& cplSiteName &

Sony, Dish Hit OTT TV Pricing Wall

Mari Silbey
10/7/2014
50%
50%

It looks as if Sony's much-anticipated online TV service won't come cheap. The New York Post recently reported that programming costs have driven up the price of Sony's proposed new over-the-top video service to somewhere between $60 and $80 per month.

Similarly, Dish Network LLC (Nasdaq: DISH) is struggling to keep the price down for its upcoming online TV service. According to a report by Variety, Dish would like to separate broadcast channels from its basic TV bundle and have consumers use antennas to access those networks for free over the air. Eliminating broadcast channels -- if Dish can swing it -- would cut the company's licensing fees, which would in turn allow it to cap subscription fees at a lower rate.

The dilemma that Sony Corp. (NYSE: SNE) and Dish are confronting is the same one that every other pay-TV provider has faced for years: how to keep subscription fees down while still offering enough content to keep viewers happy. The industry is littered with companies that have already tried to do this and failed. Microsoft Corp. (Nasdaq: MSFT) abandoned its TV efforts early in 2012 because of content licensing difficulties, while Intel Corp. (Nasdaq: INTC) sold off its assets from the development of its OnCue TV service to Verizon Communications Inc. (NYSE: VZ) earlier this year because of troubles with programming deals. (See Microsoft Puts Pay-TV Plan on Pause and Verizon Snatches Intel Media Assets.)

The situation has only gotten worse recently. Some smaller cable companies are now de-emphasizing video in their service bundles because of mounting programming costs. And both Verizon and Comcast Corp. (Nasdaq: CMCSA, CMCSK) discovered that consumers aren't willing to pay for even a cheap OTT offering on top of their existing video services if it doesn't come with a compelling library of content. (See Is Dumb Pipe the Smart Move? and Gone in a Redbox Instant.)


Keep up with the latest in OTT video developments on our dedicated OTT video content channel here on Light Reading.


Even Google (Nasdaq: GOOG) is having a tough time. The gigabit network provider told attendees at the COMPTEL telecom conference this week that the cost of TV programming "is the single biggest impediment" to the company's fiber deployments. It's hard to sell Internet access without TV service, and traditional TV programming is supremely expensive.

IP video services are growing, but they can't and won't offer a cheaper alternative for the same content that consumers are used to seeing on TV. Netflix Inc. (Nasdaq: NFLX) and Amazon.com Inc. (Nasdaq: AMZN) have shown that it's possible to get creative by combining long-tail movies and shows with some popular newer releases, and original programming. It may not look like standard TV, but it's likely the only way service providers will be able to offer a cheaper bundle.

Sony and Dish are learning that lesson the hard way.

— Mari Silbey, special to Light Reading

(8)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
gconnery
50%
50%
gconnery,
User Rank: Light Sabre
10/9/2014 | 2:13:19 PM
Re: un-televised revolution...
Yeah, if all of the "must carry" channels like ABC, CBS, NBC, Fox, WB, Disney and ESPN are part of gigantic packages that the companies won't license "unbundled" then this is the same story over again. 

These guys are making too much money with this kind of offering, and unless there is a regulatory change requiring unbundling or something (seems very unlikely), the only way this changes is the long slow attrition of customers as the pricing goes up faster than its worth compared to salaries/inflation.  Eventually enough people cut the cord/switch to OTA plus that something will happen. 

But its gonna take a long time. 

The only thing I wonder if they could try would be allowing you to buy packages along the lines of what they are being offered--ABC/ESPN/Disney/A&E for $X, CBS/CW for $Y, NBC/Comcast Sports/USA/E!/Universal/Bravo/Telemundo for $Z, etc.  I wonder if anybody would actually be happy to buy just some of these, like write off CBS to save $5 or $10 a month say.  Or if you're not a big sports fan drop ABC/ESPN/Disney/A&E to save quite a bit more.  I don't know if it would be successful.  But it might create a chink in the armor.  Make the smaller bundles consider offering themselves a la carte?
sam masud
50%
50%
sam masud,
User Rank: Light Sabre
10/8/2014 | 2:31:07 PM
Re: un-televised revolution...
Like you, I ain't gonna shell out 80 bucks for OTT video. It's great that some OTT players are into developing their own content, but I fear we'd then be headed toward an OTT video walled garden, which means a sub would have to subscribe to multiple OTT video providers in order to have access to that content.

