Quick observations on TV distribution…

I observed today that it’s now possible in the US to not only buy individual episodes of Lost via iTunes but that the Season Pass functionality now includes automatic delivery of all future episodes of the show for a massively decreased total price of $35 (about ¬£20) rather than for the nearly $50 that it would cost to buy each individually. I think that price reduction really points to the future of this kind of media distribution. I’ve been talking about this kind of pay-for podcast-like distribution mechanism for TV shows for a while on this site and in various work-related contexts over the last couple of years – and I really think this model is the way forward. It’s almost such an obvious thing to say that I can’t believe I’m writing it down, except that I know for a lot of people working in the media it still appears to be some weird pipe-dream of weirdo techno-futurism that’ll never catch on. But then you should see the faces of many of my media-working friends in the UK when I tell them that Battlestar Galactica in the US is run with a note onscreen reading, “Buy this episode tomorrow on iTunes”. They barely believe that’s true either. The future is here, dudes. The model is working. A change is gonna come.

As I’ve said before, I think we’re approaching a world in which a near-live media distribution environment will be a major partner to broadcast TV within five-ten years. This environment will be focused on show-by-show subscriptions and ultimate personalisation to get stuff down to viewers over normal broadband and mediated by the bog-standard boring old internet – probably even through the web. And it’s my suspicion that there may only be enough room for five or six major (partially democratised) distribution hubs (at a complete guess as mentioned in the above post: Amazon, AOL, Apple, Yahoo, Microsoft and Google). The group that’s going to have the most trouble with this is the public sector broadcasters – they need to be trying to work out how to influence and work with that environment and find a space for free or publically supported content as soon as is bloody possible, rather than trying to develop their own necessarily prescribed and undersupported media distribution platforms. They’re going to be under enough pressure to figure out how they’re helping compensate for market failure (in an environment with a space for every niche and genre interest) without having to deal with all these distribution questions too. Or at least so it seems to me.

18 replies on “Quick observations on TV distribution…”

Paulpod, I wonder how those stats compare with commercially available stuff, and how media is used when either payed-for or freely available without restriction?
Back to the days of VHS recording, with recording freely available, it was pretty common for people to record items that they never viewed at all. Various reasons were given, but my favourite has to be Douglas Adam’s explanation which was that we were buying video recorders so they could watch the shows for us, saving us the trouble 🙂

Pausing only to reel slightly at Neil’s past-tense reference to the days of VHS recording… 6% is not bad at all, I’d say. There are only so many TV-watching hours in the day; even with only six channels to choose from[1] (and Sturgeon’s Law applying to at least two of them at any one time) I very rarely find myself stuck for something to watch, and still use the VHS more for recording than for watching. If iMP established itself in this trial to the extent of an hour a week, I think it’s probably here to stay.
[1] Counting BBC 4. I believe there are other digital/terrestrial channels also.

There’s an interesting (to me, anyway) parallel here with book publishing. I work for a small publisher and I’ve been keeping a quiet eye on Amazon because I’m convinced they’re going to move into publishing – and I don’t mean just ebooks, but full on paper publishing in a lulu-type way – they’ve just launched a writing competition ( where the winner gets their book published and marketed on Amazon – but no mention of a publisher. And why not? Amazon don’t need publishers, they just need Authors, and there are plenty out there…
They have an excellent distribution system in place, so if they were to take on authors directly they’d have access to exclusive content (can you see them approaching Stephen King, or Patricia Cornwell?) and they’d cut out the expensive middle-men: greedy agents and tweedy publishers (not me, obviously).
Not exactly Web 2.0, but I thought you might find the theory interesting…

6% is ok i guess if that means mostly on “digital devices” – if I recall correctly, iMP makes it really hard to watch this media on an actual TV. That’s not going to help at all, but that’s DRM for you.
Neil, I think you can comfortably say that paid for content is going to have a near 100% watched status. As a hacked Tivo user there are a couple of trends noticable – you tend to record stuff you know you will enjoy, but only *might* watch when proper bored, and with decent wedges of space, keep for ages. Obviously the iMP prevents this with the 7 day limit, and the download times mentioned sound like enough barrier to immediacy to me.
The other trend of course is the complete abandonment of non-timeshifted content, leaving schedule land forever. Again the lack of TV-set integration makes iMP unsuitable for this too.
Phil, you’re still using VHS? Blimey.

