OT-ESPN in Big $$$ Trouble

[theRU]

Those prices only exist because ESPN still gets $6 a month from every cable household whether they like sports or not. If the current cable model goes away and ESPN gets only 25% of households to subscribe to ESPN instead of 100% (which is wildly, wildly over- optimistic) the price for ESPN subscribers needs to go up to $25 a month for them to equal current revenue.

Things like the Amazon package, Sling TV,etc are only cheap until the current model goes away.

Whatever applies downward pressure on cable packages is good with me.

Its amazing that every single options which is explored includes raising prices, charging more for content, increasing advertising costs etc.... Yet the one option that is never discussed is paying an MLB pitcher 10 Mill over 10 years vs 180mil over 10 years... I love capitalism dont get me wrong.. but these people, networks and owners are making way too much money.Its all disproportionately way to high vs the rest of the market.

So, now its time for the market forces to start straining these massive empires. People are turning to cord-cutting, apathy, whatever other means out there to get content they want at the prices THEIR wages can afford.

 

[FanuSanu52]

Will the cable bill go up as much or as frequently as these new players. No I don't think so. You realize how much of Amazon is subsidized by Amazon Web Services. They regularly report quarters where they lose money, if and when others start honing in on that web services/cloud business all these subsidies Amazon has for other parts of its business will go away and they'll be charging even more. IIRC Prime jumped from 79 to 99 that's a pretty big jump I don't recall my cable bill ever jumping 25%. Netflix went up a couple bucks too in the last few years and on a subscription that was costing 7 bucks or so that's also around a 25% increase in the bill. Cable bill isn't going up that much in percentage terms and if anything they'll be keeping it under control to stay competitive will all these new players. I've had FIOS for about 7 years as soon as it was available in my area and the cost has been pretty much the same. The biggest change from the past is those damn cable boxes because of the move from analog to digital. I get pissed off about that more than the cost of the triple play I get. Nothing analagous to the cable ready tv of the old days just plug the coax into the back and that's it. There could be a time that get rid of those as well, I hope so. I've read players like Apple and Intel may get into that space, not sure.

The point isn't look at me I was right, the point is those thinking they're going to be saving tons of dollars by cutting the cord are mistaken unless they are severely curtailing their habits. People act like all these costs are fixed and they're not and that includes broadband which is how all these new services are coming to you. The cost increases you see on the newer services are never going to be as much as you'll see for cable. Cable needs to stay competitive and there's a much harder ceiling on them as opposed to the new guys.

Too early to draw any conclusions, but your analysis is off. Prime shouldn't even be a part of your reasoning. Amazon launched it as a $79/year two-day shipping service in 2005, adding the streaming service in 2011 while maintaining the $79 price. It didn't increase the price until 2014. At some point prior to that increase, I think they added other benefits like an eBook library. Shortly thereafter it added HBO content, which I believe was at that time unavailable on any streaming service except maybe cable-required HBO Now, and then a music service, which is quite good. They've continuously enhanced the service from there, with things like same-day shipping and downloadable off-line video content. So the $20 hike is actually a rather modest increase for the addition of an entire video streaming library, plus forthcoming additions like an on-demand track music library, etc. It is not, as you suggest, a quick spike in video service pricing.

Netflix launched streaming-only service in 2010 for $7.99. If I'm not mistaken, its first price increase to $8.99 came in 2014, for new subscribers only, and was accompanied by the intro of a lower-tier SD package for $7.99. For most existing subscribers, that $8.99 package is set to increase to $9.99 this year, but the $7.99 intro package remains. Even forgetting that you can still get basic Netflix service at $7.99, a $2 increase over six years doesn't suggest that it's going to be out-pricing cable anytime not measured in decades.

Your original point was about bottom-line pricing, not increase percentages. I could care less if the $20 extra I'm paying for cable is a smaller increase percentage-wise than the $2 extra I'm paying for Netflix - all that tells me is that cable was way more expensive to begin with. Netflix is still way, way cheaper! Like I said, it could quadruple and still be cheaper in real dollars, and I don't think it's gonna quadruple anytime soon.

