Verizon unbundles cable

[RegisteredUconn]

Oh it's a moral issue now. Got it. You do realize your free model did the same thing right? Drink Busch but don't watch NASCAR - you are paying for it.

Well it will be tremendous when you get what you want and then there will be nothing that anyone wants to watch.

Rooting for TV to turn into the music industry is one of the stranger things going on the internet.

Somebody call Don Draper! Advertising is a one size fits all industry. All anyone needs is one commercial.

I didn't realize I should check my sense of morality before entering www.the-Boneyard.com.

What you are arguing for is already dying. This thread is about how Verizon just moved to recognize that. Cable has not moved to contain costs and now it is they who will pay. Detroit offered a similar paradigm in the 1970s when they simultaneously built shoddy cars AND ignored labor costs. Then World War Two's losers came calling. Like the Big 3, cable believed in gold laying geese. You're a guesser so guess what...they're aren't any. Young adults are fleeing cable like their parents and grandparents fled GM, Ford, and Chrysler. How long will Comcast et. al. survive with a revenue base trying to decide whether to get Bravo or an artificial hip?

 

[RegisteredUconn]

Because things don't work that way. If there's an opportunity to get you coming and going, business will find that opportunity and make money from it. You're already on multiple mailings lists because of the merchandise you buy (which isn't free). But I'd think that the value of that information will at least partly offset your cost.

Don't disagree with anything you've said here. I just believe the cable providers have overreached to the extent they won't survive in their current form. Expensive and complicated subscription options don't work. The phone company tried it when they had the monopoly. Now I can make as many calls as I want for as long as I want and pay less to boot.

 

[whaler11]

Somebody call Don Draper! Advertising is a one size fits all industry. All anyone needs is one commercial.

I didn't realize I should check my sense of morality before entering www.the-Boneyard.com.

What you are arguing for is already dying. This thread is about how Verizon just moved to recognize that. Cable has not moved to contain costs and now it is they who will pay. Detroit offered a similar paradigm in the 1970s when they simultaneously built shoddy cars AND ignored labor costs. Then World War Two's losers came calling. Like the Big 3, cable believed in gold laying geese. You're a guesser so guess what...they're aren't any. Young adults are fleeing cable like their parents and grandparents fled GM, Ford, and Chrysler. How long will Comcast et. al. survive with a revenue base trying to decide whether to get Bravo or an artificial hip?

I don't see how it's a moral issue. The advertising angle is no more moral than cable bundling. The cost of products are higher because companies sponsor programming. If I don't watch that programming it's the same subsidy as cable bundling.

There is no morality in question.

I'm not arguing for the current model BTW. Just pointing out that for sports fans it's the best model that will ever exist and instead of trying to make it go away we should try to make it last as long as possible.

If you like great television and think you are going to continue to get the quantity of great shows you get today due to the cable model...

So less good programming - a way more complicated and less reliable delivery system plus the same companies have you by the balls because at least cable has competition where high speed internet it doesn't really exist...

So good you can pay for exactly what you use. You'll have fewer good options and it will be a pain in the rear to access and when your internet bill triples you'll save nothing - this is what people have made themselves excited about?

 

[RegisteredUconn]

I don't see how it's a moral issue. The advertising angle is no more moral than cable bundling. The cost of products are higher because companies sponsor programming. If I don't watch that programming it's the same subsidy as cable bundling. I do believe, however, that advertising is a form of communication rather than a direct charge for a product like cable bundling. Is the cost of communication baked into the product price? I'm sure it is.

There is no morality in question. I believe you used the word "moral" first although I did say something to the effect I don't think it's right to charge people for something they don't want so you could easily make a case that I started it.

I'm not arguing for the current model BTW. Just pointing out that for sports fans it's the best model that will ever exist and instead of trying to make it go away we should try to make it last as long as possible. I'll argue against the "best model" theory. Perhaps, had the cable execs done more to control costs (including athletes salaries) rather simply passing increases along to the consumer, it may have continued to exist, but they didn't and it won't. Ergo, it was (or became) a bad model. In a nutshell, cable TV is too expensive...and it's dying.


