
What happens if TV goes the way of music and newspapers? - Jaigus
http://www.theatlantic.com/business/archive/2012/10/what-happens-if-tv-goes-the-way-of-music-and-newspapers/263895/
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richardjordan
This is quite simply nonsense.

Will the cost of channels rise for some of the reasons he says, sure. But one
of three things will happen:

a) total spend/investment (in aggregate of time and surplus attention
arbitraged to ads) across ALL channels will rise - this will hit us all in the
pockets, but also raise the overall budget for content production... this
doesn't lead to his conclusions.

b) total spend and therefore the same amount will be available as is available
now for content

c) total spend will go down. This might superficially appear to support his
conclusions but it doesn't if you think about it. If ESPN rises but other
things fall in price and I lose a few things I virtually never watch, and my
overall bill is lower - which it will be on average if the total spend is down
- then I don't CARE that ESPN is $20 per month instead of $5.

What will happen is called a market!

We'll have a marketplace for content. There will be a certain amount that
people are prepared to spend on content, and how much surplus attention
they're prepared to pay for ads which will subsidize content. The allocation
of these resources will be made more efficient by a more efficient market
dynamic. We'll invest more in things we value, less in things we don't. So the
BBC and NFL Network will make money out of me for Dr. Who and the football
season. But I'll no longer be squandering monthly bills in shit I never watch.

Plus as content moves to apps on TV the playing field is leveled for
independent producers to rise up and the barriers to entry will be much lower
than they are today for a show to garner - or KEEP - an audience and revenue
stream large enough to sustain it.

Imagine if Firefly had been able to say: Fox has bailed on us, but if we can
get a million of you to pay just $20 a year we can keep it on the air and send
you a copy of the season on DVD after it's over... or something to that
effect.

This article is garbage. It's amazing how much ink old media dedicates - even
on their new media sites - to trying to argue against the inevitable changes
ahead. Perversely it also highlights why old media doesn't have some natural
right to survive and have us all protect it against this onslaught. Their
content is often mediocre, like this. (And yes I know the Atlantic has a ton
of great content, that's not the point.)

~~~
jtoeman
while i agree the article is fairly off the mark, i also do not agree with
your assumption that a traditional market will emerge.

producing the _pilot_ of Game of Thrones cost $10M, before they knew it would
be a hit. you can't make those gambles in an efficient market - ever. in the
efficient market scenario, we'll end up with a lot more reality TV and
mediocre sitcoms/drama.

the reality check is - the current system ain't so bad, and while I want
"independent content" as much as you, I think we have a lot more of it in the
current system than you outline... Workaholics? Portlandia? etc.

~~~
edanm
"producing the pilot of Game of Thrones cost $10M, before they knew it would
be a hit. you can't make those gambles in an efficient market - ever"

Why is that? Isn't it just like any other kind of investment that regularly
gets made in an efficient market?

~~~
richardjordan
Right. Plenty of market mechanisms exist for gauging risk, investing on it,
and being rewarded for it. People invest in most things without being a bit.
We're on a forum hosted by an institution whose very raison d'etre is
investing in things before they know they'll be a hit.

~~~
jtoeman
but neither of you are taking the existing industry into account. you just
want them to lay over and die and do it your way. they make FIVE HUNDRED
BILLION dollars a year, and you guys think they should just change because you
want them to.

market testing in TV and movies is exactly what produces mediocre crap.

if you'd like to spend some more time getting up to speed on how the industry
works before deciding it sucks, i'm happy to oblige.

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rdtsc
We mostly use Netflix and Youtube for things we watch. I don't remember last
time I wanted to see something (a show, a move) and then followed through and
watched something on TV. Of course I don't look for it and I don't know what
is playing. And I don't know what is playing because I don't watch TV to begin
with.

