Very interesting and informative article on ESPN and how they operate. The purpose of the article is to show how ESPN is the current commanding factor in cable rights and cable sports and how that might change or stay the same is the shifting technological future. But as good as the article is - some important considerations slip through the cracks.
Early in the article they mention Aereo but only as an excuse to get in a few quotes from Barry Diller. Later in the article they mention that 898,000 consumers have fled the pay TV market but they don't explain that even with declining TV subscribers many of the big cable operators are still raking in cash because of the bonanza that is broadband. The article mentions ESPN3 but just as a throw away sentence in how "warehousing" is being handled.
What was not mentioned is how ESPN/Disney has already been way out front of competitors when it comes to broadband channels. Currently they have ABC News Broadband, Disney Connection, ESPN3, and SOAP Net. Those 4 channels can be purchased as a package for roughly $.50 per broadband subscriber but any broadband provider who wants to carry ESPN/Disney channels going forward MUST carry ESPN3 which at about $.20 per broadband subscriber is more than what ViaCom charges for Comedy Central as a standard cable channel. Think about that for a minute.
Many people look at the HBO Go product as a model going forward. HBO has insisted that HBO Go will only be available to subscribers from a traditional cable MSO or satellite provider. But what if that changes? Suddenly HBO has a product that is as attractive as Netflix or Amazon Prime or Hulu or the "cord-cutters". It could be a market that gets too rich for HBO to ignore under loyalty to the old model.
Same might be true for ESPN/Disney. Currently their broadband channels are only available through providers carrying their channel packages but what if once the dust settles with Aereo - ESPN / Disney allows them to build ABC News Broadband, Disney Connection, ESPN3, and SOAP Net into their basic product offering for $.50 per subscriber? Small drop in the bucket when it comes to overall revenues but money is money. What if they enhanced that package by offering ESPN, ESPN2 and ESPNU for $10 per month? Suddenly we are talking different magnitudes of revenue.
The future will allow for many changes to today's TV model. The cable company may soon be just a "dumb pipe" provider and when that happens ESPN /Disney will be prepared.
They already are.
Tuesday, August 27, 2013
Saturday, August 3, 2013
NBC Lands NASCAR
Some good details on what went into NBC landing NASCAR rights away from ESPN and Turner.
It should be noted that if ESPN did bid for the rights then according to the article NASCAR would have been looking for a 30 percent bump over the $270 million per year they are paying currently. That would have been $351 million per year or $3.5 billion over the 10-year life of the new contract. NBC will be paying $4.4 billion. What will NBC be getting for that extra $89 million per year?
Well for starters they also get the 6 races per year that Turner was carrying. You could look at it that NBC payed just $15 million per race per year for those races which isn't a bad deal but maybe more important is all the extra stuff that was included in the deal by NASCAR. NBC will be getting the following programming - most of which I expect will be broadcast on the NBC Sports Network:
- NASCAR practice and qualifying sessions
- The K and N Series
- The Whelen Modified Tour
- The Toyota (Mexico) Series
- The Hall of Fame Induction ceremony
- The end of year awards banquets
That's a lot of programming for the NBC Sports Network. When you couple that programming at night with NHL hockey games plus the Dan Patrick Show in the morning - all of a sudden the NBC Sports Network becomes a very attractive channel for the average sports fan (especially any with even cursory NASCAR or NHL interests).
This was a good deal for NBC and positions the NBC Sports Network channel very well in case a la carte programming becomes a reality.
It should be noted that if ESPN did bid for the rights then according to the article NASCAR would have been looking for a 30 percent bump over the $270 million per year they are paying currently. That would have been $351 million per year or $3.5 billion over the 10-year life of the new contract. NBC will be paying $4.4 billion. What will NBC be getting for that extra $89 million per year?
Well for starters they also get the 6 races per year that Turner was carrying. You could look at it that NBC payed just $15 million per race per year for those races which isn't a bad deal but maybe more important is all the extra stuff that was included in the deal by NASCAR. NBC will be getting the following programming - most of which I expect will be broadcast on the NBC Sports Network:
- NASCAR practice and qualifying sessions
- The K and N Series
- The Whelen Modified Tour
- The Toyota (Mexico) Series
- The Hall of Fame Induction ceremony
- The end of year awards banquets
That's a lot of programming for the NBC Sports Network. When you couple that programming at night with NHL hockey games plus the Dan Patrick Show in the morning - all of a sudden the NBC Sports Network becomes a very attractive channel for the average sports fan (especially any with even cursory NASCAR or NHL interests).
