Are you saying that the commercials are subsidizing the cost Apple is charging you to buy the episodes? I feel the commercials subsidizes the FREE OTA not the Apple Purchase. The CABLE companies also pay the networks a lot of money for the right to re-transmit.
All the revenue gets totaled up in the end. If you have 12 revenue streams and Stream #7 starts disappearing are you going to go, "Well, I guess I'm making less revenue now" or are you going to try and increase revenue from the remaining 11 streams to make up for the loss of Stream #7?
To another poster's point, from a company perspective if they are shifting gears it's in oder to make more money, not less money (or the same amount of money) so they will fiddle with the revenue streams until they hit their numbers. At least with ad supported content this typically means adjustments are made between the content creators and the advertisers. For subscription services this typically means an increase in prices. 10 years from now the price of ad-supported, OTA TV will still be free, but the price of streaming services is only going to go up.
As a comparison, Netflix charges $8 (now $9 for new) for their entire catalog including the hugely successful House of Cards, Orange is the New Black and more. All without commercials. They can do this because they have 50 million people paying that monthly fee. HBO is also doing that with all of their content including original programming all without commercials but with a higher monthly fee. I assume because the movies are more current then Netflix. My point is the more people subscribe the more money available to pay for good content. For me Commercials takes a lot away from my enjoyment and their should be a reasonable price available to be able to get network should without commercials. And I do not what to BUY the season through Apple or Amazon.
This is an oversimplification but I think the wide disparity in numbers is still relevant. In 2013 66 billion dollars was spent on airing TV commercials in the U.S. alone (everything from local TV car ads to Super Bowl commercials). That's a lot of revenue to amass one $8 subscriber at a time. Advertisers are also a Network's biggest business partners and source of revenue so I'd be surprised if CBS cut them out of a new business venture like this.
Netflix and Amazon have the advantage of knowing how much content is worth before buying it. By that I mean, they know which movies/shows were successful and which ones weren't. Yes, Netflix, Amazon, Hulu, etc., are generating some original content but it's a tiny, tiny, tiny, tiny drop in the bucket compared to the amount of licensed content they distribute. On the other hand, Warner Brothers, CBS, FOX, Discovery, etc., are creating tons of original content and taking many more financial risks in doing so.
I just do not understand why you are against this option being available. I would think that having millions of people paying a monthly fee would provide more money to the networks to provide even better and more content.
I don't think anyone is against a commercial free option (I haven't seen anyone go "Yes!, I love commercials! Gimme more commercials!"). What I'm seeing is people trying to explain why commercials will continue to exist.
Did you miss my point, or just ignore it? We *already* pay, it is just a hidden cost in everything we buy. If people paid for what they actually wanted instead of having to pay for everything, the crap would not get produced and the average quality of programming might go up. The net cost could actually go down without that extra layer of marketing engine in the way.
People can already impact the quality of programming by viewing habits. I'm not a fan of Duck Dynasty, for example, but a whole of other people are which is why it's on one of the, if not the, most successful show in history of cable television. If the public loves crap you can't really blame companies for producing more crap.
Commercials go to offset the costs Networks pay to studios to license the rights to broadcast shows. But remember, their are ads within the shows themselves... That is called product placement. There are companies that lobby hard to get their products into shows. You might not think of that as a commercials, but they basically are. A lot of those product placement goes to offset the costs of producing said content.
So in a way the $2-$3 you pay per episode on iTunes is also offset by ads/sponsorship of shows.
Studios/networks really make their money for syndicated shows. They make even more silly money from Amazon and Netflix which buy entire catalogues of shows and not few seasons like network affiliates do.
And a streaming app with a full back catalogue impacts all of these other existing revenue streams too. For example, if with the CBS app a user can watch all the episodes of Big Bang Theory then that drives down the value of BBT in syndication and it also drives down the value of BBT for the local affiliate TV stations which pay CBS (the local TV stations people tune into to watch CBS content).
What Apple did with iTunes and selling music was pretty straight forward as the business model didn't change (only the medium and delivery method). With TV, a much more complicated business model (with many layers of business-to-business partnerships) that's been evolving into it's current state since the 1950's is being turned on it's head and that's going to take a lot more time to shake out than the music did. With that being said, I actually think the movie/TV industry is moving at a decent pace. I mean, I cut cable 5 or 6 years ago and between OTA TV, Netflix and Amazon I get to easily watch 99% of what I want to watch.
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