PowerPoint Presentation: Sept. 8, 2004 -- TV 2010Presentation Transcript
TV 2010 Communications Studies 197C Sept. 6, 2004
Consumer Good to Divisible, Editable Asset 1980’s 1990’s 2000’s 2010’s 2020’s Nintendo home video game -- 1981 Internet Bubble Blockbuster expansion starts 1987 Broadband AOL Founded - 1985 Pay per view starts - 1985 ?????? Megaplexes - 1995 Mergers PVR’s Wireless media? Consumer Products Channel Explosions Digital
Dominant Cable Operators (MSOs) Source: Kagan Research, LLC Top 10: 49% of HUT; 81% of Cable HH 59,294,800 720,800 CableOne 10 1,293,600 Insight Communications 9 1,543,000 Mediacom Communications Corporations 8 2,167,000 Bright House Networks 7 2,944,000 Cablevision Systems Corporation 6 5,469,800 Adelphia Communications 5 6,338,300 Cox Communications 4 6,431,300 Charter Communications 3 10,919,000 Time Warner Cable 2 21,468,000 Comcast Cable Communications ( info) 1 Subscribers MSO Rank
Concentration of U.S. Distribution Pipes
MSO’s (Multiple System Operator)
Comcast (ATT) Time Warner Charter Cox Adelphia Cablevision Echostar Dish DirecTV 21.4 11 6.5 6.3 5.2 3 “ Voom” 8.8 11.5 = 54 million = 80 % of the cable subscriber universe
Top Cable Networks by Ratings Source: Kagan Research, LLC 986,000 0.9 Discovery 1,010,000 0.9 Fox News 1,018,000 0.9 ESPN 1,243,000 1.1 Toon Disney 1,247,000 1.2 Lifetime 1,319,000 1.2 TBS 1,391,000 1.3 Disney 1,742,000 1.6 Nick/NAN 1,828,000 1.7 USA 1,984,000 1.7 TNT TVHH Primetime Rating Cable Network
Top Cable Networks by Revenue Source: Kagan Research, LLC $762.7 MM $735.6 MM Disney Channel $776.2 MM $763.1 MM TBS $790.0 MM $744.8 MM Lifetime $858.2 MM $798.3 MM CNN $933.1 MM $883.2 MM USA $998.5 MM $860.2 MM MTV $1,189.5 MM $1,022.4 MM Fox Sports $1,244.1 MM $1,088.0 MM Nickelodeon $1,502.1 MM $1,320.8 MM TNT $2,871.6 MM $2,449.1 MM ESPN 2003 Revenue 2002 Revenue Cable Network
Important Facts: Cable Financial Model
Cable financial model depends on popularity of net
New nets typically have to pay per sub fee to get carriage
Popular nets (ESPN) get per sub fee from MSO
ESPN rates at around $2/subscriber (or more)
Comcast’s total programming costs per sub per month (as of 1/13/2003) were $14.87
Satellite – Late to the Party
1988 – Congress enacted the Satellite Home Viewer Act (“SHVA”) to ensure that subscribers to satellite services would have access to broadcast signals.
At that time, satellite TV service consisted of the large C-Band dishes that were primarily in rural areas.
C-Band peaked at 2.4 million subscribers in 1995, but has dropped to below 500,000
In 1994, the Direct Broadcast Satellite (DBS) service became available to consumers – has grown to over 21 million subscribers
Reaching the US TV Consumer Source: Nielsen 2002; weekly cume
Fragmented Competition: Number of US Cable & Satellite Channels Source: Screen Digest 1994: Launch of Digital Satellite 1997: Launch of Digital Cable
Cable TV & Satellite -- US
Direct Broadcast Satellite – 15.8% US households (up from 13.8% 7/02)
Wired Cable - 70.3% of US Households, down from 67.9% 7/02 (back to 4/96 levels)
58 TV markets now have Alternate Delivery system penetration of 25% or more
Springfield, MO 46%
Dallas/Ft. Worth 38%
US Channels Available Doesn’t Materially Impact 14-19 Channels Watched Source: Nielsen, National People Meter Sample 8/01; TVB
How Do Cable Channels Compete?
