Nope, America is not the start and the end of the world mate, Europeans can't subscribe for Hulu criterion account. So Apple TV content is pretty worthless for me in this context.
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Apple Close to Completing Apple TV Deal with Time Warner Cable
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Nope, America is not the start and the end of the world mate, Europeans can't subscribe for Hulu criterion account. So Apple TV content is pretty worthless for me in this context.
Commercials... Cable fees go mainly in the pockets of the cable companies. They are a middleman redistributing content for a hefty profit actually. Hence the whole CBS/TWC debacle currently.
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I agree with everything you just said. Though HULU Plus is proof that your last statement will never happen.
Ads do not cover the entire cost of shows/television!
Not true. Cable networks do NOT make most of their money from commercials, but through affiliate fees (otherwise, how would HBO/Showtime and other channels that don't have commercials get money? They're "premium" parts of cable packages because they have the highest affiliate fees). Those fees go into developing new shows. Ad revenue is a much much smaller slice. Shows like Made Men and Breaking Bad, for example have incredibly small audiences relative to network shows, so they couldn't charge enough in ads to make up the difference. While the demos may be highly desirable, it's not enough to offset the loss of the mass audience.
So to recap:
-Networks are incentivized to develop good shows.
-Good shows that people want to watch allow them to raise their affiliate fees
-Cable companies pay those affiliate fees to the networks be able to carry them
-Ads are a drop in the bucket compared to the above
The CBS/TWC squabble doesn't really illustrate the point about cable networks because the main issue there is a broadcast network (CBS and its O&Os), not cable networks (yes, the CBS subsidiary cable networks like Showtime, TMC, FLIX, and Smithsonian were dragged in, but thats only a negotiating, "hit me and I'll hit you back" ploy, those aren't the fees/networks at issue).
To be clear, I'm not saying the cable companies are angels, I'm not saying they don't make huge profits, and I'm not saying I LIKE the system as it is, and didn't wish it could change. But to say that ads themselves (and ads alone!) pay for shows, and the rest is just "gravy" (and we're not even getting into the economics of cable companies having to maintain infrastructure, staff, etc)...well, that only displays a fundamental misunderstanding of both the advertising business and the television (cable AND broadcast) business.
Not true. Cable networks do NOT make most of their money from commercials, but through affiliate fees (otherwise, how would HBO/Showtime and other channels that don't have commercials get money? They're "premium" parts of cable packages because they have the highest affiliate fees). Those fees go into developing new shows. Ad revenue is a much much smaller slice. Shows like Made Men and Breaking Bad, for example have incredibly small audiences relative to network shows, so they couldn't charge enough in ads to make up the difference. While the demos may be highly desirable, it's not enough to offset the loss of the mass audience.
So to recap:
-Networks are incentivized to develop good shows.
-Good shows that people want to watch allow them to raise their affiliate fees
-Cable companies pay those affiliate fees to the networks be able to carry them
-Ads are a drop in the bucket compared to the above
The CBS/TWC squabble doesn't really illustrate the point about cable networks because the main issue there is a broadcast network (CBS and its O&Os), not cable networks (yes, the CBS subsidiary cable networks like Showtime, TMC, FLIX, and Smithsonian were dragged in, but thats only a negotiating, "hit me and I'll hit you back" ploy, those aren't the fees/networks at issue).
To be clear, I'm not saying the cable companies are angels, I'm not saying they don't make huge profits, and I'm not saying I LIKE the system as it is, and didn't wish it could change. But to say that ads themselves (and ads alone!) pay for shows, and the rest is just "gravy" (and we're not even getting into the economics of cable companies having to maintain infrastructure, staff, etc)...well, that only displays a fundamental misunderstanding of both the advertising business and the television (cable AND broadcast) business.
I currently work for 3 cable networks and am Privy to pricing of advertisement. Trust me. The ad sales for basic cable cover more than affiliate costs on basic cable.
"Premium channels" is a whole other beast but the extra cost on those networks are passed down to the consumer, what is it like $15-$20 extra a month to get an HBO package these days?
