More TV Executives Weigh In on 99-Cent TV Show Rentals: Viacom Out, CBS on the Fence

[RalfTheDog]

Seriously, I feel bad for the people who waste their life watching television.
Television, stunting human momentum since 1938.

Oh, and Fox sucks.


---
Go 

I like Nova. I don't see how anyone could call it a waste of time (PBS not one of the main networks). I quite often have CNN on at the lab while I am working. Where I live, you watch the local news for weather and you keep the TV on a local channel during tornado days or you can wind up dead.

Not all TV is designed for morons.

 

[spillproof]

lets see ABC effectly has job as a biggest vote so it should not really count.

Other networks so far have effectly said no. Sounds like they do not want to be held by the ball by Apple. They watch how Apple strong armed the record companies. For example not letting them cut other deals with iTMS competitors like Amazon. Price point forcing and so on.

Sounds like they refuse to get into that game. So far all the shows I watch are owned by networks that have said no. As soon as CBS says no that is all the shows. iTunes will have none of the shows.
Also the fact that it ties ONLY into apple products is hurting Apple cases. If iTunes could stream to 360, blu ray and so on they might be more open but as it stands Apple will only stream threw a computer directly connected to the TV or POS known as Apple TV.

You make a good point. But that would mean hooking deals with Microsoft and Sony. That would seem like the best idea for us consumers, but Apple likes control.

 

[Porco]

"The 99-cent rental is not a good price point," said Viacom Inc. Chief Executive Philippe Dauman at the conference, which was hosted by Goldman Sachs. "It doesn't work for us."

Hilarious. Like many of us I'm sure, I agree with both his statements, but just not in the way he means.

 

[dashiel]

pay no mind. these are simply the death throes of network television. the content of the near future is going to be decentralized and it terrifies both networks and cable/satellite. comcast wanting to buy nbc isn't a coincidence.

networks have pissed off content creators so much that they are now almost completely reliant on reality television and game shows. all the interesting narrative work is taking place on cable and you're seeing more & more "established" creative dipping their toes in the internet. i'd say we're maybe 12-18 months away from having a legitimate 22 or 44 minute show that appears solely on the internet. ideally it would be completely fan-funded and bypass the networks altogether, but that might be another few iterations away.

¢99 is effectively a decent price for me for something i'll watch once (compared to a movie in the theater with an average cost of $5 an hour, ¢99 equates to $1.10 to $2.20 an hour) but it effectively is priced low enough and is convenient enough that i'm fine with the cost. if i want to watch a 30 minute show that i'm only going to watch once $1.99 is over the top i like pretty much everybody else who elects internet based delivery for content will simply get it from alternative venues which are even less financially beneficial to the content funders.

 

[cbstevek]

The consumer paying for the content is who determines what it's worth. They can say it's worth $5 an episode, but I won't pay that much...

 

[err404]

Re posted from the NBC Thread

Unfortunately NBC may be right. I’ve look at some numbers and came up with the following:
Top performing shows on the big four networks can net as much as $.50 per household in advertizing revenue. At 11M viewers, a 1 hour episode could gross $5.5M

Lets assume TV renting becomes very popular and 4M of these viewers stop watching this show via broadcast TV and start following the rental model. Since the broadcast lost viewers, they can no longer charge the same rates that allowed $.50 per household. Now they can only charge $.25 per viewer (a single show with a large number of viewers is significantly more valuable then two shows with ½ the rating since there is no viewer overlap).
Broadcast TV to 7M viewers grosses $1.75M
Rental to 4M viewers grosses $2.8M
Total $4.55M

The numbers show realistic scenarios where successfully renting at $.99 could result in a significant drop in total revenue due to devaluing the broadcast advertising rates. I can understand their hesitance.

 

[ctdonath]

A lot of content is already available on the Network's website so why would you want to pay >$0.99 in the first place?

Apple's specialty: refined simplicity.
People pay good money for it over "cheaper but a little harder".

Most viewers won't, even if capable which most aren't, plug a computer into a TV (or watch on a computer) and go click around a website finding the desired material. For many, esp. with disposable income and no inclination to be productive therewith, it's a lot easier to just plug in an ATV, pick a show off a menu, hit "Play", and let the credit card pick up the tab.

Ya know, Apple is appealing to a whole new market here. All their other products were computer centered, with iTunes being a proxy/tether for the "not so much" gizmos. Even the iPhone really wants to talk with iTunes on occasion. The new TV may be the first foray away from Apple's computer-centric model: with no more than a WiFi connection (router plugged into cable/DSL line) the user need not be part of the Apple ecosystem per se.

 

[runeasgar]

Apple to television networks: We want to help you distribute your content in tried and true digital way!

Television networks to Apple: No thanks, we don't like change, and I have jet planes to buy and overpriced entrees to order.

