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Dish Networks is trying to put together an “over the top” pay-TV offering, which would deliver cable channels over the Web, priced at around $30 a month.

But rival satellite service DirecTV doesn’t seem all that intrigued by the notion. CEO Mike White talked about the pros and cons of selling Web TV earlier this week, during the company’s earnings call.

Short version:  It’s easy, technically speaking, to stream pay TV over the Internet. But it’s hard to make much money assembling a package of channels that the TV programmers would be willing to sell, at a price consumers would be willing to pay — because no one in the TV Industrial Complex wants to fundamentally disrupt their own business, which is still working very nicely.

Here’s the longer version, thanks in part to Seeking Alpha:

I would say you can get Newline or mlb.com to build you a website in a matter of months. It’s not a — it’s, frankly, not a very complex technology challenge.

I think the question will be, as the rights evolve, how big is the opportunity and how attractive is it.

By my math, if I sell something for $30 a month, and the estimates on how many households that are out there that are broadband-only or whatever is probably somewhere between 5 million and 7 million, and you picked up even 2 million of those, it’s less than $100 million [operating profit] opportunity and it’s less than $1 billion revenue opportunity, but it’s an opportunity.

If you can find a way to get the best channels more à la carte — because it’s content cost again that will drive the pricing on that bundle — and if you can avoid cannibalizing your core business — because if I just look at the Netflix business model and I figure 70%-odd programming cost or something in that neighborhood and a 10% margin, your monthly margin on a personalized subscription service is like $3, which compares to something like 7 to 10x that for the core business.

So I think we’re all concerned about the millenials, and we’re all concerned about folks that can’t afford pay-TV, the cord-cutters, if you will, and finding creative ways to service them. And I think I have no doubt you’ll see some launches this year. I’ve said before, we’re working on more niche ideas around content, but we are looking at this area, as well. And if we think it’s a good enough opportunity, it won’t be that difficult to take the infrastructure that we’re already building for Hispanic or other products and extend it over. It’s not that difficult.

I just think it’s a question of you have to pay for retrans and then how many other things you’re going to add into that thing and then at what point does the price point become $34.99, $39.99 or $44.99 before you get beyond what consumers will bear. When we have done over-the-top research in the past, it has shown a sharp falloff at $12.

But who knows? We’ll see.

Note that White isn’t ruling out a Web TV deal out of hand. And last year his service was one of the leading bidders for Hulu — but its TV programmer owners decided not to sell it, again. And his words may not be relevant at all, if his company ends up selling to/merging with AT&T, or Dish, or someone else.

Meanwhile, even though a billion-dollar business might not mean much to Direct, which did $31.7 billion last year, other folks might be very happy to run that. Even if it’s just for strategic reasons, like helping to sell more game boxes.

But White does a pretty good job of laying out why any Web TV service we do see this year, or anytime soon, is unlikely to blow anyone away. If the TV Industrial Complex decides to sell you TV on the Web, it’s going to look, and cost, a lot like the pay TV you already have.




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