It's so interesting.... about a year or so I thought that once
someone would break ranks in the cable world and offer al a carte channels
and the dam the monopolistic cable companies have had would bust
quickly.... well its happened in less than a year...
Reading this article reminds me of articles from some 25 years ago
when we saw the deregulation of long distance and telephone services...
at that time you had only one option of who your local telephone
company was associated with.... and that was one of only a small handful of
companies...... then the industry was deregulated and you could buy even local
telephone from dozens of companies. This unbundling of a handful of TV
monopolies feels pretty similar....and just like we saw in that Telephone
breakup people were able to choose and drive costs down and many
BIG companies had to lower prices to stay in the market. And as free markets
do they bring the prices in line with the value the customer ascribes to that
product or service.
The big cable/satellite companies will have to evaluate when to
shift from thier monopolistic attitude they have had for 35 years now in some
cases to lowering prices and being more "competitive" in the new
marketplace. Some of them won't survive.
But as the article below says there will be LOTS of confusion as
we go through a transition period. Right now the scramble is just
starting... and there will be winners and losers as they push out these new
services and people determine if they have any interest in it at that price
point.
http://www.wsj.com/articles/unbundling-pay-tv-brings-new-questions-1426639589
MEDIA & MARKETING
Unbundling Pay-TV Brings New Questions
'Cord-Cutting' choices
grow, but questions for consumers, companies swirl
ENLARGE
By
KEACH HAGEY and
SHALINI RAMACHANDRAN
March
17, 2015 8:46 p.m. ET
70 COMMENTS
The media industry is
racing toward an Internet-TV future at a breathtaking pace. But the swift
changes, highlighted by efforts from Apple Inc., Dish Network Corp. and
others, are giving consumers an array of confusing options and forcing
entertainment giants to confront some sober realities.
Not
long ago, consumers who wanted to watch "Monday Night Football" on ESPN, "Mad
Men" on AMC or
"Game of Thrones" on HBO knew what they had to do: shell out for a cable
package that typically costs around $90 a month in the U.S. They could catch
old seasons of popular shows on Netflix or a similar streaming on-demand
service, but live, up-to-date programming lived in the cable bundle.
RELATED
READING
·
Apple
TV Offering May Force Rivals to Play Catch Up
In the
span of a few months, tectonic shifts are remaking a television landscape it
took decades to sculpt, opening up a range of other possibilities for "cord
cutters" who don't want traditional pay TV. Apple is working on
an Internet-TV service with some 25 channels, which is expected
to be priced between $25 to $35 a month, according to people familiar with its
plans. It will join Dish
NetworkCorp. and Sony Corp., which are pitching their own
online-TV bundles. A host of TV companies, including HBO, NBCUniversal,
Nickelodeon's Noggin and stand-alone
streaming offerings.
But if consumers drop
pay TV and sign up for TV services delivered over broadband, will they really
get a better deal?
"If you
buy retail and you have six or seven of these things, that might cost you as
much as a bundle that gives you 400 different networks," said Philippe
Dauman, CEO of Viacom, which earns money from bundled channels but also
recently launched a subscription streaming service aimed at preschool children
that it imagines will be complementary to the bundle.
Advertisement
Sorting through which options or combination of options to sign up for-while
keeping costs from spiraling-will be a headache. Dish's basic $20 a month
streaming package will get you ESPN, TNT and some cable channels but not
broadcasters CBS, NBC and Fox. Apple wants to bring customers a "skinny bundle"
including broadcasters and some cable channels but its service will cost more.
Sony will soon offer something more akin to a full-on cable bundle, albeit
likely at a higher price than the others-and notably, for now, without Walt Disney Co.'s
ESPN and ABC.
Apple is in talks with
several broadcasters to offer an online TV service this fall. WSJ's Shalini
Ramachandran explains on The News Hub. Photo: Apple
On top of all this,
consumers will have to factor in the cost of their broadband access. As a
reference point, one operator charges $67 a month for a speed of 25 megabits
per second once its first-year promotional discount ends.
Still,
the new streaming world has the potential to be "better for many consumers"
because it offers choice that the pay-TV industry never provided,
said Roger Lynch,chief executive of Dish's Sling TV streaming service. For
the "vast majority of all consumers, the pay-TV bundle offers good value. But
there's a growing number of consumers for whom that doesn't work anymore," he
said.
'The ice cube is melting'
-senior industry executive
Media giants have
their own calculations to make-quickly-as they prepare for a world that will
look very different in 12 months than it has for the past several decades.
