1.) Disney has ordered ESPN to cut $100 million from its 2016 budget and $250 million from its 2017 budget. (Source: Washington Post) This might explain to some why the million-dollar contracts of Bill Simmons and Keith Olbermann are not being renewed.
2.) Based on current Nielsen estimates, ESPN is currently losing 300,000 homes per month. Last I checked, SNL Kagan reported that ESPN's carriage fee is $6.61/month, and ESPN2's carriage fee is $0.83/month. That means ESPN's total carriage fee income for those two channels decreases by $2,232,000 every month. Assuming a steady decline through the end of 2015, ESPN will be down to 91.4 million homes by Christmas and will have missed out on $174 million in carriage fees thanks to cord cutting and cord shaving.
3.) With ESPN on the hook for nearly $14 billion of the NBA's shiny new $24 billion TV deal, we could see a number of leagues moving back to broadcast networks in the coming years, simply because ESPN can't afford them anymore. The Big Ten is up for grabs in 2017, and TV deals for the NFL, MLB, NHL, and MLS all expire between 2020 and 2022. Who knows how many subs ESPN will have lost by 2022?
This piece explains why I think broadcast networks could take the upper hand on ESPN when it comes to televised sports in the future:
Guys, if Verizon is violating a contractual agreement, then they're violating a contractual agreement. Verizon can pull this stunt on individual customers who can't afford to fight back, but against Disney? They'll lose.
Whatever new TV paradigm Verizon is trying to create here, worthwhile or otherwise, is irrelevant. This is going to come down to contract law, and if the contract specifically states that Verizon cannot offer ESPN in a separate sports tier, Disney will force Verizon to honor the contract -- something Verizon probably does to enough of its wireless customers to deserve that.
In the meantime, ESPN has lost 6 million customers in the last 4 years. No matter -- they can still demand the terms they want, including that 6.5% annual carriage fee increase, because they have 20 of the top 21 highest-rated cable TV broadcasts of all time. (I believe the Kentucky-Wisconsin college basketball semifinal on TBS a few weeks ago cracked ESPN's complete hold on the top 20.) They won't really feel the pinch unless they lose another 20 million subs within the next five years or so, and even then, they can probably remain profitable and let sweetheart carriage deals with Sling TV and Apple TV pick up the slack.
Disney is not a huge fan of Comcast getting more control over the TV space, because Comcast can use that control to keep ESPN's ever-growing carriage fees in check. There's a reason Disney was first to strike a deal with Dish Network to put channels on Sling TV, which happened within weeks of Comcast announcing it was buying out Time Warner Cable.
So it's entirely possible that at least one giant media company is getting something it wants out of all this.
Roku cracked 10 million in total units sold last September. Apple is up to 25 million Apple TV units sold, and more than half of those are the current 3rd-gen model. I would hardly call that "roundly trounced".
Plus, Netflix + Hulu Plus + HBO Now + AirPlay will be compelling enough for plenty of people over the next 3 months. (Might be a different case come the holidays, though.)
The people interested in GoT and nothing else will probably continue pirating. HBO is counting on that group being very, very small -- especially given the sheer number of shows (True Detective, The Wire, Treme, Boardwalk Empire, etc.) that many will likely find binge-worthy. That's HBO Now's value proposal.
And it's only a hassle to sign up and then cancel if you're dealing with a cable company. It wasn't nearly as bad when I did it with DishWorld and Hulu Plus.
It's also a blatant supply chain-emptying move by Tim Cook. He's trying to clear out Apple TVs, possibly to introduce a new product later this year. That said, it's a move that seems likely to work out for Apple.
I feel a strange urge to play devil's advocate on this one -- which I know is usually a bad idea on this site, but follow me on this...
Yes, people who just want to watch Game of Thrones and either refuse to pay or don't want to watch any other HBO shows will continue seeding torrents. That's not going away.
1.) Apple TV has already sold 25 million Apple TV units to date, and based loosely on the sales figures listed on Wikipedia, more than half those units appear to be the 3rd-generation model, which has not been jailbroken. That's a pretty big installed base, and lowering the price on Apple TV ensures that base will grow. (It's a blatant supply chain-emptying move by Tim Cook, yes, but most potential buyers won't care that much.)
2.) Having more than one set-top box connected to a TV isn't so far-fetched these days. I have both an Apple TV and a Roku 3. They do have some different uses -- the Roku has Amazon Prime, Sling TV, and DIAL streaming, while the Apple TV has a superior podcast interface and AirPlay for certain iPad apps I like to use. I used to have a Chromecast as well. Given how cheap all these STBs and streaming sticks are now, it's not so odd for cord-cutters to buy and use more than one.