If you like great television and think you are going to continue to get the quantity of great shows you get today due to the cable model... I don't want or expect a quantity of product not reflective of the price I'm willing to pay. Cable TV has exceeded that price. People withdrawing from the revenue stream is far more deleterious to quantity.

So less good programming - a way more complicated and less reliable delivery system plus the same companies have you by the balls because at least cable has competition where high speed internet it doesn't really exist... In your preferred business model less good programming is on the way because cable has priced themselves disadvantageously. Their problem is that lowering their price alone won't bring back the customers. People have abandoned them, found different ways to allocate their entertainment dollars. When people abandoned Detroit, they did more than simply refuse to continue subsidizing inferiority. They shifted their paradigm. Buying American just because it's American is no longer how people think about purchases.

So good you can pay for exactly what you use. You'll have fewer good options and it will be a pain in the rear to access and when your internet bill triples you'll save nothing - this is what people have made themselves excited about? While paying for what I use is a useful shorthand to describe the problem, it's not the entirety of it. It's really the price demanded for something I don't want. Every time I eat at Olive Garden I (indirectly) pay the price of "free" bread sticks whether I eat them or not. As long as that price is negligible, no harm no foul. Cable bundling is ludicrously beyond any conceivable definition of "negligible." It's like Olive Garden offering free bread sticks plus all the pickled beets, kale, and tofu I can eat plus a free shoe shine and car wash plus transportation to and from somewhere within 5 miles of my home plus free pick up and disposal of of all my pre-1000 A.D. Viking long boats plus...

 

[whaler11]

I don't see how it's a moral issue. The advertising angle is no more moral than cable bundling. The cost of products are higher because companies sponsor programming. If I don't watch that programming it's the same subsidy as cable bundling. I do believe, however, that advertising is a form of communication rather than a direct charge for a product like cable bundling. Is the cost of communication baked into the product price? I'm sure it is.

There is no morality in question. I believe you used the word "moral" first although I did say something to the effect I don't think it's right to charge people for something they don't want so you could easily make a case that I started it.

I'm not arguing for the current model BTW. Just pointing out that for sports fans it's the best model that will ever exist and instead of trying to make it go away we should try to make it last as long as possible. I'll argue against the "best model" theory. Perhaps, had the cable execs done more to control costs (including athletes salaries) rather simply passing increases along to the consumer, it may have continued to exist, but they didn't and it won't. Ergo, it was (or became) a bad model. In a nutshell, cable TV is too expensive...and it's dying.


If you like great television and think you are going to continue to get the quantity of great shows you get today due to the cable model... I don't want or expect a quantity of product not reflective of the price I'm willing to pay. Cable TV has exceeded that price. People withdrawing from the revenue stream is far more deleterious to quantity.

So less good programming - a way more complicated and less reliable delivery system plus the same companies have you by the balls because at least cable has competition where high speed internet it doesn't really exist... In your preferred business model less good programming is on the way because cable has priced themselves disadvantageously. Their problem is that lowering their price alone won't bring back the customers. People have abandoned them, found different ways to allocate their entertainment dollars. When people abandoned Detroit, they did more than simply refuse to continue subsidizing inferiority. They shifted their paradigm. Buying American just because it's American is no longer how people think about purchases.

So good you can pay for exactly what you use. You'll have fewer good options and it will be a pain in the rear to access and when your internet bill triples you'll save nothing - this is what people have made themselves excited about? While paying for what I use is a useful shorthand to describe the problem, it's not the entirety of it. It's really the price demanded for something I don't want. Every time I eat at Olive Garden I (indirectly) pay the price of "free" bread sticks whether I eat them or not. As long as that price is negligible, no harm no foul. Cable bundling is ludicrously beyond any conceivable definition of "negligible." It's like Olive Garden offering free bread sticks plus all the pickled beets, kale, and tofu I can eat plus a free shoe shine and car wash plus transportation to and from somewhere within 5 miles of my home plus free pick up and disposal of of all my pre-1000 A.D. Viking long boats plus...