You have to remember most basic cable stations are owned by a big conglomerate, Discovery Network alone has like 15 channels and they are sold to cable companies in a package. Comcast/universal owns like 25... Etc. each network has their own advertising... I'm not saying every network is in the black on ad sales but if you think AMC doesn't make enough for the ad sales on Walking Dead (the only show AMC makes), Mad Men (Lionsgate) and Breaking Bad (Sony) then you're misinformed. The latter two shows aren't even made by them they were pickup deals so the cost of development wasn't even theirs.
Yes, the AMC shows are somewhat bad examples for the reasons you mention. I'm just using poor shorthand because those are the shows that everyone knows. Thanks for pointing it out.
That said, those AMC shows are all mature shows, that NOW have the associated proven audiences/demos to reach the ad sales they do.
But what about NEW shows? For internally developed OR pickup shows, without the supplementary income of affiliate fees, what would be the incentive for a network to take a risk on a big budget/innovative show and nurture it to GET to the place (and ads) that the AMC shows are now at? If cable networks were only at the whims of the ad spends, they wouldn't shoulder as much risk. Shows that take time to find their footing would killed before they ever had a chance at lifting off. That's why cable is different than broadcast, and it's why (arguably) the best television ever has come from cable. Content aside, pop early Walking Dead or Mad Men on ABC, and after a couple of weeks of sub 2.5s, the show is done. Hell, even ON AMC, all of the aforementioned shows have been squeezed on their production budgets, and that's WITH the affiliate fees and ads coming in!
More than anything, I just think people should know that the problem is FAR more complex than what it's made out to be, in this thread and elsewhere. It's not simply "commercials pay for everything/let me pay only for the stuff I like". It's many interrelated factors and some hard truths.
I know that big conglomerates own many networks. In my mind, that's an argument FOR the affiliate/current model (although there should be ownership limits), and illustrates why the aka-carte model wouldn't work. The rising tide lifts all boats into more choice for the consumer, and more risk taking for the networks (which, ultimately, in my view, benefits the content).
To go back to the poster that mentioned paying $8/month for the 4 networks they like...awesome! Get ready for a world of 10 or so networks, with the rest probably dying out because they didn't reach critical mass, and can't stay in the black. Sure, they have people willing to pay for them...just not enough to keep it running and/or producing the same content/quality level. (It's not "extra" money to the companies, either, because anyone who's now paying $80+ to get a bundle of cable would switch to an $8 plan, too. I don't believe the difference would be made up in volume.)
If people want to pay without bundling, I think the long-term effect would be everything creeping to the boring middle. "Safe" shows, and "safe" networks. Everything niche and different and challenging dies out, because it's too risky, or appeals to too narrow an audience! AMC could've never grown the brand it is today if the ala-carte system were already in place.
To me, the state of the movies are a perfect example of how this can go wrong. It's not a perfect analogy, of course, but most everything is now a sequel or pre-existing property (book adaptations, comics, etc), because it is engineered for max profitability from the beginning, because it relies on direct payment. But, no commercials (well, product placement and tie-ins aside).
Would they ability to pay only for the stuff you like be awesome? Yes, of course!
Could and should cable companies take less off the top? Of COURSE, but good luck with that.
To me, the far more troubling problem is the monopolies/duoopolies that cable/satellite companies have been allowed to establish over entire geographical areas. If we all had 3+ companies competing for our cable dollars and carrying the networks we wanted (even if not ala carte), prices would push down.
That said, those AMC shows are all mature shows, that NOW have the associated proven audiences/demos to reach the ad sales they do.
But what about NEW shows? For internally developed OR pickup shows, without the supplementary income of affiliate fees, what would be the incentive for a network to take a risk on a big budget/innovative show and nurture it to GET to the place (and ads) that the AMC shows are now at? If cable networks were only at the whims of the ad spends, they wouldn't shoulder as much risk. Shows that take time to find their footing would killed before they ever had a chance at lifting off. That's why cable is different than broadcast, and it's why (arguably) the best television ever has come from cable. Content aside, pop early Walking Dead or Mad Men on ABC, and after a couple of weeks of sub 2.5s, the show is done. Hell, even ON AMC, all of the aforementioned shows have been squeezed on their production budgets, and that's WITH the affiliate fees and ads coming in!
