[opendtv] Re: 20050926 Mark's Monday Memo
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: opendtv@xxxxxxxxxxxxx
- Date: Mon, 3 Oct 2005 09:25:39 -0400
At 11:50 AM -0400 9/29/05, Manfredi, Albert E wrote:
>The numbers I used for the immediate ATSC STB
>market in the US. They are the existing 15 percent
>of households that uses nothing other than OTA TV.
>So it's an absolute minimum, and that absolute
>minimum is considerably larger than the UK DTT
>market has been, which is the envy of the whole
>world.
Two problems here. A sizable and growing percentage of this 15% do
not watch TV on a regular basis. And a sizable percentage will move
to cable or DBS when NTSC goes off the air.
In the UK, we are already seeing this trend, as free tiers are now
being offered by BSkyB and other un-encrypted satellite feeds. NTL is
also talking about offering a free cable tier. Given the opportunity
to capture a sizable audience, both cable and DBS are likely to do
the same in the U.S. Cable will likely move more and more of the
extended basic channels to the digital tiers, leaving a basic analog
service that they can offer either for free, or at a price that will
be attractive to disenfranchised NTSC viewers. There are good
business reasons to do this, as the name of the game is to get people
onto your system so that you can sell them more services.
> > Of these, a sizable percentage will move to cable
> > or DBS if NTSC is shut down.
>
>By what logic would you say this? This is most
>likely not the case. Simply because, by all
>accounts, that 15 or so percent OTA households
>has held constant as long as the naysayers have been
>claiming OTA was dead. And with good STBs, and NTSC
>off the air, I'm betting there will also be quite a
>few folks just trying it out for kicks. Just as
>happened in Germany. DBS or cable users. And some
>might actually like it and stick around.
The logic is simple and clear. As I mentioned above, a portion of
this group is out-of-play because they are simply saying NO to TV, or
severely restricting the amount of TV that they allow family members
to watch. Another portion already has cable or DBS and only uses
off-air TV infrequently for a 2nd or third set.
By the way Bert, the percentage of off-air viewers have not been a
constant. They have been declining steadily for two decades. Last
year was the first, as reported in the FCC annual reports on video
competition, when the numbers were relatively stable. All of the
analysts who work in this area are saying that the off-air audience
will continue to decline.
The analogy to the UK or Germany falls apart, because it is not
possible to receive 30 channels or more via DTV in the U.S., except
via USDTV, which costs more than basic cable.
I completely agree that there is vast potential for a resurgence of
OTA TV in the U.S., if the spectrum were used to deliver a
competitive service. But that is now what is happening here. What is
happening here is that the public is paying far more than the
services are worth, so that they can have access to the content they
want. The real competition is not going to come from OTA, because the
people who control the OTA franchise do not want to give content
away, and the advertiser supported model is beginning to fail. The
Internet is more likely to replace NTSC for many homes, because the
media conglomerates do not control it. Only problem is that broadband
costs as much as extended basic cable. The difference is that more
and more people now perceive that broadband is a basic necessity; if
they can get it and entertainment content, they won't need cable or
DBS TV tiers.
>The 15 percent OTA users are people who refuse to
>become dependent on yet another single provider, for
>something that is not mandatory to sustain life. We
>don't subscribe to one gas station, or one
>supermarket, or one movie theater, or one restaurant
>either, even if we are constrained to subscribe to
>one power utility and one water and sewage utility.
But they are watching ONE TV service controlled by a handful of
companies. AND, virtually ALL of them own a VCR which they use to
watch TV as well. In most communities there are at least two choices
for a multi-channel TV service; soon the telcos will make that three.
Competition is a good thing, and it is my firm belief that when NTSC
goes away, there will be intense competition for the disenfranchised
eyeballs. Broadcasters COULD be a factor, but to date they have
chosen to use competitors to reach their viewers, and to collect fees
for the stuff they give away OTA.
If you REALLY want OTA to become a competitive factor, all that is
necessary is to eliminate must carry and retransmission consent. If
free TV were free again, then broadcasters would have the incentive
to compete. As long as they can make us pay twice, however, they will
continue to use the OTA franchise to drive up the fees that 85% of us
pay for advertiser supported TV. If 5% or 10% of the laggards refuse
to pay for a subscription service, it's no big deal, as they do not
represent a large economic market opportunity.
>
>Anyway, good and low-cost STB chipsets will also be
>used by DBS providers to more reliably be able to
>solve the local into local issue without additional
>satellites. Seems a natural way to go, especially
>because DBS needs an antenna or two anyway.
The cost of equipment has had little impact on DBS systems, as the
business model is designed to pay for the equipment via the
subscriber fees. As the cost of STBs continues to decline, it makes
it possible for the DBS companies to offer "free" service tiers at
prices competitive with broadcasters. The consumer will be in the
position of deciding if they should pay $50 for an ATSC box that give
them 5-10 channels, of $50 for a DBS box that gives them 10-20
channels, AND the ability to buy additional premium content.
>
>Also, you will find that the antenna problem is not
>what you keep pretending it to be. ATSC, at US
>power levels, will work better than NTSC for indoor
>reception at quality levels that people will accept
>as a permanent solution.
This remains to be seen. Even if you are correct, however, the vast
majority of people are not going to go back to an antenna. I have
watched TV - off-air with rabbit ears - in many homes here in
Gainesville. The quality is poor, but you can still watch. No such
luck with DTV. It's all or nothing.
Yesterday our local paper ran a Washington Post article with strong
parallels to the column I just submitted to Broadcast Engineering.
Both articles note that the consumer is becoming the program
director, and that the old packaging techniques used by the Networks
are no longer holding audiences.
Network TV: an endangered species?
http://www.gainesville.com/apps/pbcs.dll/article?AID=/20051002/DAYBREAK/51001040&SearchID=73222233478628
From the article:
The networks aren't going to die tomorrow," says Jarvis, "but they're
not going to grow. The fact that they are such cash cows will
distract them from the reality that the mass market is dead, and it's
being replaced by a massive number of niches."
Regards
Craig
----------------------------------------------------------------------
You can UNSUBSCRIBE from the OpenDTV list in two ways:
- Using the UNSUBSCRIBE command in your user configuration settings at
FreeLists.org
- By sending a message to: opendtv-request@xxxxxxxxxxxxx with the word
unsubscribe in the subject line.
Other related posts: