[opendtv] Re: Sony To Take Viacom Over-The-Top | Multichannel

From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
Date: Thu, 25 Sep 2014 20:22:14 -0400
On Sep 24, 2014, at 7:11 PM, Manfredi, Albert E <albert.e.manfredi@xxxxxxxxxx> 
wrote:
> 
> You don't compete by offering, and charging for, more than the customer wants.

Really????

The MVPDs have been doing this for nearly three decades. I'll concede that this 
is not competition, but that's the point. IF there was real competition then 
consumers would be able to choose the channels they are willing to pay for.

The fact that every new MVPD "competitor" offers essentially the same bundle of 
channels as part of their extended basic service. The DBS systems did it; 
Verizon and AT&T did it. Even Google Fiber is doing it.

What does this tell you?

It is not the MVPDs that are requiring the bundle, although they are happy to 
play along with the content congloms on this, as it has allowed them to 
increase rates every year at 2-3 times the rate of inflation.

What makes you think the content owners are willing to let Sony, or Verizon, or 
AT&T actually compete with MVPDs who are locked into the bundle?

These companies are negotiating deals to offer an OTT service, but it is HIGHLY 
UNLIKELY that the contracts they are signing permit ala carte pricing. And it 
is just as unlikely that any of these services will launch without most, if not 
all, of the most valuable content in the bundle.

> Some customers simply walk away. Aren't NFL games available unbundled to 
> Verizon wireless customers? You have a big advantage if you can target people 
> who would otherwise steer clear of the bundle.

Yes. Verizon negotiated a deal with the NFL to sell a subscription package to 
their wireless customers. Last year it only included 3 games each week (the 
Sunday, Monday and Thursday night games). This year you may be able to access 
local games in your market.

By the way, only one NFL game per week requires the bundle - the Monday night 
game on ESPN. The rest are available free to air, with availability determined 
by the NFL, and via the lifeline or basic cable package that includes the local 
TV stations.

> 
>> Netflix offered a different technology - content on demand.
> 
> Not really. HBO movies could be recorded and watched anytime too, for eons.

That is not content on demand. 
1. It requires a recording device;
2. It requires pre planning;
3. Some MVPDs restricted recording of premium movie channels.

> The MVPDs loved to rent out their proprietary PVRs, just for this sort of 
> thing. And yet Netflix stole a whole lot of customers from HBO, because what 
> they offered was "close enough" to what the customer actually wanted. Even 
> without any original content.

Not close enough BERT, to use your phrase, "more than the customer wants."
Netflix offers several advantages over HBO, and some disadvantages.
Pro
Content is available on demand.
They have an extensive library of television series.
The monthly subscriber fee is less than half of the fee for HBO.
You can get Netflix without subscribing to the MVPD service.

Con
HBO offers recent movies
The Netflix movie library is limited
HBO original content takes years to reach other services like Amazon and 
Netflix.

> 
>> The broadcast networks "expanded" into news magazines and reality
>> programs.
>> 
>> Did they do this to remain competitive?
> 
> OF COURSE! They offered lower cost material that people actually wanted to 
> watch. What a deal! And yes, initially, it was also innovative and unique, 
> and the first "Survivors" and talent shows got lots of followers (and media 
> hype). Then many got in that game. Same as always happens.

They did it to cut costs to fill up the schedule in the face of a REAL decline 
in "subscribers."  Fortunately, the time and channel grid, as epitomized by 
cable guides, is on its way out - the search capabilities for OTT services may 
be the most important competitive feature. Lot's of room for improvement.
> 
>> The Netflix DVD service competed with Blockbuster, not HBO.
> 
> Come now. You're making this up. Even the DVD service competed with HBO, and 
> certainly the streaming service did. All you have to do is **ask people** who 
> dropped HBO, or at the very least, SUBSTANTIATE YOUR CLAIMS.

HBO featured early access to new films, before they were released on DVDs. 
Convenience did help Netflix compete with Blockbusters, and for many people, 
waiting a bit longer to see new movies was not a big issue. 


Regards
Craig 
 
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References:
- [opendtv] Re: Sony To Take Viacom Over-The-Top | Multichannel
  - From: Manfredi, Albert E
[opendtv] Re: Sony To Take Viacom Over-The-Top | Multichannel

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