I introduced the word moral because it fit what you were describing.

I fully understand that a good number of people don't want to pay $200 cable bills - that's fine that is their choice.

It might look like you can create a situation where you can still get what you want at lower price points. What they are willfully ignoring is that is not what will happen.

Once enough people stop passively paying for hundreds of networks to create content - the quality and quantity of programming will disappear.

If you think companies like Cablevision and Comcast are going to sell you high speed internet at the same price they do today when their cable revenue craters... it seems obvious that you are going to actually remove competition from the equation and end up paying more for less in the long run - but I guess it will need to happen before people realize that.

In short the early adopters will do well in the near term. Then we'll all be worse off.

 

[billybud]

We do live in the golden age of sports entertainment on TV. Before 1984 college football was limited to eight national games with regional games in five specified weeks. When I was a small boy, the NCAA limited televised games to one per week.

You could play an entire career at a school like FSU or Southern Miss and never play in a regular season televised game.

Sure...we all have 200 channels and watch a dozen of them. But the beauty of that is that, no matter your interest, it is probably supported. From news channels to HGTV to The History Channel to sports to food. Ala carte costs to support such broad interests could well be more than the current socialized cost.

 

[storrsroars]

We do live in the golden age of sports entertainment on TV. Before 1984 college football was limited to eight national games with regional games in five specified weeks. When I was a small boy, the NCAA limited televised games to one per week.

You could play an entire career at a school like FSU or Southern Miss and never play in a regular season televised game.

Sure...we all have 200 channels and watch a dozen of them. But the beauty of that is that, no matter your interest, it is probably supported. From news channels to HGTV to The History Channel to sports to food. Ala carte costs to support such broad interests could well be more than the current socialized cost.

Certainly it's going to be a case of, "May you live in interesting times."

But, in reality, is there much on HGTV that you can't already find on YT? Would anyone with a brain really pay for a TMZ channel? Once we reach the tipping point of subscription viewing, it's really going to be a litmus test on what is truly of value to the viewing public.

On one hand, the benefit could be fewer Kardashians and talentless reality TV stars who never get traction to enter into public conciousness. OTOH, maybe the revenues for sports programming nosedive to a point where salaries/prize money has to come down to late-1980s levels to make the numbers work.

Probably the most significant downside is that the eventual outcome of narrowcasting is that it creates less common interest and more divisiveness. You see that already in the Fox vs. MSNBC viewership. Now expand that to everything. What would happen if an all-MMA channel became more valuable than an all-NBA channel? And what would that suggest about us as a society? Don't laugh as it could happen down the road if the costs for viewing NBA become too high while MMA can price itself as an affordable alternative and develop more stars.

This snowball is already gaining steam. You see it in the number of websites that have gone from advertiser-supported to subscription models. It takes talent to be able to pull that off. I subscribe to a couple at $2-$3/month. If I were to do that for every specialized interest, that would certainly add up quickly. And when it got to be too much, I'd have to make choices, just like I have to make a decision to cut the cable when it gets over $200/month. Do I like watching Better Call Saul? Sure. Do I need it? Nope. I can read a book.

All sorts of outcomes are possible. As a marketer myself, it'll be fun to watch this develop.

 

[frankthetank]

In short the early adopters will do well in the near term. Then we'll all be worse off.

Most accurate quote here. Short-term gains will turn into long-term losses.

A la carte sounds great to a lot of people because they're assuming that they'll have today's full suite of channel and program options to choose from. However, in the long term, many (most?) of those channel options can't be sustained under a direct subscriber model, and the ones that survive will only be the very largest broad audience channels (i.e., the circa-1985 cable lineup of ESPN, MTV, CNN, USA, TBS, etc.). That defeats the entire allure of a la carte in the first place. Is it truly a la carte if you just have 20 channels to choose from at the end? That produces less programming for Netflix and Amazon Prime (which, even though they're producing some shows on their own, are still largely dependent on third party IP), which reduces the choices on those platforms.

