Looking at this all again, we need to assume ad revenue will decline to close to zero.
So how can broadcast networks make money? To answer that question, we should look at the current examples of successful broadcast businesses that are not ad-centric.
I see HBO, Showtime and MTV. These channels have shown the ability to branch off from movies into first rate, Emmy Award winning original content. I think it's safe to assume that content is king, and for a network to be successful, good content is an absolute necessity.
But what is the revenue model of HBO, Showtime and MTV? Subscription. You get the mediocre with the good, all for one subscription price. MTV has worse content, but it has content that is also much cheaper to license or to produce. What the subscription model does is it gives the network the opportunity to hedge their bets against shifts in content quality and viewer preferences. By the time The Sopranos starts to suck, viewers are already into the next show, because they got it as a package with The Sopranos.
This is how digital content is going to have to work too. Subscription.
Forget $0.99 TV shows, rental or not. Forget $1.99 sales. Forget DVD. What the networks need to do is to present the digital viewership with a paid subscription model that can supplant the advertising model as well as the paid cable subscription model that are on the way out.
$9.99 for every HBO show (rentals) for a month. $9.99 for every Showtime show (rentals) for a month. $5.99 for MTV (rentals). Content can be bought on top of those prices.
This model will also have the effect of forcing the networks to really fight for viewers with good content. Viewers will probably choose a few networks to watch and a few networks to pass on. No more of this "it's on so I'll watch it" shit. No more reality crap. No one will rent that. People will compare networks and get the one that has the best content, and maybe the one that has the second best content. Etc.
Interesting point.
I think the economics of big budget, big production value broadcast TV is unsustainable. We've already seen a wholesale flight into cheap 'n dirty reality and game shows, with the bulk of the remaining schedule taken up by by-the-numbers police procedurals. There are still the occasional tent-pole event shows that get thrown out there, but most of them fail and they are certainly the exception, at this point.
At the same time, there are the ever proliferating numbers no-budget low-budget web only properties, which make a virtue of their DIY aesthetic and fast turnaround time.
So we may be seeing a sort of merging of the two, where "broadcast TV" becomes synonymous with You Tube clip shows and Internet vibe-ish reality stunts. I mean, when ABC can broadcast something as half-assed as "Win It In a Minute" you know there really isn't any lower limit to what they'll put on the air.
And as you say, I think the provenance of more money, better production value stuff will move entirely to subscription cable, where they can afford to take some chances and stick with shows that were designed around concerns other than a single nights ratings.
You have to ask yourselves, Do they get more than 99 cents from a regular viewer based on ad sales? And, if not and I'm guessing they don't, why do they want more than that for a single episode sale? Given that iTunes sales will not likely reduce their ad revenues much anyway, a 99 cent sale sounds like just bonus. Yes, I know, they don't get all the 99 but still... how greedy can you get?
Then you add up the season's rentals and you come close to $13 bucks - for rental. Something that people would pay for a single DVD to purchase. Bunch of money grubbing holes if you ask me.
Along the lines of $1 being 'too cheap' to rent a show, I picked up the entire Stargate series (hey, light semi-SF my kids can watch...) of something like 220 episodes for $70 on DVD from Amazon, so $0.33/episode - purchased, not rented. It would have cost several times that on iTunes - upper $200's or into the $300's, IIRC.
Same for Farscape - iTunes would run $160, and buying on Amazon was $60 for something like 88 episodes plus bonus materials. Where in the HELL are these idiots coming up with this online pricing? Renting one time for a 20 minute show with no real distribution is set to cost more than buying full hour-long episodes on disc? I have to say... pound sand, studios, I'll pick it up cheaper elsewhere. Let me rent for $0.25 for older shows and $0.50 for newer stuff and we'll talk, guys.
True. You realize, though, that Apple would love to put the price of buying down, way down. Properly, that's what a digital file that you download should be worth.
I think that prices of .25 and .50, though, are for streaming. No copies. Click and watch, though I'd like the file last for a week at least. Then, if you want to keep a copy, that should be about $2.00 per. I think you should be able to put it on all your devices, watch it how many times you want. But anywhere outside of your network?
