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Let me preface this by stating – I issue no apologies for my opinions below and have seen the industry enough to understand what is going on and what should really happen vis-a-vis the subscriber.

For sure Video technology has moved faster than other technologies. But with the arrival of IP based (and Internet streaming) technologies, and incorporation into the TV set of STB features (first step Smart TV), it will become much easier for MVPDs to better address their basic needs – bandwidth, customer targeting,  stagnating growth and churn.

The solution to these problems has shifted from STB Manufacturers (largest of who have been moving away from manufacturing boxes themselves due to cost of incorporating new technologies such as HD/3D, Middleware, Gaming RTOS, Internet Surfing, Program Guides, etc…. being prohibitive – re: Cisco–SA, and Motorola hawked by Google – currently sold to Arris) to CE Manufacturers to MVPDs to move “beyond the box” and think beyond it. Granted that the legacy issues will haunt them (i.e. STBs deployed, etc.) for a while, but the earlier they read the proverbial writing on the wall they will improve their chances of efficiently and effectively addressing the basic needs.

Add into this mix the reluctance of Networks, Syndicated Content providers, Sports Nets who have been dragged kicking and screaming to adopt HDTV (which took a long time), very slowly migrating from Analog to Digital and bringing in workflow efficiencies into their broadcasting networks (eg. file based workflows) , simultaneous multi-format processing and output. The ruling thought in the industry was (and to a certain extent still is) why change what is working (from their point of view) and learn new technologies to improve efficiencies (they did not basically like companies such as Microsoft, Apple, etc.). Coupled with this reluctance is the fact that they were on to “bundling” of poor content along with charging premiums for more popular content to MVPDs, passed on directly to the consumers.

The MVPDs-Networks/Syndicates/Sports Channels have a cozy relationship (though they put on a combative face in front of the FCC and the customer) which they are continuing to milk at the expense of the subscriber.

The original intent of adopting the STB was initially to get faraway nets to local TV screens. However, the MVPDs saw that they could make a killing by adopting a walled garden approach and controlling what the viewer could or could not see (especially Sports channels – to an extent forced by the Sports Channel Networks). Added to this was the Pay TV component of on-demand video distribution. This has had the effect of turning off an increasing number of viewers to OTT and Internet streaming.

Given that the subscriber is the one paying for the content, either to Pay TV providers or OTT, I ask a legitimate question – shouldn’t the subscribers be the ones being able to choose i.e. a la carte? How long can the subscriber be left holding the bag for cost increases from MVPDs – just learnt that DTH rates are headed higher. The subsidization of Sports Channels by non-viewing subscribers almost assures that the Sports Channel Pay TV model will continue till something is done about it (TW’s Britt did call this out). However with the declining Pay TV viewership the increases are becoming in-evitable as a smaller pool of subscribers now have to subsidize the insanely costly Sports channels, resulting in higher Cable and DTH costs.

The business models must change in order to have continued subscribers growth in Pay TV, and offer a challenge to OTTs (Netflix has signed with TW for some of their channels). If the FCC shows more spine and the government truly opens up the space (rather than pandering to special interests) the subscriber will always be exploited and pushed into the corner.

Further the MVPDs in the Pay TV space are not doing the following very effectively (and taking the easy way out by amortizing the costs of expensive channels over the less expensive ones and making money anyway they can) i.e –

– Exploiting the data with them on viewership and customer satisfaction

– Targeted advertising

– Exploiting the social media opportunities being thrown up (in particular FB and Twitter) for better targeting of channels

– Better leveraging the second and multi screen opportunities

If the Pay TV folks did the above, they will doubtless see subscriber numbers & revenue (subs and ads) growth & better ROI.

Maybe it is appropriate to call a time-out on all increases till this Content-MVPD-Subscriber “mill round the neck” scenario is changed in favor of the subscriber?

Don’t you guys think so?