For years, TV channel
owners and their pay-TV distributors-cable and satellite providers-were able to
count on two reliable trends: that pay-TV subscriptions in America would grow
each year, and that consumers would submit to paying ever-higher cable bills.
In the past two decades, the pay-TV industry has grown by about 40 million
subscribers to a total of about 100 million homes, and typical cable bills
increased at a compound average annual growth rate of about 6.1%, according to
the Federal Communications Commission. Those dynamics produced a steady stream
of subscription revenue that drove profits for Disney and Viacom Inc. just
as they did for DirecTV.
But evidence mounted
over the past couple of years that something fundamental was changing. In 2013,
the industry's base of subscribers contracted for the first time. Last year,
pay-TV subscriptions fell by 129,000 industrywide, according to
MoffettNathanson, even as analysts said new household formation surged,
typically a good sign for the industry in years past.
And
besides cutting the cord, more consumers started
"shaving" it, downgrading tocheaper
packages that operators began to offer. Comcast, for instance,
offers an "Internet Plus" package of HBO, fast broadband and local channels for
$40 a month, and AT&T has
been peddling a similar $49-a-month bundle that also includes Amazon.com Inc.'s
Prime free-shipping and streaming-video service for a year.
A mutiny was afoot,
threatening the pay-TV fortress. "The ice cube is melting," one senior industry
executive said. "It's a reality of the marketplace."
The TV advertising
business got a shock as ratings for major cable channels plunged, particularly
over the second half of last year. The Cabletelevision Advertising Bureau, an
industry trade group, recently told media executives that it estimates 40% of the
ratings decline was due to viewers migrating from traditional
television to subscription streaming services like Netflix.
"It was happening at
a pace no one was anticipating," said an executive at one big TV network. "We
said, 'We better start finding other ways to grow.' "
WSJ.D
WSJ.D is the Journal's home for tech
news, analysis and product reviews.
·
Apple
Is in Talks to Offer a Bundle of TV Networks This Fall
·
Nintendo
Opens the Door to Smartphone Games
·
Pinterest
Is Valued at $11 Billion After Its Latest Funding
·
Google
Adds Humans to Review Apps, Launches Age Ratings
And
with that, media companies that for years had pooh-poohed cord-cutting was a
real threat, began to embrace it, albeit reluctantly. HBO, owned by Time Warner Inc., announced
its stand-alone Web streaming service in October, followed by CBS, while in the
background Dish and Sony assembled rights for their online TV bundles.
The goal for TV
channels is to carry out this experimentation while safeguarding the
traditional business to the extent possible. Virtually every TV network that
has launched a Web TV service says it hopes to target the roughly 10 million
homes that subscribe only to broadband service-without encouraging any current
pay-TV subscribers to drop their service.
But holding on to
pay-TV customers is getting harder. "We think there is going to be a continual
dripping, dripping, dripping of millennial consumers and poor consumers who
will be outside of the big bundle," said MoffettNathanson analyst Michael
Nathanson in an interview.
One
risk of the media companies' strategy is that by bringing TV channels to the
Web they aren't thinking far enough beyond their current business models. Their
real competition for young audiences in coming years will come from companies
likeFacebook, Vimeo
and Vessel that are attracting content creators from entirely outside the
pay-TV ecosystem, said Mr. Nathanson and his fellow analyst Craig Moffett.
"Our suspicion is
that the millennial cord cutter isn't waiting around for just the right package
of cable channels that only their parents watch," they wrote in a research note
Tuesday.
Not
every TV channel is assured a secure place in the emerging Web TV world,
analysts say. The small and midtier channel owners-companies like Discovery
CommunicationsInc., Viacom, Scripps Network Interactive, and
A+E Networks-will be jockeying to make sure their networks are in the online TV
bundles being marketed to the audience of the future.
Some are making
headway. Discovery, owner of Discovery Channel, Animal Planet and TLC, and Viacom,
owner of MTV, Comedy Central and Nickelodeon, are in talks to be on the Apple
service, people familiar with the matter said. Some A+E Networks channels will
be added to Sling TV's core package by the end of March, the companies
announced Tuesday.
Write to Keach
Hagey at Keach.Hagey@wsj.com and
Shalini Ramachandran atShalini.Ramachandran@wsj.com
This post was edited on 4/14 4:40 PM by Boiler20
This post was edited on 4/14 4:42 PM by Boiler20
Unbundling
someone would break ranks in the cable world and offer al a carte channels
and the dam the monopolistic cable companies have had would bust
quickly.... well its happened in less than a year...
