As a mere child, I remember when the TV signal came through an antenna on the roof and there were a mere handful of channels. We watched TV commercials in return for free viewing. Cable was available, but a hard sell until it began to offer a couple of channels that you couldn’t get even with a very big antenna. I was only a couple of dollars per month. So began the slippery slope.
In the pre-broadband era, Pay TV grew into a booming industry thanks to new, premium channels and ad supported cable only channels. Broadcasters began demanding fees from cable companies for re transmitting their signal, and cable only channels grew in number and stated charging fees for their signals as well. Cable subscribers stated paying more to receive more channels and rate increases form cable providers became routine. There was a brief price war when satellite providers began offering competitive service, and the cable guys responded with digital upgrades and more channels. It wasn’t long before the satellite competitors became just another cable guy with high priced bundles of channels and routing price increases.
Fast forward to the present. Broadband is pervasive enough to deliver a decent video stream to most of us. The cable and satellite guys have pushed prices up to entry price of around $40/month in most locations. Online viewing is growing and business models ranging from ad supported to pay per view to subscription are all thriving. Thriving in fact a little too well for the old school pay TV operators.
The model of sites like Hulu that make catchup content available immediately isn’t benefiting the industry, he said, adding that broadcasters should instead reserve catchup episodes for authenticated TV Everywhere services, and only make them available freely after 30 days. “If people decide that they don’t have to pay for pay TV, then one of the pillars (of the TV industry) starts crumbling,” he said.
Greg Kampanis, SVP of Content Strategy and Operations for South Park Digital Studios had a more measured take on the issue. “We would rather be behind an authenticated wall,” he said, adding that the industry was simply too slow to roll out these models, and studios like his had to roll out their own, less restricted offerings. (GigaOM)
Consumers want on demand and a la carte channels. Content producers and distributors are making money catering to these wants online. While the cable and satellite guys ignored the consumers wishes, the marketplace did not when technology made it possible. There is no turning back, and the old guard knows it. Cable has a future as an internet provider. Satellite providers have a very short time to rework their businesses before it’s too late.
As for that local signal through an antenna? What’s old is new again. The transition to digital broadcast solved the tricky business of getting a clear picture. In fact, a small antenna usually delivers a nice, clean signal that is much better than the cable guys’ compressed version. Anyone in the broadcast area can receive it for free. The broadcasters make money selling commercials. Why would anyone wan to pay for it?
Sirius, the orbiting radio station in the sky has reached the end of its rope. Sirius has a $175m payment due on $3.2bn in notes and no way to pay it off. On a personal note this upsets me a little. Its a new play on a old business model but it had a future in my mind due to the breadth of channels it offered. –
The $3.25bn debt isn’t a surprise. Launching satellites is hugely expensive and long-term debt was part of the business plan. But that debt was expected to be serviceable thanks to the cheap credit that has now all but disappeared from the financial markets – leading to the collapse of the Sirius XM share price, which stood at 11.4 cents on Tuesday.
The credit crunch has also slowed sales of new cars, some of which are fitted with a Sirius XM radio on a revenue-sharing deal with the manufacturers. Even where people are buying new cars they are selecting their options with care – and satellite radio isn’t a priority.
Sirius XM has gained some listeners and has a big enough customer base to mean that bankruptcy won’t lead to dead air. After all, the satellites are already up there. But those customers were gained by recruiting star talent, at star-talent rates: $100m a year for Howard Stern over 5 years, $30m to Martha Stewart, and $55m to Oprah Winfrey’s Harpo Radio Inc. Bankruptcy would negate those deals, allowing Sirius XM to renegotiate or walk away, assuming their listeners would hang around for the ambiance.
NYT is also covering this story. They should take copious notes. That is their fate here in the near future.
It has been announced that starting the new year AT&T will sever its relationship with DirectTV. Best guesses are that AT&T will strike up a relationship with EchoStar. I just wonder which company as Echo has rumored to be splitting in two. –
AT&T Inc (T.N: Quote, Profile, Research) said on Tuesday it will stop selling satellite television services from DirecTV Group Inc DTV.O in the first quarter in a sign the phone company may favor EchoStar Communications Corp (DISH.O: Quote, Profile, Research) as its sole satellite partner.
Still, AT&T Chief Financial Officer Rick Lindner told Reuters separately that the company has not made a final decision on the matter and could take until the second half of 2008 to decide.
AT&T has a marketing partnership with EchoStar in some markets and with DirecTV in others, and the phone company is also expanding its own video service called U-verse, which is delivered over high-speed fiber optic cables.
The company said it would stop offering DirecTV’s services to phone customers in the first quarter, while its current agreement with EchoStar extends until the end of 2008.