As Expected, Intel Runs Face First Into TV Licensing Wall
Just Like Every Internet TV Effort Before It...
by Karl Bode 08:58AM Thursday Jan 03 2013 Tipped by amungus
The well-hyped (via leaks) Intel TV initiative we briefly discussed earlier this week
appears to have already hit a few snags. Rumors earlier this week suggested that Intel was tired of other companies' failing at Internet TV, and was planning a new service that Intel swears will finally disrupt the pay TV ecosystem. Intel, and much of the coverage ignored that nobody (Even tech sweethearts Apple and Google) has been able to get around broadcast industry licensing specifically designed to crush innovation and disruption.
According to a report in the Wall Street Journal
, Intel's efforts appears to have hit delays thanks to (drum roll, please) problems with sealing licensing arrangements with cable and broadcast companies:
One person familiar with Intel's thinking on Monday predicted it would launch its offering by mid-2013. Another person said a service might not arrive until as late as the fourth quarter, citing delays in reaching content-licensing agreements with entertainment companies that own major TV channels.
Ideally Intel appears to want to create a virtual cable TV operator where customers could order and pay for individual TV channels a la carte. With cable and broadcast companies fighting this kind of disruption for much of the last decade, a snag in Intel's plan is far from surprising. Still, it's amusing to see the company anonymously berating other efforts from Google and Apple in the press, only to run face first into the exact same problem that plagued those attempts.
Re: Dream On Intel
said by Angrychair:Yet it's liberals and democrats who generally want more government oversite, more regulation, and bigger government in general. Something doesn't add up there.
What a quaint notion. Now thank your Republican anti-regulation overlords.
| |said by Telco:antitrust doesnt exist in a burgeoning fascist state.
Surely this is prime antitrust here.
| |TransmasterDon't Blame Me I Voted For Bill and Opus
Re: Will you save money?
said by Greg2600:That is the 800 pound gorilla. The present bundling system in kind of like a supermarket. Instead of looking at the money made from an individual product a supermarket looks at to over all cash flow and have complex computer models to predict shopping habits. Before Thanksgiving really cheap turkeys. The stores make the money all of the stuff you purchase to go with that turkey, when "bundled" to gather the store makes money while the consumer actually saves money. The same could be said about the TV entertainment business. Because of the bundling process the consumer pays X number of bucks for a bundle, if they paid for each channel it would cost them more. The problem, of course is the vertical integration there is no competition for your dollar. So delivery companies can charge pretty much anything they want. In other words we are stuck with what we have.
That is my question. When most people get done picking channels.
I am quite sure now that often, very often, in matters concerning religion and politics a man's reasoning powers are not above the monkey's.
- Mark Twain in Eruption
Re: Will you save money?
said by PastTense:That is a sure lock on happening. As cable companies lose some TV channel business to streaming competitors the cost of Internet access will rise to cover their TV losses.
cable companies could well respond by increasing the cost of their internet services--where only a small fraction of the market has strong alternatives--and then only one--resulting in consumers being no better off financially.
A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves money from the public treasury.
Re: Will you save money?
said by Telco:Two words to describe this: 'loss leader'. Google Fiber is cheap because they haven't passed on the full cost of operation to consumers yet. All new business start-ups start this way. When a new hair place opened up by my house, they were offering hair cuts for $8. More than 50% less than the competition. Think they're still only charging $8? Of course not. The price is right in line now with everyone else around them. What they offered initially was a promo price - it wasn't designed to earn a profit. It was designed to create flow - make you go into the store to try them out.
It's already happening actually. I'd love to see all of those who claimed that Google FTTH is expensive, come here and explain the $74.95 for a 25/4 Comcast service starting today. That's $4.95 more already and does not include Comcast's other BS fees, for a fraction of the service.
BTW Have you ever noticed what they pay and receive in other Big Gov nations (exc Canada).
Again, this is nothing new. Amazon existed for probably 6 years before they turned a profit (heck, they still incur a loss for every Kindle Fire sold - expecting to make it up on you buying material to go on your Kindle). Verizon inititally really under-priced FiOS. Eventually the R&D gets paid off, though, and you've established a customer base. At that point you need to move into the black. Which means that you have to operate with a positive cash flow.
You can't make the assessment that Google Fiber is 'cheap' because you don't yet know what it will ultimately be priced for when it gets to that positive cash flow stage. My guess - it'll be right in line with everyone else in the market - and probably higher. I know the price of fiber has dropped, but it's still MUCH more expensive than laying coax. Installation alone for fiber is probably 2 to 3 times what the installation cost is for coax (cost of running service to a new home).
And the cost in those 'big government nations' is hidden. Ok, you don't pay as much for monthly service on some things. But if you're willing to incur a marginal tax rate of 90%... go right ahead. The point is - you're still paying for it. It's just not going directly to the company. You make it up (and then some - since government is far from the most efficient conduit of spending) in taxes.
Re: Will you save money? Your numbers just aren't correct. There are examples out there today of what such pricing would be like. For example, Verizon carries a channel called Wealth TV. It's a VERY cheap channel for them to carry. I think they get it for something like 4 cents/subscriber. The thing is, Wealth also has an ala carte option - you can get the channel through devices like Roku. How much does it cost you to subscribe to the channel that way? $5/month. Why so much? Because of how the business model works.
With the traditional model that cable companies follow, the channel gets paid per subscriber that has access to the channel. Whether they watch the channel or not. This is why content providers really want cable companies to carry their channel on the lowest possible tier. The lower the tier, the more subscribers that have the channel, and therefore the more money the content provider makes on the channel. But if you were to pay for the channel directly, the content provider has to charge you alot more for the channel than they charge the cable company, because there are far fewer people who would actively go pay for the channel. And since offering a channel's content isn't free... they have to get so much cash-flow to make the channel profitable. And remember, this is a tiny little channel that costs cable operators next to nothing to carry. Imagine how much an ESPN or Disney or Fox News would cost you ala carte.
