Channel-based TV subscription to threaten cable packaging model
http://www.businessinsider.com/intel-cable-2013-1#ixzz2GkSFccYf
Pretty serious implications for the Big 10 Network?
Kelly Clay at Forbes reports Intel is going to blow up the cable industry with its own set-top box and an unbundled cable service.
Clay says Intel is planning to deliver cable content to any device with an Internet connection. And instead of having to pay $80 a month for two hundred channels you don't want, you'll be able to subscribe to specific channels of your choosing.
Here's the key paragraph:
This set-top box, said by industry insiders to be available to a limited beta of customers in March, will offer cable channels delivered “over the top” to televisions anywhere there is an Internet connection regardless of provider.
January 2nd, 2013 at 11:55 AM ^
I see that as less and less of a threat though as time goes on. If you have a decent smart phone app, a good website, and other methods to get your content out, you don't need them. Plus ESPN already plays favorites with conferences, so they benefit some more than others.
Also ESPN makes relatively little off the NFL (just MNF). Yet they still devote massive amounts of time to it because they know they'll get views due to the popularity of the sport. As long as you have the fanbase, ESPN will promote you for their own ratings numbers.
January 2nd, 2013 at 11:51 AM ^
And another $95 for all the other channels, to be a sports fan you have to pay $20 to the NFL, $20 the NBA, $20 to MLB, $20 to each college conference you want to follow, and $5.98 to the NHL. You're basically setting up a pay per view system. If Michigan is all you watch that's great, or if you only follow the Jags but don't care about other sports, but it rapidly gets to the point that you pay less, but you really restrict what you watch. And that's not even getting into networks with regular tv shows. It takes you from socialist supporting of stations that only a few people watch to the freedom of everyone having less.
January 2nd, 2013 at 12:05 PM ^
Personally I don't believe everyone will run around charging high rates, the market won't bear it. I'd argue what we'll see is something where you can have tiered access. For example at the highest tier maybe you don't get commercials, but instead analysis or highlights from other games, while the peons who only paid 99 centers to see this game get ads. Also perhaps ads at the bottom of the feed vs a status crawl, etc.
As smart phone apps have proven, free to play with ads (or in app purchases) or pricing it so low it qualifies as an impulse buy, generates more than a higher entry fee. I'm sure at least one league will be dumb enough to charge 15 dollars a game, but some intelligent league will figure out how to make money from almost everyone due to their competitive pricing. Once that model emerges, people will adopt it.
Edit: Also in your example, if you're a huge multisport fanatic you're possibly already paying for an upper tier package with things like NHL Center Ice, NFL Gameday, etc as features. So while yes having premium packages to multiple leagues might get pricey, the cable packages are pricey already.
January 2nd, 2013 at 12:47 PM ^
So, the NHL, right?
January 2nd, 2013 at 3:04 PM ^
Right now, they just say, ESPN (MNF), Fox, CBS, and NBC (SNF) pay us a ton of money for the right to broadcast the game. Also, pay for the production, marketing, get the sponsors, deal with cable & infrastructure...
There is no reason they put that guaranteed revenue (with minimal cost) at risk to maybe make more money streaming games. In that world, who actually takes the video, has the servers to stream games, gets sponors and ads for commercial breaks...? The NFL has no incentive to go straight to the consumer.
They also need ESPN to generate all of this Tebow hype that sadly gets people to watch on TV.
January 2nd, 2013 at 5:18 PM ^
I think the reason that they would consider doing it is that, taking my personal case, the current model of forcing me to buy many more channels than I want is effectively pricing me out of the market. Ideally I would spend about $30/month if I could get what I want (local news, MI football and basketball, Tigers baseball, and Lions football(maybe). Give me enough of that, and I will pay $30/month. If $30/month will get me a good portion of what I want, I will pay it. If not, I will not pay. By not offering an a la carte option that suits me, ESPN, BTN, and whomever are leaving $30/month on the table so that they can keep gouging an ever dwindling cable subscriber base for content that in many cases is not wanted. Continued revenue growth is going to require that a la carte offerings are explored as more and more people cut the cord because they simply cannot afford, or justify budgetarily, the always increasing subscription prices for cable and satellite television.