More than anything, I just think people should know that the problem is FAR more complex than what it's made out to be, in this thread and elsewhere. It's not simply "commercials pay for everything/let me pay only for the stuff I like". It's many interrelated factors and some hard truths.
I know that big conglomerates own many networks. In my mind, that's an argument FOR the affiliate/current model (although there should be ownership limits), and illustrates why the aka-carte model wouldn't work. The rising tide lifts all boats into more choice for the consumer, and more risk taking for the networks (which, ultimately, in my view, benefits the content).
To go back to the poster that mentioned paying $8/month for the 4 networks they like...awesome! Get ready for a world of 10 or so networks, with the rest probably dying out because they didn't reach critical mass, and can't stay in the black. Sure, they have people willing to pay for them...just not enough to keep it running and/or producing the same content/quality level. (It's not "extra" money to the companies, either, because anyone who's now paying $80+ to get a bundle of cable would switch to an $8 plan, too. I don't believe the difference would be made up in volume.)
If people want to pay without bundling, I think the long-term effect would be everything creeping to the boring middle. "Safe" shows, and "safe" networks. Everything niche and different and challenging dies out, because it's too risky, or appeals to too narrow an audience! AMC could've never grown the brand it is today if the ala-carte system were already in place.
To me, the state of the movies are a perfect example of how this can go wrong. It's not a perfect analogy, of course, but most everything is now a sequel or pre-existing property (book adaptations, comics, etc), because it is engineered for max profitability from the beginning, because it relies on direct payment. But, no commercials (well, product placement and tie-ins aside).
Would they ability to pay only for the stuff you like be awesome? Yes, of course!
Could and should cable companies take less off the top? Of COURSE, but good luck with that.
To me, the far more troubling problem is the monopolies/duoopolies that cable/satellite companies have been allowed to establish over entire geographical areas. If we all had 3+ companies competing for our cable dollars and carrying the networks we wanted (even if not ala carte), prices would push down.
You would have to agree that there is a lot of money in TV. The fact is that most of the profits go to middlemen and not the content developers. Just like music, Apple can dissaggregate the entire model allowing consumers to have direct access to the content (through Apple of course). This way, consumers get lower cost content and much more flexibility and selection. I don't see music dying because Apple killed Tower Records.
I would agree, sure.
But I think what separates the music and cable TV situations make the comparison less than instructive. They're more different than alike.
First, the cable companies and their partners own the very distribution mechanisms (broadband) that would hasten their own disruption/destruction. It's not as though Tower Records was vertically integrated with the labels themselves (even though, of course, the relationships were strong, they weren't dependent...as we later found out). If the Apple set exists, I think this is why it's been delayed so long...the content negotiations. Why would the cable companies cut their nose off to spite their face? "Sure, cut your cord! We'll let you use our pipes to pay less for the same, even though we get that higher price from you now." Why do you think every TV app that works now (and is the rumored disruption model... stations as apps) requires you to log in and prove you already have that account in your cable package? It's made worse by the fact that cable providers like comcast, are allowed by the FCC to own networks like NBC.
Also, the production and consumption models are totally different. Think about networks ordering, say, 13 episode seasons vs. the album/song model. Think about how radio serves as a promotional tool (buy that cool single on iTunes after you've heard it multiple times). Television has none of that.
Yes, the record companies were caught sleeping on music piracy/the digital revolution. That said, there are several things inherent to music and the music business that made that industry particularly ripe for disruption. Everything from small file sizes, small risk/reward, the singles model, radio promotion, etc.
Those things don't transfer over to the episode/season structure (and cost) of television.
Again, I'd love to pay less, and I'd love the companies to take less profit. But the current TV model is much more well insulated from disruption than music ever was.
One way around that barrier of bundled service is for companies to pre-pay channels or studios for the right to carry them (this is rumored). In essence, they'd be covering for the loss of cable subscription revenue, and a source of security for the networks. Consumers would pay the smaller fee per episode or season or channel. The consumers would be subsidized against the higher cost, until the new model gets entrenched.