Originally Posted by xjpx
There is some major irony that NBC wants to gum up the works of people that legitimately want to buy content just to try to ruin the day of pirates. There are a lot of people that are willing to pay a fair fee for content as long as 1) it exists and 2) is easy to handle.
All true. The issue is really the corporate mindset.
With broadcast TV, you (the viewer) are not their customer. The shows are paid for by advertisers. The studios therefore do what it takes to maximize advertising dollars, without regard to what consumers want. When shows are purchased commercial-free (like on DVD, or an iTunes download), then the viewer is the customer. Viewers have a very different set of requirements, and the studios don't (yet?) know how to handle the difference.
Hence the reason NBC likes Hulu - it matches their broadcast model. The show is streamed "for free", with non-skipable advertisements.
This is also why they don't mind VCRs too much - you tend to see ads as you're fast-forwarding past them. but why they don't like PVRs - where commercials are often skipped over altogether.
Although show popularity does affect ad revenue indirectly (high Nielsen ratings allow them to demand higher payments for commercial time-slots), it is indirect. A show that is popular during a time of year when the industry isn't negotiating new rates won't command more money. And a show that has bad ratings during this time won't cause them to lose money.
The same phenomenon applies to DVD sales. If a TV show is sold in a whole-season box set, then they see money if the season as a whole is good enough to command sales. If there are some bad episodes (even a lot), it doesn't matter, because the others will pull-through the revenue.
Which is where we get to iTunes. Over here, there is NO
ad revenue. All the profits come from the individual downloads. Every show must be good enough to command downloads, because they won't get paid otherwise. If there's a bad episode, word will get around quickly and there won't be a lot of downloads. And if there's a good episode, word will also get around, and there will be a lot more downloads (although the studios don't seem to have figured out this last bit.) They feel a need to try and guarantee a steady stream of income, similar to what they get from broadcasts, which means charging a high price overall, so the bad episodes will pull through an expected amount of revenue.
This model, of course, doesn't work with a per-episode download service like iTunes, but studio executives have 60 years of broadcast experience and no download experience. They're probably not going to wise-up until they are shocked into the 21st century by a money-maker that violates their perceived model. A show that doesn't make much on broadcast but makes a tremendous amount via download (much like some shows have already done on DVD.)