[opendtv] Re: TVE definition
- From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
- To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
- Date: Thu, 6 Aug 2015 08:42:42 -0400
On Aug 5, 2015, at 8:25 PM, Manfredi, Albert E <albert.e.manfredi@xxxxxxxxxx>
wrote:
The biggest cabled MVPDs have access to 30 percent or so of US households.
They could have access to 100 percent of US households. Of course then, to
retain or increase their share, they would have to compete for it. As opposed
to being the only option (in most cases) in each locality.
Thank you for properly defining this issue.
Let's say that 80% of U.S. Hi everyone subscribe to some form of MVPD service.
And at the edges of this issue, a few percent may subscribe to some kind of OTT
service including the new VMVPD services. So there are two opportunities with
your proposal:
1. A national provider may be able to sign up some of the 20% who do not
subscribe to a MVPD bundle. But these folks are likely looking for lower cost
options that are not as profitable - did you see the story stating that TW lost
money on HBO Now last quarter?
2. A national provider may be able to shift some customers from another
service, just as DBS was able to shift about 35% of the market from cable. To
do this they would likely have to reduce prices, which in turn would reduce
profitability.
The missing element here is the shift to providing Broadband, an area where the
geographically restricted MVPDs are growing rapidly. Any provider may be able
to sell a "service" nationally, like a TV bundle, but the broadband provider
has a strategic advantage with the ability to bundle multiple services.
We are seeing this play out right now with AT&T and DirecTV. You can get a
bundle that ties four lines of wireless with 10GB data and DirecTV for $200.
That would save me about $600 in the first year, but those savings would
evaporate in the second year of the contract.
Promotional bundles with big savings for the first year are a common tactic
used to get people to switch services. Verizon is currently offering $300 to
wireless customers who switch from another service. These deals depend on
retaining you as a customer after you switch.
So bottom line, it is not easy to grow market share in a mature market where
80% of homes already buy the service.
I don't understand what point you're trying to make, Craig. I have no trouble
understanding what an anti-competitive marketplace does. How am I not taking
that into consideration?
Just stating the obvious. These folks have the ability to retain existing
customers. You are suggesting that someone is going to come in and dramatically
undercut pricing to gain competitive advantage. This could happen, but it is
not the way that monopolists behave.
It's hard to find examples of supply side competition NOT being advantageous
to the consumer.
If there really is any supply side competition.
To date I have not seen this in any meaningful way. The only potentially
significant change is the more affordable Sling bundle. But is it really such a
great deal?
You must have a separate high speed broadband service to use Sling. You can
only get one stream at a time, which makes it useless for homes with families.
And you are paying less for less. Start adding on mini bundles and the savings
are minimal.
Where we have seen real competitive impact, the victim has not been MVPD
service. SVOD services like Netflix, have taken their biggest toll on the
technologies for distribution of packaged media. Think VCR, DVD, Blu-Ray,
Blockbuster, RedBox and $5 VOD movies from the MVPDs.
The competitive reality is that more than half of U?S. Homes now subscribe to a
MVPD bundle AND Netflix.
And yet, we have ESPN on Sling TV, and ESPN on other sites in the future, and
we have HBO Now, and more movie channels to come, direct to consumer.
ESPN on Sling, and whatever Apple comes up with is just another MVPD bundle.
They are not going direct to consumer for at least the next five years.
HBO Now is trying to compete with Netflix and for now is losing money. HBO has
NEVER been the "glue" that got people to subscribe to a MVPD service - it was
the premium "cream." Ditto's for Showtime and Starz. These services compete
with packaged media sales/rentals, not MVPD linear streams, except for their
original shows; which is why they have never seen more than about 35% of U.S.
Homes versus 90% for the MVPDs at their peak.
All of which were once only available in proprietary walled gardens. So they
are NOT just protecting the old business model, Craig.
ESPN certainly is. HBO had no choice because the technology has evolved to the
point where appointment linear streams are now irrelevant for what they do.
We've been over this many times. If infrastructure cannot be competitive,
such as water and sewer, and cabled nets, then those uncompetitive aspects of
it have to be strictly regulated. Just saying "it's expensive" doesn't
translate to "therefore it can be both anti-competitive and unregulated, and
the one or two players can charge fees that increase faster than inflation."
Why is regulation a necessity? Greed?
The reality is that regulation makes this stuff more expensive, not cheaper, in
large part because of the greed of politicians who live off the taxes and fees
they collect on these "necessities."
We have had a lot of anti competitive behavior over the years, not just in
regulated industries. That's why the Sherman Anti-Trust act was created. And
you have blinders on with respect to Internet competition and monopolies, as do
the regulators. In another era Amazon would have been an anti trust target for
illegal dumping (selling stuff below cost to gain market share). The Internet
is just another way to support commerce, legal and anti-competitive.
We have to get beyond consistently falling back on vague banalities. Things
are changing, and the reason is that the technology permits this to happen.
The broadband 2-way network permits things to evolve, where previously, the
one-way broadcast technology gave few incentives for change.
Duh.
So focus on what IS CHANGING Bert, not what YOU want to see change.
Regards
Craig
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