News & Rumours: Playstation 4/ Orbis *spin*

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Scott_Arm said:
Most reports seem to think this deal is basically going to look remarkably like cable tv, where you can only pay for the bundle of channels that the network is providing. I hope that is not true. I'll never pay for any kind of subscription tv service again unless I can pick the channels I want, or the price comes down drastically. I simply can't pay $60+ a month to get the channels I want.
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This is a bit off topic - so hiding in spoiler tags.

I would not expect this type of a la carte solution from anyone - especially Sony. The problem with it is that it turns the concept of bulk discounting against the consumer. It would leave consumers shocked at the price of channels. I don't claim to be an expert on this, but I spent some time with DirecTV while I was paying for college. At least then, the providers like DirecTV didn't pay per subscriber. They paid a flat fee per channel. Generally something in the tens to hundreds of millions range depending on the channel.

So take a channel like Turner Classic Movies. If the carrier fee is 5 million a year (which is cheap for this type of channel), then they need to recoup that cost from their subscribers. Say you have 10 million (which is about what DirecTV had when I quit working there). If they can charge a bit to each of those subscribers, the channel is only $0.50 each. In reality, less than 5% probably watch that channel. So trying to charge per subscriber would end up at $10 each.

So consumers say "fine, let me pick my 10 channels that everyone wants so they will be cheap and I'll end up with a cheap package". When I looked at things with DirecTV, approximate prices would be something more like this:

Networks (ABC, NBC, CBS, FOX) - about $2 a piece to be profitable.
Home Shopping Networks (yes, these were probably the second most popular channel types. I don't get it either) - About $5 each
"Staple Channels" - ESPN, TNT, USA, CNN - the really big names. Between 5 and 10.
Specialty Channels - Outdoor Life, ScyFy, History Channel, etc. Between 10 and 15.
Niche Channels - Turner Classic Movies, Independent Film Channel, Etc. Generally greater than $20.

So if you wanted only 10 channels - 5 networks and 5 staple channels, you would end up averaging a bill of about $50-70 dollars. When I looked into this at DirecTV, that was about the average price I got for 10 channels if they were given al a carte. I'm sure it has gone up by now.

Basically, you would end up paying the same price you do now for a huge reduction in variety. It is because the economics of scale are working against you rather than for you. I know people don't tend to believe me when I say this - but all you have to do is look at the "premium" channels like HBO and Showtime to see that I'm correct. If you look at the bundles on say Verizon FIOS right now, you will see that they are between $16 and $20 dollars for anywhere from 2 to 32 channels (the 32 channels is the Showtime package which is really hugely misleading I think. You actually only pay for the two main Showtime channels. The rest are recycling the movie library Showtime has built up over the past 30 years for "added value".).

Also note that the negotiated per channel rate would go up in a huge way if it wasn't for bundling for the major networks. Those networks now show commercials as well. If DirecTV goes to them and says "We have 10 million subscribers who will get your access" it means a lot more than if they say "We have 1 million who will get access to your network". So they get a lower rate.

You don't really have to believe me on this either. Several independent and government funded studies have been done on this topic as outside groups have tried to sue the cable companies for price gouging. The conclusion for all of those studies is that the average consumer would see a pretty dramatic price increase if they got only the few channels they watch regularly under an al a carte model.
 
Xalion said:
This is a bit off topic - so hiding in spoiler tags.

I would not expect this type of a la carte solution from anyone - especially Sony. The problem with it is that it turns the concept of bulk discounting against the consumer. It would leave consumers shocked at the price of channels. I don't claim to be an expert on this, but I spent some time with DirecTV while I was paying for college. At least then, the providers like DirecTV didn't pay per subscriber. They paid a flat fee per channel. Generally something in the tens to hundreds of millions range depending on the channel.

So take a channel like Turner Classic Movies. If the carrier fee is 5 million a year (which is cheap for this type of channel), then they need to recoup that cost from their subscribers. Say you have 10 million (which is about what DirecTV had when I quit working there). If they can charge a bit to each of those subscribers, the channel is only $0.50 each. In reality, less than 5% probably watch that channel. So trying to charge per subscriber would end up at $10 each.