How about putting up your server of stuff, and people can stream it from there, and pay $.25 or $.50 per, no matter if they buy it from Apple or you? And the server would be an authorized reseller, so you'd get to keep maybe .10 out of every user you help? Kind of like Amazon works, with you putting a link to a book on your page? You get a little bit for a referral.
As the consumer, I'm not interesting in paying more than $0.99 cents for a TV show. Watching a whole season of your show simply gets too expensive..
The trouble is that Warners is worried that the precious 25k crowd of actual ratings viewers won't agree with you. They would think the price is fine and rent and not watch, thus the shows ratings go down, the networks have to make good on ad money blah blah
That's something a lot of folks don't realize. The nets and studios are not crediting shows with online ad money, downloads etc. A show sinks or swims still based on the Nielsens and their select group of viewers. Even Tivo counts are from the same bank of 25k viewers.
So the whole tv industry is terrified of anything that could damage those numbers. Even 1 lost sample viewer is a nightmare to them.
The whole thing is rather sick to me. They should be counting all forms of income and not sitting there with their heads up their analog world asses
The trouble is that Warners is worried that the precious 25k crowd of actual ratings viewers won't agree with you. They would think the price is fine and rent and not watch, thus their ratings go down, they have to make good on ad money blah blah
That's something a lot of folks don't realize. The nets and studios are not crediting shows with online ad money, downloads etc. A show sinks or swims still based on the Nielsens and their select group of viewers. Even Tivo counts are from the same bank of 25k viewers.
So the whole tv industry is terrified of anything that could damage those numbers. 1 lost sample viewer is a nighmare to them.
The whole thing is rather sick to me. They should be counting all forms of income and not sitting there with their heads up their analog world asses
I can somewhat sympathize on that part though, their affiliate stations have a lot of fixed costs. If the affiliates can't make those costs back, they'll drop shows, drop the network or even close down. But at some point they're going to have to embrace the reality that linear programming isn't what it used to be, and may well go away except for special events. For me, setting programming to time slots doesn't work.
While I agree charging over a dollar for a TV show is ridiculous. I'm also not going to pay $5 per movie, when I can Netflix ANYTHING I want for $9 a month. "Oh but it's instant". Whoopty f*ckin doo, at a 500% mark up, I'll wait for the extra 2 days it takes to get my next movie. And when that fails, Red Box... $1/night. Can't beat that.
They are fools for charging $5 per rental, Netflix and Red Box are going to destroy them in this market.
Comments
I wouldn't watch the WB if they paid me $0.99 an episode.
This isn't about "the WB" the network. Which, by the way, doesn't exist any more. They merged with UPN and became "The CW" a few years back.
This is about all shows created and produced by Warner Brothers and its various companies, regardless of the network on which they may appear.
Looking at this all again, we need to assume ad revenue will decline to close to zero.
So how can broadcast networks make money? To answer that question, we should look at the current examples of successful broadcast businesses that are not ad-centric.
I see HBO, Showtime and MTV. These channels have shown the ability to branch off from movies into first rate, Emmy Award winning original content. I think it's safe to assume that content is king, and for a network to be successful, good content is an absolute necessity.
But what is the revenue model of HBO, Showtime and MTV? Subscription. You get the mediocre with the good, all for one subscription price. MTV has worse content, but it has content that is also much cheaper to license or to produce. What the subscription model does is it gives the network the opportunity to hedge their bets against shifts in content quality and viewer preferences. By the time The Sopranos starts to suck, viewers are already into the next show, because they got it as a package with The Sopranos.
This is how digital content is going to have to work too. Subscription.
Forget $0.99 TV shows, rental or not. Forget $1.99 sales. Forget DVD. What the networks need to do is to present the digital viewership with a paid subscription model that can supplant the advertising model as well as the paid cable subscription model that are on the way out.
$9.99 for every HBO show (rentals) for a month. $9.99 for every Showtime show (rentals) for a month. $5.99 for MTV (rentals). Content can be bought on top of those prices.
This model will also have the effect of forcing the networks to really fight for viewers with good content. Viewers will probably choose a few networks to watch and a few networks to pass on. No more of this "it's on so I'll watch it" shit. No more reality crap. No one will rent that. People will compare networks and get the one that has the best content, and maybe the one that has the second best content. Etc.
Interesting point.