Now, one could argue that if channels can't survive by the direct subscriber model, then they shouldn't have existed in the first place. I understand that from a detached economic perspective if we're talking about the "widget industry", but note that most people don't consume media in the way that they order dinner (or some of the other examples that I've seen) at all. Ordering TV channels a la carte isn't the same as ordering a cheeseburger for one meal. Instead, it's akin to ordering a cheeseburger for every meal every day without variation and knowing that is ALL that you want. Most of us don't consume media that way - we'll nibble on a drama here, a comedy there, a sports event one evening, a news program another evening. That would apply to TV, surfing the Internet or even on-demand choices like Netflix.

Note that Netflix streaming isn't attractive as a pay-per-view service (which is true a la carte) - the whole value proposition is that it has a critical mass of an entire array of programming to offer lots of different types of people. This isn't that different than basic cable - it just comes in a different package. The costs of producing House of Cards and Orange is a New Black are getting subsidized by the subscribers that mainly use it for kids programming (which, if you have young kids, is probably where Netflix gets the most usage) and movies just as you see ESPN subsidize the costs of other Disney channels on basic cable.

So, cord cutters might be getting some programming cost arbitrage right now because Netflix streaming (which, to be sure, is a GREAT service for the current price) is still in growth mode making little to no profit, meaning those cord cutters are getting a lot of programming paid for by the basic cable model at a less than basic cable price for the short-term. Simple economics says that this can't last forever - either Netflix prices have to rise in order to continue to maintain the same level of programming (and shareholders will inevitably want to see profits instead of subscriber growth) or Netflix will need to reduce their programming options (which reduces its value as a basic cable substitute).

Now, this might inevitably be the model that we'll all have to live with. I just don't see it through rose-colored glasses through the long-term. A la carte choices are only attractive to the extent that such choices actually survive and exist (or else, all we'll end up doing is paying a la carte for the circa-1985 cable channel lineup in the long-term). We might pay less money for less programming. We might pay more money for the same programming that we have now. In no way, though, will we pay less money for the same programming that we have now under the a la carte model. Too many people are being tricked into thinking that the latter is somehow possible in the long-term.

 

[pj]

A la carte benefits people who only want a few channels; they'll pay less. A la carte harms people who want many channels; they'll pay more. Overall, less revenue will flow to producers, so there will be fewer channels.

Not much incentive to producers to move to a la carte. UConn's content for instance is probably worth $30-40 mn in the B1G sold through their networks but $5 mn sold a la carte.

 

[itgoeslike]

With regard to less choice and more cost. . .People said the same about books, when "publishing" companies controlled content and distribution. People said the same thing about music, when "publishing" companies controlled content and distribution. It's silly to suggest that the video content will be substantially different. Of course, video is bigger, more complex, requires more bandwidth, and has more obstacles, but it will evolve, and ultimately people will have more choices, and pay less in aggregate for content they value. And in some instances, it will provide greater access to projects that may not meet the definition of commercial success. You'll also be able to seamlessly add one-off programming, seasons, or genres without having to commit to a contract. The model will evolve, along with many of the current players, and projects will still get developed, pitched and promoted to/or by the prevailing distribution options. By simplifying access and creating competition consumption will grow, not contract. Netflix's 60M viewers are consuming more than 2 hours of content a day for 8 bucks a month. New media companies, old media companies (cable et al), and people under 30 understand what's coming. However, many of my compatriots over 40 really don't.