This was a good deal for NBC and positions the NBC Sports Network channel very well in case a la carte programming becomes a reality.
Thursday, August 1, 2013
Google Fiber, Net Neutrality and Just What Makes a Business Customer?
Some very interesting points and questions raised in this article.
I completely agree that not just businesses are running servers connected to the broadband. Just having a server is not a good way to help define business class service anymore. If you think of it even a set top box with DVR is a network server.
Even though the article doesn't mention it - even time of day parameters from the past don't work in the new Internet age. It used to be between 9-5:00 you'd have heavy business usage and then after that you'd start seeing heavy residential usage. That worked great for providers who wanted to serve both markets. But with more and more people telecommuting or working odd hours - that line is blurred beyond being useful in distinguishing types of users.
A business telecommuter doing emails, VoIP and the occasional video-conference is probably going to use less bandwidth than a home-schooled kid or a stay at home mom trading cooking recipes. New definitions are needed.
I completely agree that not just businesses are running servers connected to the broadband. Just having a server is not a good way to help define business class service anymore. If you think of it even a set top box with DVR is a network server.
Even though the article doesn't mention it - even time of day parameters from the past don't work in the new Internet age. It used to be between 9-5:00 you'd have heavy business usage and then after that you'd start seeing heavy residential usage. That worked great for providers who wanted to serve both markets. But with more and more people telecommuting or working odd hours - that line is blurred beyond being useful in distinguishing types of users.
A business telecommuter doing emails, VoIP and the occasional video-conference is probably going to use less bandwidth than a home-schooled kid or a stay at home mom trading cooking recipes. New definitions are needed.
Monday, April 29, 2013
The Genius of Google Fiber
Yes - Google fiber has had a ripple effect but I wonder if this is unintended or genius.
Google is not going to make buckets of money from being a fiber to the home (FTTH) provider. They make their money by selling ads on the Internet and the higher the bandwidth speeds and more readily bandwidth happens to be across the country - the more ads on the Internet people will see and the more money Google will rake in.
Has their fiber installation in Kansas City and their planned systems in Austin and Provo caused other providers to roll out more upgrades in more areas? Yes. A great kick in the ass for fiber deployment.
Genius!
Google is not going to make buckets of money from being a fiber to the home (FTTH) provider. They make their money by selling ads on the Internet and the higher the bandwidth speeds and more readily bandwidth happens to be across the country - the more ads on the Internet people will see and the more money Google will rake in.
Has their fiber installation in Kansas City and their planned systems in Austin and Provo caused other providers to roll out more upgrades in more areas? Yes. A great kick in the ass for fiber deployment.
Genius!
Wednesday, April 3, 2013
Microsoft May Sell MediaRoom
There have been lots of rumblings about Microsoft possibly selling their MediaRoom division to Ericsson. I think this move would make lots of sense for Microsoft for two big reasons.
1. The revenue of XBox sales and licensing (X-Box Live, etc.) dwarf the potential and existing revenue from sales of MediaRoom systems. Other middleware systems rightfully view Microsoft with a skeptical eye when it comes to integrating X-Box into their ecosystems as a set top box replacement or alternative - selling the division takes away this potential conflict. Same is true of their relationship with ATT U-verse - other MSO's may be more willing to work with X-Boxes as STB replacements when they know Microsoft is out of the "helping U-Verse" business.
2. I always believed that the architecture of MediaRoom was fatally flawed to begin with. Each stream or source has to be first "ingested" by MediaRoom before it can be presented to an end user. Even though the server footprint has been shrinking these past years it is still a massive investment and with adaptive bitrate it gets even worse.
1. The revenue of XBox sales and licensing (X-Box Live, etc.) dwarf the potential and existing revenue from sales of MediaRoom systems. Other middleware systems rightfully view Microsoft with a skeptical eye when it comes to integrating X-Box into their ecosystems as a set top box replacement or alternative - selling the division takes away this potential conflict. Same is true of their relationship with ATT U-verse - other MSO's may be more willing to work with X-Boxes as STB replacements when they know Microsoft is out of the "helping U-Verse" business.