 

[rutgersguy1]

Too early to draw any conclusions, but your analysis is off. Prime shouldn't even be a part of your reasoning. Amazon launched it as a $79/year two-day shipping service in 2005, adding the streaming service in 2011 while maintaining the $79 price. It didn't increase the price until 2014. At some point prior to that increase, I think they added other benefits like an eBook library. Shortly thereafter it added HBO content, which I believe was at that time unavailable on any streaming service except maybe cable-required HBO Now, and then a music service, which is quite good. They've continuously enhanced the service from there, with things like same-day shipping and downloadable off-line video content. So the $20 hike is actually a rather modest increase for the addition of an entire video streaming library, plus forthcoming additions like an on-demand track music library, etc. It is not, as you suggest, a quick spike in video service pricing.

Netflix launched streaming-only service in 2010 for $7.99. If I'm not mistaken, its first price increase to $8.99 came in 2014, for new subscribers only, and was accompanied by the intro of a lower-tier SD package for $7.99. For most existing subscribers, that $8.99 package is set to increase to $9.99 this year, but the $7.99 intro package remains. Even forgetting that you can still get basic Netflix service at $7.99, a $2 increase over six years doesn't suggest that it's going to be out-pricing cable anytime not measured in decades.

Your original point was about bottom-line pricing, not increase percentages. I could care less if the $20 extra I'm paying for cable is a smaller increase percentage-wise than the $2 extra I'm paying for Netflix - all that tells me is that cable was way more expensive to begin with. Netflix is still way, way cheaper! Like I said, it could quadruple and still be cheaper in real dollars, and I don't think it's gonna quadruple anytime soon.

Yes Prime was originally a shipping thing and now it's got more what does it matter, they're roping you in no matter what the original lure was. Depending on how much you buy from Amazon, is worth it or not who knows but the streaming service is part of it now and it will only go up from here if they add more original content to it. Break it down right now it's 8 bucks a month up from around 6 and like I said it's being subsidized by AWS. How long that subsidy within the company exists, who knows. It all depends on how successful AWS continues to be in the future. That's really the jewel of the company, not any of it's retail business.

As to Netflix, the first price increase was for new subscribers but was only delayed for existing subscribers, same as this last price increase where again it was for new subscribers and delayed for existing subscribers which I think will happen later this year. I have Netflix and I'm pretty sure I'll have 2 price increases during my time as a subscriber by the end of this year.

So between the 2 you pay about 18 bucks a month. For most people is that enough? I don't know but I tend to think not as I don't think their streaming libraries are that extensive yet. But say it is. If you want to talk about bottom line pricing in real dollars you completely left out the broadband part of the equation. I took a look at the stand alone FIOS internet unbundled with anything and it looks like it averages around 50 bucks for 50/50 internet alone in a 2 year agreement. Not sure what it would cost outside of a contract. So that is 68 bucks a month. I pay a little more than that if I look just at the tv/internet pieces of my triple play because of the discount of having all 3.

So even now they're close to par in terms of real dollars that you're talking about when you look at the whole "media package" we're talking about. Mind you this is something I consider a slim down version because I'm not sure if Netflix/Amazon is enough for most. Maybe it is and I'm wrong. If you add one more service like a HBO or Hulu or some future stand alone sports platform that may get created then I think you're about the same.

I don't expect the cable companies to raise prices on the same level in the future because frankly they can't. The same way it's difficult for ATT/Verizon because of T Mobile, it is for them as well. But the Netflixes, Amazons, Hulus still can because they have lots of room to grow and right now they have some pricing power that the cable companies don't. Like I said the biggest thing you leave out in your analysis is the broadband part of it which is obviously essential and guess which companies still control that? If more people unbundle away from their tv packages, I can see prices of broadband going up for those customers and then in the end you're about on par to what it is now unless like I said you really curtail viewing habits.

You know the biggest thing where you save money is the thing I complain most about and it's the god damn boxes. You don't need those when you stream. Apple TV or Roku or whatever is a one time cost and that's it. So thinking about that, you do save money there but like I said I wonder how much the cable companies would increase broadband prices to make up for lost revenue like that in the future. If there's one thing I hope gets broken in the future it's the need of the boxes and the rental fees. If Apple/Intel or whomever find a way to break that I'd be happy. I wish more people would be making a stink about them than the bundle because I think that's the bigger ripoff.

