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.
Showing posts with label a la carte. Show all posts
Showing posts with label a la carte. Show all posts
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.
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.
Wednesday, December 12, 2012
Sports Programming
Very interesting development - DirecTV to start charging customers with multiple regional sports networks (RSN's) a $3 charge.
Nobody argues that sports programming pricing is going through the roof but this news makes me think the following:
1. The logical thing would to be to move the sports programming to an expanded tier. I have Charter cable at home and the NFL Network is in the expanded tier but the MLB Network is in basic. Moving the sports channels to expanded would allow only the people who want sports to be paying for them. People like the RSN's, ESPN and others would fight this tooth and nail. They enjoy being is the most popular tiers because it makes them the most money.
2. The move by DirecTV is a little hypocritical when you think of how much they are paying for the NFL rights and the fact that many people subscribed to DirecTV just for NFL games.
3. This move could be interpreted as another step towards a la carte programming. I think if you gave sports content channel owners the choice between a la carte and having their channels on an inclusive expanded tier (sports, women's programming, etc.) - then the content owners would choose the expanded tier. We could therefor start to see some movement by the content owners regarding "must carry" requirements and tier placement as new agreements are reached with the major cable operators. The price expansion simply just can't go on like this.
Nobody argues that sports programming pricing is going through the roof but this news makes me think the following:
1. The logical thing would to be to move the sports programming to an expanded tier. I have Charter cable at home and the NFL Network is in the expanded tier but the MLB Network is in basic. Moving the sports channels to expanded would allow only the people who want sports to be paying for them. People like the RSN's, ESPN and others would fight this tooth and nail. They enjoy being is the most popular tiers because it makes them the most money.
2. The move by DirecTV is a little hypocritical when you think of how much they are paying for the NFL rights and the fact that many people subscribed to DirecTV just for NFL games.
3. This move could be interpreted as another step towards a la carte programming. I think if you gave sports content channel owners the choice between a la carte and having their channels on an inclusive expanded tier (sports, women's programming, etc.) - then the content owners would choose the expanded tier. We could therefor start to see some movement by the content owners regarding "must carry" requirements and tier placement as new agreements are reached with the major cable operators. The price expansion simply just can't go on like this.
Tuesday, November 6, 2012
Cord-Cutting on Rise at Time Warner
Interesting look at how Time Warner has lost 140,000 residential video customers during the third quarter this year.
What the article doesn't tell you is that even though TW lost those 140,000 subscribers - profits are up in part because they increased the number of residential high speed Internet customers by 8%. People who cut the cord still need a good Internet connection to view Netflix, Hulu and the rest of the over the top content providers.
The real losers from TW losing 140,000 residential video customers are the content providers. That dip in TW subscribers should cost Disney (ABC, ESPN, etc.) well over $1 million a month just in Affiliate Rights fees never mind lost advertising revenue. If this becomes a trend then content companies may start rethinking a la carte pricing as a way to get back some of the cord cutters.
What the article doesn't tell you is that even though TW lost those 140,000 subscribers - profits are up in part because they increased the number of residential high speed Internet customers by 8%. People who cut the cord still need a good Internet connection to view Netflix, Hulu and the rest of the over the top content providers.
The real losers from TW losing 140,000 residential video customers are the content providers. That dip in TW subscribers should cost Disney (ABC, ESPN, etc.) well over $1 million a month just in Affiliate Rights fees never mind lost advertising revenue. If this becomes a trend then content companies may start rethinking a la carte pricing as a way to get back some of the cord cutters.
Monday, October 15, 2012
Do You Have the Game?
When I was a kid - boxing was at perhaps its heyday. Marvin Hagler, Tommy Hearns, Roberto Duran, Sugar Ray Leonard, and Mike Tyson. It seemed there was always a big fight but the problem was where to watch it. This was the end of the closed circuit TV era and beginning of the PPV (pay per view) era. Some bars legitimately paid for the signal and charged an entrance fee to make up for the hefty fee. Other bars had a "hot box" and received the signal illegally.
Guess where I watched many of these fights.