Reading this article reminds me of articles from some 25 years ago
when we saw the deregulation of long distance and telephone services...
at that time you had only one option of who your local telephone
company was associated with.... and that was one of only a small handful of
companies...... then the industry was deregulated and you could buy even local
telephone from dozens of companies. This unbundling of a handful of TV
monopolies feels pretty similar....and just like we saw in that Telephone
breakup people were able to choose and drive costs down and many
BIG companies had to lower prices to stay in the market. And as free markets
do they bring the prices in line with the value the customer ascribes to that
product or service.
The big cable/satellite companies will have to evaluate when to
shift from thier monopolistic attitude they have had for 35 years now in some
cases to lowering prices and being more "competitive" in the new
marketplace. Some of them won't survive.
But as the article below says there will be LOTS of confusion as
we go through a transition period. Right now the scramble is just
starting... and there will be winners and losers as they push out these new
services and people determine if they have any interest in it at that price
point.
http://www.wsj.com/articles/unbundling-pay-tv-brings-new-questions-1426639589
MEDIA & MARKETING
Unbundling Pay-TV Brings New Questions
'Cord-Cutting' choices
grow, but questions for consumers, companies swirl
By
KEACH HAGEY and
SHALINI RAMACHANDRAN
March
17, 2015 8:46 p.m. ET
70 COMMENTS
The media industry is
racing toward an Internet-TV future at a breathtaking pace. But the swift
changes, highlighted by efforts from Apple Inc., Dish Network Corp. and
others, are giving consumers an array of confusing options and forcing
entertainment giants to confront some sober realities.
Not
long ago, consumers who wanted to watch "Monday Night Football" on ESPN, "Mad
Men" on AMC or
"Game of Thrones" on HBO knew what they had to do: shell out for a cable
package that typically costs around $90 a month in the U.S. They could catch
old seasons of popular shows on Netflix or a similar streaming on-demand
service, but live, up-to-date programming lived in the cable bundle.
RELATED
READING
·
Apple
TV Offering May Force Rivals to Play Catch Up
In the
span of a few months, tectonic shifts are remaking a television landscape it
took decades to sculpt, opening up a range of other possibilities for "cord
cutters" who don't want traditional pay TV. Apple is working on
an Internet-TV service with some 25 channels, which is expected
to be priced between $25 to $35 a month, according to people familiar with its
plans. It will join Dish
NetworkCorp. and Sony Corp., which are pitching their own
online-TV bundles. A host of TV companies, including HBO, NBCUniversal,
Nickelodeon's Noggin and stand-alone
streaming offerings.
But if consumers drop
pay TV and sign up for TV services delivered over broadband, will they really
get a better deal?
"If you
buy retail and you have six or seven of these things, that might cost you as
much as a bundle that gives you 400 different networks," said Philippe
Dauman, CEO of Viacom, which earns money from bundled channels but also
recently launched a subscription streaming service aimed at preschool children
that it imagines will be complementary to the bundle.
Advertisement
Sorting through which options or combination of options to sign up for-while
keeping costs from spiraling-will be a headache. Dish's basic $20 a month
streaming package will get you ESPN, TNT and some cable channels but not
broadcasters CBS, NBC and Fox. Apple wants to bring customers a "skinny bundle"
including broadcasters and some cable channels but its service will cost more.
Sony will soon offer something more akin to a full-on cable bundle, albeit
likely at a higher price than the others-and notably, for now, without Walt Disney Co.'s
ESPN and ABC.
Apple is in talks with
several broadcasters to offer an online TV service this fall. WSJ's Shalini
Ramachandran explains on The News Hub. Photo: Apple
On top of all this,
consumers will have to factor in the cost of their broadband access. As a
reference point, one operator charges $67 a month for a speed of 25 megabits
per second once its first-year promotional discount ends.
Still,
the new streaming world has the potential to be "better for many consumers"
because it offers choice that the pay-TV industry never provided,
said Roger Lynch,chief executive of Dish's Sling TV streaming service. For
the "vast majority of all consumers, the pay-TV bundle offers good value. But
there's a growing number of consumers for whom that doesn't work anymore," he
said.
'The ice cube is melting'
-senior industry executive
Media giants have
their own calculations to make-quickly-as they prepare for a world that will
look very different in 12 months than it has for the past several decades.
