Skip to main content

Ah, figuring out how to charge for TV shows online

A couple of days ago, I shared (via Reader) this article by Duncan Riley over at TechCrunch. His basic premise was that Big TV (networks in the US) just weren't getting it. His basic arguments were that the increasing use of Bittorrent (and other alternatives) meant that the networks couldn't really justify products which
  • didn't offer broad choice (i.e. all the programs that they could make available)
  • restricted based on geography (i.e. certain shows are only available in the US)
  • had an expiry date (i.e. only TV shows broadcast in the last x weeks are available)
  • had bad content (because more options now exist on long-tail stuff)
I ended up thinking about the third of these practices the other day, and decided it wasn't really as bad Duncan made it out to be and may not be just about future DVD sales as he suggests. In fact, if you wanted to be charitable, its a creative attempt to figure out a business model in a changing environment.

Price-discriminating with respect to time is an established practice especially when it comes to media-related products.
Most common example: movies. The same "product": the movie is packaged in different ways (i.e. in theatres, on DVD, online and TV via syndication) and its made available gradually over time, for reducing average prices. The idea being: people who want to see it most will get to it.

I think what the media companies are trying to achieve with TV shows is similar...but in reverse. Here's what I think/understand they're trying to get to work:
  • they know a market exists for downloading (and "owning") TV shows (iTunes limited success with TV shoes seems to have proved that)
  • this audience has shown a willingness to pay for content they care about, but they want more than just being able to view it online.
  • On the other hand, the volume of Bittorrent traffic for illegal TV shows seems to suggest a much, much larger market exists for viewing popular network shows, with the highest demand being for shows that have been recently broadcast. People aren't as willing to pay to own/download this, but if its available, they seem to want to watch it despite it being more effort to acquire this content.
Given that you know this consumer behavior, and your background in media and mindset of charging different prices for variations of the product with time, wouldn't it make sense to try this in reverse?

  • Start with it being free (maximizing the number of people who will watch it) and try to monetize from advertising
  • Then with time (on the order of a few weeks), remove access to these files. If you believe that people who want to watch this content then want it more, they might be willing to pay for it! If you allow them to download it (and offer higher-quality) that might seal the deal.
  • Finally, make the DVDs available with extra benefits like outtakes/commentary/interviews etc.
I don't believe that this system will work as is. Let me take that may or may not work, but doesn't seem optimal to me. The additional benefits need to be tweaked (or the current prices would need to be drop) to make me more of a believer in this system.

Its going to be interesting to see how this shakes out though...


shmoo said…
Sometimes your blog is so b-school! ;)
Satyajeet said…
Yeah, I know...we are what we know I guess.:)
Isaac said…
I need the link to your Reader shared items!

Popular posts from this blog

Measure f-ing everything, and assume f-ing nothing!! - Or how mentoring ruined lives :-(

I've been really enjoying the Freakonomics podcast of late. This episode and the lesson we should take a away from it, was a stark reminder of one of the most important things we should be doing - but often don't - in building products or making any decisions: measuring the impact of absolutely everything we do, including the things that seem obviously good.

I recommend listening to the podcast if you have the time, but here's the summary. Stephen Dubner describes the Cambridge Sommerville Youth Study. The impact of social intervention programs in general is hard to measure and so they seldom are. This was the first attempt at measuring the impact over a long period of time.

It's a great story and there are a few good take-aways, but here's the main one: troubled or at-risk youth that received mentoring (good mentoring!) had worse life outcomes across every dimension than the kids that were left alone. Despite the recipients saying that the mentoring was incredibl…

Yup - humans still lack humanity

Every once in a while, I'm reminded that humans can be completely lacking in humanity.

My wife had the following experience yesterday on her ride back home. She got on the train and found a seat. The train was unusually crowded and it looked a lot of people had to stand for a long ride. An elderly Asian gentleman carrying a few things in both hands, was looking for spot, started to complain smilingly about the train being so full and stood in the aisle at the back of the carriage some seats away from her.

She expected someone closer to gentleman in the aisle (lots of younger people on the train) to give him their seat.

No one did.

The train started, and it was clear the man was having a lot of trouble standing up. Then at the next stop there was actually an announcement saying the train was full so please give up your seats to people who needed them.

Still nobody moved.

My wife got up walked to the end of the train and asked the gentleman to go over to her seat. She still couldn&#…

Whimsy when I changed my profile picture...

I changed by profile picture at work.

Later in the day, two people on my team had changed their profile pictures to these.. :-)

It made my day!

I changed my profile pic again today. Let's see how fast anyone catches on this time. :-)