Netflix consumers continue to trend away from conventional TV......

[Mizzou B-ball fan]

Sign of the times. Consumers are going to look more and more for good providers to give better streaming bandwidth and options.

Netflix Helps People Cut Cable Cord, Report Says - Yahoo! Finance (http://finance.yahoo.com/news/Netflix-Helps-People-Cut-nytimes-2234935892.html?x=0&.v=1)

[cougarfreak]

If I could get my local mlb team on mlbtv, I'd cut the cord in a heartbeat.

[Matthean]

Sports is one of the few things that hasn't moved online in a way for people to ditch cable. Thankfully ESPN3 covers most of what I watch in sports. I haven't ever had cable when I lived on my own and I can't say I miss it from when I lived with my parents.

[CrimsonFox]

I am finding several full episodes of shows on the particular network's websites. HOw they do it is they stream the show and wedge in commercials. Unfortunately they are the same commercials over and over again. And after a time it jump to a special commercial that requires you to click CONTINUE to go on. But anyway I'm glad I'm finding the shows at least. The reality ones in particular as they were often not rerun ever so if I missed one before I was boned.

[RainMaker]

I'm also in the camp of only using my cable for sports these days. Have a friend who dropped his for Netflix a year ago and hasn't looked back.

[SackAttack]

I keep telling the cable company when they call and try to get me to sign up that I'd cheerfully go for some kind of à la carte package around $20, but I'm not interested in signing up for 500 channels for $45/month when I doubt if I'd watch more than 5 of them.

[gstelmack]

If I could get my local mlb team on mlbtv, I'd cut the cord in a heartbeat.

OTA antenna won't handle that for you? That's how I watch the NFL, minus the ESPN Monday night and NFL Network Thursday night games. And those aren't worth the arm-and-a-leg the cableco wanted to charge for TV.

[gstelmack]

I keep telling the cable company when they call and try to get me to sign up that I'd cheerfully go for some kind of à la carte package around $20, but I'm not interested in signing up for 500 channels for $45/month when I doubt if I'd watch more than 5 of them.

Add in digital cable and a pair of DVRs and that's more like $70+/month.

[Antmeister]

Heh. Hulu, Vudu, Netflix (essentially using a Roku and the PS3) and an antenna to pick up digital TV are the reasons why we have completely moved away from cable.

We tried to go back to cable to watch the NFL a couple of years ago, but we found we barely watched it due to the fact that we hated having to be rooted to time slots to watch shows or wait until they were recorded on the DVR, and in either case we could no longer tolerate the slew of commercials.

[mckerney]

OTA antenna won't handle that for you? That's how I watch the NFL, minus the ESPN Monday night and NFL Network Thursday night games. And those aren't worth the arm-and-a-leg the cableco wanted to charge for TV.

Not many games on OTA broadcast here, I think with the exception of Sunday afternoon games and the occasional Fox national game all the games are on Fox Sports.

[Autumn]

We had hoped to get by with the antenna here, but we get lousy reception in this town. Occasionally we can get one or two channels to come in, but not consistently enough to be worth using. We just use Netflix and online stuff. If we could get a couple local stations we'd be perfect, really.

[lordscarlet]

OTA antenna won't handle that for you? That's how I watch the NFL, minus the ESPN Monday night and NFL Network Thursday night games. And those aren't worth the arm-and-a-leg the cableco wanted to charge for TV.

Not many games on OTA broadcast here, I think with the exception of Sunday afternoon games and the occasional Fox national game all the games are on Fox Sports.

Yep, here the games are on SOME Sunday afternoons on WB50 (for the Nationals) and the rest are on MASN or MASN2, which requires cable.

For the record, I have been using solely OTA for about six years now. With the exception of some sporting events, and GoT, I have never missed cable. For the sporting events if I really want to see it I can go to a bar, for GoT I have been able to go to a friend's house to watch it.

[JonInMiddleGA]

So lemme see here

-- The survey was limited to broadband users (about 2/3rds of the U.S.)
-- 1/3rd of those now say they're considering reducing/cutting their cable svc
-- 1/3rd of that 1/3rd cited online video as a motivating factor
-- 2/3rds of that 1/3rd of that 1/3rd mentioned Netflix

So 2/3rds of h'holds (the latest estimate for broadband penetration I find)
Then 1/3rd of those, .33 x .67 = .22
Then 1/3rd of those .33 x .22 =.073
Then 2/3rds of those .67 x .073 = .0488

So basically Netflix is a "primary perpetrator" for about 5% of those who currently have an internet connection in the home.

Wanna take any bets on how many of those actually do it?

[PilotMan]

Well let's look at it more like this.

Instead of thinking in terms of the whole of the US. Let's look at it as a factor of broadband customers. Doing the math we find that about 7.3% of broadband households are considering cutting cable service as a direct result of Netflix.

As the head of a cable company, the fact that any one item is responsible for this much company turnover should be rather alarming. Especially, when we are already dealing with 33% of our entire sales base that is considering cutting ties. Are profit margins and sales bases so strong that it can be ignored?

[JonInMiddleGA]

Well let's look at it more like this.

Instead of thinking in terms of the whole of the US. Let's look at it as a factor of broadband customers. Doing the math we find that about 7.3% of broadband households are considering cutting cable service as a direct result of Netflix.

As the head of a cable company, the fact that any one item is responsible for this much company turnover should be rather alarming. Especially, when we are already dealing with 33% of our entire sales base that is considering cutting ties. Are profit margins and sales bases so strong that it can be ignored?

As for "direct result", that's stretching the findings of the report. It was simply a "primary perpetrator" from the relatively small subset that mentioned online video as a factor initially.

Meanwhile, I've been "thinking about it" for years, as has most every cable customer I've ever known.

Extreme pricing + shitty programs (as perpetually perceived by the buying public, regardless of ratings) are exponentially bigger concerns for the cable industry.

[wade moore]

Meanwhile, I've been "thinking about it" for years, as has most every cable customer I've ever known.

This.

As recently as last week I was looking into it. But, I'm SO far away from where the channels broadcast from and I need ESPN, etc that it just isn't going to happen.

[Logan]

Cable company has me by the balls because of sports. Wish it wasn't like that, but at least I admit it.

Right now it's not an issue with having roommates to split up our astronomical cable/internet bill, but a few months from now it'll be me and the girl so I'll finally make some cuts to save a few bucks.

[PilotMan]

As for "direct result", that's stretching the findings of the report. It was simply a "primary perpetrator" from the relatively small subset that mentioned online video as a factor initially.

Alright, I'll buy that, but Netflix is still at the cusp of the entertainment change that we are seeing. I haven't had cable in almost 9 years. I only recently signed up for broadband and have been using Netflix, Hulu, MLB TV and ESPN 3 along with our free channels for viewing entertainment. I can't say I'm missing all that much.

I think that we are in the process of a major change, until the production companies start their own distribution systems and cut out Netflix altogether, which seems inevitable at some point. Netflix may not be the next big thing, but it is certainly going to be a stepping stone in the overall evolution of our entertainment choices.

[Mizzou B-ball fan]

I have Netflix now and only really use TV for sports. When Google TV comes through (supposed to be in our area next year), I'm out.

[tarcone]

Why dont cable and sat companies do an ala carte menu?
I would think they have the technology or capabilities. It may be somewhat of a cost to start, but If you charged a couple bucks to 5 bucks a month for a station or a maybe a small package of stations (3,4,5 stations), you could make a killing.

I would sign up for a package of sports stations so I could watch the Cards and college football.

[Galaxy]

Cable company has me by the balls because of sports. Wish it wasn't like that, but at least I admit it.

Right now it's not an issue with having roommates to split up our astronomical cable/internet bill, but a few months from now it'll be me and the girl so I'll finally make some cuts to save a few bucks.

At least you can get NHL Center Ice online.

[JediKooter]

Why dont cable and sat companies do an ala carte menu?
I would think they have the technology or capabilities. It may be somewhat of a cost to start, but If you charged a couple bucks to 5 bucks a month for a station or a maybe a small package of stations (3,4,5 stations), you could make a killing.

I would sign up for a package of sports stations so I could watch the Cards and college football.

Apparently, this will cost even more for the customer since the model for cable providers is packaged deals from the networks and other content providers. I don't know if this is just what the cable providers are shoveling or if there is actual data to back that up.

Personally, I'd be willing to pay a dollar for non local channels and a dollar fifty for a premium channel and only then if they are in HD. At most, I'd have maybe 25 to 30 channels that I'd watch on a regular basis.

The only reason why I haven't completely dropped cable (well DirecTV in my case) is because of sports and because channels like History, SciFy, Discovery, and other similar channels aren't available anywhere else or are extremely limited as to what is online. I don't watch network channels unless it's sports, so I'm not missing anything like American Idol or other crap shows like that.

[SirFozzie]

Cable companies force bundling on us because the networks force bundling on them.. "Sure you can have ESPN and ESPN2 on your cable network, as long as you pay us for ESPNU, ESPN Classic, ESPN News and ESPN Deportes at the same time! Oh, and any other ESPN networks we might pull out of our ass going forward"

[RainMaker]

Cable companies force bundling on us because the networks force bundling on them.. "Sure you can have ESPN and ESPN2 on your cable network, as long as you pay us for ESPNU, ESPN Classic, ESPN News and ESPN Deportes at the same time! Oh, and any other ESPN networks we might pull out of our ass going forward"
What's even worse are the new sports channels. If you want that one or two games a year you might want to watch on our network, you'll have to bug the shit out of your cable company for not giving it to you.

