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albreznick
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albreznick,
User Rank: Blogger
8/27/2013 | 1:08:50 PM
Re: Depends on your point of view
It certainly sets up a lelluva battle--Big Advertisers vs. Big Technology Firms like Apple. Can TV survive without its traditional advertising business model? i don';t know. But I'd love to see what would happen if Apple really does pursue this path. The whole business could use a good shakeup. Do you think Sony, Intel, Roku and the rest will follow Apple's presumed new model?   
mendyk
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mendyk,
User Rank: Light Sabre
8/26/2013 | 7:42:24 PM
Re: Depends on your point of view
Right, and from the POV of most commercial content providers, the current ecosystem may be dystopian, but it makes them plenty of money. I'm sure that video content producers are looking over the fence to see what has happened to the music business and are thinking, Please, not us.
brookseven
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brookseven,
User Rank: Light Sabre
8/26/2013 | 6:34:13 PM
Re: Depends on your point of view
 

I thought the purpose of any business had exactly one aim...MAKE MONEY.  The only difference between businesses is HOW they try to make money.  So the point of making video content is to GET RICH.

TLDR:  Money Talks, BS Walks.

 

seven

 
mendyk
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mendyk,
User Rank: Light Sabre
8/26/2013 | 6:03:36 PM
Depends on your point of view
If you take the view that video content exists mainly to enlighten, inform, and entertain the world, then it makes sense to look for ways to decouple content from advertising. But if you think that the main purpose of content is to sell people cars, sneakers, personal hygiene products, etc., then that decoupling doesn't make sense. This isn't simply about disintermediating advertisers from the video stream. There's a whole economic ecosystem to consider.
brookseven
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brookseven,
User Rank: Light Sabre
8/26/2013 | 5:18:46 PM
Re: Commercial-free TV programs could work for ALL Pay-TV and OTT services
Sure commercial free could work....let's just remember that on iTunes the HD version of Breaking Bad is $22.99 a season, $37.99 for the Deluxe Edition per season or $2.99 per episode.

Let's do some math...For TV service of 2 hours per night (and I will use 30 day months) we are talking about $90/month for video.  Maybe that's high...maybe not. But that is where it is and does NOT include Broadband Service.  I just looked and a very basic Comcast package (without a DVR) is $34.99 a month.

So, really a commercial free service would probably have to provide 25+ channels at $25 a month or something like that.

seven

 
gkkearny1
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gkkearny1,
User Rank: Light Beer
8/26/2013 | 2:35:36 PM
Commercial-free TV programs could work for ALL Pay-TV and OTT services
This is actually a service MANY consumers have been asking for. The "gotcha" for an advertising-free service is each network probably requires a new and different play out center. It may start out as an all-on-demand file based system, but with original programming, there will be opportunities for pay-per-view "live" viewing of events, sports, and upscale programming. Apple, Intel and Comcast are all in position to build these types of play-out centers, and there's no reason why Apple or Intel couldn't re-sell content from their platform to the greater PAY-TV industry. Commercial-free TV supported by a premium subscription package can work for ALL of the Pay-TV and OTT services over time.
DanJones
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DanJones,
User Rank: Blogger
8/26/2013 | 1:40:37 PM
Device
So they still probably need a compleling device to make this real?
stewartschley
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stewartschley,
User Rank: Light Beer
8/26/2013 | 12:46:35 PM
Re: Apple Bucks
Dan, In Apple's case, both. I think the economics of the "virtual MSO" model are tricky, but could be compelling if you are willing to believe somebody can assemble a significant subscriber base. For instance, 3 mil. subscribers at $49/month (just guessing) yields roughly $1.8 billion in revenue annually. Granted, the programming licenses will eat you alive, and could amount to as much as 70% of revenue if Apple or somebody else pays a premium to reduce the commercial load. Even so, infrastructure, customer acquisition and customer care costs are much lower than in cable/satellite TV, so presumably there's still a cash flow margin at the end of the day. It's probably not enough by itself to move the needle much for Apple, so it's critical to have a hardware/device revenue stream tied to the service in a controlled ecosystem ala iTunes/iOS. That way it may actually be possible to make some money. I suspect Intel sees it the same way.
Sarah Thomas
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Sarah Thomas,
User Rank: Blogger
8/26/2013 | 12:34:34 PM
Content binging
Interesting post, Stewart. How consumers want to watch TV is certainly changing. I was also interested to learn Netflix's model for its own TV shows like House of Cards was to release the entire season at once. That's a lot of content without commercials, appealing to how consumers like to veg out and binge on content at their whim.

I think getting rid of the commercials is a great idea, but it does seem like a huge overhaul and one that the cable networks would be really uncomfortable with for awhile to come.
DanJones
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DanJones,
User Rank: Blogger
8/26/2013 | 12:16:23 PM
Apple Bucks
How does Apple make money though in this model? Selling the device, the service?


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