4 ms·
Wrong. Cable companies pay for content, and recoup their money (+profit) through a combination of subscriptions and advertising. The cable gets ~$1200 + adverti
by qeorge 17y ago
Wrong. Cable companies pay for content, and recoup their money (+profit) through a combination of subscriptions and advertising. The cable gets ~$1200 + advertising revenue per customer per year, and from this pool they can buy content from content producers like NBC, Viacom, etc.
Now consider that Google makes about $40/user/year off ads. Even if Hulu made as much money per user per year as Google, they'd still be making < 5% of what Time Warner Cable makes per user per year, selling arguably the same content.
So as cable TV subscribers are replaced by lower-value internet TV viewers we should expect the total amount of money available to buy content to decrease rapidly. Consequently, there will be less money available to produce said content.
So when Kagan says "Somebody has to pay. It’s not going to stay on Hulu forever for free" she's exactly correct.
Whether or not that matters is another discussion.
- chrisbolt 17y agoBut Time Warner Cable has much higher costs per user since they have to build the infrastructure to get to those users, whereas Hulu can take advantage of the fact that users pay for most of the infrastructure to get to Hulu (and they may even be paying Time Warner Cable).
- qeorge 17y agoIn 2008, TWC spent roughly $1 billion on video content and only $33 million on high-speed data (30x more spent on content). So the infrastructure cost per subscriber to TWC is negligible. Also worth noting, TWC made about $2.7 billion off cable TV subscriptions, compared to $145 million from advertising. So while its true that they do "double dip", its fair to say that monthly subscriptions are paying the content bills, not advertising. Source: TWC's 2008 SEC filing, available here: http://files.shareholder.com/downloads/TWC/629188992x0xS950144-09-3639/1377013/filing.pdf http://files.shareholder.com/downloads/TWC/629188992x0xS9501...