AT&T’s Troubling Plan to Change HBO

Eh, Nintendo hasn’t always made lower-spec hardware than the competition. That started with the Wii in 2006, followed by the Wii U in 2012 and now the Switch (but the Switch has an excuse, its portability). Before that, though, the GameCube outspecced the PS2 and the N64 outspecced the PS1.

It’s true that today’s Nintendo can get away with lower specs, largely due to their high reliance on first-party exclusives – both because their titles tend to use cartoony graphics which don’t benefit as much from increased processing power, and because their status as exclusives creates differentiation, a reason to buy Nintendo’s console over the others even if it doesn’t win on specs. And in exchange, Nintendo is typically able to sell their consoles at a lower price point.

But this strategy has its costs, as Nintendo learned with the Wii U. In the original Wii era, it was completely unfeasible to port titles designed for PS3 or Xbox 360 (or PC) to the Wii, because it was far too underpowered (single-core 729MHz CPU, 88MB of RAM!). But it had a large selection of third-party titles anyway, including the big brand names, because the Wii sold so many consoles that third parties were incentivized to develop games (or versions of their games) specifically for it. On the other hand, the Wii U was if anything slightly less far behind than its contemporaries in specs, but still not close enough for successful ports of AAA titles. And since it sold much less, third parties didn’t target it nearly as much as a primary platform, either. The result was a serious dearth of third party titles – which further reduced console sales, a vicious cycle.

The Switch seems to be at least somewhat of a different story. For one thing, as a portable console it’s a successor to not just the Wii U but also the 3DS – which has always been highly popular. And its sales to date have looked more like the Wii’s than the Wii U’s. It also benefits from a relative stagnation in processing capabilities of its competitors, which has given it a bit more room to catch up (even though, as a mobile Tegra based design, it’s still far behind). But it’s still going to suffer a lot from not having the usual complement of AAA games that are on every other system. For most hardcore gamers (which is not Nintendo’s core demographic but nevertheless a big one), it’s a second console, not a first.

If it were just a matter of price, I don’t think it would be all that surprising or unreasonable for Nintendo to come out with an equal-spec console next time around. Maybe not the most likely possibility, but not super unlikely either. And there would be a clear sales pitch. Your $600 figure is an exaggeration – Xbox One X launched at $500, PS4 Pro at $400; and the Switch at $300, only $100 cheaper than the latter. So it would be more like, $400 to buy a console that has the new Mario game (and Zelda and Smash Bros. and all of Nintendo’s other games)... plus CoD, whatever comes after Skyrim, and all the other cross-platform stuff that appeals to kids. Or you can pay the same price for a competitor’s console with the same cross-platform games, no Mario, and far fewer exclusives overall.

In reality, though, it’s not just about price but also portability. While it’s just a guess, I think Nintendo’s next console will be a “Switch 2”, with the same hybrid form factor, and probably a similar NVIDIA architecture to allow backwards compatibility. If so, while they might be able to narrow the gap some more, they won’t come close to getting rid of it, regardless of price point.

Sopranos, Curb Your Enthusiasm, Six Feet Under, Sex And the City and The Wire are currently "free" in Amazon Prime.

At some point those licenses will expire but this illustrates the "innovator's dilemma" as applied to HBO.

They have a good business of selling cable subscriptions for new stuff, licensing their past shows to Amazon, Hulu and other willing buyers and selling on-demand access via Apple, Amazon etc.

Now they need to compete with Netlifx, which has a large catalog of licensed, popular shows from all over and their own exclusive content.

To compete with that HBO would have to drop revenue from licensing (there's less reasons to pay for HBO if I can get a lot of their good stuff elsewhere)

Their cable subscriptions are probably going to decline no matter what. Cable subscriber count is on a steady, 6 year decline (http://www.businessinsider.com/cable-tv-subscriber-losses-q2...) despite being propped by internet + cable bundles.

That decline is accelerating i.e. every year more people are cancelling cable as a percentage. If that continues, it'll be a bloodbath. If the decline stops accelerating, it'll still be bloodbath, just later. I don't see a scenario in which cable starts growing again.

Netlifx model is easy to explain but almost impossible to replicate.

The model is: get so many subscribers from all over the world paying you relatively small amount that you'll be able to outspend any other company in quantity of TV/movie exclusive content, thus making it even more likely to get new subscribers.

This is "rich get richer" model and Netflix is already the richest.

People will be willing to buy 2-3 such subscriptions so that's how many winning slots there are.

So HBO better fight hard for that 2nd or 3rd position, but unfortunately just like BlockBuster or Borders had a good business until they didn't, HBO might not do enough to compete.

Don't feel so bad about the analog satellite downlink hack box and torrenting anymore. The question is: will programming decline?

With its position as ISP, AT&T can make trouble for Netflix content delivery.

And they know how. Remember all those independent DSL providers, back around the millennium? I had one for years, then intermittent failures set in. After months of debugging, the cause was traced to misconfigured AT&T equipment in the local office.

It's as easy and untraceable as deprioritizing Netflix-sensitive operations tasks.

What is it that you think the prestige networks do to develop shows? They're not writing them themselves; they buy them from writers and production companies. Nobody is suggesting that AT&T is going to pull the next Sopranos out of a conference room meeting.