Today bars, restaurants, hotel common areas and other places are supposed to pay commercial rates based upon formulas that make string theory algorithms look like child's play. For that reason and because its not a whole lot of money in this bundled channel package world - having cable in these places at the same rates as a residential customer is not really a big deal.
One of the unintended consequences of a la carte TV may be to completely change this.
If Disney can no longer bundle all the ESPN channels together to get a hefty rights package fee then they may need to find other avenues to recoup the costs of buying rights to things like the NFL's Monday Night Football. One of those avenues may be to go after some of these bars and other places that are paying residential rates when they should be paying commercial rates based upon bulk rate pricing and fire code seating and a bunch of other variables.
We could wind up in a world where bars have to charge $7 for a draft beer to cover their TV costs. Or, conversely, we may end up in a world where the bar avoids these rights fees by simply offering free WiFi and people watch what they want on iPads or other tablet-type devices. We may even have scenarios where one person uses a Slingbox to get their signal from home and the bar shows it on a "group projection device" (don't call it a hot box).
Not saying this is what is going to happen. Just saying it is possible.
Guess where I watched many of these fights.
Today bars, restaurants, hotel common areas and other places are supposed to pay commercial rates based upon formulas that make string theory algorithms look like child's play. For that reason and because its not a whole lot of money in this bundled channel package world - having cable in these places at the same rates as a residential customer is not really a big deal.
One of the unintended consequences of a la carte TV may be to completely change this.
If Disney can no longer bundle all the ESPN channels together to get a hefty rights package fee then they may need to find other avenues to recoup the costs of buying rights to things like the NFL's Monday Night Football. One of those avenues may be to go after some of these bars and other places that are paying residential rates when they should be paying commercial rates based upon bulk rate pricing and fire code seating and a bunch of other variables.
We could wind up in a world where bars have to charge $7 for a draft beer to cover their TV costs. Or, conversely, we may end up in a world where the bar avoids these rights fees by simply offering free WiFi and people watch what they want on iPads or other tablet-type devices. We may even have scenarios where one person uses a Slingbox to get their signal from home and the bar shows it on a "group projection device" (don't call it a hot box).
Not saying this is what is going to happen. Just saying it is possible.
Sunday, October 7, 2012
A Bad Argument Against A La Carte
Joe Flint tries to pass off analyst Todd Juenger's argument that cable prices really aren't that bad and that a la carte won't work. The reasoning on both counts is servery flawed.
The article starts off with a graph showing the price increases of various items from movie tickets to cups of coffee. The idea is to show that in comparison the recent increases in the price for cable TV is more than reasonable. The problem is all of the items listed (with the possible exception of health care) are voluntary purchases. If I think the price of Dunkin Donuts coffee is getting too expensive then I can go to McDonald's for their $1 large coffee. If I buy a cigar - the tobacco industry doesn't tell me I also have to purchase a pack of cigarettes and some nicorette gum as part of the package. Yet that's what cable TV does. You want ESPN - then you have to get at least 3 other channels along with that.
Then the example of if Nickelodeon was an a la carte option then viewers may have to say goodbye to shows like Dora the Explorer or SpongeBob SquarePants is used. Not sure if two worse examples of the effects of a la carte could have been chosen. Both shows are cartoons with low production costs and both shows probably make more in merchandising and web applications at this point than in affiliate rights. A la carte won't harm those two shows in the least.
I was told that consumers being able to buy individual MP3's of songs would kill CD sales. But it didn't - it just created a new market - for MP3 songs! And it also allowed entry into the market many of many more artists and bands.
So too with TV. If a la carte was available and a provider could simply give me a menu of choices - that provider probably would have incentive to put as many channels on that menu as possible. Instead of just the History Channel maybe a channel is put on the menu that actually shows history. I would subscribe to that and then maybe History would see that success and rethink doing shows like Ancient Aliens.
But I digress.
The article starts off with a graph showing the price increases of various items from movie tickets to cups of coffee. The idea is to show that in comparison the recent increases in the price for cable TV is more than reasonable. The problem is all of the items listed (with the possible exception of health care) are voluntary purchases. If I think the price of Dunkin Donuts coffee is getting too expensive then I can go to McDonald's for their $1 large coffee. If I buy a cigar - the tobacco industry doesn't tell me I also have to purchase a pack of cigarettes and some nicorette gum as part of the package. Yet that's what cable TV does. You want ESPN - then you have to get at least 3 other channels along with that.