Also, Netflix has trained me to not be able to stand commercials. When I am at
a relative's house or catch a glimpse of TV in the background, commercials
stand out like a sore thumb and irritate the heck out of me.

~~~
goostavos
I completely agree about the commercials. I watched all of the available
seasons of breaking bad on netflix. When the new season started, I was super
excited, and didn't want to wait the 24 it takes to show up online. So, I
watched the first episode of the season at my girlfriends house on her TV,
and... It was awful! I couldn't get past the interruptions -- and by the way,
I thought they passed a law that required commercials to not be 105db louder
than the tv shows, no? I digress..

It's an absolutely terrible way to watch a dramatic series. I could only
stomach that first episode. For all the rest, I just waited till they popped
up on amazon and paid the $2 so I could watch them without interruptions.

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prostoalex
If only there existed some channels not subsidized by cable industry to give
us a clearer picture of what's possible. If only those channels existed as
for-profit enterprises in the US. If only they charged subscribers and covered
the costs of productions through paid television and merchandise sales. If
only their costs also included the cost of HD streaming, maybe they would name
such venture with channel name + the word "Go" to drive a point that it's
available to subscribers on the go.

But alas, outside of HBO, Starz, Cinemax, Showtime and The Movie Channel none
come to mind, so let's engage in theoretical discussions.

~~~
mayneack
What about TYT [1] ? It's not exactly what you're describing, but it's close.
They have a live Free broadcast every day, then put clips on YouTube and offer
no-drm downloads of the video or just audio for a monthly subscription fee.
They've been doing this for many years and I have recently been big enough to
get a tv show too.

1 <http://en.wikipedia.org/wiki/The_Young_Turks>

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EricDeb
Is it possible ESPN will just make less money? The article assumes ESPN will
charge an individual subscription rate such that it will make the same revenue
as it would via cable bundles. If TV is like music or newspapers, it's
entirely possible ESPN or similar cable channels will just make less money.

~~~
prostoalex
You're spot on. What are ESPN's expenses? It's the royalties it shells out for
the rights to broadcast specific events and leagues. They will have a better
leverage now against NFLs and NBAs of the world, who would have to accept
lower rates, passing the savings onto consumers.

~~~
philwelch
For the NFL and NBA, ultimately the lower revenues will be passed on to the
players in terms of lower salaries, and aside from potential labor disputes,
things will continue largely as before. That's because the NFL and NBA are
essentially cartels anyway. But soccer will take the hit even harder. Clubs
like Manchester United, Real Madrid, and Barcelona depend upon TV revenues to
fund themselves, while clubs like PSG and Manchester City have received
massive investment with the hope that it'll be recouped in the long run.
Without TV revenues, and without anything to replace them, we're likely to see
a major impact, and more than a few clubs facing severe financial problems if
not outright bankruptcy.

~~~
icebraining
But TV revenues wouldn't disappear, just drop. Those clubs just have to cut on
the massively inflated salaries. I expect smaller clubs to be hit much harder.

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codeka
"If the universe changes and they [viewers] want us to bring the content
directly to them, then we can."

What does he mean _if_ the universe changes?

I'm also not entirely sure that people would continue subscribing to "ESPN" in
this new world. More likely, you'd subscribe to individual sports or sporting
events. Similarly, I don't think you'd be subscribing to "CBS", you'd be
subscribing The Big Bang Theory, or whatever individual show you're actually
interested in.

To be honest, though, I don't think he really means what he says there.
They're going to fight tooth and nail to keep the status quo.

~~~
robryan
I think they mean that the majority of their current audience wouldn't pay for
the content in a per channel or per show way. Basically the same stuff that
comes up with Game of Thrones, for HBO the traditional model is still bringing
in more money than would be made adding the per show subscription model.

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pixie_
I'd say, "don't let the door hit you on the way out."

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elpool2
"And that's before we get into paying the cost of delivering the video in high
quality to your HDTV or iPad, since it's hardly cheap to house and stream hi-
def to tens of millions of homes".

Except it IS cheap to distribute content on the Internet. Shows are already
being distributed to millions of homes without costing the content owners a
dime (It's just currently being done illegally using bit-torrent).

~~~
InclinedPlane
1080p, 10hr limit per video, youtube.

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dm8
His blog shows an image of shot from The Big Bang Theory. TBBT has done
excellent job for on-demand content. The minute their weekly show ends, they
post that video on their website (<http://www.cbs.com/shows/big_bang_theory/>)
for week. I haven't watched a single episode on TV since they started doing
this. It's currently free and supported by pre-roll video advertising. I don't
mind ads as I'm getting content on-demand and free.

I don't buy that TV is going to be dead. I'd love to watch TV along with my
family in our living room. However, I also want flexibility that on-demand
offers. I'm sure TBBT is getting lot of money with this experiment.

The question about Netflix is complicated one and I hope author goes into unit
economics in his future column. I also agree, at the current rates (for
netflix subscription), it will be hard for Netflix to show latest on-demand
content. I imagine we will have premium fees for such feature.

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skennedy
Sites like Hulu and Netflix generate money from content that has already been
created. The budget was found to create the initial content and publishing
sites like these create residual income from targeted advertising. Great.

The content providers know the direction things are heading and probably know
$20-30 a month for one channel from each subscriber is a tough pitch. So
what's the ingenious model to offset the loss of big money cable television
advertisements?

