The Great Cable unbundling continues....

Discussion in 'Apple TV and Home Theater' started by 2010mini, Oct 30, 2014.

  1. 2010mini macrumors 68040

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    #1
    Now Starz is contemplating offering their service without cable.

    https://gigaom.com/2014/10/30/not-just-hbo-starz-wants-to-launch-a-streaming-service-for-cord-cutters-as-well/
     
  2. macUser2007 macrumors 65832

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    #2
    Unbundling is great, but let's see if they pass any of the middle man savings to us....
     
  3. HobeSoundDarryl, Oct 30, 2014
    Last edited: Oct 30, 2014

    HobeSoundDarryl macrumors 603

    HobeSoundDarryl

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    #3
    They won't. Much like HBO's tease, the key thing to notice is no discussion of pricing. And much like HBO, my guess will again be about 2-3 times what Starz costs now in bundled cable. If CBS is going to try to go with $6/month for what is thought of as a free channel or a basic cable channel, these "premium" channels are going to charge more-to-a-lot-more than that.

    If Starz is about $12-$18 in your cable bundle now, they won't want to alienate the big partner where most of their money is made. So I guess pricing will be something toward adult channel pricing in the $35-$50/month range, buy maybe rolling out at $29.99/month. I know that looks crazy but just think it through:
    -CBS at $6/month.
    -Does that put the "big 4" at $24/month for just the big 4 networks?
    -If basic cable that would include the local big 4 costs about $15/month now and adding the Starz premium channel to basic would cost $15 more per month, does the Starz online offering pricing come out at $24 times 2? $24 times 1.5? $24?
    It just doesn't seem likely to me that it could be priced near what it is priced at within the bundled cable deal, so it seems it must start at something north of $18/month. Would Starz be priced at less than the "big 4"?

    People show they are willing to pay up for individual adult channels in that range. Even something like WWE is getting $10-$13/month for only wrestling programming, most of which is already long since in the can.

    Now think about a Starz vs. that. Then think about an ESPN vs. that. Then think about TNT. And so on.

    I love the al-a-carte dream as much as the next guy but the reality seems like it would not involve us paying a lot less for just what we want... unless just what we want is very, very little. Around here, the chorus is usually talking about wanting to pay $5, $10, $20 or maybe $29/month to get everything they want, commercial-free. Take that $20 divide by $6 (for CBS) and everything one wants had better fit into 3 channels (at $6 each). $29/$6 = just under 5 channels. The business math just slams into the dream of al-a-carte.
     
  4. oneMadRssn macrumors 68040

    oneMadRssn

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    #4
    Unless there is some price collusion going on (which would not surprise me at all), more channels selling their content independent of cable should drive prices down, in theory. I think Netflix sort of set the market at under $10/month, and that is what HBO, Starz, and others will need to beat in order to be competitive.

    Also, there is no way I will ever pay a single dollar for CBS. They have the privilege of using a pretty wide band of frequencies, frequencies that I'm sure other companies would be very willing to make much better use of. That is more than payment enough for them.
     
  5. bruinsrme macrumors 601

    bruinsrme

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    #5
    Don't worry, when we are paying $150+ a month for capped internet we will all be laughing
     
  6. orestes1984 macrumors 65816

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    #6
    LOL CBS $6 a month, can't you get CBS over the air pretty much anywhere?
     
  7. ElectronGuru macrumors 65816

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    #7
    Assuming the cbs option is on demand and commercial free, would you pay $6 to replace the advertisers?
     
  8. orestes1984 macrumors 65816

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    #8
    I'd rather just download the shows I want to watch directly through the iTunes store, no need for live TV, everything should just be on demand in this day and age.
     
  9. Lord Hamsa macrumors 6502a

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    #9
    You still get the national commercials, at least for current season offerings. But you do get on-demand access to a good chunk of the CBS library, both current and past - just be aware which shows are actually owned by CBS and which ones are owned by someone else even though they air on CBS (Big Bang Theory, for example). For the latter shows, they'll only be available for the current season, as someone else has the distribution rights beyond that.
     
  10. 2010mini thread starter macrumors 68040

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    #10
    That would require a complete change in the current model. Right now ads are sold by networks based on neilson ratings at specified time slots. If 10 million people watch a show at 9pm, they can market that to advertisers.
     