January 2nd, 2013 at 10:37 PM ^
January 2nd, 2013 at 6:34 PM ^
You're insane if you think the NFL would charge $5 a game for their content. ESPN pays $1B+ for a season of games. It would be much closer to $20+ per game and maybe more. I mean, if they are going to charge $50+ for you to watch in person, do you really think they'd offer everyone a cop out to watch for $5 at home? And every year it would go up. So, then in 5 years, we'd be back here bitching about how we now have to pay $40 to watch a single NFL game at home and we'd be longing for the days when we could get them for much cheaper as part of a bundle of cable channels.
January 2nd, 2013 at 11:29 AM ^
Disney (ESPN) is not going to agree to sell content in this fashion. They make too much money as it is, getting $$ for each subscriber, whether that person watches ESPN or not, and $$ for each Internet subscriber (WatchESPN) whether that person uses WatchESPN or not.
And if Disney did agree to sell the content a la carte, it will charge a heckuva lot more than $5/month for us to watch.
January 2nd, 2013 at 11:31 AM ^
The only thing wrong with this model is that you will need a heck of a lot of bandwidth to be able to watch one program in HD and record four other shows at the same time, which some of the satellite services are offering. Even watching one show and recording another may be impossible unless you have solid internet service.
I get 50 MBPSa where I am, and could get higher speeds if I wanted to pay for higher speeds, but even at 50 we pay close to 100/month. When it is all said and done, I wonder just how much of a savings there will be.
January 2nd, 2013 at 11:38 AM ^
Why would you need to record anything? If this model is done correctly you'll just pull the shows in serial off some server somewhere. The only time your connection will die is when you pull 1080p sports while someone else in your household is trying to pull 1080p Law and Order.
January 2nd, 2013 at 12:04 PM ^
That is a valid point re being able to pull shows off a server, but equally valid is that while I go through endless hours of watching football, my wife will often watch something else.
January 2nd, 2013 at 12:09 PM ^
You need 4 to 7 mbps per 1080p streaming. I have 18 mpbs via UVerse DSL for 38 a month. As ISPs improve their infrastructure and things like FIOS, UVerse, and Google Fiber expand, this becomes less of an issue. Plus if Comcast isn't serving up as much TV content, they can use more of that copper for TCP/IP.
January 2nd, 2013 at 11:42 AM ^
I don't think you understand the internet/this model. You wouldn't be downloading five shows at once, all shows would be stored "in the cloud." So you would only ever be streaming one show per tv.
January 2nd, 2013 at 12:12 PM ^
I guess I am thinking more theoretically than practically, as I don't know how this would work from a technology or financial standpoint, but why can't all non-live content be viewed/streamed immediately on demand? Couldn't the product be delivered in a fashion where we don't have to DVR it? For instance, instead of "Homeland" or "The League" airing at X:XX PM on X-Day, why not make it available for streaming at that time? You can click to watch it any point from there on after. No need to DVR, and providers can actually control pause/FF functions and force you to watch commercials (like they do now with some On Demand content). The only exception to this would be live content.
I agree that it doesn't seem like people would save much in the long-run. However, I just hope this is a step in the right direction for delivering media. The model just seems so dated with the technology that is available to most Americans.
January 2nd, 2013 at 11:32 AM ^
This model is going to have problems since you still need a broadband Internet connection... which probably comes from the cable company. So that's at least another $40-50/month before you've bought any channels... and if it's really a threat, the cable companies will change their pricing model to make Internet-only more expensive.
In the end, the wire in the ground will remain important and interfere with plans to change the model.
January 2nd, 2013 at 12:39 PM ^
A few years back, Google purchased a company that provided broadband-over-powerlines. Google already provides the hardware, but many electric companies haven't figured out that this is a major opportunity to squeeze cable/phone companies and get new revenue $ in an era of declining/regulated margins for providng electricity.