3.) HBO Now's value proposal goes beyond GoT. Think of all those other HBO series and movies that people might not have seen yet -- The Wire, True Detective, Veep, Treme, Boardwalk Empire, etc. That's a lot of binge-watching for not that much money. Sure, you can pirate all of them, but for $15/month, you can stream the whole kit and caboodle and not have to look at those soul-sucking porn ads. (Or maybe I'm the only guy who's grown weary of computer-animated tits. You tell me.) Netflix streaming traffic overtook torrent traffic FOUR YEARS AGO. That proved people will pay for convenience. This is what HBO Now is offering, and it *will* be compelling to many who only use torrents because HBO hadn't otherwise made it convenient. Does Apple exclusivity lessen that convenience for a few months? Sure, but the installed Apple TV base and the relatively low cost of entry *will* attract customers.
4.) This is a long play for HBO, and for its parent company, Time Warner, which licensed its Turner Broadcasting channels to Sling TV. By Labor Day, *all* those channels will be available on a *lot* of STBs and streaming sticks. Apple exclusivity is just a temporary move to help keep Comcast off its back for a while.
Also, apropos of nothing:
5.) At least one market research group (Parks Associates) has predicted that as many as 7 million people will get rid of cable TV once HBO Now becomes available. I don't think it will be quite that high all at once, but let's revisit that figure a year from now and see how close they got.
6.) None of this takes into account HBO Go password-sharing, which is also likely to rise with the premier of GoT season 5 -- especially if cable companies still try to offer customers 3 months of free HBO. That might already be putting a dent in piracy without anyone examining it too closely. It's certainly a reason why HBO Now exists in any form. If the market wasn't there, HBO wouldn't bother.
ESPN and TNT show a ton of NBA games, including most of the playoffs. ESPN also shows a lot of college basketball, and TBS/TNT will air a huge chunk of the NCAA Tournament, including the Final this year. So if you like hoops but hate your cable company, this might work. (And there have been studies showing basketball fans skew younger than other sports, so this falls in line with Dish's target market here.)
If you're a hockey fan, forget it. There's no way Dish and Comcast come to terms here, especially if Charlie Ergen gets on Capitol Hill and starts screaming about data caps being uncompetitive.
Here's a guide to help you figure out if Sling TV is right for you:
After I got on Twitter and bemoaned the lack of competition among ISPs in my city, he told me I was misguided, because there was plenty of competition provided by WISPs out there. Never mind the fact that:
1. A bit of Googling failed to uncover an WISPs in the Raleigh-Durham area, and 2. I live in an apartment, so even if a WISP existed, I couldn't put up an antenna to use it.
So what, I'm supposed to move into a house in another city to conform to Brett Glass' little Wyoming fantasy world? Right. When I challenged him to find a WISP, any WISP, here in the Triangle, he offered no help and just told me I was delusional and there was no hope for me.
Brett Glass has no clue what the vast majority of consumers have to go through in this country with their internet access. I blocked him on Twitter. You should, too.
Now that ESPN is valued at more than one-third of the entire Walt Disney Company, Disney is simply focusing fewer resources on copyright protection and more resources on simply keeping the cable bundle intact, so that they can continue to collect $70/year from people who don't care about sports but gotta have their Mad Men fix.
1.) The Comcast-NBCU merger practically prevents NBC from withholding its programming from other services, but even if it didn't, if Dish wants to settle on similar terms with NBC, Comcast can't afford to be viewed as a holdout. Any appearance that Comcast abusing their market position could convince regulators to block the buyout of TWC.
2.) Should Dish get this IPTV service off the ground, Charlie Ergen could go in front of the press (and Congress) and claim that Comcast's data caps are anti-competitive, because they prevent Comcast Internet customers from using Dish. That could force Comcast to concede on data caps to get the TWC acquisition through.
3.) In terms of the marketplace, Dish has a long-term partnership with Frontier Communications to be the TV portion of their "triple play" package, but Frontier can't offer that package to apartment dwellers who can't put up a satellite dish. If Dish gets this IPTV service working, that changes, and those renters who hate Comcast and TWC can have a legit alternative for TV service.
I don't know about you, but I'm okay with losing Auto-hop if it means either putting the kibosh on data caps, blocking the Comcast-TWC merger, or costing either of them a large number of customers.