I understand that content is expensive, but if content providers can or are channeling their content via multiple OTT players, and hence reaching a larger market, shouldn't the cost of content be going down with the economies of scale...?

 
Ariella
50%
50%
Ariella,
User Rank: Light Sabre
10/8/2014 | 9:49:33 AM
Re: un-televised revolution...
@kbode I can't fathom it either, but I'm not a sports fan. You can even hear such discussions pre-game, post-game, and post-post-game on the radio.
KBode
50%
50%
KBode,
User Rank: Light Sabre
10/8/2014 | 8:55:47 AM
Re: un-televised revolution...
I really think it comes down to live sports, really. And the gatekeepers are loosening their grip on that front slowly but surely, even though I think a lot of sports junkies really like to watch ESPN talking heads yelling at one another for some reason I can't quite fathom. :)
kq4ym
50%
50%
kq4ym,
User Rank: Light Sabre
10/8/2014 | 8:43:05 AM
Re: un-televised revolution...
DVR manufactuers are now selling units that will pick up those over the air channels which should not help the satellite and cable companies keep customers. But, I've always wondered by providers don't keep subscription fees low by offering ala carte channel choices. That might pursuade customers from cutting the cord.
Smoochy18
0%
100%
Smoochy18,
User Rank: Light Beer
10/7/2014 | 8:40:42 PM
Re: un-televised revolution...
Another issue for Dish... if people have local channels through an antenna, they are going to want a DVR for that.
Ariella
0%
100%
Ariella,
User Rank: Light Sabre
10/7/2014 | 5:52:12 PM
Re: un-televised revolution...
I never did get why people shelled out so much money for cable. The Netflix approach makes a lot more sense: choosing what you want instead of paying for a whole package with loads of stuff you don't want. 
KBode
100%
0%
KBode,
User Rank: Light Sabre
10/7/2014 | 1:07:30 PM
un-televised revolution...
I cut the cord several years back and I'm just not sure I have any interest in paying $60 to $80 for a bundle of channels, most of which I won't watch. Wasn't the hope that these OTT services would shift us away from this model? I like that Netflix, Amazon and Hulu are focusing heavily on developing their own content -- this seems like the most logical path forward to help us escape this programming pricing dead end.
Educational Resources
sponsor supplied content
Educational Resources Archive
From The Founder
Cisco's Conrad Clemson, recently promoted to head up the company's Service Provider Apps & Platforms developments, talks to Light Reading's Founder and CEO Steve Saunders about how he's bringing cloud video, mobile and virtualization together to empower network operators.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
Shades of Ray
Why Analytics Is the Tech World's Digital Glue

3|27|17   |   02:20   |   (0) comments


It was obvious at the massive annual CeBIT enterprise tech trade show that the foundation for tech innovation right now is real-time analytics.
LRTV Custom TV
CommScope – Meeting the Demands of Tomorrow's Networks

3|24|17   |     |   (0) comments


Phil Sorksy, Vice President International at CommScope, discusses addressing the challenges faced by service providers today, and as future trends emerge.
LRTV Huawei Video Resource Center
AMS-IX & Huawei's OSN 902

3|24|17   |     |   (0) comments


Huawei shows how its OSN 902 platform helps the Amsterdam Internet exchange to connect the world using multiplexing.
LRTV Huawei Video Resource Center
Huawei's Smart Energy Innovation Center

3|24|17   |     |   (0) comments


In Nuremberg, Huawei showcases its latest capabilities in the digitalization of Internet resources, network infrastructure and intelligence at its Smart Energy Innovation Center.
Valley Wonk
OFC & Hyperscale: A Good Mix?