 

[FanuSanu52]

Yes Prime was originally a shipping thing and now it's got more what does it matter, they're roping you in no matter what the original lure was. Depending on how much you buy from Amazon, is worth it or not who knows but the streaming service is part of it now and it will only go up from here if they add more original content to it. Break it down right now it's 8 bucks a month up from around 6 and like I said it's being subsidized by AWS. How long that subsidy within the company exists, who knows. It all depends on how successful AWS continues to be in the future. That's really the jewel of the company, not any of it's retail business.

As to Netflix, the first price increase was for new subscribers but was only delayed for existing subscribers, same as this last price increase where again it was for new subscribers and delayed for existing subscribers which I think will happen later this year. I have Netflix and I'm pretty sure I'll have 2 price increases during my time as a subscriber by the end of this year.

So between the 2 you pay about 18 bucks a month. For most people is that enough? I don't know but I tend to think not as I don't think their streaming libraries are that extensive yet. But say it is. If you want to talk about bottom line pricing in real dollars you completely left out the broadband part of the equation. I took a look at the stand alone FIOS internet unbundled with anything and it looks like it averages around 50 bucks for 50/50 internet alone in a 2 year agreement. Not sure what it would cost outside of a contract. So that is 68 bucks a month. I pay a little more than that if I look just at the tv/internet pieces of my triple play because of the discount of having all 3.

So even now they're close to par in terms of real dollars that you're talking about when you look at the whole "media package" we're talking about. Mind you this is something I consider a slim down version because I'm not sure if Netflix/Amazon is enough for most. Maybe it is and I'm wrong. If you add one more service like a HBO or Hulu or some future stand alone sports platform that may get created then I think you're about the same.

I don't expect the cable companies to raise prices on the same level in the future because frankly they can't. The same way it's difficult for ATT/Verizon because of T Mobile, it is for them as well. But the Netflixes, Amazons, Hulus still can because they have lots of room to grow and right now they have some pricing power that the cable companies don't. Like I said the biggest thing you leave out in your analysis is the broadband part of it which is obviously essential and guess which companies still control that? If more people unbundle away from their tv packages, I can see prices of broadband going up for those customers and then in the end you're about on par to what it is now unless like I said you really curtail viewing habits.

So long as we agree that your point about Prime is pure speculation and not supported by the previous price hike. The price went from $6 for a two-day shipping option to $8 for a multi-service tier that journalists call the best deal in tech. It's better than cable, better than Netflix, better than any legal content platform. It may very well go up in price, but so far it's only gone up in value and has got a long way to go before it looks as overpriced as cable.

Prime is all about expanding Amazon's massive customer base. Maybe you buy it for streaming, but since you have two-day shipping, you start doing more of your shopping on Amazon. That's exactly what I did and now I buy things on Amazon that I never would have before Prime. Or maybe you bought it for the shipping, but you check out the video service and start buying or renting movies on demand within the same app. I already used Amazon for on-demand movie renting, or I would have done that, too. Prime may not be profitable, but it's been very effective at increasing Amazon's customer base in a world where it's easier and easier to purchase anything and everything from them (I think you can now order Prime items by voice, in your home, through Amazon's Echo). Not sure what that will mean for future price hikes, but you can't just look at Prime as a video service, the way you do Netflix.

I'd say Amazon/Netflix would be more than enough for me ... if not for college football. My cable provider took away the "vacation" option, or I'd eliminate cable for the rest of the year and just watch Netflix and Amazon, with some free OTA and MLB TV mixed in. MLB TV is a wash because I'm an out-of-market fan who would need to pay for it with or without cable, and (surprise, surprise) cable's version was more expensive with less features. Also, a lot of cord cutters have made an even better realization: they don't need to watch so much TV (or any all). A lot of other stuff going on out there, and with no boob tube to waste your life in front of, you're motivated to find it.

Broadband service is a good add-on point, but it really depends upon your options and pricing. I don't think it'd be close for me: If I didn't like sports, I'd cut cable in a heartbeat and save a significant amount of money going broadband + streaming. Broadband is also partially tax deductible for me (home office) while cable is not. Pretty sure cord cutters are saving plenty of money or they wouldn't bother. And in your case, you say you're using Netflix, not sure about Amazon or Hulu, so you have to tack that right onto your total cable bill (or take it off of the $68) when comparing. If cable was giving you everything you wanted, you wouldn't be paying for Netflix.