The potential for a monopolization of the "pipe" will likely have a greater impact on how much consumers pay (versus any form of a la carte), which is why the government appears to be moving against the merger of Time/Warner and Comcast (shades of Ma Bell). BTW, ESPN is fighting Verizon on this claiming their contract prohibits it. The last thing they want is the non-sports viewer is too see the percentage of their cable bill that is allocated to sports programming. Additionally , I can't imagine they want to "bring along" many of their competitors in a limited genre offering. . .

 

[CL82]

The value of keep us an ESPN product just jumped up a few notches.

 

[whaler11]

With regard to less choice and more cost. . .People said the same about books, when "publishing" companies controlled content and distribution. People said the same thing about music, when "publishing" companies controlled content and distribution. It's silly to suggest that the video content will be substantially different. Of course, video is bigger, more complex, requires more bandwidth, and has more obstacles, but it will evolve, and ultimately people will have more choices, and pay less in aggregate for content they value. And in some instances, it will provide greater access to projects that may not meet the definition of commercial success. You'll also be able to seamlessly add one-off programming, seasons, or genres without having to commit to a contract. The model will evolve, along with many of the current players, and projects will still get developed, pitched and promoted to/or by the prevailing distribution options. By simplifying access and creating competition consumption will grow, not contract. Netflix's 60M viewers are consuming more than 2 hours of content a day for 8 bucks a month. New media companies, old media companies (cable et al), and people under 30 understand what's coming. However, many of my compatriots over 40 really don't.

The potential for a monopolization of the "pipe" will likely have a greater impact on how much consumers pay (versus any form of a la carte), which is why the government appears to be moving against the merger of Time/Warner and Comcast (shades of Ma Bell). BTW, ESPN is fighting Verizon on this claiming their contract prohibits it. The last thing they want is the non-sports viewer is too see the percentage of their cable bill that is allocated to sports programming. Additionally , I can't imagine they want to "bring along" many of their competitors in a limited genre offering. . .

We'll see what happens but the scale of producing a television show worth watching is nothing like the capital required to write a book or record music.

If you lose the scale of cable carriage dollars - you end up with something that looks more like the movie industry - the same recycled ideas that are designed for the lowest common denominator.

 

[itgoeslike]

We'll see what happens but the scale of producing a television show worth watching is nothing like the capital required to write a book or record music.

If you lose the scale of cable carriage dollars - you end up with something that looks more like the movie industry - the same recycled ideas that are designed for the lowest common denominator.

HBO and Netflix don't rely on carriage and have a pretty good track record for producing award-winning content. You may think carriage goes into production value, but it typically ends up funding low-cost fair like Honey Boo Boo, Duck Dynasty, The Kardashians, The Real Housewives, home makeover shows and 17 versions of CSI. I'm picking on these shows but many are premier properties (guess what they stuff into the remaining hours). Their goal is to generate maximum revenue/profit via advertising and living off the carriage dole. Delivering exception production quality is rarely at the top of the list. If anything, not having carriage to fall back on will force content providers to improve their product. If it's good it will get funded.

This coming evolution is really more about access, flexibility, convenience and distribution. Today, instead of allowing you select nice cuts of beef, the cable companies have been fattening you up on a mix ground beef, crushed saltines and melamine. Sure it's filling, but is it satisfying? Listen, ESPN, Disney, etc. have too much content, resources and leverage to lose, but they clearly want to manage the transition. Sports will be fine. And I'm sure you'll find a "Reality" streaming package to round out your viewing pleasure. . .

Since the last time we agreed to "see what happens" ESPN, HBO, the Networks, and others have all set up streaming solutions. They are all different, but all are trending in the same direction.

 

[UConnJim]

It has always been my opinion that ala carte cable options is good for UConn. Why? UConn has a strong fan base, strong brand, successful athletics, and an affluent demographic which means people will pay for the content. Can you say the same of all P5 schools? The answer is no as there are a lot of conference free riders who are reaping the benefits of stronger schools in their conference.

Anyone who doesn't think the cable model is undergoing a paradigm shift is not looking at the trends. Cable subs have peaked and Netflix subs are surging. Young people don't watch network TV and generally are not signing up for cable. ESPN is not growing subs anymore, they are increasing price.