[gstelmack]

Sports is one of the things I had to let go of when I cut the cord, because it just wasn't worth that much per month to me. I just finally told myself that if the sports want to be that restrictive about who can watch them, they must not want me as a viewer much. I think both sides are okay with that arrangement so far.

[spleen1015]

I can't get away from cable for some of the same reasons as you guys. I won't be able to watch Sports and most of the shows I like to watch are on cable stations. I don't think I can wait for them to hit Netflix.

[JonInMiddleGA]

Cable companies force bundling on us because the networks force bundling on them.. "Sure you can have ESPN and ESPN2 on your cable network, as long as you pay us for ESPNU, ESPN Classic, ESPN News and ESPN Deportes at the same time! Oh, and any other ESPN networks we might pull out of our ass going forward"

Because bundling is the only way those networks can make it work. Using ESPN as a handy example here, without all the barely watched networks they can't offer 5 (or 100 or 200) extra commercials on those in order to make the often outrageous price of prime programming on the main network viable for advertisers. Lose ad revenue (and without all the "bonus" spots they surely would) then the cost per network to the cable systems goes up to make up the difference.

Ultimately the money needed for the ESPN family isn't that much different whether U, Classic, and News exist or not. They just provide an additional revenue opportunity, the vast bulk of their expenses are tied up in the main network & without bundling, that'd be the only one (along with E2 at this point) that would remain but at a higher price back to the systems.

[RainMaker]

I'm one of the few people who doesn't think cable is horribly priced. I mean for less than $100 a month, I can get hundreds of channels 24/7 with hundreds of new content all the while being able to record shows and watch them at any time.

Take your wife to the movies for 2 hours and you'll probably drop $30-$40. Go to a ballgame and you're likely talking well over $100.

[JediKooter]

On a side note, DirecTV is offering free NFL Sunday Ticket. Part of me thinks they are betting there will be no season.

[johnnyshaka]

My wife would love to get rid of digital cable, too...but my addiction to sports is a tough one to break. Funny thing is I don't have much time to watch all the games I want to watch and while I PVR a bunch of games I rarely end up watching even 25% of the games so I end up just deleting most of them without watching to make room for more games that I likely won't be able to watch.

Hi, my name is Johnnyshaka and I have sports addiction.

[Logan]

At least you can get NHL Center Ice online.

Aren't local games still blacked out?

[gstelmack]

I'm one of the few people who doesn't think cable is horribly priced. I mean for less than $100 a month, I can get hundreds of channels 24/7 with hundreds of new content all the while being able to record shows and watch them at any time.

Take your wife to the movies for 2 hours and you'll probably drop $30-$40. Go to a ballgame and you're likely talking well over $100.

If you watch it all. And if you don't consider the ballgame and movies horribly overpriced as well ;)

Keep in mind that a good chunk of what you mention above IS available. The shows my kids watched on Disney and Nickelodeon and PBS are nearly all available on Netflix instant streaming with no commercials. We buy seasons of Mythbusters from Amazon. We have lost the Food Network and cable-only sports, and gained about $70/month for other things.

[CrimsonFox]

The only reason why I haven't completely dropped cable (well DirecTV in my case) is because of sports and because channels like History, SciFy, Discovery, and other similar channels aren't available anywhere else or are extremely limited as to what is online. I don't watch network channels unless it's sports, so I'm not missing anything like American Idol or other crap shows like that.

This is why I like directtv too. The dvr and all the great channels. I haven't found anything online. THen again the problem with that many channels and show is I end up watching repeats a lot anyway so maybe it's for the best that I don't have it anymore.

[Swaggs]

Good thread and discussion here.

I wonder if cable/sat TV (as we know it) will be one of the bigger casualties of this down economic cycle? It seems like a lot of folks have cut back due to finances and then realized that they don't really miss it all that much.

Right now, with a young child at home, we spend a lot more evening time at home than we did before we had him (don't go to spur of the moment movies or to see live bands play, go out with friends to bars/clubs, etc.), so we are probably getting more use out of cable than most since we are essentially home 99% of the time while he is sleeping (from 8:30 on-ish). I can see that changing in a few years, though.

[RainMaker]

If you watch it all. And if you don't consider the ballgame and movies horribly overpriced as well ;)

Keep in mind that a good chunk of what you mention above IS available. The shows my kids watched on Disney and Nickelodeon and PBS are nearly all available on Netflix instant streaming with no commercials. We buy seasons of Mythbusters from Amazon. We have lost the Food Network and cable-only sports, and gained about $70/month for other things.
I agree. It's definitely not a must in my life, but it's a nice luxury. I'd rather cut other areas of my life before cable. I got to watch NBA TV air old drafts all day yesterday as I cleaned my house.

I'd love to see major sports start offering up their league passes on XBox, Roku, and other streaming devices without blackout restrictions.

On a side note, I have to imagine that premium channels are getting hammered by Netflix. I like the shows they put on occassionally, but I can wait for the DVDs. The 24 hour movie channel is almost a waste nowadays.

[JediKooter]

I'd love to see major sports start offering up their league passes on XBox, Roku, and other streaming devices without blackout restrictions.

I believe MLB and the NBA now offer exactly that on the Apple TV. I was at my friends house this past saturday and he pulled up the MLB on what I'm pretty sure was his Apple TV. We watched any game that was on at the time. You could even choose between if you wanted to watch the home or visitor broadcast. There were no blackout restrictions at all. And the kicker? No commercials.

[JonInMiddleGA]

I believe MLB and the NBA now offer exactly that on the Apple TV. I was at my friends house this past saturday and he pulled up the MLB on what I'm pretty sure was his Apple TV. We watched any game that was on at the time. You could even choose between if you wanted to watch the home or visitor broadcast. There were no blackout restrictions at all. And the kicker? No commercials.

According to both mlb & apple tv, blackout restrictions do apply & the service is only available to mlb TV premium subscribers.

It's also only available on second-gen (I think they called it the "black Apple" or something like that) systems.

[Antmeister]

According to both mlb & apple tv, blackout restrictions do apply & the service is only available to mlb TV premium subscribers.

It's also only available on second-gen (I think they called it the "black Apple" or something like that) systems.

Yeah, something tells me he was using a proxy server so he could get those games.

[RainMaker]

The blackout thing is what gets me.

[JediKooter]

According to both mlb & apple tv, blackout restrictions do apply & the service is only available to mlb TV premium subscribers.

It's also only available on second-gen (I think they called it the "black Apple" or something like that) systems.

I didn't even ask him about his set up. Since we are both from San Diego, he was telling me that he's been watching the Padres a lot. So, maybe there's not much in the way of blackouts for watching Padres games in the Bay Area?

[tarcone]

I get the bundling and that makes sense. Would it be financially sound for ESPN to bundle their channels make them instant streaming available for, say$20, a month? Then allow companies to sponsor them or have commercials?

I would pay that to watch college football all Fall and Winter.

We got rid of Directv and we havent missed it. But college football is coming. And Im starting to get sweaty palms thinking I wont get my 20 games a week. Although, like others I would watch 10% of them. But just knowing I can sit down Thursday night and tune into a game is a nice feeling. :)

[Logan]

I agree. It's definitely not a must in my life, but it's a nice luxury. I'd rather cut other areas of my life before cable. I got to watch NBA TV air old drafts all day yesterday as I cleaned my house.

I'd love to see major sports start offering up their league passes on XBox, Roku, and other streaming devices without blackout restrictions.

I assume this would be a game changer. I'd have to workout all the numbers to see what I'm actually paying for my sports-addicted reason for sticking with cable. Top of my head though, I'm sure that even with adding in whatever streaming costs for all the free/basic services, I could pay $50/month on an annual basis for the MLB and NHL packages via streaming and still come out WAY ahead. Those packages looked like they cost about $400 combined this year, so that's an extra $200 going to the content provider.

[Suicane75]

I firmly believe that the day the major sports make their product available via streaming/online, the cable companies and dish networks will have their viability cut enormously. If I could watch Football online in the same capacity I can on Cable I'd be done with cable forever.

[JonInMiddleGA]

I get the bundling and that makes sense. Would it be financially sound for ESPN to bundle their channels make them instant streaming available for, say$20, a month? Then allow companies to sponsor them or have commercials?

Almost certainly not. Generally the value of web-based commercials is fractional vs TV so there's one huge mark against it.

[RainMaker]

Cable companies will just start throttling internet and lowering caps. They've slowly started to do this and it will get worse soon.

[panerd]

On a side note, DirecTV is offering free NFL Sunday Ticket. Part of me thinks they are betting there will be no season.

For new customers or current? It has always been that way for new but as a current customer it looks like they are about to rake me over the coals for another $300+ this season. Why I don't just start following the Rams is beyond me. Would love to hear this is true but nothing on their website or elsewhere on the web confirms this.

As far as the main discussion goes I think we are missing that almost all of the internet providers are generally part of the cable tv game. I would expect the minute they do start offering a la carte is also the minute the internet prices go through the roof.

[cougarfreak]

OTA antenna won't handle that for you? That's how I watch the NFL, minus the ESPN Monday night and NFL Network Thursday night games. And those aren't worth the arm-and-a-leg the cableco wanted to charge for TV.


Nope, baseball for me. None of the Reds games are OTA. If they ever make MLBTV available in market, I'm gone from directv.

[JonInMiddleGA]

For new customers or current? It has always been that way for new but as a current customer it looks like they are about to rake me over the coals for another $300+ this season. Why I don't just start following the Rams is beyond me. Would love to hear this is true but nothing on their website or elsewhere on the web confirms this.