Yes, we still use VHS. I also use a pay-as-you-go mobile and bitterly resent calling people during the day (it’s ridiculously expensive…) I did think, when the VCR appeared to have broken the other day, that we’d been given a golden opportunity to go DVD-R – then I looked at the shelves full of VHS tapes…
Did I mention I’ve got kids? (That’ll put Tom right off the idea.)

How will anyone know about “Lost” without the mass delivery system of TV? Everyone has a tv. Soon, everyone will have a computer, but the computer will have tons of content without a central place to create a hit show. You need a hit before people are going to pay to see it? Answer that and it’s a done deal, as Tom says, in 5-10 years for all content to be web-based. I have to slog through a lot of lousy podcasts to get to a good one. Once I find it, I tell maybe 2 people. That’s not mass distribution.

Forgive a non-UK-resident — what’s the “7 day limit”? Does that mean the
Beeb’s downloader deletes the programs after 7 days? That’s insanely
In my experience as a PVR user, and BitTorrent TV downloader, I’d regularly
leave programs for weeks before watching.
Funny to read that press release that paulpod posted, with its talk of “live
streaming”. One key value proposition of PVRs, downloadable TV, and even those
Sky+ boxes, is the decoupling of TV from a live schedule. Holding onto the
“liveness” strikes me as like car companies holding onto the guy walking in
front of the car with a red flag!
And finally, the iMP software didn’t allow users to view the media on a real
TV? bizarre.
If this trial was intended to get an idea of user habits when dealing
with downloadable TV, it sounds like it started out backwards by hobbling
the software.
‘How will anyone know about “Lost” without the mass delivery system of TV?’
Eh? The same way they do now — via word of mouth, triggering downloading. To
tell the truth, most of the people I know who are watching “Lost” *are*
downloading it!
It doesn’t take a schedule to have a hit show — just a roster of shows on
your “channel”.
For what it’s worth — every year I see more and more people watching
downloaded TV shows. Pretty much everyone I know with a DVD-writer drive and a
cheapo DVD player, is now burning downloaded TV to DVDs and watching them — no
way is it wierdo techno-futurism any more.

My point is that it costs MILLIONS to produce “Lost.” Without advertising dollars pumping $$ into the networks to develop shows, how will a show get developed without money?
Or, “Lost” makes so much dough on-line that we screw the advertisers and go right for the on-line content. I still can’t picture it but I’m a tv watching/ipod consuming baby boomer.

The problem with the current direction is that if I sign up for a Lost season pass for $35 and a King of Queens season pass for $35… I’ve just spent more than I spend to get all of my tv channels… which I can DVR and migrate to my iPod, etc.
I’m not suggesting this type of pay per episode service is not valuable. I’m just suggesting that it may be the best service for business but it’s not the best service ‘Value’ for customers.
It’s time business gets innovative enough to figure out how to add value to customers instead of just sucking dollars from their pocket.
It’s the 21st Century – but entertainment companies are still doing business like it’s 1970. Get on with it.

To Scott: So at the moment, my sense is that they’re viewing this stuff as a competitor to DVDs, but I think that changes relatively quickly, because they can be released so soon after broadcast and DVDs have physical costs. So in that direction the cost goes down dramatically. There’s really no point in having a media in the future that you can’t have and use as you want after it’s been initially distributed – so I think this distinction between broadcast and buying will disappear for a whole bunch of people.
Basically the market will sort this out to an extent – assuming there’s no collusion and price fixing which is a big assumption. But my assumption is that fundamentally you pay these companies for a whole bunch of television you never even watch – that in terms of ‘must-see’ TV, people probably only really care about five – ten shows at any given time – and that most TV series arcs are between twelve and twenty five weeks, so that’s between a quarter and a half of a year. So even at today’s prices, you’d be paying what – $350 every six months – sixty dollars a month equivalent for ten new fresh shows downloaded a month.
Now that’s clearly too much money, but it’s not too much by an ENORMOUS margin. Drop it down by a third and, you know, you’ve got yourself a deal – between eight to ten shows a week distributed down to my equipment for me to own and use immediately and for as long as I like for about $10 a week? That doesn’t seem so unreasonable.
And let me make something clear – I’m suggesting this as a major partner to broadcast TV rather than a replacement within five to ten years. That could simply mean that you can pay to buy some core shows and download them (anywhere in the world?) six months before they’ll be on broadcast. Or it could be that broadcast continues as normal but ten percent of the income is coming from immediate sale and download from a small percentage of the audience, and a wired up niche market – completely circumventing the television companies.