The old saying in media is content is king. Some schools/conferences have it and some don't. This is why UConn is an attractive expansion target in a changing media landscape.

 

[whaler11]

HBO and Netflix don't rely on carriage and have a pretty good track record for producing award-winning content. You may think carriage goes into production value, but it typically ends up funding low-cost fair like Honey Boo Boo, Duck Dynasty, The Kardashians, The Real Housewives, home makeover shows and 17 versions of CSI. I'm picking on these shows but many are premier properties (guess what they stuff into the remaining hours). Their goal is to generate maximum revenue/profit via advertising and living off the carriage dole. Delivering exception production quality is rarely at the top of the list. If anything, not having carriage to fall back on will force content providers to improve their product. If it's good it will get funded.

This coming evolution is really more about access, flexibility, convenience and distribution. Today, instead of allowing you select nice cuts of beef, the cable companies have been fattening you up on a mix ground beef, crushed saltines and melamine. Sure it's filling, but is it satisfying? Listen, ESPN, Disney, etc. have too much content, resources and leverage to lose, but they clearly want to manage the transition. Sports will be fine. And I'm sure you'll find a "Reality" streaming package to round out your viewing pleasure. . .

Since the last time we agreed to "see what happens" ESPN, HBO, the Networks, and others have all set up streaming solutions. They are all different, but all are trending in the same direction.

How exactly does HBO not rely on carraige? Those 29 million subscribers don't count?

I understand where it's going. I just don't agree with you that it will be less expensive or provide the broad array of programming we get today.
The motion picture industry sure doesn't look like what you predict.

Netflix will be interesting. They have produced some very good things. They also have a p/e ratio of 131 - and like Frank mentioned at some point actually generating profits will be required. It's fairly incredible a company will a $540 billion dollar market cap only made 25 million dollars in the first quarter. Acquiring content is only going to continue to become more expensive and the lunatics in congress could stick it to them on net-neutrality.

I highly doubt anyone moving forward will have a critical mass of content like Netflix does today (look how mediocre the streaming
movie selections have become already). They certainly won't be able to put together it together at a $10 price point as competition increases and the content owners have their own foray into similar services.

 

[UConnJim]

How exactly does HBO not rely on carraige? Those 29 million subscribers don't count?

I understand where it's going. I just don't agree with you that it will be less expensive or provide the broad array of programming we get today.
The motion picture industry sure doesn't look like what you predict.

Netflix will be interesting. They have produced some very good things. They also have a p/e ratio of 131 - and like Frank mentioned at some point actually generating profits will be required. It's fairly incredible a company will a $540 billion dollar market cap only made 25 million dollars in the first quarter. Acquiring content is only going to continue to become more expensive and the lunatics in congress could stick it to them on net-neutrality.

I highly doubt anyone moving forward will have a critical mass of content like Netflix does today (look how mediocre the streaming
movie selections have become already). They certainly won't be able to put together it together at a $10 price point as competition increases and the content owners have their own foray into similar services.

I'm glad your not managing money for a living. Netflix has a market cap of $35 billion and has 57 million subscribers growing fast. Currently, NFLX is valued at ~$600/sub which doesn't seem outrageous, although smart minds could differ given they haven't produced profits yet. This was the same argument people have used for Amazon, but the revenue growth has continued to be terrific, although profits less so.

People will view their content any way they want in the future and all content providers will have to adjust their models. Look at HBO. They see the trends and they are starting to offer HBO directly. Unlike ESPN, they are not included in basic cable and price their content to the number of subscribers. ESPN has succeeded in getting included in basic cable so they can charge everyone for content they may not want. That is not a sustainable model in the future.

 

[whaler11]

I'm glad your not managing money for a living. Netflix has a market cap of $35 billion and has 57 million subscribers growing fast. Currently, NFLX is valued at ~$600/sub which doesn't seem outrageous, although smart minds could differ given they haven't produced profits yet. This was the same argument people have used for Amazon, but the revenue growth has continued to be terrific, although profits less so.

