Who killed the great American cable TV bundle?(bloomberg.com)
bloomberg.com
Who killed the great American cable TV bundle?
https://www.bloomberg.com/news/features/2018-08-08/who-killed-the-great-american-cable-tv-bundle
8 comments
Cord cutting began when people who didn't love U.S. pro sports balked at paying their cable system for the so-called triple play.
I love ESPN, but their revenue model was built on the belief that it would have extreme pricing power to use against its cable system customers as long as it locked up most of the important live sports events.
ESPN's revenue model assumptions caused them to overpay for U.S. broadcast rights, to favor the NBA, NFL, and MLB over all other U.S. sports, and to keep raising their per-subscriber rate to cable systems.
The price of the triple play increased most because the fee to carry ESPN in the U.S. is assessed per-cable-basic-package-subscriber, whether or not the subscriber watched any ESPN, Disney, or ABC channel.
At some point something had to give.
I love ESPN, but their revenue model was built on the belief that it would have extreme pricing power to use against its cable system customers as long as it locked up most of the important live sports events.
ESPN's revenue model assumptions caused them to overpay for U.S. broadcast rights, to favor the NBA, NFL, and MLB over all other U.S. sports, and to keep raising their per-subscriber rate to cable systems.
The price of the triple play increased most because the fee to carry ESPN in the U.S. is assessed per-cable-basic-package-subscriber, whether or not the subscriber watched any ESPN, Disney, or ABC channel.
At some point something had to give.
It was great at beating the rate of inflation and great financial results for cable companies.
My college years saw the decline of MTV and rise of ESPN. The OJ chase inspired MTV to make a show out of idiots driving across the country. If ESPN Sports Center wasn't on it would be shortly. Every other channel had the OJ trial save PBS. Seriously! It was nauseating!
ESPN spends around $7billion/year on licensing. Eight dollars of every cable bill goes to ESPN. I cut the cord when it was less than $4/month.
Starting in 2013 Time Warner agreed to pay an average of $335million a year for 25 years for broadcast rights to the Dodgers. The average payroll and luxury tax for the Dodgers peaked at $235million. I'm sure in the next 20 years it may approach the $335 million.
So who's your ISP? The profit margin for cable packages is in the mid 40%. The profit margin for ISP is 97%.
They don't just want to be the only ISP service available today they want it for the next 30 years because that's where the market is going.
My college years saw the decline of MTV and rise of ESPN. The OJ chase inspired MTV to make a show out of idiots driving across the country. If ESPN Sports Center wasn't on it would be shortly. Every other channel had the OJ trial save PBS. Seriously! It was nauseating!
ESPN spends around $7billion/year on licensing. Eight dollars of every cable bill goes to ESPN. I cut the cord when it was less than $4/month.
Starting in 2013 Time Warner agreed to pay an average of $335million a year for 25 years for broadcast rights to the Dodgers. The average payroll and luxury tax for the Dodgers peaked at $235million. I'm sure in the next 20 years it may approach the $335 million.
So who's your ISP? The profit margin for cable packages is in the mid 40%. The profit margin for ISP is 97%.
They don't just want to be the only ISP service available today they want it for the next 30 years because that's where the market is going.
Free wifi, horrid TV shows (compared to youtube), and decent prepaid mobile service absolutely killed my need for an overpriced comcast $100 bundle.
I do really miss the call quality of a landline though. Wifi calling, at least in the US, can be dodgy.
I do really miss the call quality of a landline though. Wifi calling, at least in the US, can be dodgy.
I do really miss the call quality of a landline though
As a person who still has a landline, V-Tech is working hard to counter your nostalgia.
As a person who still has a landline, V-Tech is working hard to counter your nostalgia.
IMO, it was ESPN. Over the years, they strong-armed the cable companies into carrying more and more specialized sports channels. And gradually increased prices (boiling the frog).
I would see my cable bill go up, and drop a tier. And 3-4 years later be back to paying too much for too little, and would drop another pricing tier.
Finally a couple of years ago, I bought a cheap over-the-air HD antenna and cut the cord. No more.
I would see my cable bill go up, and drop a tier. And 3-4 years later be back to paying too much for too little, and would drop another pricing tier.
Finally a couple of years ago, I bought a cheap over-the-air HD antenna and cut the cord. No more.
I dunno, if subscribers are down 5% and prices are up 44%, it doesn't sound too bad. Even if this is the start of an avalanche, why would they be increasing prices so much if they believed it?
BitTorrent dealt the fatal blow over a decade ago (and something else would have come around if not it).
In fairness to the article, they do mention some of the later actors: Hulu gave it a good pillow smothering, but it looks like Netflix will be the one to convince everyone to pull the plug.