[opendtv] Re: News: NBC chief says Apple 'destroyed' music pricing
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: opendtv@xxxxxxxxxxxxx
- Date: Thu, 8 Nov 2007 09:34:05 -0500
At 4:21 PM -0500 11/7/07, Manfredi, Albert E wrote:
The problem you're facing is simply that the monopoly that you choose to
use for TV distribution, the cable system, chooses to use this scheme.
Which makes sense for them, because it lowers their operating costs.
That's your opinion.
The reality is that there are historical infrastructure reasons for
bundling - Blocking individual channels is difficult at best with
millions of cable-ready analog TVs out there. Moving to a digital
infrastructure will help to resolve this issue, however, the DBS
systems are all digital and could offer ala carte now - but they do
not, because of the OTHER major reason:
Subscriber Fees
Here is an interesting article that may shed some light on the subject:
http://findarticles.com/p/articles/mi_qa3653/is_199607/ai_n8749918
What is surprising is that cable companies can actually be sold and
even more so at the price they command. Cable companies have
terrible looking financial statements in the traditional sense. Thei
balance sheets show a tremendous amount o debt and a negative net
worth. Their operating statements usually show a negative profit Yet
cable companies sell for $1,500 per customer. They have a big hidden
asset on the balance sheet called the value of customer contracts.
The 60 plus advertising supported cable networks receive only $5
bil. of the TV advertising pie (See Table 1) but get another $12
billion from subscription fees.
The TV distribution industry likes bundling because this allows them
to collect subscriber fees from everyone - whether or not they use
the products. And the Media conglomerates LOVE THIS!
A huge chunk of Disney profits come from ESPN subscriber fees. At one
time I heard this was about 35% of the total Disney Corp. revenues.
The same article notes:
Although many people think of "television" as being one industry, it
is actually three (Broadcast, Cable and Network) The cable segment is
much like the utility industry (telephone and electric business). It
requires a huge distribution system of wires either overhead or
underground or by satellite into people's homes.
The TV network business is much like being an automobile
manufacturer (i.e. Ford, GM ). The network produces the "product"
i.e. shows like Home Improvement or The Tonight Show with Jay Leno.
The broadcasting companies are like the car dealers. They take the
"product" the network produced and get it to the consumer.
Over the years the industry has become vertically integrated.
Network companies own more and more TV stations. Cable companies now
own parts of network companies.
What you just cannot understand is that these industries LIKE the way
things work now. They are all protected by politicians who bitch
about the rising cost of our entertainment fixes, even as they pass
more laws to help protect them - e.g. copyright laws now protect
content for 70 years after the death of the creator. Dare I mention
the Broadcast Flag, or the conditional access rules that you were
just discussing on the list. And now the NAB is lobbying to keep
radio stations from having to pay performance fees like Internet
broadcasters.
These industries love to blame one another for the problem, but they
ARE the problem.
However, you CAN wait and buy the DVD sets for quite a large number of
TV programs now. Isn't that a decision made by the various
conglomerates? They are bypassing all the middlemen by doing so. Doesn't
this point to the actual source of the hearburn you're experiencing?
Huh?
The cost for these DVD collections is typically quite high. The most
successful DVDs have been for programs only available via premium
channels, like the Sapranos. And they are NOT bypassing the middlemen
- they are simply using different middlemen to reach a larger market.
I can't blame anyone for wanting to maximize profits. But I can get
upset when they use the punitative force of government to help line
their pockets.
I have little doubt that the evil conglomerates would not mind more of
an a la carte model from your cable company, as you keep wanting, if
they could jack up the rate of individual selections enough. And if
there were very many local multichannel TV distribution outlets, you
would see many more variations on package deals than you see now.
I have HUGE doubts that they would like ala carte. This would result
in a significant loss in revenues for many channels (networks) and
something amazing...
COMPETITION.
IF these companies can live on advertising revenues alone in other
parts of the world (and they often pay for distribution), then there
is plenty of fat in our system to be eliminated. I would expect many
channels to drop subscriber fees all together.
And with respect to local broadcast multiplexes, the real issue is
whether the station can generate enough incremental advertising
revenues to cover to cost of paying for the programming. The evidence
to date is that this is very difficult to achieve - the audience is
limited (and most are already subscribers to a multi-channel system),
and local ad dollars are finite.
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: