Fox Responds To 'Piracy Surge' By Answering A Different Question

from the you-didn't-answer-the-question dept

Exactly as we predicted, when the Fox Network hid its TV shows online behind various paywalls and delays, the rate of infringement on those shows shot way up. Eriq Gardner, over at THResq spoke to a Communications VP at Fox to get his response about all those people going to unauthorized means to get their content, and in true “Communications VP” fashion, Scott Grogin deftly ignores the key question and focuses on a secondary claim from the original TorrentFreak article, the suggestion that these delays were about getting people to watch TV live:

The TorrentFreak blog post is a little over the top. The story indicates that we ‘took this drastic step in the hope of getting more people to watch shows live and thus make more revenue.’ Nothing could be further from the truth.

Authenticating viewers is not about making sure they only watch live…in fact, quite the opposite?we support a ‘TV Everywhere’ proposition and are working with our distribution partners to benefit our businesses. It’s about receiving fair value so we can continue to produce this expensive and high quality programming. We are pursuing a strategy where the 90+ million households who pay to watch our programming via cable/satellite/telco will ultimately receive maximum benefit. They can watch live, via DVR, on VOD, online, or through one of the various tablet apps that allow in-home viewing.

We are actively in negotiations with all cable/satellite/telco providers regarding authentication of their customers. We hope to announce several more agreements before the start of the new television season in mid-September.

The issue of watching “live” or not is really a side matter, and was perhaps a bit of hyperbole from TorrentFreak. What those guys clearly meant was that this is a weak effort by Fox to keep people watching via TV or via a big cable/satellite provider. And, I’m sorry, but this line is pure bull:

We are pursuing a strategy where the 90+ million households who pay to watch our programming via cable/satellite/telco will ultimately receive maximum benefit.

Anyone who claims that to offer maximum benefit to one set of people, you have to take away features from others isn’t being particularly honest. To offer maximum benefit, you offer maximum benefit. Could Fox offer new additional features to such subscribers? Sure. That would be interesting and perhaps a good strategy. But taking the content away, when it’s so readily available via unauthorized means doesn’t help provide maximum benefit to subscribers at all. It drives more people to unauthorized means of access (where Fox gets no money at all), and actually takes away value from those subscribers. That’s because one reason why people watch hit shows right away is so they can discuss them with friends. Fox has now made it more difficult to discuss with friends because it’s that much harder to watch its shows.

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Comments on “Fox Responds To 'Piracy Surge' By Answering A Different Question”

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82 Comments
E. Zachary Knight (profile) says:

That’s because one reason why people watch hit shows right away is so they can discuss them with friends. Fox has now made it more difficult to discuss with friends because it’s that much harder to watch its shows.

That was one of the key points I made with Syfy recently, that they completely ignored.

By taking away my ability to watch shows now, while my friends are watching them, they are turning a class of people, those who cannot afford or refuse to pay for cable/satellite, into social pariahs. A lot of people don’t like that.

It is completely insane to alienate fans in the hopes that you get more money.

Granted, what Fox has done is far more reasonable than what Syfy has done (8 day delay with Fox, 2 month delay with Syfy) it is still idiotic.

Anonymous Coward says:

Re: Re:

Don’t even forget people outside the US. In some countries the seasons are a year or more behind compared to the US and sometimes they even get dubbed into the native languages. That was my key reason to switch to p2p.

Why should I be required to wait a year for a show and then not even get the original audio? It’s the internet… I want to discuss new eps now and not in a year.

Anonymous Coward says:

Re: Re:

That was one of the key points I made with Syfy recently, that they completely ignored.

By taking away my ability to watch shows now, while my friends are watching them, they are turning a class of people, those who cannot afford or refuse to pay for cable/satellite, into social pariahs.

Chances are that if your life revolves around watching and discussing SyFy shows you’re already a social pariah. And if you simply refuse to pay for cable or satellite why do you think you’re entitled anyway?

Fickelbra (profile) says:

Re: Re: Re:

Personally, I find much more strength and courage in the person that openly acknowledges things they are interested in versus people that have nothing better to do than rain on other peoples’ parade for it.

So he and his friends watch Syfy and talk about it. Is that any different than what you presumably do, trolling over details of a comment that don’t reflect the commentor’s point?

Fickelbra (profile) says:

Re: Re: Re:

Personally, I find much more strength and courage in the person that openly acknowledges things they are interested in versus people that have nothing better to do than rain on other peoples’ parade for it.

So he and his friends watch Syfy and talk about it. Is that any different than what you presumably do, trolling over details of a comment that don’t reflect the commentor’s point?

E. Zachary Knight (profile) says:

Re: Re: Re:

Chances are that if your life revolves around watching and discussing SyFy shows you’re already a social pariah.
Not among my circle of friends.

And if you simply refuse to pay for cable or satellite why do you think you’re entitled anyway?

Like I said, I am more than willing to watch shows legally if they are provided in a format that is convenient to me. I don’t find paying for satellite or cable to be convenient. Yet, I do find watching shows online to be so. It is not my fault Syfy took away that option thinking I would be willing to pay $80 a month just to watch a handful of shows.

Anonymous Coward says:

Re: Re:

That was one of the key points I made with Syfy recently, that they completely ignored.

By taking away my ability to watch shows now, while my friends are watching them, they are turning a class of people, those who cannot afford or refuse to pay for cable/satellite, into social pariahs.

Chances are that if your life revolves around watching and discussing SyFy shows you’re already a social pariah. And if you simply refuse to pay for cable or satellite why do you think you’re entitled anyway?

PopeRatzo (profile) says:

Re: Re:

By taking away my ability to watch shows now, while my friends are watching them, they are turning a class of people, those who cannot afford or refuse to pay for cable/satellite, into social pariahs.

Don’t you think “social pariah” is a little bit strong? I mean, we’re talking about television shows here. If you believe not being able to talk about a television show with your friends somehow degrades your experience of friendship, then you’re TV should be taken away from you until you return to sanity.

I mean this sincerely. And who even talks about broadcast TV shows anymore except maybe if The Sopranos or Sons of Anarchy come back.

And really, if it’s that important, there are torrents of your favorite TV show available a few hours after they’re broadcast. If you were so motivated, you could certainly download and watch a TV show before seeing your friends the next day.

For your own good, don’t make TV so important.

Fickelbra (profile) says:

Re: Re: Re:

Why don’t you get off your high horse Pope? TV isn’t even the point, it’s the fact that friends socialize and this causes a barrier for him to engage. It is none of your business what they socialize about unless you are a part of that friendship.

His point is valid, whether or not you think he should like TV as much as he does. I’m sure there are interests you talk about with your friends that my circle of friends would laugh at you over. I personally don’t like sports, and I think it is absolutely silly to watch grown men play a sport you have no affiliation to other than living in a close proximity of land. However, what I don’t do is run around trolling about how I think it’s a waste of time, because it’s not, it is simply an interest people choose to engage in.

E. Zachary Knight (profile) says:

Re: Re: Re:

Don’t you think “social pariah” is a little bit strong?

Not really. It is a shared interest. I can engage with my friends in the discussion or sit out with nothing to add to the conversation. Personally, I like to be engaged in the discussion.

And really, if it’s that important, there are torrents of your favorite TV show available a few hours after they’re broadcast.

That was also something I raised with SyFy and which the subsequently brushed aside. I have turned to such means. Sadly they won’t get any ad revenue from me in 2 months time when they are finally available online legally.

Zot-Sindi says:

Re: Re:

By taking away my ability to watch shows now, while my friends are watching them, they are turning a class of people, those who cannot afford or refuse to pay for cable/satellite, into social pariahs.

…well, your first problem was being social in the first place

drop the flock and watch the damn shows on YOUR own time, not your friend’s, if they want to outcast you for it, fuck them, friends are dime-a-dozen and not really that important, with those actions they probably aren’t your “friends” anyway

Fickelbra (profile) says:

Re: Re: Re:

…Zach, I’m really baffled how no one can see what your actual point is. The point is it is a social experience on a current event you and your friends’ engage in. Syfy took it away.

This isn’t a point that Zach needs new friends, or a new channel to watch, or a new hobby. It means that he needs more options than a $100 cable bill. Syfy is only losing a fan in this way. Correct me if I’m wrong here!

out_of_the_blue says:

Says " the 90+ million households who pay to watch".

Which you twist into implying that those who DON’T pay should get equal benefits:
“Anyone who claims that to offer maximum benefit to one set of people, you have to take away features from others isn’t being particularly honest.”

Fox doesn’t care about those who don’t subscribe. Why should they? Those who pirate it are neither paying directly nor watching the ads. They’re just getting the content for free.

Anonymous Coward says:

Re: Says " the 90+ million households who pay to watch".

The problem with that line of thinking is that many of the people who did watch it online were watching it because they happened to miss the show at the regularly scheduled time on cable. Why should they have to pay twice to watch it? Now they won’t get to watch the show until after next weeks show has aired.

rubberpants says:

Re: Re: Re: Says " the 90+ million households who pay to watch".

“OH, boo-hoo. IT’S TEEVEE! You will SURVIVE WITHOUT IT!”

That would be a pretty ineffective thing for someone who is trying to sell television advertising to say to potential viewers and I think it sums up the entertainment industry’s current situation pretty well.

SabreCat says:

Re: Re: Re: Says " the 90+ million households who pay to watch".

And Fox will survive without the paying subscribers who give up on legit-but-crippled viewing and cut the cord.

Or maybe it won’t. Boo-hoo indeed.

As always, this is about sustainable vs. unsustainable business models, not… whatever it is you think it’s about.

Marcus Carab (profile) says:

Re: Re: Re: Says " the 90+ million households who pay to watch".

but I’m leaving this thread.

Do you fancy yourself some sort of hero? Do you think you accomplish something by making your weirdly nonsensical comments that absolutely nobody takes seriously and then leaving? In your head, are you the great and mighty defender of reason, who shatters our illusions with well-placed hammer blows then leaves us to pick up the pieces in our new state of enlightenment?

Basically, blue, what I’m asking is: exactly how crazy are you?

PaulT (profile) says:

Re: Re: Re: Says " the 90+ million households who pay to watch".

I love that line of argument. You’re admitting that their entire business is run around providing a triviality that most people wouldn’t want to pay more than a pittance for in the first place. Let alone the bastardised version from which they’re removing value via these moves.

Part of their problem, perhaps?

:Lobo Santo (profile) says:

Re: Says " the 90+ million households who pay to watch".

A- Trolling. You’re getting quite good.

Statement: Ye aulde paper newspaper manufacturer makes their money via selling advertisements, the price they can charge would-be advertisers being influenced by the number of people they can reliably claim read their newspaper.
Why then does the newspaper also charge a paltry fee to “purchase” their newspaper?
Greed, and because they can. The purchaser, the consumer is in fact the product. The advertiser is the customer and always has been.

The same is true of television programs. Getting people to “buy” those shows is peripheral to claiming a huge audience so advertisers will bow and scrape and throw hookers and blow at you in order to get the honor of advertising on your uber-popular show.

Alien Bard says:

Re: Re: Says " the 90+ million households who pay to watch".

“Why then does the newspaper also charge a paltry fee to “purchase” their newspaper?”
Actually the fee also created a provable paper trail to show distribution levels. This was useful when trying to sell that add space. With modern distribution techniques that is no longer necessary but as you said…

Ed C. says:

Re: Re: Re:3 Says " the 90+ million households who pay to watch".

Apparently you can’t recognize it when you see it. Since your SDA (Sarcasm Detection Apparatus) is either broken, uncalibrated or needs updating to the newest firmware, consider this a notice a benchmark which you can use to either correct your SDA settings or request a RMA from your retailer.

[This post is a notice of the Sarcasm Advisory Council]

Anonymous Coward says:

Re: Says " the 90+ million households who pay to watch".

The real question is why does Fox about about those that do subscribe? They’re not in the distribution market. Yes they receive money based on the number of people that watch, but those are separate contracts set up with advertisers which has no bearing on any individual subscriber.

They could just as easily put the shows on their own website and tell the advertisers how many people are viewing their stream at any given time and write up an advertising contract based on that.

What Fox is really saying is that they currently make lots of money with the help of cable/satellite companies and are afraid of change so they want people to stay tied in and in their shortsighted ways are driving people away from potential revenue streams.

CommonSense (profile) says:

Re: Says " the 90+ million households who pay to watch".

I am honestly growing tired of your intentional misrepresentations of everything.

I don’t subscribe to Fox, and I don’t pirate Fox shows (mostly because they’re not worth the hard drive space and hassle to get to my TV from my PC). I do, however, pay for Hulu+ (who then pays Fox for their programming) and I do watch the ads. When Mike refers to people who don’t subscribe to cable, he’s not talking only about the people who don’t pay, he’s still including those that pay in other ways, which you conveniently ignore because then your contradictory point wouldn’t work (if it even does anyway, which I doubt and won’t waste my time thinking about).

Fox doesn’t care about those who don’t subscribe, including me, that is true. Why should they though?? Because I am NOT a pirate, I DO pay and therefore I’m NOT just getting the content for free, and because if Fox continues to strip value away from my means of watching the show, I will stop paying, and stop watching. Then Fox doesn’t only lose income, but they lose someone who could have been involved in the free-for-Fox marketing campaign that is word of mouth.

Lastly, that quote you have in your comment stands, you never even hinted at a valid counter-argument, though I suspect you think you did. Stripping benefits away from me and my viewing options did not change anything for cable subscribers. If you think they are currently getting maximum benefit, then they were still getting maximum benefit before, and the change had absolutely NOTHING to do with benefit for anyone except Fox. That, I believe, is Mike’s point, and it stands.

Rekrul says:

Re: Says " the 90+ million households who pay to watch".

Fox doesn’t care about those who don’t subscribe. Why should they? Those who pirate it are neither paying directly nor watching the ads. They’re just getting the content for free.

Just like the people watching Fox OTA (over the air). They get it free, and realistically, nobody watches the ads. People either flip channels, take a bathroom break, or read a magazine or two until the show comes back on.

Sean C. (profile) says:

Re: Says " the 90+ million households who pay to watch".

“Fox doesn’t care about those who don’t subscribe. Why should they? Those who pirate it are neither paying directly nor watching the ads. They’re just getting the content for free.”

What about those that would watch the shows via over-the-air broadcasts if they were available in the area? Or missing a showing because of something happening in their lives? Should they be required to subscribe to cable or satellite service in order to watch the shows online?

Anonymous Coward says:

Re: Says

So it is your position that those who don’t have cable or satellite subscriptions who were watching in online via Fox before that change are ‘pirates’ who ‘get their content for free?’ You know set top antennas also ‘get their content for free’ and DVR or VCR recordings will ‘not watch ads,’ are they pirates too? Maybe we should add more value to subscribers by delaying broadcasts for set-top viewers by two weeks and passing legislation to make recording devices illegal.

big al says:

fox seems to forget…..their programing is already paid for by our eyeballs on their commercials… so it’s my thought that if it goes behind a paywall i am now paying twice for the same show… now if they remove the commercials…..

also when they charge the sponsors by the number of people who watch ,then the paywall defeats the earnings as fewer eyeballs will see the show….everyone seems to forget that it’s still broadcast tv….free to watch..free to record… cable is just and addition to the broadcast media…

just a thought

Alien Bard says:

Re: Re: Re:

The cable/satellite company is providing a separate service in the form of higher quality reception, simpler receiving equipment, and more channels. Really it should not have anything to do with the networks, other than maintaining a high level connection for receiving the signal they are rebroadcasting. Of course that is a simplified view and doesn’t take into account the corporate reality of kickbacks, licensing fees, and other pocket stuffers…

out_of_the_blue says:

@ "turning a class of people ... into social pariahs"

Good heavens. Your sense of entitlement applies to TV shows!
“By taking away my ability to watch shows now, while my friends are watching them, they are turning a class of people, those who cannot afford or refuse to pay for cable/satellite, into social pariahs. A lot of people don’t like that.”