People will view their content any way they want in the future and all content providers will have to adjust their models. Look at HBO. They see the trends and they are starting to offer HBO directly. Unlike ESPN, they are not included in basic cable and price their content to the number of subscribers. ESPN has succeeded in getting included in basic cable so they can charge everyone for content they may not want. That is not a sustainable model in the future.

So you don't see any issues for Netflix? You are buying at $567 a share and a 131 p/e?

When did I argue things aren't changing? I'm arguing that in the end we won't be better off.

 

[UConnJim]

So you don't see any issues for Netflix? You are buying at $567 a share and a 131 p/e?

When did I argue things aren't changing? I'm arguing that in the end we won't be better off.

$600 /sub is not expensive in my view and NFLX does not have a $540 billion market cap as you stated. It is $35 billion or 6% of your stated value. Is it a buy? Not my taste in stocks, but for an aggressive growth investor? Probably. The key is how much money can they make on their subs? $20/sub profit gives you a 30 multiple. I think they will figure it out.

As for net neutrality, the current new regs are written to prevent the large cable providers from competing with Netflix based on download speeds. That is very positive for Netflix. What is doesn't prevent is small new entrants from entering the market, so competitors could arise, but Netflix has a big head start. End of the day, Netflix could end up being the platform for content providers to sell their content as there is a value for someone to consolidate content.

As for P/E ratios, don't focus too much on them. Why? For example, cyclical stocks are buys when they are either losing money or selling at high P/Es and sells when they are making money and sell at low P/Es. For growth stocks, when the growth is there, give them some leeway. Stay away from former fast growth stocks that are experiencing decelerating or declining growth rates.

 

[whaler11]

$600 /sub is not expensive in my view and NFLX does not have a $540 billion market cap as you stated. It is $35 billion or 6% of your stated value. Is it a buy? Not my taste in stocks, but for an aggressive growth investor? Probably. The key is how much money can they make on their subs? $20/sub profit gives you a 30 multiple. I think they will figure it out.

As for net neutrality, the current new regs are written to prevent the large cable providers from competing with Netflix based on download speeds. That is very positive for Netflix. What is doesn't prevent is small new entrants from entering the market, so competitors could arise, but Netflix has a big head start. End of the day, Netflix could end up being the platform for content providers to sell their content as there is a value for someone to consolidate content.

As for P/E ratios, don't focus too much on them. Why? For example, cyclical stocks are buys when they are either losing money or selling at high P/Es and sells when they are making money and sell at low P/Es. For growth stocks, when the growth is there, give them some leeway. Stay away from former fast growth stocks that are experiencing decelerating or declining growth rates.

Yeah I don't know why I stuck a number near the stock price in as their market cap.

Yes, the current NN rules favor Netflix and I hope they stick - but it's a huge potential risk for
them - look how hard they are still fighting the TWC/Comcast deal.

I don't get hung up on p/e generally, but I wouldn't buy Netflix now (I generally don't try and fool myself into thinking I'm a stock picker anyway). I just look at how much more expensive acquiring the content is about to become and how many of the companies currently providing it are going to attempt to compete.

I don't understand their strategy or the international landscape well enough to understand what that means for them.

Will be interesting to see what happens the next time they raise prices - because either they are going to bleed content or be forced to increase them.

 

[itgoeslike]

How exactly does HBO not rely on carraige? Those 29 million subscribers don't count?

HBO is a premium channel and not part of a basic package, which, if anything, reinforces the concept that people will pay for quality programming. Their new HBO Direct product is being offered for less than my carrier charges. Of course, most providers are matching the rate (that's right, prices went down). This also speaks to the potential for profit when you flatten the distribution.