  11. Lord Hamsa macrumors 6502a

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    #11
    I do that for Doctor Who instead of paying an extra $10/month to get the tier with BBC America included (which was basically the only reason to get that tier). I'll pay $40-$50/year over $120/year and have permanent access to the shows in my library any time.

    Now, with a true ala carte system, I wouldn't expect to pay $40 for every show - a good chunk of that is buying permanent access - but for things I want to just watch once, I could see in the neighborhood of $5-$15 per show per season being reasonable, depending on factors such as show and season length and costs of production, etc.

    Think about it... if you're paying $100/month for cable and the average show costs, let's be conservative and go higher than my estimates above, $20/season, then over the course of a year you could get 60 different ala carte shows for the same price as your cable subscription.

    Of course, that only covers series, not things live live sports, news, etc., but you could look at other ways of getting those. Again, going back to $100/month for cable and $20/season for shows, if you spent $600/year on sports subscriptions, you'd still be able to pick up 30 shows for the same price.

    ----------

    On the whole, I think it would be easier to simply count the number of subscriptions sold than to try to use the old method of attaching monitoring boxes (or paper logs) for "Neilson families".
     
  12. orestes1984 macrumors 65816

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    #12
    The only thing I'd be interested in hooking the dish back up for would be sport, and with the way it is here where I can't get a sports only package I'm not interested in that either. I can go to a bar if I really want to watch sport.
     
  13. HobeSoundDarryl, Oct 31, 2014
    Last edited: Oct 31, 2014

    HobeSoundDarryl macrumors 603

    HobeSoundDarryl

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    #13
    Yes and no. Many people can get CBS with a local antenna if they live close enough to CBS broadcast towers. That's why I reference it as being seen as a "free" channel. However, apparently this CBS streaming option will also include on-demand "in the can" programming (series and shows from past years too) in a Netflix-like way. So, there is some value in there vs. the concept of solely comparing it to the idea of getting CBS for free with an antenna.

    That said though, the reason I reference it is to point out how the content owners view their properties and how they'll see pricing it in some kind of al-a-carte "new model". Is all of CBS (new programming + old series) equivalent to Netflix at $8-$9/month. Some might argue yes while others might argue no. But relative to $8-$9/month, CBS is thinking $6... cheaper than Netflix in spite of producing much more (new) original programming and having a >50-year library of classic series, shows & specials. Is CBS at $6 a better value than WWE at $9-$12/month? Again, people might argue it both ways (personally, I'd probably argue that 50+ years of CBS programming is easily worth more than the very nichey slice of entertainment that is WWE but then that would imply that CBS should price theres at least on par with WWE at $9-$12).

    Now, if CBS can get $6, where does ABC, NBC and FOX price their version of the same? I would guess at least $6. Thus, the big 4 may hit at $24/month. These are 4 channels that many people think of as "free" or that are typically included in basic cable packages with a number of other channels for <$20 or so per month.

    What does a Starz or HBO package cost in cable "as is"? Usually about $15/month. So if basic cable is about $15/month and it includes the "big 4" and Starz doubles that price to add it in, how does Starz and HBO get priced when the big 4 streaming is priced at $24? I think at least $35-$50/month but maybe they'll get very aggressive (relatively) down toward $29/month. Big 4 at $24 plus a Starz or HBO at $30 = $54 for just that set of channels. What about ESPN? What about TNT? What about USA, Food, Comedy Channel, TBS, WGN, CNN, FOX, VH1, your neighbors favorite, their neighbors favorite and so on?

    And there you see the business math problem of this al-a-carte dream clashing with the oft-spun want by us consumers of "everything we want, whenever we want it, commercial-free" for about $5/month... or $10/month... or $20 or $29. In all of these al-a-carte threads, I just about NEVER see anyone talking about wanting to pay more than about $29. Most are dreaming at <$10 or <$20/month. And this begins to show why the actual math is so incompatible with the dream.
     
