[opendtv] Re: TV Programmers Put Subscriber Caps on Skinny Bundles | Media - Advertising Age

  • From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
  • To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
  • Date: Sun, 12 Apr 2015 00:18:09 -0400


On Apr 11, 2015, at 8:00 PM, Albert Manfredi <albert.e.manfredi@xxxxxxxxxx>
wrote:

More relevantly, I get some 52 channels OTA now, Craig, and they don't act as
a single monopoly. Same when I watch on the Internet. Collusion happens when
the medium allows/fosters/promotes it, as walled garden monopolies did.
Collusion ends when the previously colluding parties see that they can
increase revenues by not colluding. Even if they initially do this only
incrementally (which means, they continue to collude on the media that
promote collusion, while at the same time striking out on their own over the
Internet).

Many of you 52 channels are duplicated as you can access neighboring markets.
But this is irrelevant. Those 52 channels are now a small fraction of what is
available, and they do not carry most of the programs that people are actually
watching. The total market for the broadcast networks is now less than 40% of
U.S. Homes during prime time - less during other day parts. And the size of the
audience for all the other programming from independent stations and other
programs in the Multicasts can barely be measured.

There is a strong reason why so much high value content has moved behind the
pay walls. They can make more money and it helps drive subscriptions. Bert is
excited that there are some new options, like CBS All Access, but he ignores
the fact that these options are not free. In fact they may be more expensive if
you need to subscribe to multiple services to get the programming you want.

Not "allowing," but rather "requiring." When ESPN, HBO, Showtime, etc., see
that they lose out by colluding, and can do better if they strike out on
their own, that's what they have to do.

Here we go again.

ESPN is not striking out on their own. You still need to subscribe to a bundle
of channels.


When Netflix surpassed HBO, HBO *had* to respond. Remaining safely behind
those garden walls caused HBO to fall behind.

HBO did not fall behind Netflix because of their association with the MVPDs.
They have always been an expensive premium service with limited appeal because
of the linear nature of the live channels. When some on demand capabilities
were added it did not attract many new subscribers.

Why?

Just Ask Bert. Like 70% of U.S. homes, Bert is not willing to pay $15-20/month
for HBO. Netflix surpassed HBO in large part based on price, but that advantage
is slowly eroding as the monthly fee for Netflix goes up to cover programming
and operating costs.


That's the only reason why HBO had to respond. When ESPN lost viewership in
the past few years, they too had to respond.



And any of this was possible with the legacy MVPD walled gardens. The fact
that
individual channels were pulled in subscriber fee disputes proves this.

The opposite is true. When there is no single gatekeeper, it becomes foolish
for any content owner to pull content. Craig continues to limit his thinking
to the walled garden model. Pulling content only works if the customers are
all beholden to that one gatekeeper, giving that one gatekeeper the power to
negotiate with the content owner. When the content owner instead uses direct
delivery over the Internet, the problem of pulling channels vanishes. There
is no single monopolistic gatekeeper involved anymore, with whom the content
owner has to negotiate.

Bert

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