3 ms·

Actually your model doesn't really match the economics. First I'm taking Netflix/Movies off the table for my response, totally different business model. Most p

Actually your model doesn't really match the economics. First I'm taking Netflix/Movies off the table for my response, totally different business model. Most people don't understand how networks make money. The networks make money by one of 2 methods. 1. Ads. 2. Carriage Fees. Carriage fees are a portion of your cable bill that goes to the networks. These fees are MASSIVE. ESPN makes $3-$4 per subscriber (all subscribers - not just ones who watch ESPN) They make a billion dollars a year this way. Most networks make under a buck but still multiply $.50 (what Food Network gets on Cablevision - as an example [1] ) * 80,000,000 (estimated cable households in the US * 12 (months). And you end up with $480,000,000 So can you deliver content via the internet in a better way then over cable - maybe. But you also need to replace the revenues they're paying to the networks and nobody has figured that out. The cable companies and networks are tied together so tightly in this model that an OTT model doesn't make sense. There's no way that $10 (per viewer) a month split between each of the shows comes anywhere near what the big networks are making in carriage fees. The bigger Hulu gets the more dangerous it gets to existing models and the less likely that it will get top tier shows. As the producer of Modern Family said "Some estimate Hulu IPO could bring in $2Bil. What will the content providers get? Zero. What is Hulu without content? An empty jukebox." If you're only watching 2.5 hours of TV regularly then you should cut the cord. But most people are watching that much a day [2]. Thats 17 hours a week (or close to 1.5 seasons of a one hour show a week). Even if seasons were $12 you end up paying over $60 a month. (and you need to know what you're watching). [1] http://www.businessinsider.com/scripps-wins-in-fight-against-cablevision-2010-2 http://www.businessinsider.com/scripps-wins-in-fight-against... [2] http://www.bls.gov/news.release/atus.nr0.htm http://www.bls.gov/news.release/atus.nr0.htm

timmaah 16y ago
Is it really that bad if a few terrible cable channels die off?
- wmf 16y ago
  What if your favorite channels are considered "terrible" (or perhaps just boring) by the masses? Be careful what you wish for.
  - rtyuioiujhygf 16y ago
    If it didn't support enough content for 24x7 but could concentrate on 2-3 good shows and sell them direct at 99c/episode?
sprout 16y ago
I think it's fairly uncontroversial, especially in this forum, to say that I'm sick and tired of subsidizing a race to the bottom. Food network has increasingly stopped showing cooking shows, and I'm ready to vote with my wallet. The same goes for most of the other subject networks. If they lose that money, I'll be quite content, because they deserve to lose it.
illumin8 16y ago
That's right, Hulu is a network, not a TV producer (well, technically they do produce at least one show that I know of). Modern Family's producers get paid every time Hulu airs a show. All they have to do to make money is price it appropriately. Let's do some napkin math, shall we? Let's say Modern Family has 20 million regular viewers. Let's say it costs them $5 million to make one episode in production costs, actor salaries, etc. They can charge Hulu or Apple $0.50 to show an episode to a viewer, and then Hulu can either choose to sell 4 30 second ad slots for $0.25 each, or Apple can choose to charge $0.99 per episode. The producers made $10 million revenue for 50% profit, Hulu/Apple also made $20 million revenue for 50% profit, everybody wins. The problem is that the cable companies and networks are used to being able to double and triple dip at the well of consumer spending. Charging for content and ads is double dipping. Bundling channels I don't want with the few channels I do want is triple-dipping. Why should they be allowed to do that? There is plenty of profit to go around, but the cable companies might not like having their piece of the pie made smaller.

timmaah 16y ago

Is it really that bad if a few terrible cable channels die off?

wmf 16y ago
What if your favorite channels are considered "terrible" (or perhaps just boring) by the masses? Be careful what you wish for.
- rtyuioiujhygf 16y ago
  If it didn't support enough content for 24x7 but could concentrate on 2-3 good shows and sell them direct at 99c/episode?

sprout 16y ago

I think it's fairly uncontroversial, especially in this forum, to say that I'm sick and tired of subsidizing a race to the bottom. Food network has increasingly stopped showing cooking shows, and I'm ready to vote with my wallet. The same goes for most of the other subject networks. If they lose that money, I'll be quite content, because they deserve to lose it.

illumin8 16y ago

That's right, Hulu is a network, not a TV producer (well, technically they do produce at least one show that I know of). Modern Family's producers get paid every time Hulu airs a show. All they have to do to make money is price it appropriately. Let's do some napkin math, shall we? Let's say Modern Family has 20 million regular viewers. Let's say it costs them $5 million to make one episode in production costs, actor salaries, etc. They can charge Hulu or Apple $0.50 to show an episode to a viewer, and then Hulu can either choose to sell 4 30 second ad slots for $0.25 each, or Apple can choose to charge $0.99 per episode. The producers made $10 million revenue for 50% profit, Hulu/Apple also made $20 million revenue for 50% profit, everybody wins. The problem is that the cable companies and networks are used to being able to double and triple dip at the well of consumer spending. Charging for content and ads is double dipping. Bundling channels I don't want with the few channels I do want is triple-dipping. Why should they be allowed to do that? There is plenty of profit to go around, but the cable companies might not like having their piece of the pie made smaller.