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Why 2011 will be do-or-die for TV

Discussion in 'TV Show Talk' started by thelucky1, Jan 18, 2011.

  1. thelucky1

    thelucky1 Icon

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  2. fornold

    fornold Legend

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    The problem with all these types of articles is that they assume that people have adequate Internet connections, which unfortunately is not the case for many.

    I can't get one adequate to stream one show, let alone multiple shows that I can watch now using DirecTV.
     
  3. Doug Brott

    Doug Brott Lifetime Achiever DBSTalk Club

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    Hard to say .. DIRECTV has some things going for it .. High Bandwidth to the user (compared to 1.5Mb/s DSL and really even 20Mb/s Cable) .. So even if the model adjusts significantly, DIRECTV could make adjustments to compensate. The author uses ESPN as an example .. Even he states the a la carte version of ESPN would be 3x the current going rate. How many people want JUST ESPN? How much is a Netflix subscription plus ESPN? What if you want more?

    DIRECTV is in a position now to bring a lot of things together so that you get the benefit of bundling. Yeah, some of the content is free now .. but as that is reigned in and content providers start charging real money, will be be as attractive?

    Don't get me wrong. I think DIRECTV needs to change. There needs to be a "Take it with you" option to keep up with the Joneses (including Internet delivery), but DIRECTV has the ability to do it .. The only question is will they?
     
  4. hdtvfan0001

    hdtvfan0001 Well-Known Member

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    Agreed.

    This is the one profound flaw in every such article published.

    It assumes sufficient high bandwidth is mainstream, it's affordable to most, the amount of it is virtually unlimited in quantity, and it's effectively deployed in most locations.

    None of those things exist today.

    No doubt things are evolving, but the speed of change will not be lightening fast, at least not as long as the connectivity has so many limitations. 2011 will not be "do or die" by any stretch of the imagination.
     
  5. 1948GG

    1948GG Icon

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    The opportunities missed a decade ago with music, mostly to blame for manufacturing 25cent plastic discs and then trying to sell them for $16, is precisely today what is going to nail the tv distribution industry.

    As can be seen from the price hikes this season, although DirecTV is nowhere near most of it's competitors (FIOS here, non-Verizon but Frontier with it's 30-50% hike or Comcast with 15-25%); the handwriting has been on the wall for a very long time, although it has taken digital technology to make it practical (from an engineering standpoint) to be able to deliver individual channels (encryption wise).

    Ala-carte. Stop making people pay for things they DO NOT WATCH and DO NOT WANT. If distributors refuse to de-bundle their popular channels from their un-popular ones, then go ahead and sell them as such, and see what the market will bear. But don't 're-bundle' them with other yet unpopular heaps of junk just to make folks pay (yet again) for more junk they DO NOT WATCH and DO NOT WANT.

    Uncoupling the 'hits' on a music CD was considered 'heresy', yet it's made the folks who did it billions. The 'Pay TV' operators like HBO/Showtime et. al. are, with the advent of Netflix, dinosaurs. The real battle-lines today are between the internet transport companies (carrying VOD at 2cents per HD-hour) and the local distributors (Comcast) trying to erect a tollbooth to extract an additional $1 per HD-hour.

    Once again, it's the differential between wholesale costs and the retail distributors. When it starts getting to 1:1000, then your business model is going to collapse as the consumers start to realize they're being 'ripped off'.
     
  6. Stuart Sweet

    Stuart Sweet The Shadow Knows!

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    I agree with the basic thrust of the article... but I think this is not the year when it's going to happen. We who are tech-savvy tend to forget about the great mass of folks who are still watching TV much the same way as they did ten years ago, and have no wish to switch.
     
  7. Doug Brott

    Doug Brott Lifetime Achiever DBSTalk Club

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    When people stop watching Pay TV (be it Comcast, DIRECTV, Netflix, whatever) .. Then pricing parity will be better.

    The price of a good (TV in this case) is not based on how much it costs .. but how much people are willing to pay. 2011 seems worse than in the past, so maybe we really are closer to "the end" of killer prices, but recent history has shown that people in general just keep paying and keep watching.
     
  8. 1948GG

    1948GG Icon

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    Despite the economy being much better here (we actually make things here that are selling rather well in the world market, and housing prices are nowhere near the collapse seen elsewhere), the percentage of folks 'cutting the cord' has been large; it might have something to do with the fact that BOTH our large telcos (Verizon and Qwest) decided to pull out, and there is no alternative (besides satellite) to the hated Comcast (state law prohibits any real competition). Then again, maybe it's that streak of Scandinavian frugality.

    But a lot of it has to do with pure inertia. Why switch if it works okay. We see that with gas prices, there is a psychological tripping point out there, it was around $4-4.50 that folks seriously started to look to change their ways. Most folks want their locals, and a handful of other channels. Then the occasional sports subscription. The other 95% can go.

    But since the retail distributors won't provide that, it takes a 'meeting of minds' to pull up and toss the whole thing, and go back to OTA. Unfortunately, for most folks, reception beyond 30 miles of the digital transmitters is hit and miss, so they're stuck, and decent internet service is also mostly miss and not hit.

    But the right mix, as things improve, will hit that tripping point.
     
  9. paulh

    paulh Godfather

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    It will be interesting. Land line phone rates dropped as more users switched to cell. Cell minutes dropped as data services were added. Data plans have somewhat reduced...

    I keep hearing more and more people dropping conventional TV delivery for OTA and Netflix/Roku, much like the early land line to phone conversions...

    The question is not if communications costs will drop, the question is what will your share of the pie change to. (Comparing land line only bills to phone/cell/internet/TV/subscriptions(netflix). I'd say overall bills have gone up, but a lot more options and convenience)
     
  10. hdtvfan0001

    hdtvfan0001 Well-Known Member

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    The irony of more adoption of broadband to deliver new or expanded services is that there will be less of a pie to eat for each user, unless massive changes occur, both in pricing and capacity.
     