For years, TV channel
owners and their pay-TV distributors-cable and satellite providers-were able to
count on two reliable trends: that pay-TV subscriptions in America would grow
each year, and that consumers would submit to paying ever-higher cable bills.
In the past two decades, the pay-TV industry has grown by about 40 million
subscribers to a total of about 100 million homes, and typical cable bills
increased at a compound average annual growth rate of about 6.1%, according to
the Federal Communications Commission. Those dynamics produced a steady stream
of subscription revenue that drove profits for Disney and Viacom Inc. just
as they did for DirecTV.
But evidence mounted
over the past couple of years that something fundamental was changing. In 2013,
the industry's base of subscribers contracted for the first time. Last year,
pay-TV subscriptions fell by 129,000 industrywide, according to
MoffettNathanson, even as analysts said new household formation surged,
typically a good sign for the industry in years past.
And
besides cutting the cord, more consumers started
"shaving" it, downgrading tocheaper
packages that operators began to offer. Comcast, for instance,
offers an "Internet Plus" package of HBO, fast broadband and local channels for
$40 a month, and AT&T has
been peddling a similar $49-a-month bundle that also includes Amazon.com Inc.'s
Prime free-shipping and streaming-video service for a year.
A mutiny was afoot,
threatening the pay-TV fortress. "The ice cube is melting," one senior industry
executive said. "It's a reality of the marketplace."
The TV advertising
business got a shock as ratings for major cable channels plunged, particularly
over the second half of last year. The Cabletelevision Advertising Bureau, an
industry trade group, recently told media executives that it estimates 40% of the
ratings decline was due to viewers migrating from traditional
television to subscription streaming services like Netflix.
"It was happening at
a pace no one was anticipating," said an executive at one big TV network. "We
said, 'We better start finding other ways to grow.' "
WSJ.D
WSJ.D is the Journal's home for tech
news, analysis and product reviews.
·
Apple
Is in Talks to Offer a Bundle of TV Networks This Fall
·
Nintendo
Opens the Door to Smartphone Games
·
Is Valued at $11 Billion After Its Latest Funding
·
Adds Humans to Review Apps, Launches Age Ratings
And
with that, media companies that for years had pooh-poohed cord-cutting was a
real threat, began to embrace it, albeit reluctantly. HBO, owned by Time Warner Inc., announced
its stand-alone Web streaming service in October, followed by CBS, while in the
background Dish and Sony assembled rights for their online TV bundles.
The goal for TV
channels is to carry out this experimentation while safeguarding the
traditional business to the extent possible. Virtually every TV network that
has launched a Web TV service says it hopes to target the roughly 10 million
homes that subscribe only to broadband service-without encouraging any current
pay-TV subscribers to drop their service.
But holding on to
pay-TV customers is getting harder. "We think there is going to be a continual
dripping, dripping, dripping of millennial consumers and poor consumers who
will be outside of the big bundle," said MoffettNathanson analyst Michael
Nathanson in an interview.
One
risk of the media companies' strategy is that by bringing TV channels to the
Web they aren't thinking far enough beyond their current business models. Their
real competition for young audiences in coming years will come from companies
likeFacebook, Vimeo
and Vessel that are attracting content creators from entirely outside the
pay-TV ecosystem, said Mr. Nathanson and his fellow analyst Craig Moffett.
"Our suspicion is
that the millennial cord cutter isn't waiting around for just the right package
of cable channels that only their parents watch," they wrote in a research note
Tuesday.
Not
every TV channel is assured a secure place in the emerging Web TV world,
analysts say. The small and midtier channel owners-companies like Discovery
CommunicationsInc., Viacom, Scripps Network Interactive, and
A+E Networks-will be jockeying to make sure their networks are in the online TV
bundles being marketed to the audience of the future.
Some are making
headway. Discovery, owner of Discovery Channel, Animal Planet and TLC, and Viacom,
owner of MTV, Comedy Central and Nickelodeon, are in talks to be on the Apple
service, people familiar with the matter said. Some A+E Networks channels will
be added to Sling TV's core package by the end of March, the companies
announced Tuesday.
Write to Keach
Hagey at Keach.Hagey@wsj.com and
Shalini Ramachandran atShalini.Ramachandran@wsj.com
This post was edited on 4/14 4:40 PM by Boiler20
This post was edited on 4/14 4:42 PM by Boiler20
Unbundling