To begin with, you’re better off NOT watching that CRAP. If you hold that the empty idiot box entertainment of modern TEEVEE is valuable and important, then I sure ain’t going to be with you on the barricades of that fight.

Anonymous Coward says:

Re: @ "turning a class of people ... into social pariahs"

Blah blah blah.

More excuses as to why you won’t sell the stuff that people want. You think this is about entitlement? This is about a business refusing to make the decisions that will make them money, and then throwing hissy fits when their profit margins start hurting. That’s entitlement.

rubberpants says:

Re: @ "turning a class of people ... into social pariahs"

Yeah, why would you try to make money by meeting demand? Surely that’s not a good business plan.

My business plan is to write a book then keep the only copy under my pillow. I’ve purchased a new home in anticipation of the large checks I’ll be receiving. I’m planning a house warming party, and you’re invited.

egghead (profile) says:

Re: Re: Re: @ "turning a class of people ... into social pariahs"

Instead of stealing the physical book, I’ll just bring my ultra-portable, energy harvesting copy machine to the party and take a gander at your book. I’ll later go home and peruse my copy while coming up with my own ideas. Hell, I may even improve upon your book.

Wait…you want to sue me for using such a tool? Well, lets just line up the entire world population, along with any animal capable of mimicking behaviors since my tool was simply my vision system combined with memory controlled by an organ called the brain. Oh…and you can’t patent that…well maybe with the current patent system.

Anonymous Coward says:

The very basics of product differentiation. Fox realizes that their online product (free) was likely to cause some losses in their paying product (OTA and via cable broadcasting). So they adjusted the free product (you know, the “bonus” product) to make sure that it didn’t take away from the product paying the bills.

There are a bunch of unhappy freeloaders out there now. Since they weren’t customers anyway, and since they weren’t helping to pay the bills, why do they matter so much?

It’s amazing to see people who are anti-hollywood and anti-big business worked up into a tizzy because fox took away their free TV binky. It’s classic to see how much you guys are addicted to the very products you claim to despise.

egghead (profile) says:

Re: Re: Re:

Then the second person (SP) sees the video and likes it enough to hunt down the other episodes. SP finds Fox’s webpage with the lineup and checks the schedule for when the show airs next. Sadly, SP has other commitments that will take SP away from home for a significant period of time. SP would still like to watch the new episodes and tries to find ways to watch the show legally. Sadly again, SP finds that the geographical restrictions prevent SP from viewing the legal videos outside SP’s home country. Downtrodden, SP does a Google search including the shows name and the search token ‘:filetype torrent’ which points SP to a plethora of options for viewing the videos on whatever device and wherever SP currently is. It’s too bad that SP couldn’t provide Fox with additional viewership simply because SP is physically distant from home. If only Fox had figured out the internet and how to deliver SP the desired content in the desired format.

Anonymous Coward says:

Re: Re: Re: Re:

Remarkably, because they didn’t see any episodes, being a couple of weeks behind isn’t going to kill them. They set up their PVR to record new episodes OTA or via cable, and in the meantime use the website to “catch up”. Within a couple of weeks total, they are up to date and running.

The second person gets plenty of benefit, because their viewing isn’t “time tied” to a short window between OTA and online release.

What Fox and others have seen so far (based on reports I have read) is that while they can charge more for ads that run online, the costs to provide the service, and the losses on the other side (declines in OTA viewership and ad rates) make it a losing proposition so far. It is slowly changing, but it is still a part of the broadcast industry that incurs heavy costs and nowhere near enough revenue to justify it.

egghead (profile) says:

Re: Re: Re:2 Re:

Unless of course, SP is under deployment orders and may not be back home for a year.

