elevator pitch to sell an investor on your startup

Discussion in 'TiVo Coffee House - TiVo Discussion' started by Pacomartin, Feb 11, 2015.

  1. Pacomartin

    Pacomartin Member

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    Imagine making this elevator pitch to sell an investor on your startup.

    We’re developing a video delivery service that provides literally hundreds of channels. Sure we’ll carry the big networks, but mostly we’ll be offering niche outlets that only a tiny fraction of our customers will want to watch. Our subscription prices will include rental fees for low-cost hardware like modems, set-top boxes and remote controls. We also plan to build in annual rate hikes that outpace inflation by about, say 400%. And for good measure, our arrangement with the creators of the content that we distribute will ensure that every couple of years we’ll be locked in contentious and public renegotiation rights that interrupt service for our customers. If all goes as planned, we should be able to consistently deliver customer satisfaction levels that rank among the lowest of any industry.

    Forbes magazine- 10/14/2013
    Cable TV Model Not Just Unpopular But Unsustainable

    Personally, I think that this year might be critical. We already know about Over the Top HBO and Showtime and Sling TV.

    I truly don't understand why they don't put show on VOD the day before they are first seen on linear TV (instead of the day after). The broadcast networks are getting credit from advertisers for VOD watching. Why not give a minimal "value added" to cable?
     
  2. Dan203

    Dan203 Super Moderator Staff Member TCF Club

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    They can't put shows on VOD before they air on the main broadcast stations because the broadcasters won't allow it. The broadcasters first allegiance is to their local affiliates, who would not be happy if cable companies were given an advantage like that.

    I've said many times before that I think the cable coming into your house will eventually be a dumb pipe to the internet and the actual cable service you subscribe to will come across that pipe from wherever you choose. So you could have Comcast cable and choose to use Charter for your TV service instead if they offered a better package. That is if linear TV survives at all. We may eventually transition to a pure VOD system with aggregator services, like Hulu or Netflix, providing access to that content for a monthly fee.
     
  3. Pacomartin

    Pacomartin Member

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    What about in the markets where the network owns and operates the broadcast stations? It's all the same corporate entity, and the loss to broadcast revenue would presumably be returned several times in a higherr fee from the cable companies.


    I am curious about CBS cable VOD. Does it exist? We only have ABC,NBC, FOX, Univision VOD. I don't know if CBS even offers cable VOD. It may not as it might be competing with CBS All-Access.
     
  4. Dan203

    Dan203 Super Moderator Staff Member TCF Club

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    I don't know, I never use VOD specifically because they force me to watch commercials. I only use it as a last resort when a recording fails on my TiVo for some reason. (which is rare)

    I would never pay money to a service that forces me to watch commercials. (not even Hulu) If they need more money charge higher prices. If it weren't for DVRs I probably wouldn't even have cable, I'd only have Netflix/Amazon and the like.
     
  5. dlfl

    dlfl Cranky old novice

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    CBS VOD:

    http://www.cbs.com/all-access/

    They seem to go to great lengths to hide the cost but I've heard it's $6/mo.
     
  6. Diana Collins

    Diana Collins Well-Known Member TCF Club

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    I don't know if this is true everywhere, but on DirecTV the CBS VOD channel was very weak. It had only one or two episodes of maybe a dozen series, and most of them were lowly rated shows. The NBC channel had about 20 times as much content. CBS also seems to release a few of their better rated shows to pay services like Amazon the day after airing.
     
  7. trip1eX

    trip1eX imo, afaik, feels like to me, *exceptions, ~aprox

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    Good to hear the big media companies are in no way responsible for the additional channels and increasing prices. :D

    Can't wait to hear who's to blame when Netflix starts increasing their prices in the next few years.
     
  8. unitron

    unitron Well-Known Member

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    I'm not famous for having nice things to say about cable companies, but when the industry was first getting started I don't think they anticipated stuff like having to carry and pay for other Disney products in order to be able to deliver the signal from the local ABC affiliate.
     
  9. Dan203

    Dan203 Super Moderator Staff Member TCF Club

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    Yeah consolidation and bundling have really got us to where we are today.
     