2. I always believed that the architecture of MediaRoom was fatally flawed to begin with. Each stream or source has to be first "ingested" by MediaRoom before it can be presented to an end user. Even though the server footprint has been shrinking these past years it is still a massive investment and with adaptive bitrate it gets even worse.
Thursday, January 17, 2013
Aereo and DTV Apps
Interesting look at Aereo and the Dyle and MyDTV apps could undercut the growth and adoption of Aereo.
Aereo plans to roll out to 22 cities soon but if you just need the Dyle and MyDTV apps to pick up the same channels - doesn't that greatly undercut the Aereo value proposition? Right now the apps are free but even if they were priced at just the cost of a single month of Aereo service - say $8 - then it still represents a great value.
My guess is that in the future cell carriers will put together packages with apps like Dyle and MyDTV coupled with an OTT service like Netflix or Amazon Prime. Think about a company like Verizon Wireless and what they could do with a couple apps like Dyle and MyDTV coupled with their new Redbox Instant service. An almost perfect combination.
Makes sense.
Aereo plans to roll out to 22 cities soon but if you just need the Dyle and MyDTV apps to pick up the same channels - doesn't that greatly undercut the Aereo value proposition? Right now the apps are free but even if they were priced at just the cost of a single month of Aereo service - say $8 - then it still represents a great value.
My guess is that in the future cell carriers will put together packages with apps like Dyle and MyDTV coupled with an OTT service like Netflix or Amazon Prime. Think about a company like Verizon Wireless and what they could do with a couple apps like Dyle and MyDTV coupled with their new Redbox Instant service. An almost perfect combination.
Makes sense.
Sunday, January 13, 2013
The Future of Content
Many people keep talking about people like Apple, Google, Amazon or Intel changing the current dynamics of content distribution and affiliate rights but they always seem to overlook something that may have a much more immediate tangible effect of "must carry" channel packaging - Canada a la carte TV.
If a la carte works in Canada - there would be no argument about it being able to work in the US. What will be interesting to watch is what direction programmers take. I would expect ABC/Disney to charge more for an un-bundled ESPN (and maybe for ESPN2 - say $5 and $1 respectively) but would they increase pricing for the lesser channels? Would they charge more for ESPNU hoping college sports enthusiasts would pony up or would they discount it to try and rope in the casual sports fans?
And if un-bundled a la carte pricing came into being - then that's really where the billing and streaming capabilities of an Apple iTunes or an Amazon Prime could really shine. There are so many possibilities. Maybe cable rules don't apply to over the top streaming so even if cable has to un-bundle maybe ESPN makes a deal with Apple to have monthly subscriptions to all the ESPN channels for $10 a month. That deal would actually have more gross margin for ABC/Disney than their existing affiliate rights agreements.
Many naysayers predict consumers actually paying more for content if a la carte came into being. I don't see how that's possible. A la carte will lead to more competition among content producers and more options of content delivery for subscribers.
If a la carte works in Canada - there would be no argument about it being able to work in the US. What will be interesting to watch is what direction programmers take. I would expect ABC/Disney to charge more for an un-bundled ESPN (and maybe for ESPN2 - say $5 and $1 respectively) but would they increase pricing for the lesser channels? Would they charge more for ESPNU hoping college sports enthusiasts would pony up or would they discount it to try and rope in the casual sports fans?
And if un-bundled a la carte pricing came into being - then that's really where the billing and streaming capabilities of an Apple iTunes or an Amazon Prime could really shine. There are so many possibilities. Maybe cable rules don't apply to over the top streaming so even if cable has to un-bundle maybe ESPN makes a deal with Apple to have monthly subscriptions to all the ESPN channels for $10 a month. That deal would actually have more gross margin for ABC/Disney than their existing affiliate rights agreements.
Many naysayers predict consumers actually paying more for content if a la carte came into being. I don't see how that's possible. A la carte will lead to more competition among content producers and more options of content delivery for subscribers.
Thursday, January 10, 2013
The State of Netflix
Interesting look at where Netflix is today and how it got there.