Then the example of if Nickelodeon was an a la carte option then viewers may have to say goodbye to shows like Dora the Explorer or SpongeBob SquarePants is used. Not sure if two worse examples of the effects of a la carte could have been chosen. Both shows are cartoons with low production costs and both shows probably make more in merchandising and web applications at this point than in affiliate rights. A la carte won't harm those two shows in the least.
I was told that consumers being able to buy individual MP3's of songs would kill CD sales. But it didn't - it just created a new market - for MP3 songs! And it also allowed entry into the market many of many more artists and bands.
So too with TV. If a la carte was available and a provider could simply give me a menu of choices - that provider probably would have incentive to put as many channels on that menu as possible. Instead of just the History Channel maybe a channel is put on the menu that actually shows history. I would subscribe to that and then maybe History would see that success and rethink doing shows like Ancient Aliens.
But I digress.
Monday, September 3, 2012
NFL Sunday Ticket without DirecTV?
Peter Kafka has an interesting post about DirecTV's relationship with Sony's PlayStation Network and how the PS3 can be used to watch the NFL Sunday Ticket (whether you get DirecTV or not).
While that is interesting in and of itself. The article got me wondering - what is the future for the NFL Sunday Ticket?
While that is interesting in and of itself. The article got me wondering - what is the future for the NFL Sunday Ticket?
Monday, August 27, 2012
Time Warner Cable and Fox News TV Everywhere
Time Warner Cable now has TV Everywhere apps for Fox News and Fox Business News. This announcement got me wondering if we will see a new trend where TV Everywhere becomes the first line of defense for content producers against the oncoming tide of a la carte TV.
HBO Go is tremendous but the over the top service is only available to people who are already subscribing to HBO through their cable company. One hand washes the other in this arrangement. If you think about it - HBO is also a defacto package of channels. Nobody gets just one HBO channel. Other content providers who are not premium channels may see this and wonder if a similar arrangement like this can be used to their advantage.
I am not sure about the details of the Time Warner Cable arrangement with Fox News and Fox Business News regarding their apps but I have to wonder if the language of the agreement states that the apps are only available to people who subscribe to both channels? That may not be a big deal now when Time Warner and other cable companies package the channels together but it would be good protection and a very valid selling selling point if a la carte ever came to be. Sure with a la carte TV you would be free to pick either Fox News or Fox Business News or neither but what if you lost access to the apps for both channels if you didn't also get both linear channels?
Just something that occurred to me.
HBO Go is tremendous but the over the top service is only available to people who are already subscribing to HBO through their cable company. One hand washes the other in this arrangement. If you think about it - HBO is also a defacto package of channels. Nobody gets just one HBO channel. Other content providers who are not premium channels may see this and wonder if a similar arrangement like this can be used to their advantage.
I am not sure about the details of the Time Warner Cable arrangement with Fox News and Fox Business News regarding their apps but I have to wonder if the language of the agreement states that the apps are only available to people who subscribe to both channels? That may not be a big deal now when Time Warner and other cable companies package the channels together but it would be good protection and a very valid selling selling point if a la carte ever came to be. Sure with a la carte TV you would be free to pick either Fox News or Fox Business News or neither but what if you lost access to the apps for both channels if you didn't also get both linear channels?
Just something that occurred to me.
Thursday, August 16, 2012
A la Carte TV
Peter Kafka has a new article where he argues that it is most likely that Apple TV will go along with the current content arrangements to get along. He mentions two scenarios that would create a more a la carte environment but he misses the most likely - Congressional action.
A la carte TV may come to Canada and will be through legislative action. Of course the content producers would spend millions lobbying against such action in the US but can you imagine how popular it would be? Everyone - Democrats and Republicans - have to pay for channels they don't like.
A la carte TV may come to Canada and will be through legislative action. Of course the content producers would spend millions lobbying against such action in the US but can you imagine how popular it would be? Everyone - Democrats and Republicans - have to pay for channels they don't like.
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