  10. Pacomartin

    Pacomartin Member

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    October 1, 1993 is the first time they had to make such a concession. In order to deliver signal from ABC they had to agree to carry and pay for ESPN2. The terms are renegotiated every 3 years, and I don't know when it became commonplace to pay cash.

    I am under the impression that the original proposal was not very onerous to cable companies. It was still early in the history, and fees were not exorbitant. Almost all of them would have taken ESPN2 anyway.

    That makes sense to me. ABC, NBC, and FOX are all part of corporations that make most of their money from cable. CBS has very little invested in cable except Showtime and Smithsonian channel. ABC, NBC, and FOX have vested interests in making basic cable more attractive. CBS does not, and not it is more interested in selling CBS-All Access.
     
  11. unitron

    unitron Well-Known Member

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    The original proposal, at least what I read about in broadcasting trade magazines at the time (I was in radio) was back in the '80s, and was only about retransmission of local broadcast signals.

    The National Association of Broadcasters (the NAB) wanted a law passed that was commonly referred to as "Must Carry-Must Pay".

    Cable companies were going to be forced by law to carry all the broadcast signals licensed in and around the communities being served--you couldn't drop one of the lower demand ones because you needed room on the 2-14 tier to put pay channels like HBO or Showtime--and you had to do it on the same frequency (which back then was the same as saying on the same channel number), so that people accustomed to tuning to channel 7 when they used an antenna would get that same channel 7 when they tuned to it on a cable system, but with exemptions when the broadcaster agreed, like in our area when nearby Channel 12's Over The Air signal got into the 10 to 20 year old cable and ghosted their signal on cable channel 12 so badly in some cases that the Channel 12 owners went along with cable putting it on I think it was Channel 2.

    That's the must carry part--broadcasters are protected from cable companies putting them at a disadvantage relative to their local broadcast competition.

    But the other part was must pay. That's where cable companies have to pay re-transmission fees.

    That's what the NAB wanted back then. They didn't get it all right away or at the same time, but eventually they managed to wind up with pretty much all of it.

    Interestingly, it's not just the broadcast stations, most of which are affiliated with, but not owned by, the networks, benefiting from retransmission fees.

    The networks, on which those stations rely for so much of their content, take a cut of those fees from the affiliates in addition to getting to run national ads during a part of the total time each station runs ads.

    And networks with other irons in the fire, such as various cable channels, can leverage their power over the cable companies to get those channels bundled with the local affiliate's signal.
     
  12. mattack

    mattack Well-Known Member

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    nitpicky, cable frequencies/channels were different than OTA.. At least my first TV had an OTA/cable switch on it.. Later TVs automagically figured it out.

    But aren't you conflating two things? I thought that the broadcast station can invoke "must carry", so they are carried (only the main OTA station) for free... or paid when more stations are included?
     
  13. unitron

    unitron Well-Known Member

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    VHF Channels 2-13 were the same frequency on cable and OTA, it was only for the numbers 14 and up there was a difference. With OTA, those were the relatively sparsely used UHF channels, whereas with cable they were frequencies that were licensed for purposes other than television broadcasting if you were using them for "over the air" stuff, but if you're putting stuff on a shielded wire you could put whatever wherever as long as it didn't leak out into the air and cause interference with stuff.

    In fact, the whole idea of moving a channel to a different "number" came from cable companies carrying local UHF channels but needing to move them to a lower frequency because the cable system wasn't able to handle the higher UHF frequencies.

    "Must carry" is what local broadcasters can invoke when the cable company's customers aren't already demanding the channel in sufficient numbers to make the question moot.

    But for most stations the pressure on the cable company by the subscribers to carry those stations gives the stations the leverage to extract retransmission fees and other concessions from the cable company.


    Once upon a time the stations used the publicly owned airwaves to send out programming and got paid by advertisers to have their messages included in that, but once the viewers were sufficiently hooked they started wanting to get paid by both the advertisers and the local populace whose air waves they were getting to use.

    They still haven't found a way to do that for viewers using their own antennas, but now they can do it to the rest of them.
     
  14. atmuscarella

    atmuscarella Well-Known Member

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    Actually the thing that gave broadcast stations the ability to extract retransmission fees is competition. Before Dish/Direct and competing "cable" companies the local broadcast stations had no leverage over the local cable company. In the past a local broadcast station not on cable could have a real issue with having enough viewers and could soon have financial issue, a cable company that lacked an OTA station had unhappy customers without a choice- they still needed cable to get all the other "cable" channels even if they could pickup the OTA channels with an antenna.