I'm not a big fan of the ala carte option mainly because, at the end of the day, you'll spend just as much as you do now, but only get a fraction of the channels. If I'm going to spend $100/month anyway, I would much rather have 300+ channels for that money. Even channels I wouldn't normally care about occasionally carry program that I like. I don't think the reason ala carte hasn't taken off is because of some conglomerate somewhere stopping it. I think it's because the current model is far more efficient at providing the biggest bang for your buck. These companies, in other words, are serving the wants of their customers. Doubt that? Just peruse some of these forums - how many people get their panties in a twist over channel counts? Alot. People get really upset when the provider they use has fewer channels than other providers. If the market really was demanding ala carte, I think these guys would be falling all over themselves to provide it. I just don't think the demand doesn't really exist for it.
Santa Monica, CA
·Time Warner Cable
| |said by Skippy25:1) The industry is not full of crap. They're in business to make a profit, and absent legislation to the contrary, they are generally allowed to negotiate content bundling agreements, much to our collective dismay.
That is your assumption and the same BS the industry spouts out as though we should just take it at face value.
I for one do not agree for 2 reasons.
1.) The industry claims it and they are full of crap so pretty much anything they say when it comes to consumers the opposite is true.
2.) There are only a few channels that are very expensive that make the entire package expensive that many would not subscribe to. Disney and ESPN channels are just 2 examples.
Regardless, even if I end up spending the same amount or even a little more to get the channels I want that is my choice as opposed to the current forced "choice" we live with now.
Most channels cost less than a dollar per subscriber and can be sold at a dollar given them plenty of profit on them. Assuming of course that they will want to charge more because they wont be able to force the providers into X sub numbers with forced tiering it will cause the channels to be sold at a true market value. This will probably bring the cost up a little per channel. How much? No one will know until it is done, but what we do know is that the channel will charge what they can and we will pay what we are willing.
Let's not forget, ala-carte doesn't mean there don't have to be bundles. They can still bundle based on X channels, themes, channel owners or whatever other creative way they want in ADDITION to having the channels available on a completely ala-carte option.
2) We all know that there is a Sports Tax, which 75% of pay to subsidize the 25%. But industry is very comfortable with that model, and they aren't going to change it. Even Google forces its KC subscribers to pay for it.
You affirmed my point - industry isn't going to permit "ala-carte" unless you and I pay more than ARPU not less. That can work, if and only if they let us choose 2nd- and 3rd-tier channels that we currently have to buy in bundles, likewise for premiums.
The figures that you cite are meaningless. Sure, MDU/bulk/headend, CATV and satellite pay $.10/drop/channel for some channels, others are $1. That doesn't carry over to ala-carte - where rates would have to at least 3-4x more or greater to be revenue-neutral to the content seller, plus cover the additional customer service overhead for channel delivery and billing management.
Industry is NOT going to abandon the last-mile guaranteed bulk revenue for the headache of direct-to-consumer sales, via IPTV, OTT or the Roku channel store.
Under normal conditions, "greed" would drive them to do so, but they all know the pitfalls of taking responsibility for delivery of streams in a net-neutral world and doing customer service, all the while netting less revenue.
Crappy as it is, CableCo has a pretty good handle on customer service and repair. Do you really want to talk to Santa Domingo, Cebu, or Mumbai when you can't stream Matlock?
Lots of luck... they will be about as successful as the U.S. Government is at stopping the flow of Cocaine.
INTEL(igent) Way thru the Walled-Garden The most effective way for Intel, Google, Apple or any other IP-based service to scale tv's walled garden is to partner with the mso's vs competing with them. Sure, they might be able to nibble around the edges by launching virtual services with hybrid channel line-ups & more robust, cloud-based UI's...but there's no reason they shouldn't just integrate the mso's IP streaming services to fill the gaps in commercial-grade programming. In addition to saving them billions, it would allow them to concentrate on what they do best. Apple pioneered this model in the mobile space when it forged the first carrier deal, so there's no reason a similar approach won't work with major cable/sat providers. Instead of the silo'd (and very fragmented) approach we have today, it would also allow the industry to deliver more uniform, integrated services to consumers...with more freedom of choice from a device and OS perspective. Especially now that cable and satellite providers are pushing (authenticated) linear channels over IP, there's no reason these channels shouldn't be accessible via the device of choice...whether it be xBox, AppleTV, or Intel, Roku...LG, Samsung, Funai...or new, more converged services we've yet to see. As long as the content is properly authenticated (just like cell service is authenticated by the iPhone)...its just a matter of UI, navigation and co-branding. Time will tell...
And the winner is... nobody. The second you start paying for what you want is the second you stop watching commercials because who is going to pay for commercials, right?
"They" won't have that. 80% of the economy is based on the fact we sit and watch commercials. BS you say. 50 years ago I would have agreed. Back when people didn't spend all there spare time watching tv it was local business doing local advertising. Those days are gone and Big business has no way to get you to buy their stuff unless we all sit down and watch, listen and then go purchase.
When I say "they" I don't just mean content providers... I mean the Auto, Food, Pet, Sports, Electronics, Entertainment, Pharma, etc. and of course marketing industries. Who are "they" tied too? Your Government, so no help there either. Is there a better way, a cheaper way that works better for you? Yes. Quit holding your breath waiting for the system to work for you and just cut the cord.