Niche Programming – repackaged, syndicated, used across platforms
HGTV, Discovery, History, MTV, ESPN
Repurposing (co-owned networks; quick reruns)
FX: The Shield, Nip/Tuck
Bravo: Queer Eye for the Straight Guy
ESPN/Fox: Sports programming
Network Concentrated Landscape Turner ABC/ESPN MTV Networks Discovery Fox NBC Scripps 10 10 19 13 8 6 4
Recent Off-network Programs to Cable Source: Kagan Research, LLC $75K 96 CBS TBS Fox Yes, Dear 2004 $150K 61 WB ABC Family Warner Jamie Kennedy 2004 $200K 66 ABC TNT Buena Vista Alias 2005 $280K 100 NBC FX NBC Fear Factor 2004 $400K 66 WB ABC Family Warner Smallville 2004 $600K 264 NBC Lifetime Paramount Frasier 2006 Fee/episode Eps. Orig. Network Cable Network Syndicator Program Year Avail.
U.S. Changing – How about other Countries?
Different cable/satellite mix
National programming – culture
Reality Show – Global Impact
Interactive TV – U.K. (Sky TV), Israel (cable)
Digital Customization for Local Appetites – MTV brand extensions
Vertical & Horizontal Integration
Reality (previous kings included game show)
Advertiser support – Integration – Product Placement
Reruns & Cable Repurposing
Vertical & Horizontal Integration
Comcast - AT&T (failed bid for Disney)
News Corp. buys DirecTV
Adelphia up for sale
Intensifies competition: more at stake, more pieces to maneuver
Competition Driving New Services
Cable launching VOD (difficult for satellite, inefficient upstream path)
Satellite counters with DVR, calls it VOD (cable launching DVR too)
Cable offers broadband and voice (satellite teams with DSL, RBOCs)
HDTV - advantage for satellite in short-run, capacity issues later; regulatory local “must-carry” considerations
ITV and custom IPGs next (Murdoch’s success with BSkyB)
Retail prices kept at bay for now
People Meter Controversy
Nielsen is trying to record what people watch every 15 minutes to determine rating with 2,000 households
Challenges now that sample is unrepresentative of total population (higher end house skew).
Boxes just tell if the TV set is on, not whether a person is there actually watching it or not.
Issues that have arisen with technology is that there are multi-set households, VCR and Tivo which alter when people watch, etc.
Reality Show – Winner of 2003/04 Season
9 of the top 20 top-rated shows among adults 18-49 were reality shows.
A reality show was the top-rated show in the key demo for ABC ("The Bachelor“), NBC ("The Apprentice," tied with "Friends"), Fox ("American Idol") and UPN ("America's Next Top Model").
Source: Variety 5/27/04
Reality Show Economics
How American Idol makes $
Ad spots (network, national spot, local spot, cable insertions)
Syndication of idea to other countries
Low Cost & No Reruns or Traditional Syndication (except Reality Show Network)
DVDs -- TV Episodics Releases Source: Video Store Magazine Market Research 2003 TV Episodics are the latest goldmine for Studios who will be expanding the category for the next few years as they mine their deep TV catalogs.
Digital Television & High Def (HDTV)
Rule change in 1997 allowed broadcasters to hold onto their analog channel until 85 percent of Americans have made the DTV transition.
End of transition
December 31, 2006 or when 85 percent of U.S. TV households have the capability to receive Digital TV signals (whichever is later )
Digital Must Carry??
Distribution: Changing the Basic Economics of Television?
Broadband: 24% of households
Cable 15.9 mm, DSL 10.4 MM 1Q94
Cable 60+% of all broadband customers in U.S
Voice over IP (VoIP)
Video On Demand (VOD)
Cable TV Subs declined 63,000 1Q04
DirecTV -- Murdoch took over Dec. 03
Europe -- Sky TV
Asia -- STAR TV
Echostar (Dish +)
Tivo / PVRs
How much piracy?
How much band to the home? Who controls it?
How much will the consumer be willing to spend each month?
How do advertisers get their impressions to the home?