Retailer Chat Recap - 1/14/2014

[mike123abc]

Well, there is always the speculation that we could possibly change Dish's mind by raising a big enough stink here.


I suspect that even the content providers have a stipulation in their contracts that they get more per sub based on the number of TV outlets they have (programming access), thus there will always be a programming access fee, owned or leased, real or virtual.

Doubtful, it has never been the case in cable, and I doubt that Dish or DIRECTV would accept worse terms considering they are bigger than most cable companies. The fees are simply a different name for profit. If they were to put a $7 profit charge on someones bill instead of $7 virtual joey fee on someone's bill the customer would probably be a lot more upset by it. I am not saying Dish/Direct/Cable should not charge fees, but as a customer one just has to be aware of them and how they affect the true price of your bill. The world is full of these profit fees - look at the goldmine airlines found when they started to charge for luggage, 2 suitcases checked used to be free on all the airlines.

 

[Scherrman]

If it was $5 a month I would send DISH back one of the Joey's and let me 10 year old use his Playstation 4 to watch TV... he barely watches TV anyways.

But for $7 a month I will keep the Joey.

I just got done watching the recording of the chat Scott. They had a few bits of good info there but mostly repeats of what we already now. I did like hearing them answer the question about the new HD promo for 24 months. Sounds like they think they have more flexibility by making it 24 months.

 

[dare2be]

The world is full of these profit fees - look at the goldmine airlines found when they started to charge for luggage, 2 suitcases checked used to be free on all the airlines.

That is a perfect example, but you are using the wrong terminology. Goldmine is not the word I would use. Due to escalating costs for both the airline industry (fuel) and pay tv industry (programming), each has to find ways to stay in the black. So instead of just charging a one-size-fits-all airfare or programming package, they have broken out some of the charges into line-item fees to account for actual usage. I wouldn't expect to pay the same total if I'm flying with just a single carryon vs. someone with luggage that weighs as much as another person. Similarly, a 1-2 person household with only 1-2 TVs shouldn't have to pay the same amount as a 4 person household with 4 tvs.

 

[Scherrman]

Airline and goldmine don't seem to go well together. I thought the airlines were struggling to make a profit and that's why they needed to charge the extra fees. Making a good profit gets harder and harder so businesses need to find new ways to do it.

It's kind of similar to the TV industry now. Margins in TV sales has dwindled so a business has to find new ways to make a profit. The strategy the last 5 years or so has been to offer TVs as cheap as possible to drive sales and traffic and then get them to buy a bunch of accessories. The accessories and add-ons are where a business has to make their money, at least until the manufactures get a handle on how stores sell their product.

 

[dare2be]

Thanks Schermann for saying what I was saying, but better.

 

[MikeD-C05]

Doesn't DIRECTV charge as much for their virtual app on tvs (I think it is Samsung tvs) as they do an additional receiver? I remember seeing it as being like $6.00 or $7.00 a month . I guess DISH is following their lead.

 

[mike123abc]

Airline and goldmine don't seem to go well together. I thought the airlines were struggling to make a profit and that's why they needed to charge the extra fees. Making a good profit gets harder and harder so businesses need to find new ways to do it.

OK maybe goldmine is a not quite accurate, but it is sad that the airlines make more profit from their fees than the actual flight charges. I suspect the same is with Dish.

Again I am not complaining about fees, they are going to be there with every company trying to compete. What I am complaining about is posters claiming there is a justified reason that they charge X fee for this and Y for that because of some reason other than it is a business decision.

 

[Scherrman]

Thanks Schermann for saying what I was saying, but better.

Didn't mean to step on your toes but I knew the point you were trying to prove and I agree with you.

 

[Scherrman]

OK maybe goldmine is a not quite accurate, but it is sad that the airlines make more profit from their fees than the actual flight charges. I suspect the same is with Dish.

Again I am not complaining about fees, they are going to be there with every company trying to compete. What I am complaining about is posters claiming there is a justified reason that they charge X fee for this and Y for that because of some reason other than it is a business decision.

I think it's more of a psychological thing with their customers. If they just raised the price of the flights would they still get the same amount of people flying? They must feel that if they keep the flight prices more reasonable but can get some extra cash out of them with additional fees then more will fly.

 

[jagowar]

Have to say the $7 price for vj is just stupidly insane.... its like they don't want people to use it at that price. I really thought this is what would save me from wanting to go back to cable when I saw it announced.

As much as I hate to say it cable is looking better and better because they do not charge like this for their apps. To me the apps are like the next generation of running coax into your seldom used tv's but you get some extra features with the apps. Even if they would just enable chromecast or some other support for the dish anywhere app it would be good enough for my seldom used tv's but I will never spend the full price for a joey/vj for those tv's but I use them enough I want access to my tv there.

 

[dare2be]

I think it's more of a psychological thing with their customers. If they just raised the price of the flights would they still get the same amount of people flying? They must feel that if they keep the flight prices more reasonable but can get some extra cash out of them with additional fees then more will fly.

Exactly. Savvy customers will perceive getting what they pay for and use, and having the option to reduce the total cost by avoiding the fees.

 

[TheKrell]

Similarly, a 1-2 person household with only 1-2 TVs shouldn't have to pay the same amount as a 4 person household with 4 tvs.

