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by "content" I was mostly referring to how that content is packaged and delivered. Cable customers are paying huge premiums for channels they don't want but hav
by rco8786 9y ago
by "content" I was mostly referring to how that content is packaged and delivered. Cable customers are paying huge premiums for channels they don't want but have no other choice.
- xadhominemx 9y agoThat is by the design of the content providers
- ankushnarula 9y agoThis is mostly correct. For cable/satellite/OTT, most of the package (Viacom, Time Warner, NBCUniversal, etc) content providers bundle content and get a large lump sum up-front per annum from each distributor. However, premium a la carte content providers (HBO, Showtime, etc) receive a small lump sum plus a a bulk of the per subscription fee. For Netflix, Hulu, and Amazon Prime - content is bundled and paid for up-front per annum on a multi-year contract. For example, Paramount/MGM/Lionsgate/EPIX distributed solely through Netflix thru 2014 and then switched sole distribution to Amazon Prime. Hollywood traditionally likes cash up front because production and marketing costs are "bursty" rather than evenly distributed. And this is because the success to failure rate (risk) of entertainment products is too abysmal to easily obtain reasonable financing rates from lenders or reasonable terms from investors.