[opendtv] Re: Shifting Online, Netflix Faces New Competition

  • From: Craig Birkmaier <craig@xxxxxxxxx>
  • To: opendtv@xxxxxxxxxxxxx
  • Date: Tue, 28 Sep 2010 15:45:52 -0400

At 9:38 AM -0400 9/28/10, John Shutt wrote:

Craig,
I think you vastly underestimate the current and near term projected state of 'high speed' internet in flyover country, both in capacity and availability.
Perhaps. It will be interesting to see what happens in these areas with the white spaces. It is also important to note that these areas represent a a small percentage of viewers; probably less than the total OTA audience today. 

But I agree that these areas will lag behind...
I think you vastly underestimate the difficulties, both technical and political, in implementing protocols that are required before mass communications such as OTA or MPVD can be replaced - namely multicast.
I partially disagree about this. The problems are not technical, but rather, as you say political. Not in the sense of government regulation, but rather, in the sense that the content oligopoly is going to keep playing political games to slow the deterioration of their very lucrative franchise. They have already stretched things out several decades and I would agree that they are probably going to keep things going well into this decade.
On the other hand, the MVPDs in particular, are stretching the limits of our pocketbooks. My wife just told me our cable bill is now about $91/mo. Just two years ago it was about $70/mo. The public is getting restless about the gouging and the lack of accountability for where the money is going. I would expect over the next few years that there will be a major move to force the MVPDs to identify ALL subscriber fees on the monthly bill (or in separate statements sent out at lest once a year). When this information becomes public there will be a big backlash and pressure on Congress to force the MVPDs to offer channels on an ala carte basis - when this happens the system will fall apart.
I think you vastly underestimate the technical savvy of the majority of the audience for these mass communication programs.
The majority of the audience in a few years will have grown up with the Internet - they have vastly different expectations than us old farts. And then there is the general state of the U.S. economy. If we continue down the current path there will be a huge financial crisis (making the past two years seem like the good old days) and all bets about the future are off.
Clearly there are services that will continue to appeal to the bottom feeders, but the money is not made there. Apple is cleaning up because they extract a very large percentage of the profits from each market where they play 

http://tech.fortune.cnn.com/2010/09/21/pie-chart-apples-outrageous-share-of-the-mobile-industrys-profits/
"For example, he writes, Apple sold 17 million mobile handsets in the first half of 2010, compared with 400 million handsets sold by Nokia (NOK), Samsung and LG. Yet it pulled in 39% of the industry's profit during that period, more than the 32% earned by the world's three largest handset makers combined."
So I'm not saying that the cloud is going to replace existing mass media over night, but it is likely to appeal to those with tech savy, money and some common sense.
I think you nailed the fact that for a select few, on demand programming from subscription services such as Apple Store and Netflix are going to be the wave of the future, and those adopters will abandon OTA viewing. However, I doubt that Apple Store and Netflix will completely displace OTA. I think one complements the other, and just as DVDs are a revenue enhancement for theatrical feature film releases, Apple Store and Netflix will be a revenue enhancement for OTA programming.
Those viewers abandoned OTA years ago except for select events like the Superbowl.
But I agree that for the rest of this decade we are going to go though much the same foot dragging that happened with the H DTV transition.
It reminds me of the (probably fictional) New York socialite who was bewildered at how Ronald Reagan could have possibly gotten elected President when "nobody I know even voted for the man." 

Sometimes I feel the same way living here in Obamaville, aka Berkely East...

Regards
Craig



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