New subscribers, 2 yr min. agreement for Choice Ultimate ($71/m) or Direct Premier ($115/m) only. And of course, “To the extent that there is a 2011 NFL season...

Free NFL Sunday Ticket | Satellite TV (http://www.dish-television.com/2011/05/29/free-nfl-sunday-ticket/)

[JediKooter]

For new customers or current? It has always been that way for new but as a current customer it looks like they are about to rake me over the coals for another $300+ this season. Why I don't just start following the Rams is beyond me. Would love to hear this is true but nothing on their website or elsewhere on the web confirms this.

As far as the main discussion goes I think we are missing that almost all of the internet providers are generally part of the cable tv game. I would expect the minute they do start offering a la carte is also the minute the internet prices go through the roof.

Great, now I can't find the email. I assumed it was for anyone that had one of the top tier packages or ordered one of the top tiered packages. But, since I now can't find the email, I have no idea.

Looks Jon found some info on it though.

[Mizzou B-ball fan]

On a side note, I have to imagine that premium channels are getting hammered by Netflix. I like the shows they put on occassionally, but I can wait for the DVDs. The 24 hour movie channel is almost a waste nowadays.

HBO has addressed much of that issue with their online service and on-demand channels. I use those two options 90% of the time I'm watching HBO. I don't use the conventional channels much at all anymore.

[lungs]

Just call in and threaten to cancel NFL Ticket. DirecTV can be chiseled down when it comes to that. Though I do have about the most expensive package they offer so I always have the downgrade threat in my back pocket.

[Daimyo]

I'd love to see major sports start offering up their league passes on XBox, Roku, and other streaming devices without blackout restrictions.
Last year DirectTV made the NFL Sunday Ticket package available online for people who can't get DirectTV (you have check a box saying you can't get direct tv at your location). It was expensive as they basically charge the same rate they charge their subscribers ($300 or 400).

They had an excellent iPhone and iPad app and the expectation is they will also have an Apple TV app for this coming season. I purchased it last year, and watched mostly via my iPad hooked up to my TV, and it was really, really nice.

[Terps]

NetFlix, Hulu, etc. don't have enough streaming content of current shows for me to ditch cable yet. I would like to though.

[gstelmack]

NetFlix, Hulu, etc. don't have enough streaming content of current shows for me to ditch cable yet. I would like to though.

Which shows? Check something like Amazon. I pay for the current shows I want (Mythbusters and Castle, although I could record Castle off my antenna in Windows Media Center if I wanted to deal with commercials and having to automatically catch time shifting), but in other cases I'm catching up on old shows while waiting for the new ones to hit Netflix.

[Mizzou B-ball fan]

Which shows? Check something like Amazon. I pay for the current shows I want (Mythbusters and Castle, although I could record Castle off my antenna in Windows Media Center if I wanted to deal with commercials and having to automatically catch time shifting), but in other cases I'm catching up on old shows while waiting for the new ones to hit Netflix.

Mythbusters is on Netflix now, no?

[gstelmack]

Mythbusters is on Netflix now, no?

Old Mythbusters has been on Netflix streaming for quite some time, but basically just some old DVD collections which aren't complete. We've watched those and keep them in the queue, but are buying new seasons to watch them in full HD. You know, what the cable company doesn't want me doing, getting my TV a la carte ;)

(I know, it's more complicated than that, but hey if I can pay $1.89 / episode for 24 episodes during the year for it, and another $.89 / episode for 24 episodes of Castle, each commercial-free, as the only two TV shows I think are worth paying separately for that aren't available on streaming, that's cheaper than playing the traditional pay TV game the cable and satellite companies want me to pay).

[Mizzou B-ball fan]

Old Mythbusters has been on Netflix streaming for quite some time, but basically just some old DVD collections which aren't complete. We've watched those and keep them in the queue, but are buying new seasons to watch them in full HD. You know, what the cable company doesn't want me doing, getting my TV a la carte ;)

(I know, it's more complicated than that, but hey if I can pay $1.89 / episode for 24 episodes during the year for it, and another $.89 / episode for 24 episodes of Castle, each commercial-free, as the only two TV shows I think are worth paying separately for that aren't available on streaming, that's cheaper than playing the traditional pay TV game the cable and satellite companies want me to pay).

Got it. I would note that the TV episodes seem to be coming a lot quicker of late. I've seen a lot of new episodes added where they were really slow to add them before.

[lordscarlet]

I watch too many shows to get them individually from somewhere like Amazon, but my TiVo works great for recording OTA HD content. Yes, I have to fast forward through commercials, but the bang for my buck is excellent and I can deal with that annoyance. If I really cared I would use the easter egg to skip 30s at a time.

[JonInMiddleGA]

You know, what the cable company doesn't want me doing, getting my TV a la carte ;)

Much as I dislike cable companies, pretty much everyone in the process wants you paying for it the way it is now, since that's what helps fund the entire process.

The number of people willing to pay piecemeal isn't sufficient to fund very much programming, but everytime someone does, it devalues the programs to existing networks ... which in turn reduces the amount of money available to fund the production of programming (and the salaries of everyone involved and so on down the line).

Don't get me wrong, whatever floats your boat since it's legal, but it isn't a proposition that anyone currently working in the business really wants to see succeed (beyond the level of supplemental income) since it ultimately has less value to everyone on the production side than the current model.

[SirFozzie]

Interesting: Sony pulled it's movies off Starz Play on Netflix, because it had reached subscriber goals that were expected to run through the end of 2014.

Let's see if they come to a fair price to return them, or if once again a movie company votes to kill the goose that lays the golden eggs because the eggs aren't platinum ionstead.

Analysts: Removal of Sony movies bad for Netflix - BusinessWeek (http://www.businessweek.com/ap/financialnews/D9NVP44O0.htm)

[SackAttack]

Interesting: Sony pulled it's movies off Starz Play on Netflix, because it had reached subscriber goals that were expected to run through the end of 2014.

Let's see if they come to a fair price to return them, or if once again a movie company votes to kill the goose that lays the golden eggs because the eggs aren't platinum ionstead.

Analysts: Removal of Sony movies bad for Netflix - BusinessWeek (http://www.businessweek.com/ap/financialnews/D9NVP44O0.htm)

I'd like to see Netflix start renting the discs for Sony movies immediately again instead of waiting a month as a tit-for-tat, then.

[gstelmack]

Much as I dislike cable companies, pretty much everyone in the process wants you paying for it the way it is now, since that's what helps fund the entire process.

The number of people willing to pay piecemeal isn't sufficient to fund very much programming, but everytime someone does, it devalues the programs to existing networks ... which in turn reduces the amount of money available to fund the production of programming (and the salaries of everyone involved and so on down the line).

Don't get me wrong, whatever floats your boat since it's legal, but it isn't a proposition that anyone currently working in the business really wants to see succeed (beyond the level of supplemental income) since it ultimately has less value to everyone on the production side than the current model.

I understand. The reality is that we've just given up on watching very much, simply because it got too expensive. The model you described has cable and statellite bills on a steady climb upward, and both sides are killing the golden goose. I agree completely that the content providers are just as much at fault here as the content distributors.

We have a couple of shows worth paying for individually and supporting. We then pay $8/month to watch what we want on Netflix. If it's on there, great I'll give it a shot, and if it isn't then I'll be watching something that is. Or I'll buy the Blu-Ray and watch it that way whenever I want. Or I'll watch some of it OTA the old fashioned way (like most NFL).

It's up to the individual how much they want to pay for the content. But as the price goes up, there will be more and more people for whom the threshold is crossed and they decide it's just not worth what they're paying for what they get, and they'll stop paying. This is the key trend here; growth in cable and satellite customers is reaching a standstill despite overall growth in the country continuing to rise. Yet the content providers have just been through their first round of trying to gouge money out, forcing the content distributors into ever-increasing prices for consumers, forcing more and more people out of the market entirely.

Yes it's still a minority, but it's turned into enough to cancel out the normal growth curve in new customers. Especially among the tech-savvy generation that's growing up happy to watch on their 4.3" PHONE screen for crying out loud. And I think that shows that the content providers and content distributors better start thinking hard about their current economic model. Right now their reaction is bandwidth caps to try and kill the streaming market, and that's backfiring. They need to come up with something better, because they are starting (starting, not already have, starting is the key word here) to strangle off the market with their current scheme.

[panerd]

I'd like to see Netflix start renting the discs for Sony movies immediately again instead of waiting a month as a tit-for-tat, then.

I didn't realize Netflix had a choice. What agreement benefit do they currently get by waiting a month?

[JediKooter]

And I think that shows that the content providers and content distributors better start thinking hard about their current economic model. Right now their reaction is bandwidth caps to try and kill the streaming market, and that's backfiring. They need to come up with something better, because they are starting (starting, not already have, starting is the key word here) to strangle off the market with their current scheme.

Kind of almost mirrors the music industry. You keep trying to apply 1960s financial models to a 21st century consumer base, you're going to lose a lot of money.

[JonInMiddleGA]

And I think that shows that the content providers and content distributors better start thinking hard about their current economic model.

They can think about it all they want, but when that same tech-savvy generation also shows a strong tendency to want, quite literally, something for nothing, all the thought in the world isn't going to change that.

If there reaches a critical mass where enough viewers are willing to watch old shows/reruns/movies as their primary viewing or 6th rate amateur YouTube videos become the standard or whatever, then that's what will be available.

Unless you see a titantic restructuring of the costs associated with production (like Jon Hamm's $250k/ep deal signed today) then either the current financial model has to largely survive (since there's no indication that any of the online options come close to generating that sort of revenue or will anytime soon) or there's going to a fundamental change in the type of programming being produced (which we've already seen significantly with trends on broadcast).

