[opendtv] Re: Estimate of MVPD subscriptions
- From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
- To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
- Date: Sat, 8 Aug 2015 08:16:21 -0400
On Aug 7, 2015, at 8:59 PM, Manfredi, Albert E <albert.e.manfredi@xxxxxxxxxx>
wrote:
So now you're being disingenuous and apologetic. The growth is caused by
demand for broadband, and demand for upgraded broadband. The legacy MVPD
stuff instead subtracts from this growth figure. It might still be
profitable, but decline is still decline.
Neither. The industry is healthy. It's really hard to grow when 90% of homes
are buying your product. That number has declined to something like 80%, and is
still declining slightly, but it produces huge profits.
The issue is how the TV side of the business will be transformed - what it will
look like and cost in 5-10 years. You think it will vanish, which is silly.
The linear broadcast service will survive,
Around and around we go. "Linear" only makes sense a fraction of the time,
for a fraction of daily TV programs. When you get beyond purely broadcast
technology, for content distribution, how much true "broadcast" will survive
is debatable. For instance, I watch "broadcast" because that's the easiest
way, at this point in time, to get 24 hours news. But it would be even
better, for 24 hour news, if I could pick it up unicast as I already
described many times.
What makes sense to Bert is not what I would rely on as an analyst or marketing
type. You clearly do not represent the average viewer. But you are correct that
some types of programming on the linear channels are endangered.
This is from an exec at Viacom at their earnings call yesterday:
http://recode.net/2015/08/06/jon-stewart-is-done-viacom-investors-arent-sticking-around-to-see-what-happens-next/
Viacom CEO Philippe Dauman spent this morning’s earnings call promising that
his company was moving with increased urgency — “accelerating is a word we
use a lot here at Viacom.”
And, as he has for a while, Dauman argued that his networks’ ratings declines
are overstated, because people are watching his shows on digital platforms
and other places where Nielsen can’t find them. Dauman also talked up the
notion that Viacom does fine with new shows it makes for itself — the
problem, he says, is when it shows old repeats, which Viacom has already said
aren’t worth much these days.
So let's analyze this.
Ratings are declining for reruns because a new technology is disrupting the way
people watch library content. Viacom is making big bucks selling its library
shows to new OTT services, and people are watching the shows on demand. As a
result, the linear networks are seeing declines when they are filled with
reruns.
I can't blame people for abandoning the linear reruns that are filled with ads,
when they can access the series and episode they want on demand without
commercials. That is a VERY important shift in viewing behavior.
But to extrapolate that shift into one where EVERYTHING is accessed on demand
is absurd. The problem for the content owners is they got greedy and created
far more channels than anyone needs, just to justify annual price increases.
The solution is obvious: reduce the number of channels (and the price of the
bundle), and fill what is left with original content.
One of the main reasons Fox News is successful is the content is mostly
original, albeit beating the same horses over and over. But they did manage to
attract the largest audience in cable news history Thursday night - 24 million
viewers. Seems linear is far from dead.
The broadcast networks are not going to give up on programming the core linear
networks. They still attract large audiences that advertisers covet. And the
top rated cable networks will do the same, developing more affordable shows to
keep the content fresh. Viacom may be suffering because they have relied too
much on their library content, but the Discovery and Scripps Howard Networks
are doing just fine.
If anything, Sling is a trial balloon to see how consumers react to a properly
sized bundle. It is not a finished product, which is the primary reason it has
failed to attract many subscribers.
If I can figure this out, it should not take long for the TV nets to figure
it out.
You have not figured anything out Bert. You have expressed your views on the
way you think the industry should restructure. Just because one aspect of the
old business model is evolving, does not mean that model is no longer viable.
Consumer behavior continues to evolve, as it has for the more than three
decades since the broadcast networks were the only game in town.
Anyone who watches 24 hour news programs cannot help but wonder why it makes
any sense to re-transmit the same old news stories every 30 minutes or 60
minutes, for hours and hour on end. They might be spliced in at different
points of the 30-minute segment, but they are exactly the same tape, repeated
over and over again.
I explained this above. People are attracted to fresh, live content. With news
and analysis on the 24/7 cable news nets, they expect the audience to come and
go. They get the big numbers in the evening with high paid talent and
controversy. The rest of the programming day they do news peppered with
analysis, understanding that people tune in (and out) when they have time.
It a bit like shopping at your local grocery store. They stay open long hours
to be available on your schedule, but the check-out lines swell at certain peak
periods in the late afternoon and weekends. Programming linear TV channels has
ALWAYS been about filling the pipe during the less profitable hours and making
most of the profits when more people want to watch TV in the evening of
weekends.
If you are not constrained to broadcast mode, if you have video servers
distributed throughout local ISP networks, this mechanization will disappear.
So you say. If that were true, it most likely would have happened by now.
We do know that there has been a large shift to Internet news portals that
offer both written stories and video segments. I have yet to see any of these
sites try to assemble a newscast. Linear newscasts appeal to those who have a
bit of time and are willing to see both stuff they want and stuff they don't
know or even care about. News portals appeal to those who want to access
specific news of interest, along with stuff that peaks their interest. Nothing
new here - newspapers and magazines have been random access for centuries.
Sports, news, and first runs of new programming will still attract
large audiences for the linear service.
Been over this many times too. You continue to miss the fact that the UI has
a lot to do with this. Momentum, hopeless luddites, old hardware, and on
demand UIs that make *you* claim that linear is easier. These are all causes
for linear still being used. These causes will fade over time. As did 4:3 TV
productions.
Rubbish.
People still like to turn on the TV to see something fresh. People still make
appointments to watch shows they really like and live events. And people still
turn on the TV for background noise. Yes, over time people will move to demand
based services when they really want to watch TV. But the future is likely to
be a fairly balanced mix of linear and on demand TV.
And 4:3 productions is an absurd analogy. It has nothing to do with viewing
behavior. Millions of people still watch old 4:3 shows.
I've always called it a bundle, Craig. But not being disingenuous, and not
having political motivations, I don't pretend that this Netflix bundle has
any relationship to your much cited MVPD "the bundle." I feel no compulsion
to mix apples and oranges.
Because you only like oranges.
The fact that the majority of U.S. homes subscribe to both Apple (linear) and
Orange (is the new Black) bundles should teach you something. There is a
healthy market for both.
I wrote:
If they shift from MPEG TS to IP streaming they can dedicate bandwidth
and ensure QOS.
That's absurd, Craig. It's far easier to "dedicate bandwidth and ensure QoS"
with MPEG-2 TS streams, than it is with IP streaming.
That's absurd. All that is changing is the transport protocol. I can dedicate a
6MHz channel to a HD program using MPEG-TS, or use the bits in that channel to
send IP packets. With IP I can even be more flexible and combine packets from
multiple channels. The important point I was trying to make is that the net
neutrality rules DO NOT apply to the portion of a cable or Fios network
dedicated to MVPD service. So in the future we may see an all IP plant with a
bunch of linear streams with guaranteed quality, alongside your neutral
Internet to access content outside the garden walls.
Regards
Craig
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