 

[redkamel]

Thing is, bulk of viewers want their preferred shows dictated to them - which requires a network TV channel.

Remember (and all Internet TV hopefuls miss this): the TV model is "turn on, pick one of a dozen channels, watch whatever is showing." Whoever makes an Internet TV device that dead simple (or at least IQ 60 simple) with sufficiently engaging shared-experience material will win.
Apple TV still misses that winning paradigm. It will for $0.99 get you what you request, but most viewers don't want to request, they want to sit back and be given with zero effort.

True, but don't you think more and more people are moving to "turn on, pick one of a dozen shows, and watch"? the "whatever is on" model fails when people have non-9-5 schedules, access to personal displays at all times, or just dislike what passes for 90% of TV these days. But what do I know, I havent had cable for the last 9 years and haven't missed a thing nor any show I wanted to watch.

 

[azentropy]

Apple should allow content providers to charge what they want, like the do in the App Store. The market will sort out the pricing.

 

[macfan881]

Oh and Jeff Zucker dont let the door hit you on the A$$ on the way out http://money.cnn.com/2010/09/24/news/companies/zucker_leaving_NBC/index.htm?hpt=T2:D

 

[BJMRamage]

My thoughts on this....if that matters to anyone.

I have purchased one episode of TV on iTunes. I missed an episode of The Office and watched it there. Now, if I had instead rented the episode for 99¢ and then afterward, regretted just renting I could spend even more $$$ and purchase the show, effectively paying twice for it on iTunes....actually three times in a sense as I pay for Cable too and just missed it.

I guess I am thankful for DVR. Now, I did miss a show recently that I forgot to DVR...It wasn't on Hulu or CBS or other places (where you can watch for FREE) so, I decided to search around for some oddball site that offered it free.

Strikes me odd that I can watch most shows on hulu or the owning station's site for free (minus the ads i see)??

 

[stuff4me]

99 cents is still TOO much. That comes out to about $20 or so per season of a US TV show to watch once. At that price, if you watch more than 1 or 2 TV shows you're better off paying for cable.

I pay 60$ a month for cable and only watch about 6 shows....so that is about 120$ for the year (based on a season costing 20$). Cable for the year is 720$ the Apple TV method of renting seasons is much better for me, then paying for cable or dish.

 

[JAT]

The networks need to quit looking at online as a replacement for cable/satellite and look at online as another business opportunity that may replace more traditional models at some point.

At this point, it shouldn't matter if you're only receiving 15 cents for a online viewer per episode and 50 cents for a traditional viewer. You're receiving nothing from your customers that are downloading shows on Bit Torrent, Newsgroups or P2P networks. That's your actual competition.

They all offer these shows for free on their own websites, I'd call that the actual competition. I can't believe they are making huge money off the advertisments there, but they must feel they would lose out letting someone else provide downloads. I would really love to hear the thought process that leads to this decision, it just doesn't seem to make sense.

 

[jlblodgett]

Apple should allow content providers to charge what they want, like the do in the App Store. The market will sort out the pricing.

Winner winner chicken dinner.

My thoughts exactly.

 

[transmaster]

I'm going to guess a scenario.
Maybe Apple does this intentionally. Google TV is going to be able to run apps. What if the actual content creators start taking advantage of that, making their own apps, bypassing the networks/middlemen altogether. The networks might see that as a larger threat, and then sign up with Apple to hold whatever control they still have. Once Apple gets everybody, then Apple flips on the apps switch on Apple TV, leaving the networks scrambling. Apple will become THE "network" for iptv.

You have an excellent point this is what has happened with musical acts, they have learned to directly market their works on iTunes. When you compare what a musical groups gets financially as the personal chatle of a recording label 70 cents on the dollar is fantastic, and they keep all of the rights to their musical efforts. Production companies can do the same thing. Instead of going through layer after layer of entertainment distribution companies and at each stage having to kowtow to a bunch of egotistical pre-madonnas who think they are God's gift to the entertainment world they can bring their shows to the consumer through something like iTV. This could be revolutionary. This can not happen to soon for me.

 

[tarkeybear]

Does anyone know what a viewer is worth in ad revenue?

I am curious if there is an industry average of how much money a show yields the Network in the form of ad revenue?

For on-air shows, the show is "free" to consumers via subsidies provided by the ad revenue.
If a viewer elects to watch a show by renting it, they certainly will pay a lot out of pocket for the shows they like (a la carte pricing) but are they still paying as much as what the Network can get from the advertising model?

If eyes move from the advertising to the rental model, can Networks still command the prices they currently ask for in advertising dollars?
Does this movement end up being a negative for the Networks?

I would use the rental model to try out a show (a couple episodes) or watch a previously aired episode I missed that is getting a lot of buzz at the office just to see what the excitement is all about.

For shows that I know I might want to revisit, I would buy season passes (i.e. Lost,pushing up daisies, Seinfeld, etc).

