[apendleton]

At this point, though, there are too few people doing what you're doing to influence content creator behavior. Cable companies are probably making less per unit of content off of you than they are off of cable subscribers, but that's okay: the costs of making the content are essentially fixed, and are paid for mostly by cable subscribers. If they have to choose between getting dollars from you for content they've already made, or not at all, they'll take the money, even if it's less than they'd get from a cable subscriber.

But if everyone does that, the economics of content production totally change. The shows you're buying now might not even get made in the first place.

In other words, the quote you pulled could use some more context: "The truth is that the current TV system is a great deal for everyone [including the current cord cutters]."

[9999]

Netflix's move into creating content is specifically in response to cord cutters desires. Since they can't convince HBO to give them their content, they've decided to compete directly with HBO. Cord cutters are actually creating new content creators.

[apendleton]

That may well be, but two responses: firstly, House of Cards, in particular, was exorbitantly expensive, and a huge gamble on Netflix's part that may or may not turn out to be sustainable in the long term. Second: Netflix is producing way less content than is available on cable. They produce less content than HBO, which is one cable channel among the hundreds that are currently available in the US. They'll never be able to match the breadth of content production cable can pull off, and it probably won't ever make sense for them to produce super-niche stuff of the kind that's available on non-general-audience channels (think the Golf Channel or Food Network). So they're a sort-of partial replacement for a tiny subset of content.

[aqme28]

They produce way less content partly because they only recently got into the game. It's unfounded to say that just because they're a small fish means that they'll never be able to make content with neither the breadth nor specificity of other networks.

[acgourley]

It's possible less content for less money is OK with people. The current pricing scheme of TV never got a chance to test that hypothesis. It's certainly true for me.

[r00fus]

Netflix did well to create House of Cards (and LilyHammer, though that one sucked) - they learn the ins/outs of content creation while also adding a feather to their hat of their big offering - a reason for people to not leave.

The "idea" of Netflix as an exclusive content creator has big ramifications. Nascent competitors like HBO get put "on notice". Amazon, who wanted to disrupt them with Prime streaming are put back on the defensive (most of Amazon's similar efforts are pretty lackluster). And in general, investors like it also, as it means a new possible disruption area for Netflix. Furthermore, employees can be proud of something that's an in-house product/process.

[periferral]

"But if everyone does that, the economics of content production totally change. The shows you're buying now might not even get made in the first place."

I would argue quite the opposite. If everyone switched to 'cord cutting' more content will be made for Netflix, Amazon, Hulu etc, maybe even pushed to all rather than exclusive deals.

"The truth is that the current TV system is a great deal for everyone." I partially agree with this statement. I would remove 'for everyone' here. Clearly for darkchasma, cord cutting was more cost effective. Personally, if ESPN was available online, I would cut the cord because there is nothing else I need from cable.

The OP clearly has the numbers incorrect (only looking at primetime data) but does have a point about a-la-carte prices being higher. However, the assumption here is all viewers are on cable or all are off it. However, with a gradual transition, the price will not have a drastic impact.

Lets assume that ESPN makes itself available online. You might see a flurry of cord-cutters flock to online-only mode but there will still be plenty left on cable. Between the two, ESPN will continue to hit the revenue numbers by refining the cost on each side.

I personally think that over time, the online model will follow cable where content providers will group channels to provide discounted programming.

[pbreit]

Over time? The main online properties, Netflix and Hulu, are already even more bundled than cable. For a zero marginal cost item, a la carte makes little sense.