Comments
Ariella
10/20/2016 3:38:22 PM
User Rank Author
Re: Unneccessary channels
@DHagar clearly it doesn't want to miss out on this revenue stream.
DHagar
10/20/2016 3:55:41 PM
User Rank Platinum
Re: Waiting game
@Michelle, good point. Which raises the question of who will take the lead - content providers (ie Netflix) or network operators (ie cable operators)?
I am thinking content may be king?
JohnBarnes
10/20/2016 10:44:59 PM
User Rank Platinum
But the economics say otherwise ...
Many of y'all seem to be missing the point Adi made very clearly in the article: it's not only about what the consumer wants, but also about how the consumer can be persuaded or coerced to pay. (Many generations of consumers have all wanted the same thing: as much as they want, right now, the way they want it, for free. Yet nobody has ever tried to make money giving that to them). Thick packages have margins that cable companies can live on. Skinny packages outcompete them but have narrower margins. A la carte would have almost zero margin. If OTT companies force the cable companies into that race to the bottom, OTT can survive a lot closer to the bottom than cable can -- and that's the end of cable.
They know what you want. They just don't want to starve to death giving it to you.
Michelle
10/21/2016 1:48:33 PM
User Rank Platinum
Re: Waiting game
@DH I would like to see broadband infrastructure built out and cable whipped into shape at the same time. I don't think that'll happen. I suppose content will drive the change.
Ariella
10/21/2016 2:20:13 PM
User Rank Author
Re: But the economics say otherwise ...
@JohnBarnes Of course, ultimately any business is driven by what will make money. Verizon is actually struggling with that as its lower-priced competitors are causing its subscriber numbers to plummet. According to https://www.bloomberg.com/news/articles/2016-10-20/verizon-tops-estimates-even-as-rivals-cut-prices-to-steal-users
Verizon Communications Inc. suffered its worst quarter of subscriber growth in more than six years amid intensified price competition from smaller rivals, adding pressure on the company's media and advertising ventures to take up the slack for a rapidly maturing wireless business.
The nation's largest wireless carrier signed up 442,000 total subscribers in the third quarter, falling far short of the 875,000 average of eight analysts surveyed by Bloomberg.
The results underscore a strategy by Verizon to protect profits in lieu of offering steep discounts.
DHagar
10/21/2016 2:38:48 PM
User Rank Platinum
Re: Waiting game
@Michelle, I like your vision and that is certainly a desirable development that would improve overall capabilities. I share with you, however, that I think content will be the driver and the networks will fall into line around content.
JohnBarnes
10/21/2016 2:41:53 PM
User Rank Platinum
Re: But the economics say otherwise ...
Ariella,
Yes, absolutely the pressures of declining profit (or the lure of rising profit) will drive a business to innovate and to embrace things they have long been against. The interesting thing here is whether Verizon has anywhere to be driven to; economic history is full of cul de sacs in which lie the ruins of formerly great companies. Sometimes you can give the people what they want and sometimes that is what will make money. Other times you can't do that and it will never make money.
DHagar
10/21/2016 2:55:53 PM
User Rank Platinum
Re: But the economics say otherwise ...
@JohnBarnes, key points that highlight the reality that service providers must have a sustainable margin. And the tug of war has been with how to maintain the necessary profit margins, to support the buying and access to the content, which has required a large bundle. What it appears Verizon is trying is a new model that may create enough profit through more of a customized mass bundle - which could be a new model providing more choice while sustaining the profit margins.
What I hope will evolve will be a new hybrid that will give more customer-preferenced packages that are within limits of the realistic profit margins. In other words, I think there is more discovery and research to come to finding that "sweet spot". I hope Verizon is opening doors to new solutions.
DHagar
10/21/2016 3:00:04 PM
User Rank Platinum
Re: But the economics say otherwise ...
@Ariella, thanks for update. Yes, it is a delicate balance. And successful companies have to be low-cost - maximize profit margins, but create enough value that they don't just become a commodity with no value. So the key will be can they create the right access channels that preserve their margins but increasingly provide a competitive package that attracts customers with a better bundle.
I think the opportunity is there but is a tough nut to crack!
Ariella
10/21/2016 4:22:24 PM
User Rank Author
Re: But the economics say otherwise ...
< economic history is full of cul de sacs in which lie the ruins of formerly great companies. Sometimes you can give the people what they want and sometimes that is what will make money. Other times you can't do that and it will never make money. >
@JohnBarnes very true. Certainly, not all companies succeed in the end -- even if they start out doing well -- when they can't accommodate to market demands shifts.
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