Technology and market acceptance will (eventually) enable the "motion picture industry" (Disney, Viacom, Sony, etc.) and other content owners (NFL, NBA, etc.) to distribute directly as well as leverage any prevailing distribution models. There will be an opportunity for many models to succeed without having to match the "critical mass of content" of Netflix. Although, Amazon, Apple, Google, Sony and some of the existing players all have the potential to compete with Netflix.

Nothing's going to change overnight, until it does. . .

 

[itgoeslike]

It has always been my opinion that ala carte cable options is good for UConn. Why? UConn has a strong fan base, strong brand, successful athletics, and an affluent demographic which means people will pay for the content. Can you say the same of all P5 schools? The answer is no as there are a lot of conference free riders who are reaping the benefits of stronger schools in their conference.

Anyone who doesn't think the cable model is undergoing a paradigm shift is not looking at the trends. Cable subs have peaked and Netflix subs are surging. Young people don't watch network TV and generally are not signing up for cable. ESPN is not growing subs anymore, they are increasing price.

The old saying in media is content is king. Some schools/conferences have it and some don't. This is why UConn is an attractive expansion target in a changing media landscape.

I agree. The only thing I would add is that when you control a block of content, especially when there is a limited amount, you gain leverage. Disney/ESPN knows this drill.

 

[UConnJim]

I agree. The only thing I would add is that when you control a block of content, especially when there is a limited amount, you gain leverage. Disney/ESPN knows this drill.

True, ESPN has locked up lots of content, but there is a ton of sports programming that doesn't pull it's weight. Look at cable TV ratings. There is lots of crappy content that pulls better ratings than typical ESPN content.

For sports addicts, ESPN is a bargain at ~$5/month, but it is very costly for the majority of cable subscribers that aren't that interested. Throw in other national sports networks, regional sports networks, conference networks... and the average cable subscriber is subsidizing the rabid fans. This is not a sustainable LT model.

 

[itgoeslike]

True, ESPN has locked up lots of content, but there is a ton of sports programming that doesn't pull it's weight. Look at cable TV ratings. There is lots of crappy content that pulls better ratings than typical ESPN content.

For sports addicts, ESPN is a bargain at ~$5/month, but it is very costly for the majority of cable subscribers that aren't that interested. Throw in other national sports networks, regional sports networks, conference networks... and the average cable subscriber is subsidizing the rabid fans. This is not a sustainable LT model.

I don't disagree about the model and Verizon is certainly looking to jumpstart things. The block I was referencing had more to do with the B1G locking up a large chunk of live programming.

 

[IMind]

I actually don't think bundling is going anywhere... people like choice. What I think will happen is that those people that want to be able to pick and choose a few channels will get that... or those that are happy watching shows three weeks after they air on Hulu will continue to do so. The rest of us will continue to pay $200/month... sure the delivery mechanism may change from traditional cable to streaming, etc... DirecTV doesn't advertise that you only get the 5 channels you want... they advertise that you get 100s of channels.

People subsidize other people all the time. If anyone who streams video had to pay the actual cost of their internet usage.. on a per/mb basis they'd freak out. For everyone like me with 45 devices hooked up to the internet, with two kids streaming content constantly, and playing online games... their someone who just posts on Facebook.

 

[minidarren]

I actually don't think bundling is going anywhere... people like choice. What I think will happen is that those people that want to be able to pick and choose a few channels will get that... or those that are happy watching shows three weeks after they air on Hulu will continue to do so. The rest of us will continue to pay $200/month... sure the delivery mechanism may change from traditional cable to streaming, etc... DirecTV doesn't advertise that you only get the 5 channels you want... they advertise that you get 100s of channels.

People subsidize other people all the time. If anyone who streams video had to pay the actual cost of their internet usage.. on a per/mb basis they'd freak out. For everyone like me with 45 devices hooked up to the internet, with two kids streaming content constantly, and playing online games... their someone who just posts on Facebook.

Stop abusing the system jack wad with your 45 devices. I'm sick of paying for your arse.

JK