[gstelmack]

They can think about it all they want, but when that same tech-savvy generation also shows a strong tendency to want, quite literally, something for nothing, all the thought in the world isn't going to change that.

If there reaches a critical mass where enough viewers are willing to watch old shows/reruns/movies as their primary viewing or 6th rate amateur YouTube videos become the standard or whatever, then that's what will be available.

Unless you see a titantic restructuring of the costs associated with production (like Jon Hamm's $250k/ep deal signed today) then either the current financial model has to largely survive (since there's no indication that any of the online options come close to generating that sort of revenue or will anytime soon) or there's going to a fundamental change in the type of programming being produced (which we've already seen significantly with trends on broadcast).

The only thing I'll disagree with here a bit is that there is a lot of crap that no one wants to watch that gets subsidized by the charges for the stuff people do want to watch. This is the old "500 channels and nothing on" debate. It would cost a lot less to produce a lot less and get back to core shows that are far more interesting.

Or the fringe shows will "go viral", a scheme that is making money in both music and video games. It's not quite true that the young generation wants "something for nothing", what they want is "something for cheap". There are companies right now doing well selling games for 99 cents, or books for 2.99 or less. The closest in movies / TV shows is ad-supported Youtube content, but there are successes there as well.

Also note the success of DVD and Blu-Ray sales. People will pay for the shows they want, even if not through the current traditional model. Heck straight-to-video movies have been profitable for quite some time (and some have even been good!).

What this generation hates is paying for something they don't want, or not getting what they thought they were paying for. The former is a big problem with the current pay TV model, the latter not so much, usually related to paying to watch ads (like the Hulu+ model).

So yes, I expect a shrinking of content available, and that's not necessarily a bad thing. But I do expect quality programming to remain viable and profitable, just not necessarily through the cable, satellite, and maybe even broadcast networks.

Isn't one of the reason the broadcast networks want to charge the cable companies more is because the ad-supported model is no longer working, that the revenue isn't keeping up? It's another sign of the crack here.

[JonInMiddleGA]

Or the fringe shows will "go viral", a scheme that is making money in both music and video games. It's not quite true that the young generation wants "something for nothing", what they want is "something for cheap".

I'd argue strongly that the pirating/d'load/filesharing generation strongly prefers "free" to any price, but that's a different argument for a different day.

Still, when it comes to the internet, the particularly strong resistance to paying for anything that's been free has been well documented. And individual shows have been just that: "free".

None of the other examples: music, movies, video games - have ever been free (radio is the closest example but that's distinct from owning records/tapes/CDs)

In each of the examples you mention, the primary change has been the medium, not the core issue of whether something is free or paid.

My point here is fairly specific. If we were discussing whether cable "TV" might someday transition to cable "digital access from multiple devices" (which is already underway to varying degrees) then this could be a different discussion.

But I do expect quality programming to remain viable and profitable, just not necessarily through the cable, satellite, and maybe even broadcast networks.

That's where we differ. I've seen nothing to suggest that there's more than a few hours of programming a week, max, supportable on this model. The demographic that we seem to be focusing on in our exchange is one that watches virtually no "quality programming", it's (whether we're talking 18-24 or 18-34) dominated by reality shows & a few narrow appeal comedies.

Isn't one of the reason the broadcast networks want to charge the cable companies more is because the ad-supported model is no longer working, that the revenue isn't keeping up?

In no small part due to the cheapass snot-nosed brats we're talking about here ;)

[gstelmack]

In no small part due to the cheapass snot-nosed brats we're talking about here ;)

Fair enough.

[RainMaker]

Does anyone foresee a day when a TV show won't be run first on TV? It'll be made and then sold off to companies like Netflix, Hulu, etc or just sold on a per episode/season basis on 3rd party devices?

I also don't think the problem is cheapass brats, I think it's just competition. Not just on TV, but in life. Computers, video games, and other technology has changed how we spend our lives. We don't have to sit in front of a TV and settle for a mediocre show.

[JediKooter]

It's the democratization of being able to make content that is a factor too. You don't have to spend 100s of thousands (or millions) of dollars anymore to create content now. A few thousand dollars or just a few hundred if you split the costs and you're more than halfway there in creating something. Cameras are cheap, editing systems are cheap, etc...

Now making good content, that's a whole different ball game.

[mckerney]

Does anyone foresee a day when a TV show won't be run first on TV? It'll be made and then sold off to companies like Netflix, Hulu, etc or just sold on a per episode/season basis on 3rd party devices?

Netflix is already doing that with a yet to premiere series called House of Cards that is directed by David Fincher and starring Kevin Spacey. I believe they beat out HBO for the show.

[SackAttack]

I didn't realize Netflix had a choice. What agreement benefit do they currently get by waiting a month?

From what I understand, agreeing not to rent new movies for a month is supposed to give them deeper access to the various studios' back catalogs for online streaming.

But if Sony's pulling access to the streaming catalog, what's the incentive to wait a month?

[Chubby]

and with Blockbuster dying, what benefit does it give the studios anymore anyways?

[JonInMiddleGA]

Does anyone foresee a day when a TV show won't be run first on TV? It'll be made and then sold off to companies like Netflix, Hulu, etc or just sold on a per episode/season basis on 3rd party devices?

Those shows will only be taken by the major networks (broadcast + notable cable) in the final dying days of TV.

Hell, there still seems to be a good bit of negative stigma about taking shows from co-owned cable to broadcast as second run (ala USA to NBC), imagine if it were third party & from a perceived lesser medium to boot. OMG, the cleaning crews would stay busy wiping the exploding heads off the walls.

[panerd]

From what I understand, agreeing not to rent new movies for a month is supposed to give them deeper access to the various studios' back catalogs for online streaming.

But if Sony's pulling access to the streaming catalog, what's the incentive to wait a month?

I never really understood the rush anyways but I realize among my friends and family I am in the minority. For example Hangover II will come out on DVD at some point this fall/winter. I have no idea when so what difference does it make to wait another 28 days and get it from netflix or for a $1 from redbox instead of spending $4 to get it right away? I guess there are enough people that need it right away. (Along the same lines of going to a movie on opening night I guess but it least then it's the same price)

[stevew]

I really wonder how long Netflix is gonna survive at current price points. The Sony deal is going to result in them spending 6 times as much for that content. Cable Internet providers are probably drooling and waiting for a favorable net neutrality ruling so that they can bend Netflix over a barrel.

Point being if I woke up in 3 years and a monthly limited streaming plan was 30 bucks, I wouldn't be surprised. And you've gotta be high if you spend that much a month to stream episodes of GI Joe.

[JonInMiddleGA]

J.D. Power and Associates Reports: Television Service “Cord-Cutting” Has Only a Minor Impact on Residential Television Subscriptions - Ratings | TVbytheNumbers (http://tvbythenumbers.zap2it.com/2011/06/29/j-d-power-and-associates-reports-television-service-cord-cutting-has-only-a-minor-impact-on-residential-television-subscriptions/96894/)

J.D. Power and Associates Reports:
Television Service “Cord-Cutting” Has Only a Minor Impact on Residential Television Subscriptions

WESTLAKE VILLAGE, Calif.: 29 June 2011 — Amid debates regarding how U.S. consumers will view video content in the near future, just 3 percent of pay-to-view customers report having “cut the cord” and canceling their television service in favor of other viewing options, according to the J.D. Power and Associates 2011 U.S. Residential Pay-to-View StudySM released today.

The inaugural study provides unique insights concerning attitudes, viewing preferences, behavior patterns, awareness and experiences of pay-to-view customers among the major home television and video service providers across the United States.

While a minority of customers overall have canceled their cable television service, rates of cord-cutting vary significantly by generation. Six percent of Generation Y customers (ages 17-34) say they no longer subscribe to a residential television service, compared with only 2 percent of Baby Boomers (ages 47-65). One percent of customers ages 66 to 86 report cancelling cable service, while 4 percent of Generation X customers (ages 35-46) say the same. ...

[gstelmack]

I was under the impression that overall subscribership was flat, so is the issue here the number of people never signing up for TV service in the first place (and thus never having a cord to cut), or am I wrong on the growth of subscribers?

Also, wasn't cord cutting pretty much zero not too long ago?

[DanGarion]

I was under the impression that overall subscribership was flat, so is the issue here the number of people never signing up for TV service in the first place (and thus never having a cord to cut), or am I wrong on the growth of subscribers?

Also, wasn't cord cutting pretty much zero not too long ago?

If it's flat it sure isn't reflecting upon the numbers I've been reading, or the stock price of TWC...

[JonInMiddleGA]

Also, wasn't cord cutting pretty much zero not too long ago?

Can't imagine it was actually too close to zero for any major stretch, financial drops have been around for almost as long as cable.

[JonInMiddleGA]

If it's flat it sure isn't reflecting upon the numbers I've been reading, or the stock price of TWC...

Here's a probably explanation for that, from back in April.
High-speed data drives Time Warner Cable growth in Q1, but 66,000 basic video subs depart - FierceCable (http://www.fiercecable.com/story/high-speed-data-drives-time-warner-cable-growth-q1-66000-basic-video-subs-d/2011-04-28)

In a nutshell 66k video customers lost but 177k high-speed data customers added. TWC CEO described data as rapidly becoming the new anchor product for the company.

