HiDef-Defying Cable

The inimitable B-don is displeased. It vexes him to have a TV mos’ def and yet be forced, by nature of his location, to cope with some standard-definition programming. Why, he wonders, does the cable company provide duplicate (standard def) network feeds from two different cities, yet still fail to offer even one HD signal from either of those same stations? Why isn’t there a satellite network that provides all the broadcast nets?

Worse, he continues, why is it necessary to deal with “tiers” (such as Basic, Expanded Basic, Digital, HDTV) each of which require additional fees? When will it be possible to access just the programs he watches? I’ve often wondered the same thing (and not just for PitS shows.)

I also wonder: how much will these shows cost? How much should they cost? A recent study (quoted here) estimates that $1/episode is the magic number, and, indeed, you’ll find DVDs that charge you more: based on list price, an epsiode of “Buffy” is about $2.75, while “Friends” weighs in at $1.40.

Of course, that’s to own the shows. How many things that you watch would you want to own? For me, the answer is “all”, because I watch a total of perhaps 3 shows, which would set me back a whopping $12/mo. at the $1/ep rate. But most people watch a lot more TV than I do.

In fact, any household that watches more than two shows a day (on average) would have to pay more than $60/mo, so that gets expensive fast. Could they go cheaper?

Let’s do some back-of-the-envelope math. According to Nielsen Media Research, the highest-rated non-live show for 14-20 Mar 2005 was “Cold Case”. The CBS show came in at #3, with a 17.0 share of HUT for total of just over 12 million households.

“Cold Case” is an hour-long show, which means it has roughly 18 minutes of commercials. Now, keep in mind that some of that time will be used for network promos, some given over to affiliates, etc. But we’ll ignore that in our calculations, and assume it’s all sold at the highest rate. So if these figures, which purport to be lifted from Advertising Age, are correct, CBS charges about $153k per 30 sec. spot on this show. That means the most recent episode of “Cold Case” could have brought CBS as much as:
18 minutes * 2 spots/minute * $153,305 = $5,518,980

So the highest possible figure for that episode would be $5.5m. Not bad for an hour, eh? Let’s further suppose that B’s household contained at least one “Cold Case” fan. If they wanted to download an episode, and pay CBS what they would have earned, how much would that be? I’d say:
$5,518,980 per episode / 12,041,000 households = 46¢ per household

Well! Not bad at all, there. Of course, there’s no easy way to charge so small an amount, and without multicasting or a similar solution, the bandwidth costs would be extortionate. (I can hear Pech now: BitTorrent! BitTorrent!) But if we could solve those problems, we could all pay CBS our 50¢/show and go on our merry commercial-free way.

Except: why does CBS deserve a cut? CBS and the other networks are merely methods of delivery. It’s the production companies that make what we want to see: Sony brought us “Seinfeld”, Warner Bros. Television creates “ER” and “The West Wing”, and so on. The nets have been buying into these production companies as a way to control their costs, but according to my searches still only tend to pay in the $2-3 million/episode range (except for extremely expensive shows like “ER”).

At $3m, the production company needs just 25¢ a household to cover its nut, which even B-don would probably pay. And hey, if he didn’t, there’s always another solution: advertising companies that pay us to watch the ads…

For Further Discussion

  • How fast a “pipe” would we need for HD downloads not to suck?
  • If internet delivered TV, what would CableCos charge for broadband?
  • If every TV show (ever) was available on demand, what would happen to ratings?
  • How would we find good, new stuff?
  • What would happen to the “water-cooler” effect if everyone’s watching TV-on-demand?

3 Responses to “HiDef-Defying Cable”

  1. john M Says:

    my god, when and how can we put you in charge? seriously, you have some great ideas floatin’ round these here parts…

  2. jsp Says:

    Hey, thanks! I’ve got a few more up my sleeve you might like, so stay tuned…

  3. Dennis Says:

    Reverse order:

    Water Cooler – Same as always. The popular shows would still be the popular shows, just not network-centric. The weirdo smurfoids who spend many waking hours scrounging for some drippy foreign peice of psuedointellectual psuedocomedy will still spend many waking hours scanning directories for the least popular programs, and will continue to be ridiculed at the water cooler. “Weirdo smurfoids like me,” I should have written. Although the popular shows would be available on demand, my guess is that the majority of the hits would still occur the evening that the program is first available. Those who missed the episode would fake it until the following night, when they’d play catch up. Not that different than what occurs now, with cable subsidiaries playing the big Net shows in repeat a few nights later (24 on Fox, then F/X…The Contender on NBC then CNBC.)

    Good new stuff: the same – Googling and Marketing and GoogleMarketing.

    Ratings would convert to hits. AC Nielsen would adapt or dump its tv measuring monopoloy (they are way bigger than that service, anyhow, and are already in competition with alternative measurement cos.) It would actually be more accurate, because it would measure actual viewers and stickiness. The Rating would switch to a 12.4 (million viewers)/ 36 (million looks, incl. repeat viewings) That would be a collossal success.

    It could also get better demographic margins, so spanish programs for spanish speaking Americans, for example, could better target their audience.

    Of course, a technical notion of privacy is already out the door here, but who cares. As long as I get to see Monday Night Football and select Dennis Miller commentary, take my social security number and my first born, because I’m in, Chachi.

    Before cable cos change their price structure, the entire pricing of programming (which you began to illustrate) would have to change. Cable’s got too much infrastructure in the ground and too limited of services (right now, mostly tv and internet…but they are getting into the telephone business now) to begin to be very price elastic, even if Internet offers tv. Technically, a bunch of stuff still has to happen before that’s even a reality. Early adopters are online right now, experimenting with direct purchase online video, but we’re still a decade from the Internet being a viable television competitor.

    1) A tv set costs $50. Granted, it is tiny and crappy, but its in color and it gets Desperate Housewives without requiring anything but a basic knowledge of electrical outlets.

    2) A computer “receiver” is relatively complex to a television, and far more expensive, especially for it to produce the video quality equivalent to the most basic television picture.

    3) Even if an internet receiver were adopted to display television only, and behave like a television, it would be one of those devices like the old email receivers that Best Buy used to sell – kind of like something better, more expensive than something worse…resulting in a ferociously unpopular, although ingenius product.

    These two facts alone point to the fact that cable companies may react to Internet TV, but they won’t drop prices. Nor will they have to. At least not for a while.

    Finally, how fast a pipe? 8 megabits should be plenty. Issues on an 8 meg pipe are from something other than the pipe.

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