Media watch: Thrifty 'cord nevers' could be a force


DirecTV (DTV -1.1%) and Dish Network (DISH +1.1%) are more at risk than cable operators (TWC, CHTR, CVC) from a new generation of consumers unwilling to pay premium prices for TV packages, according to analysts.

Pay-TV providers aren't the only group keeping an eye on the so-called "cord nevers" as broadcasters (DIS, CMCSA, FOXA, CBS, SBGI, BLC, NXST) weigh how long the current TV content model can stay locked in place.

The bundling approach to cable/satellite packages helps broadcasters reap lucrative content deals.

The outlook: "The revolution will take a long time," notes one grounded industry insider, but Internet TV (SNE, NFLX, AMZN) players could try to accelerate the shake-up through innovation.

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Comments (4)
  • bbeutler
    , contributor
    Comment (1) | Send Message
     
    Interesting claim that DirecTV and Dish are more at risk than cable operators from a new generation of consumers unwilling to pay premium prices for TV packages...can somebody explain why this is? Is it because cable companies do a better job at bundling video with broadband and voice in triple play packages? Is it because of their pricing or contract structures. Why would MSO be less at risk of being impacted by chord-cutters than the satellite TV providers?
    18 Sep 2013, 02:18 PM Reply Like
  • KISS_investor
    , contributor
    Comments (387) | Send Message
     
    Its because the cord nevers will end up dropping satellite completely but sticking with cable/telcos for internet..by definition you can't be a cord never and pay a satellite subscription
    (there is no cord with satellite but you know what I mean!!)

     

    what's more, the cable companies will be able to charge premium prices for premium streaming speeds and data plans...bandwidth and data will become more and more valuable over time...the next iteration of hi def is already upon us...we are 2-3 years away from it being affordable..

     

    Right now cable companies pay programmers and then mark up the programs to consumers.. they are sold primarily as subscriptions...these subscriptions subsidize the on demand programming...

     

    Streamers pay programmers and then mark them up for consumers... its a simple and good model...but its enormously competitive and will only be more competitive over time...margins for Netflix are much skinnier than they are for xfinity or fios...

     

    As cable/Telcos lose what i'd call "medium margin" cable tv subs, they will simply package internet to them at higher prices.. if you don't want ESPN et al...fine!! internet is now $199/month(or whatever the premium price may be)
    ...enjoy your Netflix and Hulu and free youtube ...

     

    These internet only subs are super high margin...there is no programming cost...yes cable becomes a dumb pipe..but that's why they are (Comcast and time warner) also owners of large programming enterprises.

     

    this model is already being put in place with xfinity and other cable providers allowing network programs to be streamed everywhere with cable subscriptions...not a subscriber?? you can't get the streaming video unless you steal it...

     

    to be honest, none of us can know 5 years out...but I am investing based on this trend being MUCH slower than people think, and i'm investing on the super high barriers to entry enjoyed by cable/Telco video providors...they will get their $$, and investors will do fine...

     

    I also think the folks betting on more cord nevers are underestimating the power of sports and local programming in keeping people in their subscriptions

     

    and lots of stuff that is easy to get online now for free(legally or illegally) will be harder and harder to get as programmers get laser focused on protecting the value of their streamed content...

     

    consumers won't get hosed because they will finally get to pay only for what they watch...however they are likely to find that this model costs them a lot more than they thought, and they will likely find they want MORE programming than what they think right now...this is because the days of Netflix having everything are long gone, and there will be 5? 10? streamers out there with deep pockets and they will all have different lineups....if you watch 10 shows you may need to buy subscriptions to 10 streaming services!!!!

     

    its funny because people don't realize its basically gonna be the same model in the end...instead of showtime and hbo...it'll be Netflix amazon and hulu

     

    instead of a monthly cable subscription, there will be a monthly internet subscription...

     

    this is all very bad for satellite...They are a cash cow for underserved markets and their salad days are over...
    18 Sep 2013, 05:01 PM Reply Like
  • Sakelaris
    , contributor
    Comments (2470) | Send Message
     
    To KISS_investor: You predicted that people "will finally get to pay only for what they watch...however they are likely to find that this model costs them a lot more than they thought, and they will likely find they want MORE programming than what they think right now...this is because the days of Netflix having everything are long gone..."

     

    And I assume that with the scenario you have outlined, there will be no more DVD rentals. Consumer costs (especially with pay-per-view everywhere) could go sky-high. If it does turn out that way, the loss of DVD rentals will be a major factor in this.

     

    Right now those DVDs and Blu-rays are still being made and Netflix is still doing a great job of renting them out to us at bargain rates. Yet, sadly, the consumers themselves are hurting the possibility of future access to low-priced deep content choices because they are being persuaded that rental discs are no longer cool, that they are a thing of the past. So sad...

     

    I hope those disc rentals can continue as long as possible.
    18 Sep 2013, 09:00 PM Reply Like
  • KISS_investor
    , contributor
    Comments (387) | Send Message
     
    I think there is merit to your point but there will always be hard copies of data and video.

     

    and Netflix will continue to rent out that dvd catalogue for a very long time... they will extend that revenue as long as possible..

     

    If you enjoy the dvd/blu ray experience, its not likely to go away in our lifetimes.
    19 Sep 2013, 06:54 AM Reply Like
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