So consumers say "fine, let me pick my 10 channels that everyone wants so they will be cheap and I'll end up with a cheap package". When I looked at things with DirecTV, approximate prices would be something more like this:

Networks (ABC, NBC, CBS, FOX) - about $2 a piece to be profitable.
Home Shopping Networks (yes, these were probably the second most popular channel types. I don't get it either) - About $5 each
"Staple Channels" - ESPN, TNT, USA, CNN - the really big names. Between 5 and 10.
Specialty Channels - Outdoor Life, ScyFy, History Channel, etc. Between 10 and 15.
Niche Channels - Turner Classic Movies, Independent Film Channel, Etc. Generally greater than $20.

So if you wanted only 10 channels - 5 networks and 5 staple channels, you would end up averaging a bill of about $50-70 dollars. When I looked into this at DirecTV, that was about the average price I got for 10 channels if they were given al a carte. I'm sure it has gone up by now.

Basically, you would end up paying the same price you do now for a huge reduction in variety. It is because the economics of scale are working against you rather than for you. I know people don't tend to believe me when I say this - but all you have to do is look at the "premium" channels like HBO and Showtime to see that I'm correct. If you look at the bundles on say Verizon FIOS right now, you will see that they are between $16 and $20 dollars for anywhere from 2 to 32 channels (the 32 channels is the Showtime package which is really hugely misleading I think. You actually only pay for the two main Showtime channels. The rest are recycling the movie library Showtime has built up over the past 30 years for "added value".).

Also note that the negotiated per channel rate would go up in a huge way if it wasn't for bundling for the major networks. Those networks now show commercials as well. If DirecTV goes to them and says "We have 10 million subscribers who will get your access" it means a lot more than if they say "We have 1 million who will get access to your network". So they get a lower rate.

You don't really have to believe me on this either. Several independent and government funded studies have been done on this topic as outside groups have tried to sue the cable companies for price gouging. The conclusion for all of those studies is that the average consumer would see a pretty dramatic price increase if they got only the few channels they watch regularly under an al a carte model.
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One thing to note: you can have a good idea how many people are watching your IPTV while I don't think you can through cable due to the way signals get broadcast through cable television.

Different technology can open up different business strategies.

It's possible they could have a different type agreement since it's pure IPTV through Sony. Sony could just be a middleman and charge very little and let the networks deal with the prices with the customers themselves.
 
That all depends if your cable is SDV or not. This was becoming the norm as the providers are looking for a means of reclaiming their signal spectrum.
 
Strange said:
One thing to note: you can have a good idea how many people are watching your IPTV while I don't think you can through cable due to the way signals get broadcast through cable television.

Different technology can open up different business strategies.

It's possible they could have a different type agreement since it's pure IPTV through Sony. Sony could just be a middleman and charge very little and let the networks deal with the prices with the customers themselves.
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They know how many people are watching cable through the neilson ratings. It's not a new technology, Sony would just be a new provider. How is adding a middle man reducing costs?
 
Neilson ratings is a joke for typical cable ratings. It's a pseudo-random sampling methodology.

http://en.wikipedia.org/wiki/Nielsen_ratings
Nielsen television ratings are gathered in one of two ways:

  • Viewer "diaries", in which a target audience self-records its viewing or listening habits. By targeting various demographics, the assembled statistical models provide a rendering of the audiences of any given show, network, and programming hour.
  • A more technologically sophisticated system uses Set Meters, which are small devices connected to televisions in selected homes. These devices gather the viewing habits of the home and transmit the information nightly to Nielsen through a "Home Unit" connected to a phone line.
Changing systems of viewing have impacted Nielsen's methods of market research. In 2005, Nielsen began measuring the usage of digital video recordings such as TiVo. Initial results indicate that time-shifted viewing will have a significant impact on television ratings. The networks are not yet figuring these new results into their ad rates due to the resistance of advertisers.
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Valid ciriticisms:
And yet in 2009 of the 114,500,000 U.S. television households only 25,000 total American households (0.02183% of the total) participated in the Nielsen daily metered system

There is some public critique regarding accuracy and potential bias within Nielsen's rating system, including some concerns that the Nielsen ratings system is rapidly becoming outdated due to new technology like smartphones, DVRs, tablet computers, and Internet viewing. In June 2006, however, Nielsen announced a plan to revamp its entire methodology to include all types of media viewing in its sample.

The situation further deteriorated as the popularity of cable TV expanded the number of viewable networks to the point that the margin of error has increased due to the sampling sizes being too small.
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The point is Sony getting this deal in a pure IPTV fashion may open up new business opportunities for the customers and the networks. You may be able to to subscribe to the entire network for a flat fee like cable or you can pay less (but more per channel) to only watch certain channels directly to the networks. If Sony is only providing the hardware and and platform to do it on (which makes business sense, as Sony's priority is to increase user base) and takes only a little to no portion of the revenue, it may ultimately end up in much cheaper subscription to the consumers.