To Autumn – I don’t think broadcast television is going anywhere is the short-order answer to your question. I have absolute faith that it’ll still be around in five-ten years time and will be a major distribution channel for much of the same media that’s being sold through iTunes at the moment. So in the short term at least, it’s going to be just as practical for people to get cross promotion on TV for the downloads.
But you have to think about it this way – the motivation for the content producers is not to give all the revenue to the content distributors, and they may not have to – you only have to see the straight-to-DVD market that Disney exploits to see that, and many shows recently (Futurama / Firefly) make more money on DVD than on TV distribution. There’s already a market (albeit relatively small) for people to buy programmes that have never been (or barely been) on TV. And there’s a huge market for buying media outright.
So if it’s in their interest to try and get rid of the middle-man (or find a new one that’s more favourable to them), then they’re eventually going to start working in ways that make things difficult for the TV channels who obviously don’t want their audience balkanised. So they’ll either form partnerships with the content distributors for revenue sharing or they’ll gradually look towards different types of content that don’t suit download so well (Big Brother, perpetual rolling news, radio-style programming, live broadcasts).
In terms of how you promote things if you just avoid broadcasting the shows themselves – well the same way you promote everything else that isn’t a TV show. They promote films without showing them on TV first, they promote albums without people hearing them first. You can buy ads on the TV that’s left, you can put things in the papers, etc. etc.
My personal favourite – the US pilot season doesn’t produce dozens of throwaway episode that never get shown, but instead every episode produced is released to the public for free download (for the first month) and then if they get enough interest in the show in terms of direct subscriptions or individual pay-for downloads then they produce a full series. All TV shows are risks obviously, so this might move the burden of risk more onto the content producers than the networks, which might produce a more risk averse environment and a need for those companies to get in more revenue with which they can support the failures, but this is only a shift in money generation from the networks to the studios, and that often happens with middle-men anyway. And on the other hand, self-financed projects might get more access to the mainstream, fan favourites could be supported literally by the fans rather than by the advertisers. Componentised, smaller, more nible, more responsive media focused on meeting every niche need. It could work enormously well.

(If you’ll excuse me a bbc-doesn’t-exist moment)
I think we’ve all forgotten a simple fact about commercial TV – it is not created to be art, great content or to entertain. It is created to put bums on seats and consume advertising. Soap opera were begun at the request of advertisers to be able to target housewives with their products, game shows we started to showcase product.
Advertisers demand their audience. If you are willing to pay a (quite ridiculous amount IMO) for a content subscription well fine, but don’t expect it come down in price “as costs fall”.
You want cheaper TV than $35 a season? Expect advertising to subsidize these downloads by embedding themselves into the stream soon enough, and be unskippable and unremovable without destroying the data – that’s what DRM is going to be for for TV, not anti-copy, anti-tamper.
Want less adds than the TV broadcast stream? Then give us more personal data so we can target the ads you do see more tightly. Want even less ads, and cheaper tv? Respond to an interactive element so we know our meme has embedded itself in your brain. Want an ad free show special? Pony up some personal info on friends of yours.
Do not underestimate how evil advertising agencies will be to ensure you receive their message. Do not underestimate how eager and greedy the TV networks are to do their bidding.

I don’t think we’ve forgotten this fact at all – there are a number of ways in which TV shows make money and one of them is clearly pay for subscriptions or purchasing the programming out right. DVD sales are a massive part of the financial future of a TV show, and networks like HBO make much of their money on international sales and – if I remember correctly – don’t have adverts either.
Let’s be clear here – there’s clearly money being made in selling a TV series for $35 a season because that’s the price right now on relatively low demand. That’s not a fantasy price, that’s a real price that’s clearly designed to bring them revenue. That in itself means that there’s a profit to be made from this activity and that alone gives space for competition. And you can shed a bit of margin in the longer term if you’ve got a hell of a lot more people downloading the programming. How much profit do we think TV networks make per member of the viewing public anyway!? And that’s assuming that there isn’t an enormous back-catalogue of content that can also be opened up for sale that can help provide stable income to help mitigate risk.
There’s clearly still a space for advertising – evil or otherwise – in this environment. I’m sure some people would prefer to get cheaper programming with unskippable ‘sponsored by’ advertising at the beginning of a downloaded show. And I should point out that I don’t by any means think that broadcast TV is going to go away or that it’s going to stop using advertising to subsidise itself. I agree with you completely that various organisations will look towards DRM and things like the broadcast flag to stop people skipping those adverts. But that’s the model for broadcast – you show people thinks for free and then you monetise their attention by showing them adverts. But just because it’s the business model for broadcast doesn’t mean it’s the model for everything – it’s not the way pay-per-view works or DVD purchasing and I don’t think it’ll be the way that download subscriptions will work either.
Hope you’re well, by the way! Also that I don’t sound like an aggressive bastard. Completely agree that TV companies are going to try and protect their advertising market by any means possible, and that advertising isn’t going to diminish in power – I just think that to an extent they’re going to be routed around by a market that decides to supplement one middle man with another one – one that doesn’t have a limit on the programming it can show to new users, and to whom you don’t have to give any of the rights of what you’re making, only a cut of each thing that’s sold.