If you can speculate that streaming services are going to jack prices, I can speculate that Internet providers will get more competition in the future - Google, cellular, satellite, whatever. Connectivity is going to be necessary for far more than just good, old home Internet and mobile devices, so I don't see cable maintaining such a monopoly on it.

 

[rutgersguy1]

So long as we agree that your point about Prime is pure speculation and not supported by the previous price hike. The price went from $6 for a two-day shipping option to $8 for a multi-service tier that journalists call the best deal in tech. It's better than cable, better than Netflix, better than any legal content platform. It may very well go up in price, but so far it's only gone up in value and has got a long way to go before it looks as overpriced as cable.

Prime is all about expanding Amazon's massive customer base. Maybe you buy it for streaming, but since you have two-day shipping, you start doing more of your shopping on Amazon. That's exactly what I did and now I buy things on Amazon that I never would have before Prime. Or maybe you bought it for the shipping, but you check out the video service and start buying or renting movies on demand within the same app. I already used Amazon for on-demand movie renting, or I would have done that, too. Prime may not be profitable, but it's been very effective at increasing Amazon's customer base in a world where it's easier and easier to purchase anything and everything from them (I think you can now order Prime items by voice, in your home, through Amazon's Echo). Not sure what that will mean for future price hikes, but you can't just look at Prime as a video service, the way you do Netflix.

I'd say Amazon/Netflix would be more than enough for me ... if not for college football. My cable provider took away the "vacation" option, or I'd eliminate cable for the rest of the year and just watch Netflix and Amazon, with some free OTA and MLB TV mixed in. MLB TV is a wash because I'm an out-of-market fan who would need to pay for it with or without cable, and (surprise, surprise) cable's version was more expensive with less features. Also, a lot of cord cutters have made an even better realization: they don't need to watch so much TV (or any all). A lot of other stuff going on out there, and with no boob tube to waste your life in front of, you're motivated to find it.

Broadband service is a good add-on point, but it really depends upon your options and pricing. I don't think it'd be close for me: If I didn't like sports, I'd cut cable in a heartbeat and save a significant amount of money going broadband + streaming. Broadband is also partially tax deductible for me (home office) while cable is not. Pretty sure cord cutters are saving plenty of money or they wouldn't bother. And in your case, you say you're using Netflix, not sure about Amazon or Hulu, so you have to tack that right onto your total cable bill (or take it off of the $68) when comparing. If cable was giving you everything you wanted, you wouldn't be paying for Netflix.

If you can speculate that streaming services are going to jack prices, I can speculate that Internet providers will get more competition in the future - Google, cellular, satellite, whatever. Connectivity is going to be necessary for far more than just good, old home Internet and mobile devices, so I don't see cable maintaining such a monopoly on it.

Netflix I add on because I can afford it and want it but it's not something that I need to have if I couldn't or others who can't afford it need to have if they're already getting tv/internet from a cable provider. It's more "luxury" than "necessity". I'm trying to compare what it would cost for about a baseline "necessity" video/tv plus broadband package between the two avenues of a cord cutter and a bundler. I'm not including what I subscribe to in that scenario. I only brought up a portion of my FIOS bill as a price point to try and compare with the costs would be between the 2 avenues. Cable would be fine with me if I couldn't afford more but I can so I subscribe to Netflix. I have a Netflix DVD subscription too because the streaming library isn't enough for me either that doesn't make that necessary though, lol. I don't think I'm the average subscriber. I was trying to do an apples to apples comparison using a portion of my bill that's all. When you do that it's close. Cord cutters are saving money now, but I'm talking about the future if many decide to go that route. Then I think the savings won't be as much. Like I said for me the boxes are the thing I hate the most rather the the price I pay for the bundle or anything else.

As to speculation on broadband and competition for that in the future, that is actually a point I've brought up in the past too. I've said the same. You're right, that is the one thing that could break the cable companies. If you had wireless service be able to deliver very high broadband speeds into the home, that would crack them because then you'd have real competition for delivery too not just content. I've said before that Masason the CEO of Softbank, the company who owns Sprint tried to merge with T Mobile a couple years ago. He wanted to do that to get scale so he could bring those high wireless speeds here that I believe they have in Asia in places like Korea/Japan. The merger was nixed so not sure what will happen to his vision going forward. But if he or anyone else can ever make those high speeds ubiquitous in many markets across the country, not just a few like Google now, then yes that will crack the cable companies and likely everyone not just cord cutters will be able to save more money.

