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Thomas Hawk
Shelly, video on demand any time any place including opening up the archive of all television past and integrating powerful search tools is the utopian dream. Unfortunately at present there is still too much money to be made from advertising and DVD sales to begin to ever seriously consider an on demand model that would actually succeed. The networks would lose far too much money. These new download services won't succeed because they are still too expensive, too limited and not compelling enough. And as long there is still an element of the population large enough to continue to absorb television in the traditional way the networks will not risk cannabilizing this revenue flow. Meanwhile, the rest of us will utilize PVR and Bittorrent technology to get around their agenda and enjoy a better custom one channel experience. http://thomashawk.com/2005/11/television-executives-stilll-dont-get.html
Don DiPietro
Thomas, I think you are right about the resistance but the bottleneck is higher up the supply chain. The big conflict facing the marketplace in the next few years will come as the studios realize they no longer have to let the advertizing model set the level at which their content flips from high demand to low demand -- a very critical pivot point. Let me explain... There are only two ways to make money with content. 1) sell the content directly or 2) give away the content and sell the eyeballs it attracts to advertisers. One is a direct sale model (tickets, PPV, subscriptions). The other is a "multi-sided" model (ad-supported). In the former, the consumers are the buyers and market demand sets the price. In the latter, the advertisers are the buyer and they set their price based upon the RISK of not selling enough product to offset the advertising cost. This is a significant difference. As you probably know, the studios now spend about one dollar in marketing for every dollar they spend creating a feature film. They realize that whatever demand they create up front will influence revenue as the film cascades down its release windows. Since the earliest days of television, once a title passed below the point where its demand wouldn't cover what it cost to reach a customer, the content flipped to a "low-demand" status. This simply meant whoever could deliver any revenue (and underwrite the cost associated with reaching an audience) was worth talking with. It was "found money" and for the most part the buyer set the terms. Of course, this also meant the per-unit revenue was at least an order of mangitude lower than it might have been on a direct sales model, but the cost of retail distribution were too high. Beakthroughs in consumer electronics kept lowering that cost-of-delivery -- VHS, addressable cable, DVD -- and the studios profited every time. And each new platform meant the pivot point at which demand would drive direct retail sales raised a bit higher. As a result, the pressure to accept "low-ball" licensing fees from mass advertisers were reduced, or at least pushed back. Keep in mind, the studios have Tens of Thousands of titles. If they can stave off the systematic deflation of that huge asset -- and even re-inflate the value across the inventory -- that is a powerful incentive. What's stopping them now?: 1) DRM -- sure, but that's not the biggest problem 2) Category Restrictions -- a MUCH BIGGER PROBLEM -- output deals in place with existing distribution channels. These guys will not go gently into that good night. 3) Back end rights -- the unions and other participants with a salad-bar of contractual and other obligations. They'll eventually work this out but no studio wants to be the first on that beach -- especially if its a beach where there aren't a whole lot of coconuts to harvest. There IS a solution to all this, and it's sitting right under everyone's nose...
Don DiPietro
(Shelly, I'm sorry this looks so...dense. I wish this thing accepted paragraph breaks!)

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