~~~
pyre
Why does it have to be a channel? For example, why can't I pay $30 for the
next season of Game of Thrones, and get episodes as they come out? Sure, it's
different from a monthly subscription, because I'm paying for 10 ~ 12 weeks of
content (1 ep/week), but it seems like there's a model there somewhere.

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rabidsnail
Cheaper does not mean lower quality. [Insert snide comment about 24 or Downton
Abbey here]

~~~
maxmcd
Maybe not I'm every instance, but I think it's easy to assume that lower
overall budgets lead to lower overall quality.

~~~
InclinedPlane
Production quality and artistic quality are not the same things.

Crouching Tiger, Hidden Dragon was a low budget film, for example. It's budget
was about 9% of the budget of Waterworld.

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aufreak3

       "So now, ESPN Watcher, the price you have to pay 
       to watch the same network you love has to cover 
       all those lost homes and all that lost advertising."
    

That's assuming no alternative revenue streams in the "TV is dead" world are
worked out. Failure of imagination?

~~~
briffle
Exactly.. Ads could be much more tailored or personalized to the individual.
When your blasting out the same commercial to 60 million homes, you have to be
bland, and generic, and figure a large percentage won't be watching, or not in
your target demographic.. If you can only show your commercial to people you
are actively trying to target, you would pay much more per impression for that
ability.

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mistercow
This analysis completely ignores the fact that producing a TV show is (or
should be) far, far cheaper than it used to be.

~~~
seanalltogether
Once the monopoly over distribution is broken, I suspect the unions down the
chain will be broken as well leading to lower overall cost. Marketing is
usually a different story however.

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jtoeman
file under: yet another piece about "the future of TV" as written by someone
from the outside looking in. it's quite a different world from the other
side...

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InclinedPlane
It's when not if.

This is the same old romantization of the status quo that always occurs. Is TV
really so fantastic today? For every gem that manages to squeek its way
through the byzantine television production system there are a thousand bombs.
Most television is horrific. Badly written. Badly premised. Badly executed.
Badly acted. Bad.

Being cut loose from a ready stream of massive advertising revenue will affect
some of the production values of video content, certainly, but will that be
such a bad thing? Modern television is a product of committee and bureaucracy.
And it shows. Bowdlerization is commonplace. Mediocrity is the norm.

A more democritized, more guerilla, more individual "television" landscape
offers the possibility of raising the medium to a true art form.

Movies have been around for over a century, television for half that, but both
mediums still have trouble grappling with serious subjects. Consider the
fundamental difference in gravitas between an emmy, an oscar, and a pulitzer
or nobel prize in literature. Why is that? I would contend that it's because
up until now creating a movie or a tv show has been inhibited by being
beholden to commercial interests and established publishing powers. Perhaps
the brave new world of more individualized video production will result in a
revitalization of that medium.

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rorrr
This article makes no sense.

I predict

1) TV will merge into the internet

2) Channels will go away, and there will be individual shows/event broadcasts
that the viewers will choose to pay for.

3) There will be bundled packages of the best shows.

4) Most profits will go to the people who produce the shows, unlike now.

You can actually see it in action right now - look at the top Youtube channels
(which should really be called "shows"), and multiply by $2 per 1000 video
views.

<http://socialblade.com/youtube/top/500>

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IheartApplesDix
The same content will be pretty much available on the web in some places. Take
a look at the daily show.com, It's almost a carbon copy of the broadcast
version complete with five minutes of commercials between sections. Networks
will take advantage of the web audience when it's financially feasible. Comedy
Central has a young audience so it makes sense for them to embrace the web
earlier.