Google has enough cash that they could - if they wanted to - buy an electric utility as a technology/service demonstrator. They haven't done it yet, but the possibilit is certainly there.
Many companies - Dow Chemical is one - already use broadband-over-powerlines at their facilities. It's cheap, available, and the infrastructure is already paid for. The speed is also reasonable.
January 2nd, 2013 at 11:35 AM ^
Disney, for instance, charges TV distributors about $5 for every subscriber that gets ESPN. And, by some estimates, only about 25 percent of cable customers actually watch ESPN on a regular basis. So if you unbundled ESPN, the per-subscriber cost might shoot up to $20 or more, to account for the 75 percent drop in its customer base.
January 2nd, 2013 at 12:04 PM ^
I don't think Disney would actually be able to charge $20 for ESPN. Only 25% of cable subscribers watch it as is, and quite a few of those people would easily give it up if they had to pay $20 a month go get it. In an alacarte model, the channels would have to lower their rates to a price viewers are willing to pay instead of spending it on a cheaper channel.
January 2nd, 2013 at 2:24 PM ^
January 2nd, 2013 at 3:34 PM ^
I'm sure they'll fight it, but I think it'll go the same way the fight has gone when the music and movie industries tried to protect their old business models. If the music industry had there way, we'd still be paying $20 for a CD to get that one song we heard on the radio, but eventually enough unsanctioned methods for getting the songs popped up that it was better to make the songs available online than to try to fight it forever and miss out on that potential revenue stream, even if it wasn't as profitable as CDs. Movies and television are slightly behind but heading in the same direction. Once the only thing tying people to cable is live sports, you can bet the illegal streaming sites will become very popular to the point those in charge can no longer fight them and start steaming for a fee. And similar to legal music services being worth the fee for most people to avoid the mess of pirating a song, people will pay a *reasonable* fee for an easy legit stream and avoiding the mess that are illegal streaming sites.
January 4th, 2013 at 2:32 AM ^
http://www.fool.com/investing/general/2013/01/03/the-intel-tv-will-have…
The negotiations with content providers aren't going well.
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The problem with mapping the music industry's evolution onto video are fourfold:
1. Bandwidth for streaming versus cable isn't yet at the practical point. How much do you pay for a connection capable of on-demand 1080p streaming?
2. Content isn't readily available, particularly for live sports. It's one thing to rip a CD and upload it for anyone to download. It's quite another to swipe a live feed and stream it to the Internet. When your average tech-savvy adult can do the latter, then the argument might hold.
3. The movie/TV industry are considerably more proactive than their music brethern. They have simultaneously licensed content to Hulu, NetFlix, etc., provided certain content on their own sites, started selling digital copies with physical media *and* engaged with lawmakers to shut down certain avenues of distribution. This gives at least the illusion of progress(A).
4. Napster and others were widespread enough that trying to go after the people running the illegal sites was largely Sisyphusian. This is sort of the case with torrent-able content today ... except that it still takes a fair amount of work, equipment, bandwidth and savvy to upload even an episode of Hogan's Heroes for others to download. Someone setting up Napster-for-live-sports could and would get hammered for piracy.
All of which is to say that while content-providers control the bandwidth needed to obsolete their current business practices, they can continue to do business the way they want. When you can get bandwidth and content without going through them (IP-over-power-lines and more content produced for the Internet, say), then this revolution will take off. Until then ...
A. In many ways it is actually progress - the movie industry has an advantage over the music industry, which is that the content people want isn't available from someone else. You can get music you like from the artists themselves, but you can't go to your favorite actor/director/screenwriter and buy a movie. The movie industry makes movies; the music industry markets music. For now, anyway, Felicia Day's The Guild not withstanding. (And even that is a major effort by a minor studio - in many ways, it really is just TV-over-the-web, with a more focused appeal to a specific market segment.)
January 2nd, 2013 at 11:36 AM ^
I know that one of the things that Intel toyed with initially was trying to go with smaller bundles to deal with the issue of bundled services, but the issue became that many of those small bundles would not have included the major forces in the current cable structure (e.g., no Disney or ESPN or movie programming and so on). It's also problematic that a lot of the provider-channel deals tend to be long-term ones, I believe, so there's also this to consider.