Now, onto your ‘reports’ that indicate a higher cost for providing streaming services versus the traditional OTA broadcasts.
– Bandwidth is cheap, especially when purchased in bulk
– Their shows are likely already in a digital format
– Paywall management is expensive and usually outweighs gains
– Less restrictions on users leads to more eyeballs on content
– An increase in online viewers does not correlate to a loss of OTA viewership
– The infrastructure for streaming video including the capability to display ads is already available

I’ve yet to see how providing open access to shows including less invasive advertisements becomes a losing proposition for the broadcaster. If the broadcaster tries to restrict the access, then they not only incur additional expenses, but they also reduce their viewership which drives the revenue from advertisements.

As even you’ve said, people can live without the TV shows; so, they’re not a product for which people will just simply pay whatever. Hell, the advertisers pay for the content to be displayed to the audience; so, why is the audience even being charged to see the content? Certainly, it doesn’t really cost a broadcaster $3million to display 30 seconds worth of content or nearly $300million for 3 hours worth of content (about $27k/sec). If that were the case, then it would cost $876,000million or $876billion to run a 24 hour network for only 365 days. That’s roughly $2,190 per person in America per year. I don’t know of any network that actually reaches everyone in America, so it would be significantly higher per viewer and that’s for only one network!

Now, what were you saying about ad revenue not covering costs?

Anonymous Coward says:

Re: Re: Re:3 Re:

Not sure where you get all the math from, but I can’t say it really means anything.

You have to consider something very important, that few people here want to look at:

When you shift a percentage of your business to a new medium, you are not only looking at the “marginal costs” of showing that TV show to one more user, you also have to carry some of the productions costs with you.

Why?

If you add one online user and lose one OTA viewer, your revenue on one side goes up, and on the other side goes down. When you talk about 1 person, it’s not a big deal. But let’s say 10% of the OTA viewers for Fox suddenly stop watching, and become online viewers instead. At some point, the costs of providing the programming needs to include the actual costs to acquire that programming.

Remember too, the number of total viewers is pretty much a neutral thing: You have only so many people in the US, almost all of them are within broadcast range (or sat / cable range) of Fox. So unless they are taking viewers from other networks (an ever shifting pile of sand), they are just cannibalizing their own viewership and revenue.

You also have to remember that the way TV networks are setup, the actual costs for distribution are picked up by local affiliate stations. It isn’t Fox itself putting up transmission towers and the like, it’s local affiliates, who make their money but inserting local ads into national broadcasts.

How would you propose you share the income of the online world with the local affiliate broadcasters?

el_segfaulto (profile) says:

Re: Re: Re:

Then let Fox enhance it. Publish an RSS feed with links to torrents that users can set up to automatically download. I don’t torrent, but I know the terrain well enough to know that the annoying nature of commercials would be tolerable knowing that I wouldn’t have to hunt for a particular release group in my language at a decent quality.

Ed C. says:

So, they’re basically saying they really don’t like this “internet” thing and think it’s more profitable to just go back to the expensive way of doing things that had been working for the last several decades. Where have I heard that argument before…

It’s like watching a dinosaur see the meteor strike, blink a few times, then go on pretending nothing had happened.

Anonymous Coward says:

With mythical-cord-cutters becoming a reality, cable and others probably are pressuring Fox and other content providers to cut down the cost, that is Fox’s real customers the cable companies, so in order to help them Fox will screw the viewers so they can give the cable guys something they can claim “hey if you don’t sign you won’t be able to see this”.

Piracy in this case is a blessing and a curse. It is a blessing because it keeps the conversations at the water place in offices everywhere live and well it creates the buzz, who wants to make a joke that nobody gets it?

It is a curse because they can’t lash out at viewers in public, and need to address the concerns of cable companies, with the cable companies only willing to pay for something others find of value that will keep them from entertainment diet.

The funny part is, this probably will drive more people to cut the cord LoL

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