If anyone knows of a nice analysis of the network ad subsidy economic model, please post.

cheers,
TBear

 

[alent1234]

So these same companies will put content on places like Hulu, or other free streaming sites with ads, but won't put it up were they are getting direct financial compensation?

In other words they are saying..." our shows are not popular enough to generate enough rental revenue" .

Possibly not, but I have a feeling that networks like this are slowly going under. Honestly, there is enough good content on YouTube (or similar) by "amateur hour" folks, that I haven't felt the need to renew my cable subscription for almost decade.

there are some shows that make more money via advertising on Hulu than on TV

and Hulu is owned by the networks so it's not like they are giving up control

 

[phillipduran]

So these same companies will put content on places like Hulu, or other free streaming sites with ads, but won't put it up were they are getting direct financial compensation?

.

And dont forget they broadcast it straight into our homes nightly for FREE!

 

[md63]

One problem with the apple model is that all shows cost the same. Advertisers pay different amounts based on ratings but on the apple store revenue is the same regardless of rating. I bet the networks are looking at their most popular shows and figuring that they need a higher price. The marginal and les popular programs are probably not the problem.

 

[alent1234]

I am curious if there is an industry average of how much money a show yields the Network in the form of ad revenue?

For on-air shows, the show is "free" to consumers via subsidies provided by the ad revenue.
If a viewer elects to watch a show by renting it, they certainly will pay a lot out of pocket for the shows they like (a la carte pricing) but are they still paying as much as what the Network can get from the advertising model?

If eyes move from the advertising to the rental model, can Networks still command the prices they currently ask for in advertising dollars?
Does this movement end up being a negative for the Networks?

I would use the rental model to try out a show (a couple episodes) or watch a previously aired episode I missed that is getting a lot of buzz at the office just to see what the excitement is all about.

For shows that I know I might want to revisit, I would buy season passes (i.e. Lost,pushing up daisies, Seinfeld, etc).

If anyone knows of a nice analysis of the network ad subsidy economic model, please post.

cheers,
TBear

in the last few seasons of Friends i heard the cast was being paid something like $20 million per episode. figure another $10 million in production costs per episode.

that's $30 million just to lose money because you could have put it in T-bills and come out ahead.

i've also read the big shows like Friends lose money or break even on the first run and make money on syndication. my wife is always watching old episodes of seinfeld, friends and other shows.

renting via iTunes would be too expensive compared to paying for cable for us. and the networks putting these shows on itunes would kill the syndication market and wipe out profit. and you have to be crazy to pay $.99 per episode when cable is $75 a month for unlimited viewing and $130 a month if you include home phone, internet and DVR

HBO costs $15 a month because shows like Rome cost $175 million to produce

the appleTV has a place but it seems to be to keep Boxee, Roku and GoogleTV at bay. it's not going to replace cable except for a small niche

 

[Mister Snitch]

"We value our content a lot," he said. "We don't think Apple has it quite right yet."

Just keep waiting like you have been. Wait until you are finally extinct.

Quite right. Give Fox credit - they know Apple wants this to work, and they have entered an arena with only ONE competitor (Disney)! By contrast, I have about 600 channels on my cable TV, which means Fox competes in that space with nearly 600 other options.

As others have said in this forum, all these execs are thinking about is retaining their power. Murdoch, with his long history of innovation and gutsy decisions, is the rare exception.

 

[skeep5]

Seriously, I feel bad for the people who waste their life watching television.
Television, stunting human momentum since 1938.

Grandpa used to call it "the idiot box". he was right.

 

[alent1234]

Quite right. Give Fox credit - they know Apple wants this to work, and they have entered an arena with only ONE competitor (Disney)! By contrast, I have about 600 channels on my cable TV, which means Fox competes in that space with nearly 600 other options.

As others have said in this forum, all these execs are thinking about is retaining their power. Murdoch, with his long history of innovation and gutsy decisions, is the rare exception.

fox competes in the same demographic that apple does. young single people or younger married couples. the shows on Fox suck so it's not like they are going to lose anything

 

[akw]

What Apple needs to do to make Apple TV and rentals a success is to make networks join up. They should do this by saying to any network that doesn't agree is that if you don't sell rentals you're off the store and tell fox if they like the iPad then to put all their shows up. That's the only way rentals will successful otherwise get NC up and running then stream purchased shows over.

The way to get networks to join up is to open the platform to other codecs. Make it easy for people to pirate content -- no reencoding of bittorrented shows necessary. Once the networks lose control of the content, they'll be begging for a way to get legitmate for-sale content into consumers' hands.

The iPod would have flopped if you had to buy all your music from iTunes. Instead, people put all their pirated and ripped music on their iPods. The Apple TV is worthless without content. And the content is controlled by the media companies. Time to wrest control of that content away.