Thought I’d add my sixpence-worth/clarify a few things as I took part in the BBC iMP trial.
There was no problem watching programmes via the iMP on a normal tv (you just needed to hook your computer up to your telly box – which I did). The stunning quality of the television content was the part of the service that surprised me the most.
The seven-day rule was due to the rights issues with independent television producers (as reflected in the on-going discussions between PACT and Channel 4). While there was BBC-produced content that could have been made available for longer than 7 days, it seemed at the time that the team behind the iMP put everything on 7 days for ease in trialling the system – who could blame them!
I took part in a focus group, in which most (if not all) people said they saw the value of the iMP as a more advanced version of the BBC Radio Player, rather than as a TV player. Most/all of the attendees said it was getting radio content that was the useful (and used) element of the iMP. Although since then, podcasting of BBC radio content has massively increased, so I wonder how this would have affected iMP usage for radio.
They also said that once you got used to having iMP, that it was very frustrating that other channels’ content wasn’t available – thus I think reflecting the suggestion that if broadcasters set up distribution networks for only ‘their’ programmes, then users are more likely to by-pass them and instead go to an aggregator service/site like iTunes, Google Video etc where more than one rights-owners content is available. I don’t think this was a desire to avoid paying for content, rather it seemed to be about looking for a range of programming.
In terms of design and the idea of ‘interactive players’, many participants comments that the sort of console/application interface used by iMP (similar to the design of the BBC radio player) is becoming outdated, as it behaves neither like a browser, nor like an application and has the worst bits of both.
Love the blog Tom, by the way, only discovered it recently, and it either gets me thinking or is a marvellous aid to procrastination.

“The future is here, dudes. The model is working. A change is gonna come.”
Not via iTunes it is not. 20+ million people watch Lost every week for example; no-one will give out the figures for Lost via iTunes but my guess is that it is below 100k per episode. That is less than 1%.
Two things need to happen for the pay-per-programme method to work; computers need to be in the living room more or IPTV needs to take off. Even then, I don’t see pay-per-programme taking off.
What we need is in all-you-can-eat payment model BUT with the option of downloading and viewing whenever we want. That, in my mind, is the future.

Well the equipment to get it to your television isn’t there quite yet, but it’s clearly on the way – and nor is buying online enormously mainstream yet. And I’d be interested to know how much money the content creators get per person who views the show on broadcast television – it could be that they’re getting massively less per user than they’d get by distributing through subscriptions. So – for example – it could be that a two-parter that cost $11 million dollars (Lost) would require each episode to be downloaded six million times for them to already have paid for it. Or – potentially assuming that the incremental cost of selling it around the world was not enormous – it could be that you’d have to get only a third of that from the US (and then sell around the world for the rest at a marginal increase in cost) in order to make your money back. Now we’re down to two million downloads to make something financially viable on downlaods alone at which point 100,000 (at 5%?) starts to look like a movement in the right direciton – particularly when used as a bonus or an offset against parallel broadcast TV.
The point is that we can’t say that a technology hasn’t taken hold yet and therefore it’s not going to. The iTunes model is relatively new – and there will be other services with variations on the model that appear before CDs become an unusual way of getting music. But I think we all accept that at some point that will happen. It might not be through iTunes, of course, but a change will come. My prediction was that the basic model we’re seeing of subscription media available for purchase and download will be a substantial part of the TV ecology in five to ten years – perhaps only amounting to 10% of the market, but still a substantial part. And I stick to that.
I don’t know about the all you can eat model though. I know that most of hte music companies are trying to get people to do that kind of thing, but they all rather depend on being able to get all of your content through intermediaries and I can’t for the life of me think who the intermediaries would be except for the major six again. TV is different to music, and I think probably more amenable to the whole subscription model because we’re used to it, but I still rather get the impression that downloads which disappear after a while aren’t going to be enormously popular.
(Having said all that, the ‘the future is here, dudes’ comment was pretty tacky and I apologise for that.)

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