Hollywood has a bad history of seeing new, innovative technologies, as a way to screw their customers and take more money from them. For years they stubbornly fought various internet companies – Napster, Kazaa, Audiogalaxy, Bittorrent and then Beatport and Apple – by suing their very own customers and refusing to sign economically logical deals to give people access to music at reasonable prices.
They did the same with movies, waging a war on customers while sites like 1 Channel, Popcorn time and Bittorrent ate their lunch because they refused to play ball and preferred to sue their customers.
Their delay has cost them. They don’t control distribution, which they could have, instead relying on Pandora, Spotify, Apple, Netflex, Amazon and Hulu to deliver their content, missing the boat on a lucrative opportunity to cut out the middlemen and connect directly to their audiences.
So you would think, in light of these tough lessons, content producers would have smartened up. But a look at streaming services shows that’s not the case. Rather than banding together, most premium content producers have inked haphazard deals with a variety of players, effectively splitting the catalog that has been available on cable TV across a host of third parties.
Those that have launched their own services, like HBO and as of today Showtime, think for some reason people will pay almost as much as cable for their shows online.
In all cases, big content companies are dreaming with the prices they’re setting for their online services.
To illustrate the point, let’s look at the numbers:
Hulu – $7.99
Netflix – $8.00
HBO Go – $15
Showtime – $10.99
Amazon Prime – $6.58
Total Monthly Cost: $48.56 + tax
Yet this $50 per month doesn’t get you the NFL, NBA, MLB, NHL or any live content whatsoever. It basically gets you most of the newer shows and a nice catalog of old shows and movies.
Assuming (which is a VERY generous assumption) that all live sports, news and local TV could be had for another $50 per month, which is low (rumor is ESPN alone wants fully $20 per month), the total price for web TV at the same service level as cable would be an astounding $100 per month.
Otherwise known as the price of cable.
Until big media starts to appreciate that they cannot capture all the value from new technology or use technological advancements to capture even more value for themselves, rather than give the benefits to consumers, apps like Popcorn Time or things like Bittorrent will continue to persist.
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