  11. kmcnamara

    kmcnamara Icon

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    These kinds of "online" TV distribution models are going to be problematic if the trend toward capped bandwidth continues. Right now I have unlimited bandwidth on Time Warner/Roadrunner cable. I never really think about how much I'm consuming so I'll watch however much Netflix instant watch as I want to. That will change for me if Time Warner tells me I only have 5GB/month to use. I won't be paying Netflix the same price I pay now to get fewer movies, I promise you.
     
  12. Doug Brott

    Doug Brott Lifetime Achiever DBSTalk Club

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    That's just it .. If enough people migrate to the "free" stuff .. that "free" stuff will become Pay TV, too. $0/month is about as likely as $1000/month.
     
  13. rayik

    rayik AllStar

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    Same here. Otherwise I would have already cut the cord and gome OTA / internet streaming.
     
  14. tulanejosh

    tulanejosh Godfather

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    this topic is far more complex than simple supply and demand. Net neutrality is going to play a HUGE role here, and in case you haven't noticed, that debate is going rather poorly for companies like Netflix and Hulu.

    Additioally - and someone touched this earlier - but broadband is another huge issue. Not just access to adequate speeds but data caps. ISPs are no longer interested in providing you with an all you can eat connection for $40/month. To watch a similar amount of programming in HD that i watch now, using conservative data estimates, I'd be looking at $100+ just for internet in addition to any a la carte channel or program pricing. That sounds suspiciously similar to what i pay for Directv.

    I live in Austin - a very tech savy city and one of the centers of the tech industry - and even here Time Warner has very recently tried to implement monthly caps of 40gb downstream, with a $1.50/gb overage fee. That's not the exception - its going to be the norm, and is the norm already in many countries around the world (Canada, Australia, parts of Europe). 40 gb a month is not enough to supply the average family with enough data to cut the tv cord. Nor is 250.

    I also challenge someone to show me an existing server farm capable of streaming HD video to 8,000,000 people simultaneously. 8,000,000 is the number of people that watch a mildly popular show on a tuesday on network tv. I don't even want to talk about the superbowl or other high profile sporting events that dwarf that number.

    And even if it were technically feasible - there are a huge array of media, advertising and creative forces that are pretty happy with the current model and very invested in keeping it going. They're going to be a pretty difficult group to overcome, and let's be realistic here - no one is going to cut tv out of their lives in 2011 because its not offered a la carte. Until people are willing to actually do that, you won't see any change.
     
  15. sunking

    sunking Godfather

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    Live TV is perfect for the internet using multicast streaming. It's what FIOS/Uverse/mlb.tv/most actual internet radio/etc use.
     
  16. Stuart Sweet

    Stuart Sweet The Shadow Knows!

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    After some consideration, I have decided that this topic deserves to be in the TV Show Talk forum as it is not DIRECTV-specific.
     
  17. Doug Brott

    Doug Brott Lifetime Achiever DBSTalk Club

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    This might help on the "out" side of things, but the "in" side of things is still hit or miss. Not everyone has mongo Internet speeds.
     
  18. 1948GG

    1948GG Icon

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    THE problem is that most folks (and yes, that includes the FCC commissioners) don't have a frame of reference. We all generally know what the cost of gas is, because we can easily look up the cost of a barrel of oil (although most Americans don't even know that there is 55 gallons in a barrel), and then what the pump cost per gallon is. Of course, there is the transportation and refining cost to take that $80/barrel (or $1.45/gallon) of crude to the actual gasoline, and since the average cost today is just over $3/gallon, that gives us a 2:1 ratio. Not bad!

    But, virtually nobody can tell you what the bulk cost of broadband internet is. I know, because I spent the better part of the last 35 years designing and building the national and international digital backbone, and know how to look up the current connection charges and such.

    Example: Comcast currently sells internet access to consumers at around $50 for 10Mb/s link (on average). They buy OC48/2.4Gb/s links at around $200/month each. So, they pay $200 wholesale for something they resell to 240 customers at $50/ea, or $12,000/month (that with no 'caps'). A ratio of 60:1. Yes, is does cost them a bit in infrastructure to transport it that 'last mile', but 60 times the basic cost!?!?!!

    Now you know why the managers of those companies are living in multi-million dollar homes driving $250K automobiles.

    If the oil companies (right there at the bottom of the list of most hated companies in America along with the cablecos) had such a price differential, a gallon of gas would cost $90. Have fun with selling that!

    The internet is so cheap, and getting cheaper, at the same time it's getting more expensive to the actual user. Somethings wrong with that picture, and sooner or later, folks will realize it. Maybe.
     
  19. sunking

    sunking Godfather

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    Obviously, however that's not what was being addressed. Let's put it this way, if every Directv subscriber who *could* successfully stream content (either through current or an available internet upgrade) were to jump ship Directv would go out of business. Of course this won't happen, however things are advancing so at some point in the future all of the TV services will have to divy up for another piece of pie. This is what the thread is really about, there will soon be another viable pie piece that all providers will have to deal with.

    Of course this affects cable tv as well, but maybe not quite as much so because many of these people would be relying on their cable provider for their internet access. One of the reasons I may get rid of Directv is because I'm tired of my slow 1.5M DSL and a cable tv/inet/phone bundle would save me money that right now Directv isn't justifying.
     
  20. hdtvfan0001

    hdtvfan0001 Well-Known Member

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    That's the key underlying issue.

    Until that nut is cracked as a mainstream-available and affordable-source channel for video/data transfer...its a niche solution.
     

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