SME

Assignment

Fahad Ahmad

17U00092

Section A

Q1. Why did HBO and CBS introduce OTT services?

Ans. HBO and CBS introduced OTT services in order for a direct to consumer service through

streaming instead of having a customer pay a full television subscription. Both platforms looked

to gain better deals with current distribution partners without having to worry about a middle

man any more. They would be able to create their own pay packages at the fraction of the cost

and rebid at a higher rate. Furthermore it reduced the dependency on Cable Operators: HBO had

come to be known for its original high-quality content, but they were still reliant on the cable

operators to market their channel which resulted in a varying viewer base ranging from 14% to

42% across different cable companies. Additionally, in terms of revenue, they had to negotiate

with the cable companies for a per subscriber fee. From Comcast after negotiations, they

received $7.7 per subscriber, which was almost half of what the subscribers were paying to

Comcast ($15). Furthermore, net neutrality prevented HBO from getting any prioritization.

Moving to OTT at this stage would help HBO get more direct subscribers and a larger share of

revenues from them

Q2. How should Comcast respond to the announcements of HBO and CBs?
Ans. Comcast has a few options. Comcast could join other TV networks and aim to become a

streaming service themselves. This will result in an easy access to all the consumers who are

already connected to the comcast cables and internet service. However, it will also add a bonus

consumer angle that those who did not have access to these options will also get to view them

due to the streaming service.

Q3. What is the consumer appeal of cord cutting?

Ans. In broadcast television, cord-cutting refers to the pattern of viewers, referred to as cord-

cutters, cancelling their subscriptions to multichannel television services available over cable or

satellite, dropping pay television channels or reducing the number of hours of subscription TV

viewed in response to competition therefore it helps in saving a lot of money.

Q4. Is pay- TV ripe for unbundling? What is the future of television industry?

Ans. The pay-tv bundle is a gigantic iceberg that’s slowly melting. As Internet-video options

proliferate, consumers will have a growing list of reasons to stop paying $90 or more per month

for multichannel television. And the jockeying is now under way among programmers and

distributors to prep the life rafts if viewers decide to jump en masse. A key change in the

landscape: Major media companies, after years of resisting the Internet’s pull, have finally

decided to step into the brave new over-the-top world, with video delivered not via satellite or

cable TV, but through broadband.

In future TV will become obsolete. Forecasters predict a 33% of people will be abandoning

their cable service this year. It's not a matter of money, although saving money is a significant

advantage of dropping cable. Still, it's more about having more options and a more convenient

way of having entertainment at your fingertips