[gstelmack]

Articles like the following are what I had been basing that off of:

Subscriber growth suddenly stops for cable TV industry (http://arstechnica.com/media/news/2010/08/subscriber-growth-suddenly-stops-for-cable-tv-industry.ars)

The following indicates the trend may have been reversing earlier in the year, although it was DirecTV, AT&T U-Verse, and Verizon FIOS that were the beneficiaries:

Analysts See Pay TV Industry on Track for Q4 Return to Subscriber Growth - The Hollywood Reporter (http://www.hollywoodreporter.com/news/analysts-see-pay-tv-industry-160853)

Looks like last year they did lose subscribers, but have started to gain again this year.

[Logan]

Cable company has me by the balls because of sports. Wish it wasn't like that, but at least I admit it.

Right now it's not an issue with having roommates to split up our astronomical cable/internet bill, but a few months from now it'll be me and the girl so I'll finally make some cuts to save a few bucks.

I knew I had a post like this in a thread like this...

So people may be unaware, but Time Warner customers no longer have access to MSG network. I chose my words carefully there, because TWC alleges that MSG pulled the plug, and MSG alleges TWC pulled the plug. What's been funny are all the TV ads...especially the pro-MSG ones, since they state "TW does not care about its customers, switch your provider!" But when Cablevision (MSG parent) was in similar network disputes last year, it was "We're standing firm against the networks, thinking about our customers!"

Whatever. Point is I can't watch Rangers games anymore, or entertain the thought of watching Knicks games, which is probably one of the 3 reasons I have a TV in the first place. This is one of those things where I'm sure it will get worked out in a few weeks but I'm legitimately pissed about how much money I'm wasting on cable with such little return. I've cut out what I can in terms of the premium channels but I'm still paying over $100/month to watch live sports, some random FX or network shows, and so my fiance can watch Chopped.

So my question is...are us sports enthusiasts any closer to winning this battle against the cable companies?

[Ksyrup]

Hell no. It's only going to get worse. As fewer and fewer people really care about attending games and all the expense/trouble that comes with it, and as technology advances to make the in-home experience even more enjoyable, eventually we'll start having to pay for all live sporting events, I believe. I hope that day is far off, but I don't think it is. Right now, we're indirectly paying for channels and directly paying for access to all televised games, but eventually I think live sports will go the PPV way. Which will suck.

[Draft Dodger]

I already pay to watch live sports - $160 a year to watch the Avs

[Ksyrup]

I'm talking about any and all live sports - what we currently get as part of a channel subscription on ESPN or Fox Sports and what we get on broadcast TV. I pay for the MLB package. I don't pay to see 3 NFL games on Sunday afternoons. Yet.

[gstelmack]

What will be interesting is if the sports leagues offer more streaming options. MLB is ahead of the curve here, not sure where the NBA and the NHL stand, and you can get NFL Sunday Ticket for streaming if trees block your view of the DirecTV satellites. The problem area will be college sports, as ESPN has those locked up tight. I missed the Rose Bowl because it's no longer on ABC, for example.

[sterlingice]

If you look at cable and entertainment prices, you can see more and more that sports is what commands the dollars. Scripted tv can get money from you in a variety of ways: Hulu, on demand, iTunes, DVDs, etc. But live tv where you have to watch the commercials demands the big bucks. And as we limit the avenues where we can get them more and more, we're going to see higher and higher prices as they monopolize that advertising market

SI

[Honolulu_Blue]

What will be interesting is if the sports leagues offer more streaming options. MLB is ahead of the curve here, not sure where the NBA and the NHL stand, and you can get NFL Sunday Ticket for streaming if trees block your view of the DirecTV satellites. The problem area will be college sports, as ESPN has those locked up tight. I missed the Rose Bowl because it's no longer on ABC, for example.

What does the MLB offer?

The NHL offers full streaming options. You can buy the NHL on-line package and get access to every game over the internet, except those that are being broadcast nationally (i.e., NBC Sports, NBC, or NHL network). You can even watch 4 games at once and can stream games over your PS3.

The NHL has been very good in terms of using the internet to grant more access to the sport.

[Logan]

I was under the impression that the online NHL package would block local games too?

[Draft Dodger]

I'm talking about any and all live sports - what we currently get as part of a channel subscription on ESPN or Fox Sports and what we get on broadcast TV. I pay for the MLB package. I don't pay to see 3 NFL games on Sunday afternoons. Yet.

well, the NFL just signed a bunch of deals taking them to the early '20s so you wont be having to do that with football games soon. and I think as long as networks are willing to pony up $7 billion a year to air football games, I'm not too worried. Maybe for some of the other sports though. Doesn't Canada have some PPV for NHL games?

[Pumpy Tudors]

I was under the impression that the online NHL package would block local games too?
Unless something has changed in the past year, you're right. The local games would be blocked, so you still wouldn't be able to watch the Rangers.

I actually feel bad for you, so I'm not going to make any jokes about the Rangers here.

[Logan]

You're a good man Pumpy.

[Fidatelo]

Are you opposed to streaming Rangers games 'unethically'? Because it is pretty easy to find any sporting event on the internet within about 2 clicks (although feed quality is often not great). I'm not sure if it's cool to post my main source here, though.

[Logan]

Thanks, I know what's out there and have used it when I've been traveling for work and I'm just sitting in my hotel room killing time. While I'm a big NYR fan, I'm not the type that will sit in front of my laptop and watch it when I have other stuff going on at home. If I was sending a close-enough-to-HD signal from the feed provided by the NHL on my laptop to my beautiful LED screen, I would be much more interested.

[Glengoyne]

What does the MLB offer?

...

In my experience. MLB offers a pixelated feed best viewed on a 2"x2" window on your PC. Hopefully they will improve their streaming bandwidth a bit this season, as they were deluged in feedback from people using all manner of wifi enabled devices to view MLB on their 52" HD tvs.

[Marc Vaughan]

As the head of a cable company, the fact that any one item is responsible for this much company turnover should be rather alarming. Especially, when we are already dealing with 33% of our entire sales base that is considering cutting ties. Are profit margins and sales bases so strong that it can be ignored?

I think its a similar thing to the pressures for pricing which drive anything - what does cable offer that Netflix doesn't .... cable companies need to either cut subscription costs of ensure they have USP's influential enough to hold them above Netflix.

For me its soccer - I pay an additional $30/month to get my fix on top of the cable subscription .... recently I picked up an online subscription for post-match Brighton highlights if I could get the rest of English soccer in another medium then I'd cancel cable instantly (presuming I could also get Teen Moms for my wife somehow which is about the only other thing watched on it tbh ;) ).

I'd also suggest that US cable companies look heavily at the UK companies such as Virgin and simply take on Netflix directly.

In England you can watch your 'cable' provider through any medium - got a smart phone, watch your cable through that, got a TV use that etc.

Secondly is the 'on demand' aspect of Netflix - Virgin in the UK allows you to simply watch any recently broadcast show (within a month or so of it showing I think, possibly more haven't been back recently) by surfing back in time or searching .... this gives them shows before other mediums and equally as flexibly as on those other mediums, which is compelling to purchasers imho.

[Ksyrup]

In my experience. MLB offers a pixelated feed best viewed on a 2"x2" window on your PC. Hopefully they will improve their streaming bandwidth a bit this season, as they were deluged in feedback from people using all manner of wifi enabled devices to view MLB on their 52" HD tvs.

What is their motivation to make this markedly better? To allow people to pay for a TV viewing experience for a fraction of the normal TV viewing cost?

[Honolulu_Blue]

Unless something has changed in the past year, you're right. The local games would be blocked, so you still wouldn't be able to watch the Rangers.

I actually feel bad for you, so I'm not going to make any jokes about the Rangers here.

Yes, this is true. Local games will be blacked out.

I guess one, quite complicated, solution would be to buy a Slingbox and have someone outside the New York market who has the NHL Center Ice Package hook it up.

I did that for a buddy of mine in Brussels. He's a big Oilers fan and bought a Slingbox. It's been hooked up to my TV upstairs for years now. I probably use it more than he does for nights like last night when I need to keep track of three or more events.

[Ksyrup]

With DTV's sports packages, when you have it on the mix channel - the channel that shows 8 games at once - the local game is not blacked out. You can watch it, but it's obviously on a real small screen. If you want to tune to it, the package channel is blocked and you have to tune to the regional network to see it. But I can watch the local game on the mix channel without it being blacked out. I don't know why they allow that.

[Logan]

What is their motivation to make this markedly better? To allow people to pay for a TV viewing experience for a fraction of the normal TV viewing cost?

But what if the fraction of the cost to the consumer can also mean more money in the hands of the content provider? To use the MSG example...apparently the holdup with TW is because they want to charge them the same $4.50 or so per subscriber per month that FIOS and DirectTV charge. So I'm paying about $50 a year to watch the Rangers. If the NHL were to eliminate blackout restrictions, and I could stream Rangers games to my TV in HD quality, what is that worth to me, especially when considering I could drop my actual cable costs by an enormous amount?

For the simplicity of the argument, let's ignore the fact that MSG is owned by Cablevision...

[Ksyrup]

But that's a delicate dance, isn't it? Are you, as the content provider, willing to piss off the cable/satellite providers to end-around their subscription model in order to directly pocket money they would otherwise share in, to make money off of a small fraction of users? I wouldn't think a pro league would consider doing something like that until a large segment of the population was comfortable with getting its live content via streaming services. Maybe if internet/streaming services reach a tipping point, like when music downloads surpased physical CD sales, that would signal a large enough base of people would be willing to go that route that it makes sense to tell the cable/satellite providers to kiss off.