I think the economics of big budget, big production value broadcast TV is unsustainable. We've already seen a wholesale flight into cheap 'n dirty reality and game shows, with the bulk of the remaining schedule taken up by by-the-numbers police procedurals. There are still the occasional tent-pole event shows that get thrown out there, but most of them fail and they are certainly the exception, at this point.
At the same time, there are the ever proliferating numbers no-budget low-budget web only properties, which make a virtue of their DIY aesthetic and fast turnaround time.
So we may be seeing a sort of merging of the two, where "broadcast TV" becomes synonymous with You Tube clip shows and Internet vibe-ish reality stunts. I mean, when ABC can broadcast something as half-assed as "Win It In a Minute" you know there really isn't any lower limit to what they'll put on the air.
And as you say, I think the provenance of more money, better production value stuff will move entirely to subscription cable, where they can afford to take some chances and stick with shows that were designed around concerns other than a single nights ratings.
Then you add up the season's rentals and you come close to $13 bucks - for rental. Something that people would pay for a single DVD to purchase. Bunch of money grubbing holes if you ask me.
Along the lines of $1 being 'too cheap' to rent a show, I picked up the entire Stargate series (hey, light semi-SF my kids can watch...) of something like 220 episodes for $70 on DVD from Amazon, so $0.33/episode - purchased, not rented. It would have cost several times that on iTunes - upper $200's or into the $300's, IIRC.
Same for Farscape - iTunes would run $160, and buying on Amazon was $60 for something like 88 episodes plus bonus materials. Where in the HELL are these idiots coming up with this online pricing? Renting one time for a 20 minute show with no real distribution is set to cost more than buying full hour-long episodes on disc? I have to say... pound sand, studios, I'll pick it up cheaper elsewhere. Let me rent for $0.25 for older shows and $0.50 for newer stuff and we'll talk, guys.
True. You realize, though, that Apple would love to put the price of buying down, way down. Properly, that's what a digital file that you download should be worth.
I think that prices of .25 and .50, though, are for streaming. No copies. Click and watch, though I'd like the file last for a week at least. Then, if you want to keep a copy, that should be about $2.00 per. I think you should be able to put it on all your devices, watch it how many times you want. But anywhere outside of your network?
How about putting up your server of stuff, and people can stream it from there, and pay $.25 or $.50 per, no matter if they buy it from Apple or you? And the server would be an authorized reseller, so you'd get to keep maybe .10 out of every user you help? Kind of like Amazon works, with you putting a link to a book on your page? You get a little bit for a referral.
Hi Warner Bros,
As the consumer, I'm not interesting in paying more than $0.99 cents for a TV show. Watching a whole season of your show simply gets too expensive..
The trouble is that Warners is worried that the precious 25k crowd of actual ratings viewers won't agree with you. They would think the price is fine and rent and not watch, thus the shows ratings go down, the networks have to make good on ad money blah blah
That's something a lot of folks don't realize. The nets and studios are not crediting shows with online ad money, downloads etc. A show sinks or swims still based on the Nielsens and their select group of viewers. Even Tivo counts are from the same bank of 25k viewers.
So the whole tv industry is terrified of anything that could damage those numbers. Even 1 lost sample viewer is a nightmare to them.
The whole thing is rather sick to me. They should be counting all forms of income and not sitting there with their heads up their analog world asses
The trouble is that Warners is worried that the precious 25k crowd of actual ratings viewers won't agree with you. They would think the price is fine and rent and not watch, thus their ratings go down, they have to make good on ad money blah blah
That's something a lot of folks don't realize. The nets and studios are not crediting shows with online ad money, downloads etc. A show sinks or swims still based on the Nielsens and their select group of viewers. Even Tivo counts are from the same bank of 25k viewers.
So the whole tv industry is terrified of anything that could damage those numbers. 1 lost sample viewer is a nighmare to them.
The whole thing is rather sick to me. They should be counting all forms of income and not sitting there with their heads up their analog world asses
I can somewhat sympathize on that part though, their affiliate stations have a lot of fixed costs. If the affiliates can't make those costs back, they'll drop shows, drop the network or even close down. But at some point they're going to have to embrace the reality that linear programming isn't what it used to be, and may well go away except for special events. For me, setting programming to time slots doesn't work.
They are fools for charging $5 per rental, Netflix and Red Box are going to destroy them in this market.