| Content thinks about this a little bit differently. Here are a few factors that may make the proposed offering less favorable than the status quo, even if you factor in piracy: (1) Windowing. First-run content is way more valuable than longer tail content. So sure, Simpsons episodes can go for $2 on Amazon and eventually come bundled on Netflix, but only after a wait. This is a more favorable situation for content. Different media and different windows command different fees, and this allows content producers to sell to different people at different times. In the case of Scrubs, for instance, Buena Vista/ABC produced the content, sold the first run rights to NBC (who paid ~20% of cost for first-run rights) and then later syndicates it to Comedy Central and others. They ultimately become available on DVD, iTunes, etc. (2) Advertising revenue isn't enough. That's right, in many cases, only around half of value comes from advertisers. "But TV is free on my bunny-ears!" Sure...but not if you pay for cable. If you do, the cable guys have to pay retransmission consent to content guys, and those costs can be considerable. On cable, most if not all of the content revenues are from subscription fees. (3) Bundling. Taking in subscription revenue allows content to take bigger risks on (potentially) great content, and to invest more in it upfront. Think about HBO. They cost a fortune, but I think that many would argue that they are worth it. On a related note... I part of a new TV startup that addresses many of these issues. We're serious, we're venture-backed and we're disruptive. PM me if you're interested. |