  14. mac8867 macrumors 6502

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    #14
    You are most likely already paying for capped internet. Take a look at your contract, it's probably something like 200-300 GB. Shocked me when I saw that in mine
     
  15. orestes1984 macrumors 65816

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    #15
    Actually if I could pick and choose the channels I wanted instead of having to buy a whole raft of channels I don't want I might see more value in that $30-$40 a month for the channels you have to buy, but with the way cable works at present you're pretty much stuck buying what you don't want in order to get a couple of channels you do want which is why I got rid of it in the first place.

    The way it's run is a con from the beginning and I do hope digital streaming starts to break that down a bit.
     
  16. HobeSoundDarryl, Oct 31, 2014
    Last edited: Oct 31, 2014

    HobeSoundDarryl macrumors 603

    HobeSoundDarryl

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    #16
    Right and that will come with any mass migration to kill cable revenues and replace them with on-demand streaming. Can they do that with broadband pricing? Why not? It's their pipe? For many, there's no competition to pressure prices down. Where there is competition, that competition is typically also in the cable TV subscription business so they too will want to make up for lost revenues. The model that is replacing their cable TV model is entirely dependent on their broadband pipe. What would you do if you were them?

    But wouldn't it be illegal or something? Cellular bandwidth has already set the precedent of tiered pricing and charging more for "heavier bandwidth users". Some of these wired broadband companies are those very same wireless broadband companies.

    But what about the Gov? Won't they step in and prevent cable from raising broadband rates? Would that be like they prevented cellular companies from pinching wireless broadband with tiered pricing?

    In any scenario including the dream "al-a-carte" scenario, the cable company is still going to get theirs. If they currently sell cable for $100 and broadband for $50 and someone like Apple eats up their $100 with a "new model" replacement that depends on the cable company's broadband pipe, I fully expect broadband pricing to rise to $150 or more (to make up the loss). When a company has a monopoly or a duopoly in some cases, there's little to stop them from getting theirs no matter what. With little to no competition in most places, where you going to go?
     
  17. Hermes Monster macrumors 65816

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    #17
    I thought this was going to be about a new way to keep your cables and wires tidy, behind your entertainment unit :eek:
     
  18. Lord Hamsa macrumors 6502a

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    #18
    A couple of problems with this dire prediction. That $100 cable bill isn't pure profit to the cable companies; they incur a lot of cost to gain that $100 of revenue. If they make more than 15% profit on that, I'd be surprised, and it's the profit they'll primarily be looking to replace.

    Secondly, you either have competition or you're regulated. Or both. Cable companies in monopoly areas typically have to go to a government or quasi-government board to get rate changes approved. That type of board is quite unlikely to approve a doubling or tripling of cost.
     
  19. HobeSoundDarryl, Oct 31, 2014
    Last edited: Oct 31, 2014

    HobeSoundDarryl macrumors 603

    HobeSoundDarryl

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    #19
    At least you're posting a more realistic pricing idea. However again, if you look at CBS at $6 as a kind of base bar of pricing, $30/$6 = 5 channels. $40/6 = 6 channels. Can your picking & choosing of channels work with only 5 or 6 channels?

    And again, if CBS is generally viewed as "free" within the existing model (because we can just put up an antenna and get it for free), how does that imply an ESPN, TNT, HBO and other channel(s) being priced? I would think NOT at $6. If true, that $30-$40 might buy 2-3 highly desirable channels in a pick & choose scenario.

    What people tend to do with this al-a-carte idea is commoditize all channels as about equal (in terms of cost) and they get this idea that $10 or $20 (or $30-$40 in your case) can buy them the 10-20 channels that would make up their perfect, "pick & choose" package. The math is usually 200 channels for $100 = 50 cents a channel. I want 15 channels so my personal bundle should be $7.50/month or so. But that won't fly in reality, anymore than us saying we would like Apple to give us 93% off of Apple product pricing in some kind of "new model". How long could Apple last selling all of their products at 93% off?

    There's a view of al-a-carte already emerging. Along with CBS spinning $6/month, WWE is out at $9-$12/month. Write down your "pick & choose" list and personally consider each channels value against those 2. Is an ESPN to you worth more than CBS? Then price it relative to that $6. Is it worth more than WWE to you? Then price it relative to that $9-$12. Personally, I'd easily value ESPN at 2X-3X WWE but that would imply $27-$36/month for just ESPN. If that made your "pick & choose" package, you would have enough to subscribe to just that one channel.