BTW, everything is speculation. The point is whether it's baseless speculation or has some reasoning behind it.

 

[Friend of 112]

FWIW Amazon Prime will be $73/year this weekend

Must use this link

If not already a member/subscriber, there are creative ways to get this rate for 2 years

 

[Rhuarc]

One thing I learned about Amazon Prime over vacation was that one household membership gives 2 different adult accounts and 4 children accounts access to all the perks of prime. I was always buying books, etc. with my wife's account, but now since we're linked I can stream and ship using my own credit card info.

 

[derleider]

This does not have much relevance to the BTN. ESPN is screwed because they have to pay the NBA and NFL $3 billion a year for those bad contracts. Their profitability is based on getting money from every household.

The BTN only made a total of $240 million of revenue in 2011 and still had $80 million in profit to distribute to conference members. The BTN will do fine under a subscription model.

Define fine. It will do as good as any other CFB network will for sure - but like ESPN the Big Ten's profits are predicated on making 95% of people pay something for something they don't want. I dont think the other 5% are going to pay $20 instead of $1 a month, so I think the BTN is going to take a financial hit if it has to move to a subscription model.

Sure, the BTN itself might not be THE reason people drop cable - but once people start dropping cable or cable moves to a la carte because of ESPN, the BTN is going to feel the effects, obviously.

Im wondering if the Big Ten wishes it had sewn up the Tier 1 deal by now. Each little trickle of bad news for ESPn is a little less money that they or some other network is going to be willing to put forward for the Big Ten.

The TV bubble is starting to burst and the old models are going down the drain - it was only a matter of time before increased bandwidth became virtually unlimited bandwidth, and that changes everything. We REALLY lucked out that we got good at just the time when bandwidth was wide enough to have viable conference networks, but not wide enough to have unlimited networks.

rutgersguys 1 - I think the thing is htat people in fact DO severely curtail their habits when they cut the cord. Espeically for non-sports fans - where seeing something live, or even shortly after release doesnt really matter. The fact that network TV is still free is a huge part of this. You could get by very well with an internet connection, netflix/amazon prime, and network TV.

 

[rutgersguy1]

rutgersguys 1 - I think the thing is htat people in fact DO severely curtail their habits when they cut the cord. Espeically for non-sports fans - where seeing something live, or even shortly after release doesnt really matter. The fact that network TV is still free is a huge part of this. You could get by very well with an internet connection, netflix/amazon prime, and network TV.

If that's enough for most then yes I think you'd save money... for now. Mainly the cost savings I see are on the boxes you don't need when streaming. But in the future will that be made up by increased prices on broadband if enough people go that direction.

Like I said above paying for broadband alone and 2 of these streaming services puts you around the same ballpark as you'd get if you had 2 of them bundled from a cable provider. In the future, I think the price points for most of these streaming services like Netflix/Amazon/Hulu will end up being in the 12-20 dollar range when all is said and done. There is still pricing power to push it farther. HBO Go is already 15 and I expect most of these services will end up in this vicinity when all is said and done. So get a couple of them and your broadband you're around 80 bucks or so at least and that's at the 50/50 rate. If you all you do is stream and you have more people in your household you might need higher speeds than if you didn't so your costs go up. If you add 3 services then I think you're pretty much the same.

The one thing that I think would really save money is what I've mentioned in the past and above and that's if there's real competition for delivery. I don't know that Google can or is willing to build out its fiber network to make it so ubiquitous across many markets. They have a lot of money but I don't know that it will all be spent on that. To me it's if the wireless players ever are able to get high speed into the home. If they can do it, then I think there can be cost savings for everyone not just cord cutters.

I kind of wonder if all these smaller players in the future don't similarly package/bundle their content into similar streaming services and charge a bundled price say maybe 5-7 bucks. Kind of what it is now but just streaming version of it. Say a Home TV app on Apple TV or what have you where you get the current Food/HGTV/DIY content, maybe a Science/Education app with Discovery/NatGeo/History, and then so on and so forth. So you'll kind of have the same model but a streaming version of it.