[Logan]

I realize that, and I'm thinking more about whether they are preparing for such a thing down the road versus what is going on today. They have to be right? They see where all other content is going, and as someone has said, sports is really the last piece. ESPN has started it with ESPN3, and as of now you need to be currently subscribed, but I figure they're getting their infrastructure in place

Additionally, aren't we already seeing some of that content provider pissing off the distributors in the form of movies/premium shows with the fighting over Netflix and other streaming devices?

[JonInMiddleGA]

Maybe if internet/streaming services reach a tipping point, like when music downloads surpased physical CD sales, that would signal a large enough base of people would be willing to go that route that it makes sense to tell the cable/satellite providers to kiss off.

Not sure that's the right metric, as the two audiences have pretty dissimilar composition.

Basically (and incredibly generically) the younger the user, the more likely they are to d'load music. The older the user (up to about age 65-70) the more likely they are to watch sports in any fashion. Maybe that changes in another decade or two, but it anywhere near there yet.

Not sure that says a great amount more about the demographics of d'loading than it does about the demographics of sports audiences.

[cougarfreak]

In my experience. MLB offers a pixelated feed best viewed on a 2"x2" window on your PC. Hopefully they will improve their streaming bandwidth a bit this season, as they were deluged in feedback from people using all manner of wifi enabled devices to view MLB on their 52" HD tvs.

You can stream the MLB TV through the PS3 or Roku. My picture was HD quality on a 42" tv.

[Draft Dodger]

Yes, this is true. Local games will be blacked out.

I guess one, quite complicated, solution would be to buy a Slingbox and have someone outside the New York market who has the NHL Center Ice Package hook it up.

I did that for a buddy of mine in Brussels. He's a big Oilers fan and bought a Slingbox. It's been hooked up to my TV upstairs for years now. I probably use it more than he does for nights like last night when I need to keep track of three or more events.

probably easier to use a proxy server that fakes your IP address

[Ksyrup]

In somewhat related news to this discussion:

Disney partners with Comcast to provide ABC, ESPN on-demand - latimes.com (http://latimesblogs.latimes.com/entertainmentnewsbuzz/2012/01/walt-disney-co-partners-with-comcast-to-provide-abc-and-espn-on-demand.html)

[Shkspr]

In my experience. MLB offers a pixelated feed best viewed on a 2"x2" window on your PC. Hopefully they will improve their streaming bandwidth a bit this season, as they were deluged in feedback from people using all manner of wifi enabled devices to view MLB on their 52" HD tvs.

Regrettably, your experience sucked. On my run of the mill connection (B- at SpeedTest) the view streamed to both my TV and my iPad were strong whenever the wife wasn't watching Hulu. My only MLB complaint is blackouts.

[sterlingice]

Regrettably, your experience sucked. On my run of the mill connection (B- at SpeedTest) the view streamed to both my TV and my iPad were strong whenever the wife wasn't watching Hulu. My only MLB complaint is blackouts.

And their ridiculous policy for blackouts like where in Iowa you can't see the Cubs, White Sox, Cardinals, Royals, or Twins or how Vegas can't see the Angels, Dodgers, Diamondbacks, Rockies, Giants, and As?

SI

[RainMaker]

Another question for the cable gurus. Does anyone think companies like ESPN will eventually force an a la carte system? From what I've read, they have been racheting up their prices annually and are starting to get some pushback from the cable companies. I think it's up to $5/month just to have ESPN.

So at what point do cable companies just say fuck it and go a la carte? If all these cable channels want to keep raising their annual prices, you'll get a basic cable plan that becomes too much for the average consumer.

[DanGarion]

Another question for the cable gurus. Does anyone think companies like ESPN will eventually force an a la carte system? From what I've read, they have been racheting up their prices annually and are starting to get some pushback from the cable companies. I think it's up to $5/month just to have ESPN.

So at what point do cable companies just say fuck it and go a la carte? If all these cable channels want to keep raising their annual prices, you'll get a basic cable plan that becomes too much for the average consumer.
I think it will happen sooner rather than later. The hard part will be the negotiating. Many broadcasters specifically have it in the contract that they are to be a "must carry" station on basic.

[gstelmack]

In somewhat related news to this discussion:

Disney partners with Comcast to provide ABC, ESPN on-demand - latimes.com (http://latimesblogs.latimes.com/entertainmentnewsbuzz/2012/01/walt-disney-co-partners-with-comcast-to-provide-abc-and-espn-on-demand.html)

Disney signed an agreement with Netflix a few months back, all the Disney shows should be streaming soon, with every episode of a season available soon after the season ends.

[sterlingice]

Another question for the cable gurus. Does anyone think companies like ESPN will eventually force an a la carte system? From what I've read, they have been racheting up their prices annually and are starting to get some pushback from the cable companies. I think it's up to $5/month just to have ESPN.

So at what point do cable companies just say fuck it and go a la carte? If all these cable channels want to keep raising their annual prices, you'll get a basic cable plan that becomes too much for the average consumer.

Last I heard it was well over $10 but maybe I was mistaken.

SI

[SackAttack]

Another question for the cable gurus. Does anyone think companies like ESPN will eventually force an a la carte system? From what I've read, they have been racheting up their prices annually and are starting to get some pushback from the cable companies. I think it's up to $5/month just to have ESPN.

So at what point do cable companies just say fuck it and go a la carte? If all these cable channels want to keep raising their annual prices, you'll get a basic cable plan that becomes too much for the average consumer.

While I'd like to see à la carte, the more I think about it the more I think à la carte doesn't end well for the subscriber.

I think part of why the cable companies deal with the Disney/ESPN (although, same company, y'know?) bullshit on subscriber fees is because that family of channels attracts enough subscribers that even if they lose money per subscriber on Disney/ESPN, the other stuff they're able to bundle in makes the package profitable. Loss leaders, in other words. But if it's à la carte all of a sudden, the cable companies can't use ESPN/Disney/etc as loss leaders anymore. They have to be profitable in and of themselves, OR the companies say "yeah, you can add this, but only to a package of $XX or greater."

The niche channels would also be in a situation where, since they're not getting bundled, survival dictates that their fees would have to go up since they don't get to ride coattails any longer.

What ends up happening is the consumer gets to target the channels they want, but they don't actually end up saving any money. They just get rid of the stuff they never watch and keep the stuff they do, with no change to the bottom line. From a cable operator perspective, either you're able to dump the dead weight and just keep the profitable stuff, or the act of "unbundling" has a revenue impact similar to what's happened with the airlines.

[Logan]

My opinion on that is that it's the cable companies who tell us that the whole bundling thing makes the most sense for the consumer...so it's likely not true in reality and these guys (cable companies, big networks, niche channels) would figure out a way to squeak out profitability or die like they should.

[Autumn]

It's for sure that prices would go up a lot, and/or a lot of channels would just disappear, if they went a la carte. And that's great when it's not the channels you care about, or if you only care about a small seleciton of channels, but if it's your channel that disappears you won't be happy.

A la carte will only make sense once a large amount of people stop using cable, and by going a la carte they can pull in poeple like me. I haven't paid money to a cable company in 12 years and won't be in any foreseeable future. But if I could pick a couple of channels for cheap and be able to catch some sports or some particular programming, I'di pay them a few bucks. At this point that's meaningless to them, but if their share of the viewing market grows small, it would be worthwhile. I don't really expect that to happen though, not for a long, long time.

[SackAttack]

My opinion on that is that it's the cable companies who tell us that the whole bundling thing makes the most sense for the consumer...so it's likely not true in reality and these guys (cable companies, big networks, niche channels) would figure out a way to squeak out profitability or die like they should.

It's not that bundling makes the most sense for the consumer. That's not what I'm trying to convey.

What I'm saying is that "unbundling" wouldn't, I don't think, lead to any long-term cost savings for consumers. They'd pay the same amount, they'd watch the same shows, and they wouldn't even notice, by and large, that the size of their cable package had shrunk - because a lot of the benefit that cable companies try to say that bundles offer is noise.

There might be a benefit to not having to flip through that noise to find what you're looking for, but if you're like most viewers who have a particular set of channels you watch, you know the numbers anyway. When I lived with my parents in California, for me those channels on DirecTV were 206, 256, and 526. ESPN, Turner Classic Movies, and one of the Starz channels. If nothing was on that I wanted to watch on those, I might flip through and see what else was on, but there wasn't a lot of flipping through them to find the channels I was a regular consumer of, either.

At any rate, I think the à la carte route WOULD kill off a lot of the niche channels. Those are channels that survive largely because they're rolled in to the basic cable package, which means they get a cut of every subscriber to begin with. Without that guarantee, you either reduce what you spend on original content to balance the reduced revenue, or you raise your rates and hope that people respect the quality of the content enough to continue to pay.

That's not a dilemma that Nickelodeon, Disney, HBO, etc would largely face. The "big" networks would be just fine. Maybe better than fine. The folks who'd have some hard choices to make would be the niche content providers and the cable operators themselves.

[JonInMiddleGA]

these guys (cable companies, big networks, niche channels) would figure out a way to squeak out profitability or die like they should.

And that "way" is going to be about $20-$25 a month (each) for ESPN/Nick/Disney, about $10 each for many other channels, and $5 each for the random stray stuff.

And that's before I start trying to figure out the impact of networks being forced to increase their marketing budgets 2x - 10x the current levels (which is the gap between their current spending and what premium networks spend)

[Logan]

The pain I'd have if ESPN was not in my life...

Look, I know it's not going to be easy...I just think that with how everything in our world relating to social interaction and entertainment is changing, it's naive to think that somehow the cable TV model won't need to change with it.

[gstelmack]

A la carte is here now. See Amazon Video on Demand. I pay $1.89 / episode to get Mythbusters now that I'm off cable. That's worth it to me, I can cherry pick the shows I want to watch. Not everything I want is there, but enough that I just don't watch the stuff that's not available (I'm looking at you Food Network).

