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

  • From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
  • To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
  • Date: Sun, 14 Sep 2014 21:38:58 -0400

> On Sep 14, 2014, at 7:28 PM, "Manfredi, Albert E" 
> <albert.e.manfredi@xxxxxxxxxx> wrote:
> 
> Yes, Craig, that's the way one understands where the wind is blowing. You 
> can't convincingly demonstrate your insightful understanding and thinking 
> only after the changes have already happened. And when this will 
> (undoubtedly) happen, for at least some of the ESPN content, Craig will 
> continue to deny it for several more years. If history is a guide. Right, 
> Craig?

It's easy to understand what consumers who are dependent on oligopolies would 
like. 

As they say, "Want'n and Get'n are two different things."

ESPN has many businesses. The TV channels are the cash cow, but they monetize 
the brand via the web ( including "insider" content, with an additional 
subscription), broadcast radio, print, and merchandise.

There may well be a business in special interest sports portals, monetized via 
advertising. It may be  profitable to create ad supported portals for sports 
that are too "special interest" for the ESPN TV channels. 

As for my track record...

The bundle will be around for several more years.

> You wrote:
>>> Plus, I've already suggested to you more than once that "bundles" with
>>> OTT sites can be totally different from the MVPD bundles. Remember? For
>>> instance, that individual congloms can now create their own bundles,
>>> unimpeded by other congloms.
And I responded:
>> Really?
>> 
>> Please show me an example.
> 
> You should know better than to question these things, Craig. How many times 
> has this happened? Here's a fairly recent example:
A fairly recent fairy tale...
> ----------------------------------
> [opendtv] Re: =?windows-1252?Q?NCTA:_"Netflix_is_beating_cable"?Message-Id: 
> <4BCFB0CA-F390-4144-A4C1-F50BF3F230AC@xxxxxxxxx>
> From: "Manfredi, Albert E" <albert.e.manfredi@xxxxxxxxxx>
> To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
> Date: Fri, 17 May 2013 19:35:44 +0000
> . . .
> 
> Let me give you an example. Using the Internet as distribution pipe, and 
> freeing itself of any dependency on old-school MVPD bundling, CBS could 
> create 
> its own content bundles, on its own web sites. Or perhaps even create its own 
> content bundles on aggregation sites, like Amazon.
> 
> It is foolish to think that CBS prefers to have customers tied to bundles 
> that 
> include a bunch of expensive ESPN channels, for example, since CBS gets zero 
> nada out of that ESPN overhead cost for customers. They might even lose 
> potential customers that way.
> 
> The MVPD model, retained to control access to Internet TV, cannot stand long. 
> It's top heavy, cumbersome, unnecessary anymore. You can't assume the 
> consumer 
> is too plain dumb to eventually figure this out. They already are figuring 
> this 
> out.

ALL OF THIS is your imagination working over time. None of this has happened. 

From a technology perspective all of this is possible. But we are not talking 
about technology, we set talking about the evolution of powerful oligopolies 
that operate at the (great) pleasure of the politicians.

> And yet, their president has even questioned that, directly. Like I said, 
> broader distribution, perhaps even without subscription fee, can end up being 
> even more profitable. John Skipper is thinking along those lines too, even if 
> Craig can't. And with the Internet, "broader" can mean the entire world, 
> Craig.

Seriously?

With $6.1 billion in subscribe fees (affiliate revenue), per quarter they are 
generating cash at  a huge pace gor a media property. Ad revenue is less than 
half that; what's more, almost everyone who wants their content subscribes, so 
there is not a large additional audience to attract in the U.S. Here is some 
useful info from the Forbes article I posted yesterday.

> But Disney is grateful for those $6.1 billion in affiliate fees from ESPN 
> that help stabilize revenues each quarter. Ad revenues at ESPN, now $3.3 
> billion, can fluctuate depending on the economy (total ESPN revenues, 
> including the networks, magazine and website, are $10.3 billion). Affiliate 
> fees, paid by cable companies to channel owners each month, have steadily 
> grown 8% annually at ESPN in recent years. ESPN and ESPN2 are both in more 
> than 100 million homes and command $5.13 and $0.68 per month, according to 
> SNL Kagan. The next highest among widely available channels are TNT at $1.18 
> and Disney Channel at $0.99 says Kagan. The average fee for basic cable 
> channels is $0.26.

Guess you missed that part.
> 
>> To make this absolutely clear, DO NOT expect Sony to launch a MVPD
>> competitor without ESPN as part of the mandatory bundle.
> 
> Because Craig says so.

Because there is no market for a MVPD service that only offers a piece of the 
bundle. I guess they could try to outbid DirecTV for the NFL Sunday ticket 
package...

Regards
Craig

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