    How about HBO or Starz? If you like commercial-free movies you might already pay about $15/month for them in a cable/satt bundle. Relative to what you pay for a CBS in that same bundle, they are probably priced at 5X-8X more. So if CBS streaming is $6 does that mean Starz or HBO should be priced at $30 or $48/month?

    The point is we are now getting a few pictures of how the sellers will price their content on a streaming, al-a-carte basis. Of course we can sling how much we want to pay for all of what we want but that's about the same as slinging that we want to pay $50 for iPhone 6 or $200 for the retina iMac. All it takes is putting ourselves in the sellers shoes: If CBS is $6/month and WWE is $9-$12/month, how should I price my channel(s)?

    My perfect package would have about 23 channels. Even at CBS's $6/month (which obviously would be low relative to what would be considered premium channels), 23 times $6 = $138, which is about $60 more than I'm paying for those 23 + "about 180 channels I never watch". So, given the choice, I'd keep the savings in the "as is" and if I want to approximate the concept that I'm getting only my favorite 23, I'll just hide the other 180 channels in the guide so that I can only see the 23.

    The idea that we're paying for every channel isn't even real. Some channels pay the cable company to be there. And all those channels that "I never watch" have commercials running on them that yield a contribution to a subsidy that flows to the content producers of stuff I do watch on other channels. Kill them off and that subsidy (paid for by other people) is also killed off. Does the quality of the programming I like go down to reflect that loss of revenue or do I pay more to make up for the loss of the subsidy?

    Once you go through thoughts like these, it's not hard to see the weakness of the al-a-carte dream. What makes it work is motivating the other players to want to make that kind of change. What motivates them? The opportunity to make more money by changing. How do they make more money if we consumers want to spend a lot less? And there's the biggest problem with the al-a-carte dream (without even getting into the idea of the cable companies making up for the losses of their cable TV revenue with higher broadband rates in any kind of mass change).
     
  20. bruinsrme macrumors 601

    bruinsrme

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    #20
    I agree.
    I will wait for the al-a-carters to start their complaining how incovenient it is to keep up with all the individual al-a-carte payments and wish there was a central service to group all the payments into one neat site. Of course that site, apple or ( ) will set a charge and people will be happy to pay the convenience charge.
    Right back where everyone started.

    Of course internet providers will jack the rates and compensate for loses.
    Then for their customers bundle services at or a lower rate than third party al-a-cartes and broadband provided service.

    My cable bill is $200
    Internet $50 (unlimited or a very high cap including rental)
    Phone $40
    Cable $160
    When bundled $180 then DVR fee

    I could easily see this for non-bundled customers
    Internet $50 Tier 1 cap
    Internet $75 Tier 2 cap
    Internet $120 Tier 3 cap
    Then require their modem at $20 monthly equipment rental
     
  21. HobeSoundDarryl, Oct 31, 2014
    Last edited: Oct 31, 2014

    HobeSoundDarryl macrumors 603

    HobeSoundDarryl

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    #21
    I'm not sure I see the problem. Certainly $100 is not "pure profit"; it's revenue. If an Apple eats $100 per customer in revenue by delivering a "new model", the Cable company will want to make up for that $100 loss (in revenue) with $100 in revenue from somewhere else. Where? Broadband pricing. They'll argue that infrastructure for cable is the same infrastructure for broadband and that it takes the same revenues to yield the operating capital to keep it all going. They'll argue they actually need to make more money to keep up with the spiking demand to support this "new model".

    In another view of the same scene, replacing a cable company middleman with an Apple or similar seems unlikely to yield huge savings either- that's just swapping middle men (distributers). Sure an Apple might decide to charge a little less than cable within that middle man role or they might decide to charge a little more. But I have zero expectations of huge savings by switching out one middleman for another... especially when the other's replacement solution will still be entirely dependent on the former's broadband pipe to even work.

    Relative to the Gov preventing the cable company from raising broadband rates, you have much more faith in Gov looking out for the little guy than I do. Again, I look to the wireless broadband business where so much of this has just gone down. Did the Gov do anything when the Verizons & AT&Ts implemented tiered pricing for "higher bandwidth users"? Many people's wired broadband service are fed by Verizon & AT&T (along with Comcast and others). When the wired companies switched from "unlimited*" to actually publishing a cap, did the Gov do anything?

