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The Cord-Cutting Fantasy

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Re: The Cord-Cutting Fantasy

#51

Post by groby_b »

jaibot wrote: post #44
groby_b wrote: post #4

There's something odd about those numbers - if really _all_ of those channels, including ESPN, are too expensive to be financed by just their viewers at the current cost level, and each household would pay more for just the things they want... Where exactly does the money for those channels come from? The logical conclusion would be that large numbers of people never watch their cable TV at all and just subsidize ent…

Behavioral economics. People are willing to pay $50 for 24/7 access to 40 channels, but they won't pay $1 each for the 50 things they actually watch.

Hm. Apple TV/Amazon Instant Video/GoogleTV seems to put paid to that idea.

At the very least, there is a group of people who are willing to pay for unbundling.

Re: The Cord-Cutting Fantasy

#52

Post by pbreit »

periferral wrote: post #50
apendleton wrote: post #20

Earlier quoted context omitted.

At this point, though, there are too few people doing what you're doing to influence content creator behavior. Cable companies are probably making less per unit of content off of you than they are off of cable subscribers, but that's okay: the costs of making the content are essentially fixed, and are paid for mostly by cable subscribers. If they have to choose between getting dollars from you for content they've alr…

"But if everyone does that, the economics of content production totally change. The shows you're buying now might not even get made in the first place." I would argue quite the opposite. If everyone switched to 'cord cutting' more content will be made for Netflix, Amazon, Hulu etc, maybe even pushed to all rather than exclusive deals. "The truth is that the current TV system is a great deal for everyone." I partially…

Over time? The main online properties, Netflix and Hulu, are already even more bundled than cable. For a zero marginal cost item, a la carte makes little sense.

Re: The Cord-Cutting Fantasy

#53

Post by groby_b »

monkbent wrote: post #38
nemothekid wrote: post #35

Earlier quoted context omitted.

My hunch is OP's calculations are right, but his numbers are just wrong. I have a tough time believing ESPN only penetrates 4% of American Households. Looking at his sources I think OP's error comes from the fact that he is using Primetime viewership as a metric. I'm going off assumptions here, but I would think that ESPN's major value add is huge number of people watch ESPN at all times of the day. SportCenter, for…

Yeah, I should have been clearer. It would lower the a la carte price, but it would still be a pretty unsustainable number.

At the very least, you also need to look at how much of the programming is original vs. reruns of already existing content.

I have a strong hunch that if we actually did these numbers, we'd see that there are a few programs that are way more expensive to produce than others. (ESPN and sports licensing fees come to mind).

Which means bundling artificially props up overpriced content - I'm really not sure how you can come to the conclusion that that is good for everybody.

Re: The Cord-Cutting Fantasy

#54

Post by pbreit »

amalcon wrote: post #34
pbreit wrote: post #13

Earlier quoted context omitted.

I get cable AND Internet for $55/month (including espn and amc). People who claim cable is expensive seem to be unwilling to lessen their bill.

Where do you live? Cable Internet alone would run me a minimum of $50/mo. at the slowest speed, ignoring the introductory rate. The cheapest package with TV runs almost $100/mo after the introductory rate expires.

Comcast San Francisco, outside intro rate. Tv + 20+ Mbps Internet.

Re: The Cord-Cutting Fantasy

#55

Post by pbreit »

enoch_r wrote: post #42

The author's claim is that, if we split the price of our meal evenly, we'll all be better off than if we each pay for our own portion. It may be true that splitting the price encourages us all to eat more, and pay less attention to price. That increases the demand for everything, and expensive options in particular (the lobster and filet mignon). It's entirely possible that switching to a "pay-for-your-own-meal" mode…

Except there's a huge difference: cable tv is a zero marginal cost business.

Re: The Cord-Cutting Fantasy

#56

Post by pbreit »

groby_b wrote: post #51
jaibot wrote: post #44

Earlier quoted context omitted.

Behavioral economics. People are willing to pay $50 for 24/7 access to 40 channels, but they won't pay $1 each for the 50 things they actually watch.

Hm. Apple TV/Amazon Instant Video/GoogleTV seems to put paid to that idea. At the very least, there is a group of people who are willing to pay for unbundling.

Apple TV mainly used for Netflix/Hulu. Amazon mainly for Prime bundling. So even the online players are going with bundling.

Re: The Cord-Cutting Fantasy

#58

Post by bluntly_said »

Even assuming the numbers here are correct (and I'm rather skeptical) it means that channels like ESPN are getting heavily subsidized by cable subscribers who aren't interested in that content. That's not a win to me. That's my money going to produce shows that I don't like and don't want to watch.

If ESPN is unable to sustain the level of content/quality they currently show without huge subsidies, they shouldn't be making it. The subsidy to ESPN implies that channels and shows that I DO WATCH are not receiving a fair amount of my bill for the time I spend watching them.

This is not a "better for all" type of socialism. It's a "better for the entrenched" type of taxation.

To reiterate a common theme in the comments: "A la cart distribution is good for consumers and content creators, and is bad for networks and cable providers"

Re: The Cord-Cutting Fantasy

#59

Post by cwe »

ssharp wrote: post #33
cwe wrote: post #17

AMC is a terrible example for this, because their shows are available on iTunes a la carte right now. I have 'cut the cord' and still get new Mad Men episodes thanks to iTunes. I can directly support the show--not even the network--that I like. That is the cord-cutting ideal. Consumers don't give a shit about networks and their profits, we want the content we like at a reasonable price in a timely fashion.

One thing I hate about buying shows on iTunes/Vudu/etc. is that I don't want to OWN them, I just want to watch them. The $2.99 price may be fair for ownership, but for a show I probably only want to watch once before it's available on Netflix, $2.99 seems like a lot.

True, especially since Mad Men ends up on Netflix a few months later.

It's even worse with movies; most you can't rent, and buying them costs as much or more than buying DVD's or Blurays (if you impulse buy on sale, which I always did).

Re: The Cord-Cutting Fantasy

#60

Post by r00fus »

apendleton wrote: post #31
9999 wrote: post #27

Earlier quoted context omitted.

Netflix's move into creating content is specifically in response to cord cutters desires. Since they can't convince HBO to give them their content, they've decided to compete directly with HBO. Cord cutters are actually creating new content creators.

That may well be, but two responses: firstly, House of Cards, in particular, was exorbitantly expensive, and a huge gamble on Netflix's part that may or may not turn out to be sustainable in the long term. Second: Netflix is producing way less content than is available on cable. They produce less content than HBO, which is one cable channel among the hundreds that are currently available in the US. They'll never be a…

Netflix did well to create House of Cards (and LilyHammer, though that one sucked) - they learn the ins/outs of content creation while also adding a feather to their hat of their big offering - a reason for people to not leave.

The "idea" of Netflix as an exclusive content creator has big ramifications. Nascent competitors like HBO get put "on notice". Amazon, who wanted to disrupt them with Prime streaming are put back on the defensive (most of Amazon's similar efforts are pretty lackluster). And in general, investors like it also, as it means a new possible disruption area for Netflix. Furthermore, employees can be proud of something that's an in-house product/process.

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