3|24|17   |   01:50   |   (0) comments


Cloud and telecom players want different types of equipment for their networks, as the chatter at OFC reveals.
LRTV Custom TV
Etisalat on NFV Journey

3|24|17   |   10:37   |   (0) comments


Etisalat is a service provider that prides itself on bringing innovative technologies to the markets it serves. It was one of the first operators to implement 3G and leads the pack in fiber penetration. Now, Esmaeel Al Hammadi, Etisalat's SVP of Network Development, explains the operator's journey to virtualization, beginning with the network core, as well as the ...
LRTV Huawei Video Resource Center
Huawei at CeBIT 2017: Day 3

3|22|17   |     |   (0) comments


Light Reading reports from CeBIT 2017 in Germany, where Huawei is exhibiting on the application of technologies and key business verticals such as transportation, smart city, manufacturing, media and finance.
LRTV Documentaries
No Regrets: Cox's Finkelstein on Fiber & More

3|22|17   |     |   (0) comments


At the Cable Next-Gen Technologies & Strategies event in Denver, Cox's Jeff Finkelstein examines the cable capex conundrum.
LRTV Documentaries
Cable Next-Gen: The 'Mile High' View From Denver

3|22|17   |   11:56   |   (0) comments


Alan Breznick kicks off the Cable Next-Gen Technologies & Strategies event in Denver, casting his thousand-yard stare over cable's current competitive landscape.
LRTV Huawei Video Resource Center
Huawei at CeBIT 2017: Day 2

3|21|17   |   2:27   |   (0) comments


Light Reading reports from CeBIT 2017 in Germany, where Huawei is exhibiting digital transformation solutions around IoT, smart data centers, OpenCloud ecosystem and its newly announced storage-as-a-service solution.
LRTV Custom TV
Driving Better Mobile Customer Experience While Transforming the Mobile Network

3|21|17   |   7:47   |   (0) comments


Light Reading talked to George McGregor of Citrix about the NetScaler Mobile Gateway - an intelligent traffic management solution which can markedly improve the customer experience provided by mobile operators, even when traffic is encrypted. Critical network services can be consolidated and virtualized using NetScaler. Because of the unique architecture, ...
LRTV Custom TV
Mastercard: What's Next for Mobile Payments?

3|21|17   |   7:49   |   (0) comments


2017 marks the fifth consecutive year for Mastercard at Mobile World Congress and it was a great time to reflect on the amazing advances the payments industry has made as well as discuss "What's Next' in the digital commerce future. We spoke to James Anderson, executive vice president of digital payments at MasterCard, about digital wallets to tokenization to ...
Upcoming Live Events
May 15-17, 2017, Austin Convention Center, Austin, TX
May 15, 2017, Austin Convention Center - Austin, TX
June 6, 2017, The Joule Hotel, Dallas, TX
All Upcoming Live Events
Infographics
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
High-Band 5G: Let's Address the Range Question, Shall We?
Dan Jones, Mobile Editor, 3/21/2017
Eurobites: A1, Nokia Turn It Up to 11
Paul Rainford, Assistant Editor, Europe, 3/22/2017
FTTH No Slam Dunk for Cable
Carol Wilson, Editor-at-large, 3/23/2017
Nokia & Facebook Push Undersea Fiber to 32 Tbit/s
Craig Matsumoto, Editor-in-Chief, Light Reading, 3/21/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
TEOCO Founder and CEO Atul Jain talks to Light Reading Founder and CEO Steve Saunders about the challenges around cost control and service monetization in the mobile and IoT sectors.
At MWC 2017, Qualcomm's CTO Matt Grob talks to Light Reading's CEO and Founder Steve Saunders about the progress being made in the development of the technologies and standards that will underpin 5G.
Animals with Phones
Neither Do We Click Here
Is that a prerequisite?
Live Digital Audio

Playing it safe can only get you so far. Sometimes the biggest bets have the biggest payouts, and that is true in your career as well. For this radio show, Caroline Chan, general manager of the 5G Infrastructure Division of the Network Platform Group at Intel, will share her own personal story of how she successfully took big bets to build a successful career, as well as offer advice on how you can do the same. We’ll cover everything from how to overcome fear and manage risk, how to be prepared for where technology is going in the future and how to structure your career in a way to ensure you keep progressing. Chan, a seasoned telecom veteran and effective risk taker herself, will also leave plenty of time to answer all your questions live on the air.