SR. Maybe I need a third cup of coffee but aren't you arguing for two completely contradictory positions? What is it? Should sports channels like the PAC 12 be a separate tiered package? That's what the article you linked to seems to say DirecTV's position is. Or are they part of the base package? You seem to be telling TheRatPatrol that must be the case.

    Please tell me what I'm missing here.
     
  19. Sep 14, 2012 #59 of 134
    JoeTheDragon

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    well it's sports pack out of market on the distributors.

    Big ten on Directv is only RSN like sports channel that is not in a sports pack on a wide base.
     
  20. Sep 14, 2012 #60 of 134
    JoeTheDragon

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    Also there have been hints of a "NEW" sports pack / tear dating back to when VS was taken down.

    Now maybe we need a choice ultimate with sports channels and not Movie channel and encore.
     

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