I don't think there is any way the stock ever gets back to the $300 neighborhood it was in 2011 but I am bullish on the stock. I think the company can either get acquired or it can become the on-line equivalent of HBO.
HBO has a big advantage in original programming because of its long history and the subscribers expectations of quality from the HBO brand but Netflix's on-demand library beats HBO's channels showing the same movies over and over.
The article is worth the read.
I don't think there is any way the stock ever gets back to the $300 neighborhood it was in 2011 but I am bullish on the stock. I think the company can either get acquired or it can become the on-line equivalent of HBO.
HBO has a big advantage in original programming because of its long history and the subscribers expectations of quality from the HBO brand but Netflix's on-demand library beats HBO's channels showing the same movies over and over.
The article is worth the read.
Monday, January 7, 2013
Roku and Time Warner
Interesting to note that Roku will be able to make available 300 channels to Time Warner Cable subscribers. This means that Roku is becoming a defacto replacement for a normal TWC set top for TWC subscribers.
I have beaten this drum before - a move like this is good for all involved. TWC doesn't have the opex or headaches involved in supporting additional STB's. Actually expenses should reduce as some existing STB are replaced - plus there is no truck roll costs involved when a subscriber adds a Roku box. Roku gets a great revenue opportunity as they get to market to millions of TWC subscribers. For the customer - there are a number of advantages of owning a Roku box that they will now be able to take advantage of. A win-win-win situation.
I also firmly believe that Apple will eventually announce both a new Apple TV box and a relationship with larger operators like TWC. They won't let Roku have all the fun (or all the market)
I have beaten this drum before - a move like this is good for all involved. TWC doesn't have the opex or headaches involved in supporting additional STB's. Actually expenses should reduce as some existing STB are replaced - plus there is no truck roll costs involved when a subscriber adds a Roku box. Roku gets a great revenue opportunity as they get to market to millions of TWC subscribers. For the customer - there are a number of advantages of owning a Roku box that they will now be able to take advantage of. A win-win-win situation.
I also firmly believe that Apple will eventually announce both a new Apple TV box and a relationship with larger operators like TWC. They won't let Roku have all the fun (or all the market)
Friday, January 4, 2013
Tiered Cable Data Plans
Interesting look at possible tiered data plans for heavy data users. My initial reaction is "big deal".
Near the end of the article it is mentioned that Comcast has a data tier that allows for "300 gigabits per month - or about 130 hours of Netflix HD videos." Think about that for a minute. That's 4.33 hours of HD video a day. Good chance someone doing that is probably a cord cutter - and why should the cable company subsidize Netflix? Plus - as encoding algorithms advance less and less bandwidth will be needed for the same amount of video.
If in the future both cable and telcos will be the equivalent of dumb pipe providers - why shouldn't they get to charge for how much you drink from the pipe?
Near the end of the article it is mentioned that Comcast has a data tier that allows for "300 gigabits per month - or about 130 hours of Netflix HD videos." Think about that for a minute. That's 4.33 hours of HD video a day. Good chance someone doing that is probably a cord cutter - and why should the cable company subsidize Netflix? Plus - as encoding algorithms advance less and less bandwidth will be needed for the same amount of video.
If in the future both cable and telcos will be the equivalent of dumb pipe providers - why shouldn't they get to charge for how much you drink from the pipe?
Thursday, January 3, 2013
Happy Anniversary Apple
The fine folks at The Motley Fools remind us that Apple was incorporated on this day in 1977.
The article also reminds us of who Apple's original competitors were - the Altair 8800, the Radio Shack TRS-80, the Commodore 64 and IBM.
That reminded me that when IBM released their PC they blanketed the airwaves with commercials featuring the cast from M*A*S*H. Amazing to look back and realize that while Apple today is perhaps the most influential company in the world - IBM's are as influential today to PC's as the cast from M*A*S*H is to network primetime TV.
The article also reminds us of who Apple's original competitors were - the Altair 8800, the Radio Shack TRS-80, the Commodore 64 and IBM.
That reminded me that when IBM released their PC they blanketed the airwaves with commercials featuring the cast from M*A*S*H. Amazing to look back and realize that while Apple today is perhaps the most influential company in the world - IBM's are as influential today to PC's as the cast from M*A*S*H is to network primetime TV.
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