Variety has a good article up on the subscription cable model and how it's biggest three players, HBO, Showtime and Starz are coping with customer's on-demand appetites. But I had a gripe with this:
That may be especially true in a recessionary environment where many consumers are looking to rein in discretionary spending, although so far there's no sign of a mass exodus in the latest subscriber figures for pay TV's Big Three.
Let me get out my club here and bludgeon Variety over the head.
So far there's no sign of any exodus at all, let alone a mass exodus! When the numbers can just speak for themselves, let them speak for themselves! In September 2008, Nielsen estimated coverage for HBO was 30.78 million, Showtime, 18.93 million and Starz in 20.6 million. In September 2009 the estimates are 32.5 million for HBO, 22.2 million for Showtime and 22.52 million for Starz. That's not an exodus, that's growth! Significant growth! Particularly for Showtime.
Could it be that in a recessionary environment, even as customers rein in discretionary spending, that the perceived value of the entertainment dollar for subscription cable services is higher!?
Showtime should make up t-shirts that say 'I've got your exodus right here!" with a graph of its subscriber growth over the last year. Ok, maybe they shouldn't, but still.
I had to get that out of my system, but with that aside the story had some interesting points and data, one that I will include in a separate post.
One big hurdle, however, is that on-demand services are not offered by every cable operator because of technical limitations. DirecTV can't offer true on-demand because its sat-TV platform doesn't support the same level of two-way communication with the home set-top box as do digital cable services.
"All of the linear networks are challenged by on-demand competition in Internet delivery space," says Deana Myers, analyst with media research firm SNL Kagan. "The premium networks have been embracing new technologies as a new means of distribution, and looking at different ways in which they can make (themselves) more valuable to the consumer."
I've always thought that the On-Demand issues gave a competitive advantage to cable, and I still do, but On-Demand usage seems to have a very slow pace of growth, even in homes where it is available. For now, it's still tiny, smaller than Internet video viewing (which while big in the aggregate is still tiny compared to television viewing).
"Homes with HBO on Demand actually watch twice as much HBO as homes without On Demand," says HBO co-prexy Eric Kessler. "What that means is that as it provides greater access to programming, it increases overall usage, and that leads to greater satisfaction with the overall subscription."
The satisfaction factor is a key measure for HBO, because it's so focused on retaining its existing subscriber base. The oldest of the pay cable pack remains the gold standard, situated in 90% of pay TV homes.
Amen! And I'm sure they really mean that and I'm sure, that is, in part why HBO on Demand in High Definition returned. By taking it away and leaving only the standard definition version, they alienated the paying monthly subscribers who were most likely to use the On-Demand. I haven't had Starz for about a year, but at least in the cases of Showtime and HBO, my viewing of those networks is at least twice as much as it would be without On Demand.
There's a lot more in the article about Starz on Netflix and HBO's plans for "TV Everywhere" and how Showtime views putting the shows up on iTunes a few months after they've aired. And more. Definitely worth the read if you're into the whole on-demand scene.
Sounds like the recession has hit Variety’s research department with enough force to mess up their use of a calculator and a pair of reading glasses.
Or, perhaps, this is another example of writing an article with a conclusion already in mind regardless of the facts (at least on this “mass exodus” point)?
As to value of dollar for those channels, that’s probably closer to the truth. Say indoors, make a home-cooked, special meal, pop some popcorn, get a few drinks, and you can have a great time at home watching some movie for a lot less than dining out and movies these days.
That should be “Stay indoors”. My bad.
Well i guess i was one of the few exodus members.
Foxtel (Australia’s effective monopolistic sat and cable TV provider) had a recent ad campaign trying to convince people that given the economic situation, they should get Foxtel to save money by staying home more. In a country where everyone already has pay TV like the US, this could be exactly what’s happening with premium cable.
OT, what’s with the new header graphic? It’s soft and blurry and covered in JPEG compression artefacts. Ugly!
PS. Just noticed that this site is serving me Foxtel ads too! Free second non-DVR box and installation on a twelve month contract. Now if only they had some decent competition and I didn’t have the internet, that might be good value.
Jack, you’ll note we have changed the position of the search box and the leaderboard ad at the top of the page to eliminate the “dead” space that was there earlier. In doing so, we had to change the logo to make it fit. Neither Robert nor I are graphic artists, and we agree that the result is sub-optimal. Be assured we will be replacing the logo with something much more professional looking.
However, logo aside, we both think the page looks much better now, and it does bring more content “above the fold”, particularly for those with lower resolution monitors. Since we’re just about to hit the second busiest time of the year for us (aside from mid-late May) we’re going to hold off going through the process of replacing the logo until things slow down a bit.
Almost certainly those Foxtel ads are via Google Adsense. We have a number of ad sources, but AFAIK Adsense is the only one that will serve ads in Australia.
HBO and Starz’s growth is a lot smaller compared to Showtime especially when you consider that HBO and Starz have better movies since the studios that Showime turned down are starting up Epix so it’s obviously the original series and sport than movies.
Considering that only a few years ago, Showtime had half the subscribers of HBO, to be only 10 million behind them and 32,000 behind Starz is impressive. I imaginne Starz will gain footing once their originals start becoming a major part of the channel.
Actually I can’t remember how it was before.
Just re-doing the image as a PNG instead of a JPEG would improve it a little at least.
And what low resolution users?! Do they still exist? I’m on a late-2007 (I think that’s actually to how the product line is referred) 15″ MacBook Pro and I see a lot of dead grey space on either side. Granted, my resolution at 1440*900, but that’s my point, whose isn’t at least that nowadays?
Granted, my resolution at 1440*900, but that’s my point, whose isn’t at least that nowadays?
I think standard is still 1280×800. My late-2006 13″ MacBook maxes out at that. And I just got the IT people to give me a second monitor at work so now I feel like I have no room on my laptop anymore.
Jack, it reveals more of the content to everyone, but to answer your question, in the past month more than 30% of the visitors to the site had vertical resolutions of 800 pixels or fewer. (20% of visitors had resolutions of 1280×800). The change revealed ~100 pixels of content, that’s pretty significant if you can only see 800. Plus, it just looks better (again, besides the logo).
As for the change, until yesterday the 728×90 leaderboard ad was by itself at the top of the page with the logo and search box below it, then the nav bars. That left a lot of dead space at the top of the page.
Ah, I can picture it now, that is a definite improvement.
Julia, damn you 13″ users, ruining the internet for the rest of us! Before my MBP I’d been running a 17″ CRT monitor at 1280*960 since 2003.
Wow, 30% still at 800 and lower? Are they still living in 1997?
Vertical, Julia. You’re one of them!
Ha, missed the vertical part. I’m totally current.
This has got to be the most half-hearted effort at Variety nadsat editing I’ve ever seen, although it did lead me to the inadvertently humorous observation in their “Styleguide” that “stay tuned” is deprecated as cliche.