And a person with 2 people in the house and 8 TVs should pay... What exactly? TVs are really cheap these days, and I have one in most rooms of my house. Mirroring would work, but doing so in HD can be problematic. And expensive.

 

[Scherrman]

This is what I would do if I were Dish and why. I would make the Virtual Joey affordable, like $3-$5. I feel this would actually make Dish more money than charging $7 because you would get more people adding more TVs. Think about it, how many people have a TV that they would like to have separate programming on but they can't justify $7 because they rarely watch it. Now it it were only $3-$5 they could see spending that much and now Dish is making money on a customer they normally wouldn't.

It makes sense to me but I may either be delusional or maybe just way too logical.

 

[harshness]

I definitely like the one-time payment idea, we'll start the bidding at $10.
Well... it is pretty much the same solution, other than potentially not having to put in a 24-month contract, at the price of fewer bells and whistles. I guess I do see their argument, a portal is a portal, but they paid to develop the software, not the hardware this time, so the cost of the portal is notably lower!

This hasn't been the model that other companies have employed. Cable companies used to charge punitive prices for CableCards where there was no significant hardware and no software involved. DIRECTV charges the same fee for their Genie subscribers to use third party televisions, media players and consoles rather than the outboard DIRECTV box.

Software is where the ongoing cost is and development has to happen on both the server and client ends so I don't expect the pricing model to change any time soon.

 

[dare2be]

And a person with 2 people in the house and 8 TVs should pay... What exactly? TVs are really cheap these days, and I have one in most rooms of my house. Mirroring would work, but doing so in HD can be problematic. And expensive.

Well, then, sounds like a VJ and a WJ are perfect solutions for you then.

Just upgrade, let me be the lone ViP standing.

 

[david_jr]

Exactly. Savvy customers will perceive getting what they pay for and use, and having the option to reduce the total cost by avoiding the fees.

It has a lot to do with sticker shock. If your an airline and you raise every ticket $50 because fuel costs have skyrocketed over the last 5 years, you will probably get a lot of customers that either won't go or might drive if it is a jump ball on distance. Rather than do that they keep the tickets down and tack on $25 per checked bag at the door where you are less likely to change your plans. Dish advertises low package prices, but they have high fees especially if you are a multi-TV household. They get you in the door with the low price package and then when you find out how much the fees are you are less likely to change your mind. You don't usually see anything in their advertising about THEIR OWN fees. Yet they need these fees to remain profitable because their other costs keep going up.

 

[Yespage]

My thought is, if people don't want the Virtual Joey, who cares? Why would Dish care? It's not like they have tons of money stuck into hardware like a receiver. It's basically just another option for customers. When that customer does need it I'm sure they'll be willing to pay the $7.

But it isn't $7, i is higher. I would need to get a Hopper to use the VJ. It would cost me more to use a Hopper. So, if the price of the VJ was low or a upfront fee, I'd consider jumping up to Hopper, otherwise, I'll just stick with the cheaper 722k.

 

[harshness]

The problem is that they didn't get the razor for free..cable only charges for an additional outlet when u rent a box..cable ready TV's are free..dish should be compensated for developing software but not be able to charge for an additional box when they don't provide one..my bill has separate charges for programming and hardware

In many markets, "cable ready" TVs aren't ready anymore. Most (if not all) newer TVs no longer include CableCard slots so they MUST have a cable box to receive channels.

My local Comcast requires a conditional access device for ALL TV channels (including locals). I'm not sure how they fit a cable card in the el-cheapo adapter as it isn't much bigger than a CableCard. I recall that they offer up to two SD-only adapters for free but you must pay for the rest.

 

[dare2be]

It has a lot to do with sticker shock. If your an airline and you raise every ticket $50 because fuel costs have skyrocketed over the last 5 years, you will probably get a lot of customers that either won't go or might drive if it is a jump ball on distance. Rather than do that they keep the tickets down and tack on $25 per checked bag at the door where you are less likely to change your plans. Dish advertises low package prices, but they have high fees especially if you are a multi-TV household. They get you in the door with the low price package and then when you find out how much the fees are you are less likely to change your mind. You don't usually see anything in their advertising about THEIR OWN fees. Yet they need these fees to remain profitable because their other costs keep going up.

Agreed on the sticker shock angle, which is why I mentioned the savvy customer, who will usually research their options before making a decision. Yes, it is a marketing decision to hide or distribute the charges in this manner, but it is also industry-wide for the most part (Southwest excluded, for example). Same goes for the pay tv industry...Dish has high additional fees, yet so does most of the other players, many even higher than Dish. It is the nature of the saturated, pushed-to-the-brink market at this time. Many of the Cable companies have the inexpensive cable card option to avoid such fees, but only because it is mandated by the FCC.

 

[Scherrman]

But it isn't $7, i is higher. I would need to get a Hopper to use the VJ. It would cost me more to use a Hopper. So, if the price of the VJ was low or a upfront fee, I'd consider jumping up to Hopper, otherwise, I'll just stick with the cheaper 722k.

Well now we're talking about something a little different. I've been talking more about current Hopper customers. You raise a good point though. A customer with a 722 that wants to upgrade to the Hopper sees a big increase in fees, as they should though. If the Virtual Joey were only a couple of bucks then that 722 customer could justify the upgrade more. These are all of the scenarios that Dish has to think about when they decide on the price and I really hope they are reading this site to get a good understanding of what their customers are willing to spend.