    The same is true with forced bundling of stations, competition in the pay TV market gives the content providers leverage over the cable/satellite providers.

    I find it ironic that the holey grail of competition actually worked against consumers in the pay TV market. Perhaps that will change if Internet access is kept open and regulated like a utility.
     
  15. JosephB

    JosephB Member

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    Here's the problem:

    1. Most of the big programmers own a broadcast network (ABC/Disney, Comcast/NBC). Most of the broadcast networks own their own affiliates in the biggest markets like NYC, LA, SFO, etc. Because they own that whole stack, and because they want to recoup as much of their investment as possible, they are going to try to squeeze as much revenue out as possible. They don't want you to watch VOD because it doesn't make as much money, and doesn't utilize the huge infrastructure they've built up. Yes, there are ads on cable VOD, but not nearly as many as a live broadcast and usually doesn't include local ads which are a HUGE money maker (especially in election years) for the broadcast networks and local affiliates.

    2. Cable companies would likely (well, except maybe Comcast) love to unbundle and offer whatever customers want. Bundling and the regular price increases are by and far the fault of the program providers, not the cable companies. The fact that the program providers are the one who are forcing the ancient, customer-hostile business practices and the fact that they are also the ones who would have to agree to industry-redefining practices means that it is unlikely to happen quickly. It's also extremely unlikely that any new Internet-based TV service, VOD/Netflix style or otherwise will ever be significantly cheaper than current cable TV service. I mean, in what universe does anyone think Disney or Viacom is going to sell their product for less than they do today? Sling is $20 because you get 15 channels. Read any thread on Reddit or Engadget and you'll have people clamoring for just about every channel out there. When that happens Sling will be $100+ again.

    3. The biggest cable companies and satellite companies have "most favored nation" clauses that guarantee them the best rates and rights. This means if some new company (like Intel or Apple) comes along and happens to talk Viacom or Disney into some awesome cheap VOD rights, Viacom or Disney have to offer those same terms to Comcast, Dish, DirecTV, TWC, etc. In fact, due to volume pricing, it is crazy expensive for a newcomer to come into the market. That's why AT&T is buying DirecTV. At 5 million subscribers, it's not economical for AT&T to offer TV packages that are competitive with the local cable companies. By buying DirecTV, they instantly overnight even without integrating the two companies get better pricing on their TV package for U-Verse because they are then at 25-30 million subscribers.

    4. All of this doesn't even bring into account the regulatory burden that video providers have. One of the biggest drivers of rate increases has been retransmission fees for local network affiliates. The problem here is that cable companies are *legally required* to put those channels in every single package that they offer. It is *illegal* for your local cable company to sell you service that doesn't include your local channels. The FCC is currently going through a rulemaking procedure to open up internet TV services to the same program access rules as cable companies. I promise you one outcome of that will be to require local channel carriage if an internet service wants to be classified as an MVPD. This will then put them under the same cost structure as a cable company.


    The real change has to happen at the content side. This is going on today with so many young people watching YouTube and Twitch instead of anything produced by any major media company, but we're talking a 20-30 year timeframe. Otherwise, Fox, Time Warner, Viacom, Disney, etc are going to have to voluntarily blow up their own business models. I think they will change, but it will not result in you spending less money than you do now.
     
  16. Pacomartin

    Pacomartin Member

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    The law was changed in 1992 so that starting in the Sep 1993 a local OTA broadcaster could opt to be carried by the cable company. In this case the local cable company is *legally* required to carry them for no retransmission fees. This option is chosen by local news companies and religious broadcasters.

    But the major broadcasters can opt to waive this right. The cable company now requires the consent of the broadcaster to retransmit. The first three years cable companies did not pay any cash for this right, but usually some "deal" was negotiated. For example in order to retransmit ABC in 1993, the cable company had to agree to carry the new channel, ESPN2.

    A local cable company could legally refuse to carry ABC, CBS, NBC, FOX, UNIVISION, CW, and ION but the networks would probably withhold their cable channels like FX, FXX, SYFY, etc. It is difficult to know if the cable company would have a product that customers would pay.
     

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