First up is Time Warner Cable. Recently Time Warner has been in negotiations with Disney over the amount of Disney’s retransmission fee. Basically, Disney wanted more money for their programming and TWC wasn’t willing to give it up. They ran a bunch of "Rollover or Get Tough" ads, giving subscribers the impression that giving in to Disney’s demands was some kind of surrender or submission. This isn’t the first time TWC has been in this position in recent history. Not too long ago TWC didn’t want to pay NBC’s retransmission fee and ended up on the short end of the stick with NBC pulling their programming.
Now maybe I’m just not up to date on things, but I don’t see many other cable companies having this same problem. I haven’t heard of Comcast in Houston getting in any of these situations. I know that Grande here in Austin doesn’t have this trouble. Why won’t TWC pony up the cash? They already are one of the few internet providers I know of around Austin that doesn’t pay for ESPN3 access for their subscribers. So why is this? Best I can tell, they’re just greedy.
I already pay about the same amount for the same service that my dad gets in Houston from Comcast and that my friends get from Grande here in Austin. I didn’t see my bill go up when they negotiated with NBC, nor do I believe I will see it go up with this latest development. But even if it did, I wouldn’t care. If my bill goes up by a few dollars a month to get ESPN3 and I don’t have to listen to the "Rollover" ads, then I’ll pay it. Better yet, just give me the option! If they don’t want to pay the Disney retransmission fees for all their subscribers, fine! Make it a package deal! Give me options to pay for what I want! Granted, this will never happen from a business standpoint, because the cable companies stand to lose too much money, but a guy can dream.
Now on the flip side, today Microsoft announced a price increase for Xbox LIVE starting November 1st. Now these increases are not in every market, and not on every level. My guess? They’re raising the prices on the most popular subscriptions to make more money. Lets take a look shall we?
Xbox LIVE brings in over $1 BILLION in revenue for Microsoft annually. Half of the 25 MILLION subscribers to LIVE pay the $49.99 fee for the 12-month subscription. Those same subscriptions bring in more than $600 MILLION in revenue. So what does an increase of $10 to that price do? An increase of about $125 MILLION annually. Crazy.
Now, Microsoft cites improvements in their service as rationale for raising the price. But really, what have they added? Netflix? That requires its own subscription. Zune Marketplace? Gotta pay for movies from that too. Twitter and Facebook? Yes, I’m sure those cost a TON. ESPN on the way? Oh wait, you have to have ESPN3… which is all done through your internet/cable provider. They are planning to add Hulu Plus as well, but will this $10 increase cover that extra subscription? Unlikely. Bottom line is, Microsoft really hasn’t added THAT much to justify this increase. They’re just doing it because they can.
They just released a new, cheaper to manufacture Xbox 360. They have a boatload of huge games around the corner. They posted the best earnings from Xbox LIVE ever this year. The Xbox 360 is leading the market in sales. Microsoft is doing just fine as far as the 360 and LIVE are concerned. This increase is not justified, and is just greedy.
Unlike the TWC issue though, I’m not entirely okay with paying this one. I will, of course, but that doesn’t mean I like it. Why? No idea. Realistically I should probably be more upset about a potential increase to my cable bill, but I’m not. It just doesn’t make sense to me.
Then again, neither does business.