    Just think it through. A new model comes in that would have consumers eating a lot more data through Cable's broadband pipe. Cable will spin how they need to build up infrastructure to support that ever-growing demand. Campaign contributions will be made and the Gov will look the other way. Stories of people "abusing" wired broadband usage will hit. Tiered wired broadband will be put in place to try to better manage such abuses. Average broadband per household will rise to "balance" the growing demand for al-a-carte streaming (which will more tangibly translate into making up for the revenue loss from the cableTV model being replaced). We've already seen this movie on the wireless broadband side. This would be a pretty close re-make of that same movie.
     
  22. HobeSoundDarryl, Oct 31, 2014
    Last edited: Oct 31, 2014

    HobeSoundDarryl macrumors 603

    HobeSoundDarryl

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    #22
    You already can see the beginnings of this in other :apple:TV threads where people gripe about having to login with each :apple:TV app so that it can validate a cable subscription. People are posting how they want to log in once and have all such channels there unlocked.

    Correct. That's exactly how it will go if al-a-carte comes together. You can already see a little of that too when people realize the real math of it. As I posted above, using CBS's $6/month price against my own ideal "bundle" of 23 channels, my situation would look like this:

    23 channels for $130/month vs.
    "as is" 200 channels for $70/month which includes the 23.

    Mix in concepts of how broadband pricing would change. If average broadband is- say- $50/month and average cable is- say- $70/month and some "new model" could fully replace the CableTV piece, I'd expect the owners of the broadband pipe on which the "new model" entirely depends to evolve pricing to make up for the loss: $120/month for broadband.

    Combined:
    23 channels for $130/month + $120/month for broadband vs.
    "as is" 200 channels for $70/month + $50/month for broadband.

    How could Cable possibly get away with raising broadband that much? Where you going to go? If you are lucky enough- like me- to have more than 1 choice of broadband, isn't the other option(s) also in the cable TV business? In my case, I've got the broadband provider choice of Comcast vs. AT&T. Does anyone think one of those would keep broadband rates at $50 while losing their cableTV revenues and watching the other raise their rates to make up for the loss? Why would they?

    What about Gov regulation? See prior post

    What about Google Fiber? How many cities is that in now? And is Google fiber also in the CableTV business? Yes. And how is that pricing now where it is installed? https://fiber.google.com/cities/kansascity/plans/

    All that said, again, I LOVE the dream as it's often spun. I would want it as much as the dreamers. But I'd also like to buy iPhones and iMacs at 93% off too. It's the math that actually spoils the fantasy. And this particular math is UGLY in just about every way.
     
  23. ElectronGuru macrumors 65816

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    #23
    The Great Cable unbundling continues....

    True, but that's not how [our] government works. Our politicians look to exploit the broadest pain points. In a tiny town around here, to small for Comcast to be bothered serving (because it's not profitable to wire up so few), the town banded together and blanketed the valley with wall to wall unlimited wifi.

    The guys currently burning through 400G per month are a minority, a group small enough that they can be ignored. At the point when 40% of Americans are hitting that same or smaller cap and paying $150/mo for the privilege, politicians will be lined up to help them.

    Now that's not to say that public internet is inevitable. The cable companies aren't stupid. They will see long before 40% that internet is the only commodity they have left and make things only unpleasant enough not to insight voter uprisings. Cause you know, the free market is that effective.
     
  24. StinDaWg, Oct 31, 2014
    Last edited: Oct 31, 2014

    StinDaWg macrumors 6502

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    #24
    HBO is going to be around $15/mo.
    http://www.cnet.com/news/hbo-may-price-online-only-subscription-service-at-15-a-month/

    It already is, with no restrictions. They are basically competing with free, and failing horribly at it. You get a better experience with a pirated service. It shouldn't be that way but it is.
     
  25. Judas1 macrumors 6502a

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    #25
    Its going to cost the same as with cable. The reason is that HBO is totally different from CBS or ESPN. HBO doesn't have commercials, and isn't part of basic cable. People buy HBO solely for the content. The partnership with Cable gives HBO more exposure and subscribers while the cable company gets part of the profit from HBO. HBO is already al a carte within cable. They are just going to expand it outside of cable.
     

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