The revenue model would need to change, I think, for this to work at a cost savings. For example, as the article notes, if millions of ESPN subscribers chose to no longer have the channel, the fees go up and those who still have the channel would see the increase. Behind the scenes, ESPN could always go to the major sports and ask for a decrease in the fees for the broadcast rights, but I don't see that as something the NFL or MLB would even consider at the moment. That doesn't mean that this will never change, but it could be a while.
This being said, it's an awesome technology, in my opinion, and I would be on board with it if I could get programming - sports, family, movies, etc... - that we watch routinely at the house.
January 2nd, 2013 at 11:37 AM ^
the Swamp Lockers Pawn Shop Housewives?
January 2nd, 2013 at 11:43 AM ^
get the money in the end. I give it a year or two and no matter how good or bad the product they will get in line with what people are currently paying or go up slightly because... "oh its easier and a much better way to watch TV" IMO. Just sayin "$$ rules consumers lose".
January 2nd, 2013 at 11:53 AM ^
That article in Forbes leaves a lot of unanswered questions that the reporter didn't seem interested in asking. The key question is, how exactly does Intel think they're going to get content providers to grant access to their programming? The article mentions Intel working Hollywood, which, ok. But what about Bristol, CT (ESPN) or Atlanta (Turner properties) or Chicago (BTN)?
The sports premium is driving the cable bill bloat. If you take everything but sports away from cable, then Comcast become a pure sports play, which is probably not sustainable.
There's too much to speculate on here to know what the hell the Intel play means.
January 2nd, 2013 at 12:04 PM ^
somehow this seems to perfect
January 2nd, 2013 at 12:26 PM ^
I have never had cable TV, but have been fortunate to be in a market where I receive major networks (CBS, NBC, ABC, WGN, PBS, FOX) via an old fashioned antenna. I'd consider buying some cable . . . perhaps ESPN & BTN, & maybe the History Channel. However, there is no such thing as a free lunch. I really wonder how the pricing will work. More specifically, I suspect that some channels will cost a lot more than others . . . that it will cost me more for ESPN & BTN than it would for the Shopping Network or the like.
January 2nd, 2013 at 11:09 PM ^
The History Channel is no longer what you think it is.
Currently airing for the next five hours: American Restoration
Tomorrow gives you nine hours of "UFO Files" followed by "Secret Access: UFOs on the Record" followed by two hours of Pawn Stars.
Yeah, the History Channel is exactly what's wrong with bundling.
(FYI: History Channel 2 is more like your daddy's history channel)
January 2nd, 2013 at 1:16 PM ^
From the postings, it seems that the technology is here or wil be very soon but there is doubt about whether the business infrastructure is there to take advantage of it. Especially given the basic conservatism of the major content providers (pro and college football) - what incentive is there to move away from a model which is in their eyes predictable and so far incredibly lucrative? For the NCAA and college football conferences, there is also the impending true football playoffs for Div. 1 in a few years - another reason why the forces of standing pat might advocate doing nothing new and seeing how that works first - if that is a huge financial bonanaza it brings back the same point - why tinker with something that is working great?
Like a lot of new tech, the first users will have to be a bit more daring and a risk taker. The comedian Lous CK took such a chance with direct funding and promotion/distribution. http://www.huffingtonpost.com/2012/03/22/louis-ck-video_n_1370516.html
So, it might take a second or third tier sport or one which has a strong internet niche following - e.g. the people who follow EPL in the USA, or world class rugby or cricket (I know these barely register on the sports radar here but that is the point) the USA market is such that even a small fan base could be profitable.
The flip side hasn't been mentioned that such a system would allow easier and wider dissemination of US based sports around the world - something the NBA and NFL have long had an interest. The college game probably won't appeal to most except the most diehard world wide diehard football fans - but they do exist.
For now, suspect the deals based on the old cable model will be OK for a few more years, but once someone takes a chance, the direct stream of revenue and the flexibility will be irresistible to the leagues.