My opinion here is simple. The 'machinery' in place right now that produces television content is dying. For anything to survive, the distance between content creators and content consumers needs to be reduced. Reducing this distance cuts a lot of middlemen out of the game, which scares a lot of those people, but means the process can be run with less revenue. Middlemen will still exist, but they will need a different skill set, a more technological one.
The current system derives the bulk of its revenue from advertising, then subscription fees from distribution agents like Comcast, and finally direct sales like DVDs. The problem is that the commercials and physical media are not as appealing to the audience anymore. This is due to the rise of DVRs and direct downloads. DVRs have shown that consumers are willing to put up with an intermediate layer of technology and even an additional monthly fee to skip the ads. This is a blow to the perceived value of the advertising dollar. The web and the proliferation of illegal downloads has shown that the public expectation for easy access is rising while the perception of the value of the content is being erroded. Having 200 channels for $40 probably doesn't help either. Perceived value may not be what NBC takes to the bank, but it does affect their bottom line if people start downloading shows from bit torrent. Technology may be killing the ad-model but at least it is making production cheaper and easier with better cameras and editing software. Plus, the ad-model is over 40 years old in an industry that is less than 100 years old. What makes everybody they got it perfect right away?
So what can be done here to keep the audience interested enough to watch and keep the shows funded enough to be interesting? The first answer is simple, since it is a trick question. The audience is still interested in the shows, just not in the ads, the DRM, the HDCP, the complexity, or the price. Some of these issues are technological, some are perceptual. These are all easy fixes on paper, but tricky to implement. The second question is even easier to answer. The way to keep production budgets reasonable when revenues drop is to eliminate waste. This means anybody who is obfuscated by a direct sales model. Yes, revenues will drop, and yes, quality shows will still be made. Looking at the music world, even as their revenues dropped the quality of the music hasn't been diminished. Great artists still appear and great albums are still produced. It is short sighted to think that quality programming can't be made without today's inflated budgets.
And if you read between the lines of my river rapids analogy, Apple is not the good guy. They are standing by waiting for the boat to capsize! When that happens, the networks will be in no position to bargain and Apple will be able to name their price. And if you extend the analogy back, everybody in their right mind should be wearing a life vest when riding in a boat anyway (by which I mean, a good executive should embrace technology and position his company to best weather the coming upheaval).
Nobody has a perfect solution yet, not Apple, not Netflix, not the studios. In the meantime, I'll take what I can get, which for me is Cable + TiVo + Apple TV (old one) + Netflix + PS3 (blu-ray). I have to believe there are a better options yet to come.
The current system derives the bulk of its revenue from advertising, then subscription fees from distribution agents like Comcast, and finally direct sales like DVDs. The problem is that the commercials and physical media are not as appealing to the audience anymore. This is due to the rise of DVRs and direct downloads. DVRs have shown that consumers are willing to put up with an intermediate layer of technology and even an additional monthly fee to skip the ads. This is a blow to the perceived value of the advertising dollar. The web and the proliferation of illegal downloads has shown that the public expectation for easy access is rising while the perception of the value of the content is being erroded. Having 200 channels for $40 probably doesn't help either. Perceived value may not be what NBC takes to the bank, but it does affect their bottom line if people start downloading shows from bit torrent. Technology may be killing the ad-model but at least it is making production cheaper and easier with better cameras and editing software. Plus, the ad-model is over 40 years old in an industry that is less than 100 years old. What makes everybody they got it perfect right away?
So what can be done here to keep the audience interested enough to watch and keep the shows funded enough to be interesting? The first answer is simple, since it is a trick question. The audience is still interested in the shows, just not in the ads, the DRM, the HDCP, the complexity, or the price. Some of these issues are technological, some are perceptual. These are all easy fixes on paper, but tricky to implement. The second question is even easier to answer. The way to keep production budgets reasonable when revenues drop is to eliminate waste. This means anybody who is obfuscated by a direct sales model. Yes, revenues will drop, and yes, quality shows will still be made. Looking at the music world, even as their revenues dropped the quality of the music hasn't been diminished. Great artists still appear and great albums are still produced. It is short sighted to think that quality programming can't be made without today's inflated budgets.
And if you read between the lines of my river rapids analogy, Apple is not the good guy. They are standing by waiting for the boat to capsize! When that happens, the networks will be in no position to bargain and Apple will be able to name their price. And if you extend the analogy back, everybody in their right mind should be wearing a life vest when riding in a boat anyway (by which I mean, a good executive should embrace technology and position his company to best weather the coming upheaval).
Nobody has a perfect solution yet, not Apple, not Netflix, not the studios. In the meantime, I'll take what I can get, which for me is Cable + TiVo + Apple TV (old one) + Netflix + PS3 (blu-ray). I have to believe there are a better options yet to come.