 

[Nosoj]

You can't compare when they had a monopoly on the business to now. Look at Verizon/ATT now that T Mobile/John Legere have come into play and been a distruptor in the industry. They're moving closer towards T Mobile to stay more competitive. ATT just reintroduced their unilmited data plan for customers who carry their tv service. They've gotten rid of their subsidies for phones and contracts.

Now that there's competition for the cable companies they can't raise prices so much, they have to stay competitive the same way ATT/Verizon have. But the new guys are still in their nascent stage for the most part and have room to grow and they will be raising prices as they do at a much bigger clip than the old players.

BTW those price increases mentioned in those articles, I'm not sure are they real actual increases in the sense that can customers avoid them with contracts and such. FIOS may have raised prices in the 7 years since I've had them but at the end of each contract I ask for and get the same price I've been paying all along but I have to be in a 2 year contract. If they don't do that a lot of people just jump back and forth and get the introductory deals that all the cable companies offer. So it may be an increase but in real practical terms are they fairly easily avoidable?

Down the line this may be the case, but there's no disruptor in most markets for the cable/internet industry like that right now. When there is, like Google Fiber, you see downward pressure on prices and upward pressure on product offerings (such as internet speed). There's still a LOT of places where your only choice is Time Warner or your only choice is Comcast. As long as that's the case, you won't see the same thing you're seeing the mobile industry.

The problem with this comparison is, the competition is still coming in over the internet, which is still likely provided by one of the major cable players. So, you might see pressure on cable prices, but they'll just flip that over to your internet cost until there's incentive to be competitive with those prices.

And again, when there's only one choice there's not much you can do. I have a family member who's trying to get their Time Warner bill lowered, they were told that they couldn't be offered any promotional prices but they could have free HBO/Showtime/whatever for a limited time. Well, if they don't like that they can cancel and...not have any cable or internet because their only choice where they live is Time Warner. There's a lot of people in apartments or renting condos who face the same thing. I'm dealing with the same thing with DirecTV this week. They've been unwilling to give me a better price (only the same free HBO/whatever), so they're probably losing my business. But I'm lucky, I have 3 cable offerings plus DirecTV and Dish where I'm at.

 

[krup]

Define fine. It will do as good as any other CFB network will for sure - but like ESPN the Big Ten's profits are predicated on making 95% of people pay something for something they don't want. I dont think the other 5% are going to pay $20 instead of $1 a month, so I think the BTN is going to take a financial hit if it has to move to a subscription model.

Sure, the BTN itself might not be THE reason people drop cable - but once people start dropping cable or cable moves to a la carte because of ESPN, the BTN is going to feel the effects, obviously.

Im wondering if the Big Ten wishes it had sewn up the Tier 1 deal by now. Each little trickle of bad news for ESPn is a little less money that they or some other network is going to be willing to put forward for the Big Ten.

The TV bubble is starting to burst and the old models are going down the drain - it was only a matter of time before increased bandwidth became virtually unlimited bandwidth, and that changes everything. We REALLY lucked out that we got good at just the time when bandwidth was wide enough to have viable conference networks, but not wide enough to have unlimited networks.

rutgersguys 1 - I think the thing is htat people in fact DO severely curtail their habits when they cut the cord. Espeically for non-sports fans - where seeing something live, or even shortly after release doesnt really matter. The fact that network TV is still free is a huge part of this. You could get by very well with an internet connection, netflix/amazon prime, and network TV.

Fine as in if the BTN gets about 1/4 of the households in the B1G footprint to pay what Netflix charges ($9 a month) for just the four months of the college football season, they would be most of the way towards making enough to pay each school $10 million a year (based on the payout = 1/3 of revenue from 2011/12).

Fine as opposed to ESPN, which would need 1/4 of the households in the entire US to pay $25 a month for all 12 months of the year to make the revenue they are making now.

Fine for the Big Ten Network is a completely different animal from what is fine for ESPN, whose profits are needed to support the entire Disney media conglomerate.

 

[RUtix4me]

Sock not doing so well

http://www.fool.com/investing/gener...ock-crashes-due-to-espn-concerns-is-this.aspx