[JonInMiddleGA]

it's naive to think that somehow the cable TV model won't need to change with it.

I believe what I'm getting at is that it's naive to think that the changes are going to end up costing the consumer less.

[SackAttack]

And that "way" is going to be about $20-$25 a month (each) for ESPN/Nick/Disney, about $10 each for many other channels, and $5 each for the random stray stuff.

And that's before I start trying to figure out the impact of networks being forced to increase their marketing budgets 2x - 10x the current levels (which is the gap between their current spending and what premium networks spend)

This is basically what I'm saying, yeah.

Like, the à la carte ideal appeals to me.

The à la carte reality is one that more closely mirrors the airlines than my pipe dreams.

[ISiddiqui]

I believe what I'm getting at is that it's naive to think that the changes are going to end up costing the consumer less.

100% agreement. The current way gets you a ton of channels for the same price you'd be paying for a handful of channels in a la carte.

[ISiddiqui]

At any rate, I think the à la carte route WOULD kill off a lot of the niche channels. Those are channels that survive largely because they're rolled in to the basic cable package, which means they get a cut of every subscriber to begin with. Without that guarantee, you either reduce what you spend on original content to balance the reduced revenue, or you raise your rates and hope that people respect the quality of the content enough to continue to pay.

Indeed. And that would have resulted in a large amount of quality programming disappearing. You think AMC is going to spend the money it does on Mad Men, Breaking Bad, the Walking Dead when its revenue is slashed? I mean the ratings for Mad Men are ridiculously low.

You think SyFy (when it was Sci-Fi Channel) would have spent all that money on the new Battlestar Galactica without subscriber fees?

[DanGarion]

Looking at the big picture from my side, at minimum with al la carte pricing the consumer would still be paying.

$10 for a box (plus about another 10-15 for DVR service)
$10-25 for the must carry broadcast channels (required by many franchise agreements with cities, counties, and states)
And then the cost of whatever channels you want. Let's say starting at $5 for individual channels and the ability to package channels (bundling) for cost savings.

Marketing for channels would have to increase a lot because the only way they will get their name out and their new shows out would be advertising. Which like Jon said would increase the costs of those channels. Many shows that actual require real budgets (think real tv shows not crappy unscripted reality or scripted learning shows that don't require much talent, like Storage Wars) would die. The consumer would have more choice as to what they pay for but their selection of what is out there would dwindle.

I would assume if cable companies went this direction they would also have many more On Demand options, where the consumer gets their selected channels On Demand for free with subscription and would be able to purchase single On Demands from other channels. So basically it becomes the eventual IPTV platform that many cable companies are already dipping their toes into. (the only problem with On Demand is that it's a negotiation with both the broadcaster and the production company, it's not always cut and dry).

[NorvTurnerOverdrive]

mccain was leading the charge for a la carte, iirc, 10-15 years ago. he had a great quote, 'it's like going to the supermarket for bread and having to buy one of everything.'

that said i agree it wouldn't be any cheaper.

also, the dolans are running amc into the ground.

[gstelmack]

I believe what I'm getting at is that it's naive to think that the changes are going to end up costing the consumer less.

That assumes the consumer WANTS what they are getting now. To use some of the examples above, I'm happy to stop subsidizing Mad Men and other shows I don't care about. Folks who want sports are probably happy to pay $30/month for ESPN and its ancillary networks, and would be willing to send it straight to ESPN. They'll pay more than ESPN charges the cable companies, if they're not paying for all the other stuff they don't want to watch, and it reduces their total bill (as they'll have cherry-picked just the ESPN bit and dropped anything that drives it too high).

The problem with the current model is it is starting to get too expensive as it is, let alone where it is heading. If it takes this kind of money to sustain the business, I think the business is going to go away as people won't be able to afford it. As this thread started with, folks ARE starting to reject this, and as the price continues to climb more people reject it each year. We haven't hit a tipping point yet, but what do you think will happen when the TV portion of the bill hits $150 or more?

[JonInMiddleGA]

Folks who want sports are probably happy to pay $30/month for ESPN and its ancillary networks, and would be willing to send it straight to ESPN. They'll pay more than ESPN charges the cable companies, if they're not paying for all the other stuff they don't want to watch, and it reduces their total bill (as they'll have cherry-picked just the ESPN bit and dropped anything that drives it too high).

I have to think that'll be more like $40-$50 if you include the 2ndary networks, networks which actually have more hours of game coverage than the main AND ESPN would be very likely to aggressively bundle them to single subscribers. Remember, their contractual obligations extend far into the future, reduced revenue really isn't an option for them even if they were willing. Very few households watch only ESPN, so add 1 or 2 more and you're not reducing the total bill at all.

For some sort of benchmark, look at the top 25 cable shows from last week (a bad week to look at but its handy), 6 networks were represented there - ESPN, NICK, TNT, TBS, HIST, USA -. Of those six, the #3 most-watched total day & Primetime (Disney Ch) isn't even included, nor are staples like FOOD, A&E, DISC, HGTV, FXNC, FX, TRU, or LIF.

That's where the ala carte model breaks down in terms of saving customers money. It's 10-15 networks for even typical viewers, it's not 2-3. And if you think they'll just walk away, ponder the hue & cry raised every time a network & a carrier hit a snag reaching an agreement.

That's the point here, you aren't going to see a reduction from ala carte unless you're pretty much willing to forego anything that isn't coming OTA from the traditional broadcast networks and maybe 1-2 cable nets. And that's IF the cable nets are willing to sell to you individually in the first place.

We haven't hit a tipping point yet, but what do you think will happen when the TV portion of the bill hits $150 or more?

Many many households passed that point long ago.

[gstelmack]

Many many households passed that point long ago.

$150 for TV? I know it can hit $200, but that's with phone and internet thrown in. You might hit that now with a DirecTV everything package with a couple of DVRs, but even TWC is only $200/month for Signature Home which is pretty much every TV channel + phone + 50/5 Internet service. My total bill when I dropped was around $160 for TV/phone/Internet.

The TV only portion seems to be in the $60 - $120 range depending on what you get, excluding basic-only folks. But it's getting higher fast.

That's why one way or another prices are going to stabilize soon. Either they'll keep going up, people will abandon as too expensive, total revenues will drop, channels will go out of business, prices will go back down, people will return, or revenues will have to grow far less rapidly than they are today. I agree that I don't think the latter will happen, so I'm betting on the former.

Keep in mind that the main reason sports leagues are still able to sell tickets is they went after the corporate market, the number of families that still buy tickets to go to games is dropping. Look at Cincy having to go to a 2-for-1 deal to get the house packed this last week in a key NFL game. Where is the equivalent of the corporate sales for TV distribution? Maybe the local sports bar?

[DanGarion]

Many many households passed that point long ago.

I don't agree with this point. I've seen many a cable account in my life and the majority are under $150 if you only include the TV portion. And I live in a market and work in a market that has the 2nd highest cost of living.

Let's throw out what a typical subscriber gets.

2 Boxes at $10 each (plus one more $1)one with DVR service $11 for $33
Digital Cable (includes broadcast and basic cable) $59 (includes 1 digital tier)
Additional digital tier $8
Premium Channel - HBO all of them $15

Total of $115 plus taxes (let us say 10%)
Grand total $126.50

[DanGarion]

$150 for TV? I know it can hit $200, but that's with phone and internet thrown in. You might hit that now with a DirecTV everything package with a couple of DVRs, but even TWC is only $200/month for Signature Home which is pretty much every TV channel + phone + 50/5 Internet service. My total bill when I dropped was around $160 for TV/phone/Internet.



Actually SignatureHome doesn't include all channels it's $200 without premiums $230 with and it includes 2 whole house DVRs in either version (with or without premiums).

[JonInMiddleGA]

$150 for TV? I know it can hit $200, but that's with phone and internet thrown in. You might hit that now with a DirecTV everything package with a couple of DVRs, but even TWC is only $200/month for Signature Home which is pretty much every TV channel + phone + 50/5 Internet service. My total bill when I dropped was around $160 for TV/phone/Internet.

Take my Dish for example (since I literally paid the bill a few minutes ago). $70 for the Top 250 pkg. Another $28/month for the addt'l rcvrs (we're not that unusual, IIRC the avg HH now has 4 TV's). No premium channels (HBO etc), no HD upcharges, no sports pkgs, no DVR's.

If my $150 estimate is off, so be it, but given that I'm paying $98 without any of the big add-ons, it seemed pretty reasonable to me.

Either they'll keep going up, people will abandon as too expensive,

But ala carte - which is what we've been talking about here - isn't going to improve the situation.

[gstelmack]

But ala carte - which is what we've been talking about here - isn't going to improve the situation.

Either ala carte will be cheap enough for folks to jump on the stations / channels they want, or folks will make decisions like we did on what things they can do without. Either way I don't think we can continue to sustain the wide variety of channels that all think they are worth a huge chunk of the pie.

Ala carte also does not have to be with traditional cable distribution. I get Mythbusters without having any cable TV at all, and I pay directly for it. There are also Youtube channels. Maybe some of these places can get by with less revenue if they don't need the distribution overhead they deal with now?

I do think current conventional TV distribution is on its way out, to be replaced by some form of Internet ala carte, because the current system is too expensive to maintain.

[Logan]

What about the broadcast networks? For years we've been hearing how their audience has been fragmented by expanded cable, satellite, etc so they're not getting the eyeballs that they used to and in turn aren't making the money they used to. If all those channels go away, shouldn't their commercial slots go back to being worth a ton?

