The Future of Television Pt 2. Funding Television

Right now I pay about $100 a month for Comcast. I pay about $20 for Hulu Plus and Netflix. That is the bulk of my entertainment budget. I have always liked television. If you look at my career path you might figure that out. I could play less, but I would have to give up some content I really like.

I keep on reading stories about Cord Cutters who get rid of their television subscription services. People don't want pay for television they don't watch so they get ride of Cable or Satellite and watch everything streaming. They still want to watch the same programs, but they want to pay a lot less. They also do not want to pay per episode. People have shown they much more want to watch Netflix and not Amazon Video.

What lots of people don't talk about is that Netflix and Hulu only work if other people are making content. Netflix is not making any television shows to stream. Netflix has to get the consent of content companies to stream content. A few years ago Hollywood saw Netflix as a little company to get extra revinue from. Now Netflix spooks Hollywood, according to CNet. Take a look at this quote.

Only, don't ask them to do all this at the expense of the long-term health of their business. The general feeling with the studio executives I spoke with is that they cannot and will not throw in with Netflix and imperil other more lucrative revenue streams, such as pay TV or traditional broadcast services. They don't believe it is a forgone conclusion the Internet will become the dominant means of video distribution or that Netflix has already conquered the category.

To me this says that content companies are not willing to give up on Cable and Satellite yet. I think until one of the big outlets go out of business you will not see the content companies relent.

I know lots of people hate the concept of Content Windows. This is the practice of causing artificial scarcity after content has been released. An example is the time between when a movie comes out in the Theaters and comes out on DVD. In that time the movie is sold to different entertainment channels, like in flight movies and hotel pay per view. The problem is that each step in this process revenue is generated.

When a movie is financed the producers look at other movies and look at what kind of business a similar movie did at every step along the way, not just the box office. That means that every dollar is accounted for before the movie is released. This means that people involved in the process are not going to give up on one dollar of this revenue.

I know that customers love Netflix. People want to pay a low price with out penalties like late fees. The problem is that business model is not going to pay for the content we get now. Since copyright gives people who make content the right to say how it is distrusted, the costumers wants will not be enough to change the system. It will also take more of the costumers money.

I love Netflix, but there is no guarantee it will still be around in five years. It has very little control of the product it provides to its customers. If the content providers do not play along, can Netflix produce compelling content? It is hard to think it will unless Netflix buys a content house.

Mark Cuban has a great quote about web content distribution. It’s only when the internet can compete for original content with traditional tv distributors can the net be a true threat to traditional models.