Of course this all comes down to how they formed up their agreement, and Sony is probably much less burdened than the big cable companies to come up with new business models.

I wonder how the network providers that provide both internet and cable will respond to this :D.
 
$$$ is just one dimension.

There is a huge void in defining what IPTV mean. The traditional cable/satellite TV contents and experiences may be enhanced over an IP network. And it can be mobile too.
 
AlphaWolf said:
That's a big enough sample provided it accurately reflects the demographics.
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Really? You consider 0.02183% of the total to be a big enough sample? That's a farce, especially when they could use nearly direct sampling of opt-in users of set-top boxes.

The biggest issue is they still employ diaries, where the user can easily forget what they watched or merely just list out what they likely would have if they did.
 
BRiT said:
Really? You consider 0.02183% of the total to be a big enough sample? That's a farce, especially when they could use nearly direct sampling of opt-in users of set-top boxes.

The biggest issue is they still employ diaries, where the user can easily forget what they watched or merely just list out what they likely would have if they did.
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With a sample size of 25k and a population size of 115 million, you have a high degree of certainty (99%, much higher than most scientific certainties of 95%) that any numbers you infer from it will have an error of less than 1%.

I know it's unintuitive, population statistics always is. For Nielson's purposes, as long as their sample does not have sampling bias, it will be accurate enough for setting advertising rates, which is, after all, it's purpose.
 
bkilian said:
With a sample size of 25k and a population size of 115 million, you have a high degree of certainty (99%, much higher than most scientific certainties of 95%) that any numbers you infer from it will have an error of less than 1%.

I know it's unintuitive, population statistics always is. For Nielson's purposes, as long as their sample does not have sampling bias, it will be accurate enough for setting advertising rates, which is, after all, it's purpose.
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Problem is you're not dealing with numbers close to 50%. Sample sizes need to be much much larger when you're sampling for <10%, which typical television ratings are.

The confidence interval of sample size 25k, population size 115 million, confidence level 99%, and a rating of 5% is 5% plus or minus 0.36%.

Which is all the way from 4.64% all the way up to 5.36%.
if the rating is 10% then it's 9.51% all the way up to 10.49%.

Either way there's too much uncertainty in these ratings to properly form up a payment scheme.

Using channel on demand would give you exact numbers and can allow networks to charge much more specifically and avoid issues.
 
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Brad Grenz said:
What if it's everything for like $40 a month?
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Doesn't really help. The way cable is rigged is such that the incremental cost tends to be low, with "package discounts".

Example:

Basic cable package (all the big channels and at least a couple ESPN's)+internet=130

Cable by itself=80
Internet by itself=80 (and where I live there's no real options, DSL is much slower)

You can cancel your cable, but they've got it rigged where it wont save you that much. In this case $50.
 
BeyondTed said:
PS4 & Vita Bundle:

http://www.gamespot.com/news/sony-releasing-playstation-4-vita-bundle-for-500-report-6412555

Thought this would be interesting news and belong in this thread.

I think that would be a great bundle and great system (console & portable) seller. Great way to fight both Nintendo (3DS - biggest seller) and MS (360/One - Next) at the same time.



If true I would go for it. I wonder what the Vita costs to build now? Or by the end of the year?
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http://m.neogaf.com/showpost.php?p=76955631

RUMOR: Japanese newspaper Tokyo Keizai reported a rumor that Sony is set to reveal a new PS Vita model in September before the Tokyo Game Show. The new model PCH-2000 will have a 6.3" display manufactured by Samsung (screen size of the current model is 5"), and the resolution will remain at 960 x 554 pixels. The amount of RAM will increase from 512MB to 1GB, to allow more programs to run in the background, the amount of RAM used by games will be unchanged (meaning games are still compatible between old and new models). In addition, the design of the new model will be more in-line with the PS4 design; and the system will launch with new game titles.
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Looks like Sony Saudi Arabia have unintentionally confirmed an October launch for the PS4. Looks like they definitely aiming for a much wider launch coverage than MS.
 
Was that the true translation? I know there were words at the end of the SArabia trailer... I hope it's true! 2 days til we find out :)

J38dnia.png
 
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