[JonInMiddleGA]

What about the broadcast networks? For years we've been hearing how their audience has been fragmented by expanded cable, satellite, etc so they're not getting the eyeballs that they used to and in turn aren't making the money they used to. If all those channels go away, shouldn't their commercial slots go back to being worth a ton?

Revenue isn't actually down as much as some of the doom & gloom might have you think (it's not like newspaper), it's more a case of very little growth in revenue for a number of years now (and forecasts for 2012 are between -1% and +4%). One of the gambles that broadcast made, and I'd say successfully on the whole, was to simple play hard ball and refused to drop below a certain rate floor even in the face of declining audience. Given that they're still the major avenue for reaching consumers even with the declines, it was a gamble that many advertisers chose to fold to.

The impact of the hypothetical decrease in cable channels on broadcast is also something that would be debatable I think.

There'd certainly be some gain, but others would erode to alternate delivery - Netflix, Hulu, etc - while remaining cable channels stand to benefit at least equally with the b'cast nets. The current primetime 18-49 share is 2:1 in favor of cable. Of the cable pie, networks outside the top 10 have a similar 2:1 advantage over the big kahunas.

In other words
All Cable Networks 37.3 rating in prime (A18-49) vs Big 4 B'cast Nets 18.7 rtg

Top 10 Cable Nets 11.7 rtg
All other cable nets 11-200 whatever 25.6 rtg

The question then becomes one of where those viewers end up, I think it's reasonable to suspect that the surviving cable networks would get more of them than the b'cast nets. We're talking about a big swath of niche type programming, which one do you think would be more likely to serve up most similar eventual replacement programming? Most of the survivors - cable AND broadcast - would gain, but whether any of them would gain in a very significant way is questionable IMO.

FWIW, here's a link to the numbers I'm talking about here
Big Broadcast Nets Still Losing 18-49 Share to Cable Though FOX Saw Gains in 2011 - Ratings | TVbytheNumbers (http://tvbythenumbers.zap2it.com/2011/12/15/big-broadcast-nets-still-losing-18-49-share-to-cable-though-fox-saw-gains-in-2011/113894/)

[Logan]

Interesting, thanks Jon.

[JonInMiddleGA]

Interesting, thanks Jon.

Hope it was of some use, honestly I felt like it was a pretty scattered answer to a good question/topic.

Here's a number that I wanted to include but didn't find until after I had posted. Give or take, it looks like there's about 175 cable networks today.

About a tenth of those routinely pull (effectively) 0.0 ratings; that is, they draw less than 1/10th of 1% of the possible viewers (think networks like Current or RFD-TV). They aren't literally zero of course, but they're getting less than .00049 of possible viewers (otherwise they'd round up to a 0.1 rtg)

So take 175 networks, subtract the top 10 and subtract the bottom 15 or so, that leaves 150 networks dividing up 25.6 ratings points (remember that 1.0 rating point simply means 1% of the possible audience, i.e. bodies), with an average rating of 0.17 each ... yep, that's right, the average of that huge mass gets 17/10000ths of the population each, but the sheer number drives them up to 1/4 of the U.S. population.

[sterlingice]

Well, there are goods and bads to the model. I don't like ala carte for some of the reasons listed (SyFy can't stand to keep a scripted show for more than a couple of seasons now- imagine if they had to actually pay the bills) but we do have an example now: think of pay stations like HBO, Showtime, etc. They have some of the best scripted tv around. But I think we'd have a have and have nots happen really quickly where you are either a high end scripted network or quickly sink into realty tv hell.

But just imagine Comcast as they seem to be the suckiest of the bunch. You'll pay them a hefty chunk just for the "privelege" of bringing you tv to the tune of "$50 subscriber fee (and you get the broadcast stations free!) + $10 for each box + $20 for each DVR" like now. But then they'll pass along the station pricing straight to you with a considerable markup. You think HBO + group costs Comcast $20? Hell no- but that's what they charge you so they can have their cut.

SI

[Pyser]

in netflix news (sorry if this is a repost, haven't read the entire thread lately), the window to wait to rent new releases is well on its way to 2 months. redbox is fighting it, netflix is not:

Redbox, Warner Bros. headed to war over new DVD delay - latimes.com (http://latimesblogs.latimes.com/entertainmentnewsbuzz/2012/01/redbox-warner-bros-dvd-delay.html)

[Logan]

Has there been any insight on how the 28 day push has helped the studios? DVDs are typically at their lowest price the week they go on sale, and then return close to or at MSRP for the next month or whatever until a random sale kicks in. I'd think people either choose to buy that week or not at all.

[Doug5984]

I'd love to see those statistics, if they are out there. I know for me, it hasn't changed my buying habits one bit. I figure if the movie is not good enough for me to get it, then it's not good enough to get it because I don't feel like waiting a couple months. Really there have been very few movies that I've purchased lately, I'd rather throw on a good old movie than watch most of what's coming out.

[Solecismic]

At what point does paying for what you download become standard, like a meter from the electric company?

I remain surprised at how many businesses are moving toward this assemble-content-subscribe model, and how they will react when (not if) the cable companies dispense with flat rates altogether.

We also can't ignore the small percentage who can't get broadband, and the significant percentage (of all ages) who won't, even when available.

IMO, the broadcast networks have done a poor job informing people that there is still a way to watch television using an antenna.

[Pyser]

At what point does paying for what you download become standard, like a meter from the electric company?

I remain surprised at how many businesses are moving toward this assemble-content-subscribe model, and how they will react when (not if) the cable companies dispense with flat rates altogether.

We also can't ignore the small percentage who can't get broadband, and the significant percentage (of all ages) who won't, even when available.

IMO, the broadcast networks have done a poor job informing people that there is still a way to watch television using an antenna.

i think phone plans are a better model than electric meters. pick a plan, and if you go over, you pay more. cell phone companies seem to be doing just fine under this plan.

[SteveMax58]

IMO, the broadcast networks have done a poor job informing people that there is still a way to watch television using an antenna.

They've done a poor job of it because they make heck of a lot more money having them go through their local cable/telco or dish company to get it. Broadcast networks are simply the favored children of the cable networks any more.

[SteveMax58]

At what point does paying for what you download become standard, like a meter from the electric company?

It becomes standard when (and I think "if" can still be used) the cable/telco/dish distributors can no longer make profit by distributing it over their own network. So for the content owner, there is still disincentive to bite the hand the feeds them by going over the top of their distribution partners. But if that revenue path starts drying up...you'll see more & more metering as the cost is subsidized today from other revenue streams.

At the end of the day...it is a fairly fixed cost to operate a land based communications system. If you cannot continue to profit in 1 way...you simply have to move the costs & to the other method of generating revenue. There is no universal solvent to this that eliminates those costs altogether.

[SteveMax58]

While I'd like to see à la carte, the more I think about it the more I think à la carte doesn't end well for the subscriber

This is precisely on the money if you use the presumption that consumers like having choices in content. If you assume the consumer only wants A, B, and possibly C...then in the short-term a la carte makes lots of sense until you realize what happens in the mid- to long-term is stagnation of content & options to where thats really all the options that can self-sustain themselves.

Cable operators don't dictate everything contrary to popular thinking. Yes, there is negotiation when it comes to carrying "just" MTV (for example) vs carrying the other 12+ networks bundled there but the reality is that the network wants the lowest tier possible (meaning...most eyeballs) and they will scale/bundle the cost accordingly. Getting closer to a la carte is what they attempt to do by offering "Tiers" such as sports, movies, etc. so that people who don't want those types of content dont have to pay the premium for it. This is probably obvious but what may not be as obvious is the reasons for putting certain channels into those tiers vs others and how those costs are structured (there are actually some fairly complex models for some networks that essentially don't have a "cost" until you determine how much you want to charge, and what networks you want to stack with it, and what those associated networks charge which could be similarly modeled as the 1st...essentially a circuitous effort). Thats why the argument that MSG puts forth is disingenuous or misinformed (take you pick)...contracts are ALWAYS different from provider to provider based on when the last negotiation occurred. Just because MSG gets that rate from some providers doesn't mean those same providers are paying the same rate for everything else they carry. It isn't rocket science by any means...but it certainly isn't cut & dry "fair is fair" either as all providers have contract renewals to plan for & anticipate rising costs. They're simply at different stages with different providers at any given time.

There are some loopholes around the bundling though on the commercial side (generally). For instance, Dish (or maybe its DirecTV) has a standalone ESPN a la carte cost for commercial customers (such as hotels) that they offer. So if you dont want to pay ~$4-6/month, per room for that 1 channel (but also get the other 2-3) you can opt out. That actually is a smart idea (imo) because it really highlights what people really are paying for & the disparity between networks. And the higher the big names like ESPN keep driving up their cost, the less room there is to subsidize an MSG-type network. Of course...MSG doesnt give a crap about that & rightfully so from their perspective...but they also are not the "must-have" network (in most consumers' minds) that ESPN is (or at least thats still popular opinion in the industry).

As for Netflix type companies of the world. They are attractive to content owners that want their 2nd tier content distributed (or library-type) but at the end of the day the content owners are always going to sell their content to the distributor that pays them the most for it. So just like Starz did...when Netflix is adding eyeballs to their content, they will sell it cheaper. But when Netflix is taking eyeballs from the more profitable delivery chain to the less profitable delivery chain...they aren't going to continue to spite themselves when those contracts run out.

Somebody like a Google-type could be a viable threat but they will have a lot of challenges...the least of which will be whether anybody trusts them to stick around when the business gets "boring".