Attackcoog
Moderator
Posts: 44,738
Joined: Oct 2011
Reputation: 2860
I Root For: Houston
Location:
|
RE: Still think we get an increase from ESPN at look in time? Think again...
(10-27-2015 11:15 PM)Niner National Wrote: (10-27-2015 08:48 PM)Attackcoog Wrote: (10-27-2015 08:19 PM)gostangs Wrote: yeah niner is on the target. It isn't that ESPN is profitable, it is that their model is going away. Having choice is going to disrupt the entire money flow. Less of a shock for us, but if you are the piglet on the sixth tit and the pig gets a lot skinnier it can't be good.
Your missing the point. The model doesn't work because the cable companies include ESPN on basic cable. The model works because so many people want ESPN that ESPN can DEMAND that they be on basic cable as part of their carriage agreement. Any cable company that cant offer ESPN is in trouble and no cable company can be without its networks.
Yes, some people get ESPN that don't want it. Some people get TNT and don't want it. The reality is a model change isn't going to make much difference. ESPN will cost more (because its no longer subsidized by folks who don't want it), but the same thing can be said for every single network on basic cable. In the end, a different model WILL give consumers complete control over the size of their cable/internet bill. But they will also pay more for every channel they do get and will likely end up paying more for their internet (the last mile of cable/pipe to the home always gets paid). Its interesting what Google is doing, but Im skeptical about Google giving internet away for free forever--that's just not what business do over the long term.
That said, its not like ESPN is not positioning itself for a changing model. Essentially, ESPN-3 is an on-demand internet platform that is already in place and branded. If the model changes completely to what some believe, ESPN-3 will simply become to sports what Netflix is to tv/movies.
The industry is so consolidated and also non-competitive that ESPN doesn't have the leverage it used to.
If a carrier decides they're going to offer basic cable packages without sports networks, ESPN isn't just going to say "F off, we won't let you carry our station at all then"
Maybe they can do that will small carriers, but they're not going to do that to to large ones because dropping off a Comcast, TWC, Charter, Dish, or DirecTV would wreck their business. Verizon already has tried to offer an ESPN-less base package and Disney threatened to sue them for breaching their contract. This shows that the carriers are definitely considering this already. Again, it's not just ESPN though that would be dropped, this would screw over Fox Sports 1 as well.
ESPN is definitely positioning themselves for a changing model. They've even indicated they're probably going to offer an ESPN streaming subscription package at some point in the future like HBO Now.
That's great for people that want ESPN and don't want cable, but it still doesn't fix the problem they have with fewer people subscribing to cable services and subsidizing their business model.
Without bundling, I bet at least 50% of the television stations that exist would go under. ESPN wouldn't, but we'd also see them change the way they bid on sports.
Clearly ESPN isn't going away, but it the layoffs we've seen recently are just the beginning. Media is a commodity. The internet killed print media and it is going to drastically change the revenue model for video as well.
I don't agree. The model is irrelevant because its just a delivery system. The key is content and control of content. Whether it comes over the internet, though a wire or cable, or via broadcast wave---nobody really in the end cares. What they care about it the actual content, its entertainment value, and the quality of image and sound they receive. Whether it be movies, tv series, or sports---in the final analysis, its all about the content.
As long as ESPN has a massive catalogue of sports media rights---sports that millions of fans want to see, they will be fine. There will always be a way to monetize the value of that sports content. The delivery method or way they are compensated isn't really that big a deal The only REAL danger ESPN faces is losing those content rights---because unlike CBS or NBC, ESPN does not produce the actual content that makes them so much money. Keep in mind, the cuts people keep referencing are simply to hit some arbitrary target goal that Disney has decided upon. If ESPN attempts to squeeze the content producers to get their profit up even higher, one of two things will eventually happen.
1) Another entity will purchase those rights for more money, because they can make plenty of money off of the rights at the higher price---it just wont be the obscene target return that the Mouse House wants to make.
The second option is much more ominous for ESPN--
2) If squeezed too much, the sports entities, who actually produce the CONTENT that makes ESPN so much money, will create their own distribution system. By doing this, the leagues will realize the FULL value of their content. This is what happened last time ESPN played hardball with the Big-10. Delany threw ESPN a deuce and created the Big-10 Network with Fox. We already see the Big-10 is making as much from their own network, which owns just a small portion of the Big-10 rights, as they do selling the bulk of their rights through traditional channels. This option is the biggest danger to ESPN---not streaming. Despite all their power, in the end, ESPN is just another middle man. That's why I don't see them being able to just arbitrarily roll back content prices because they want to hit an ever growing profit target. The marketplace doesn't work like that.
(This post was last modified: 10-28-2015 02:20 AM by Attackcoog.)
|
|