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SamuelRSmith on 05 January 2009
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famousringo said:
DMeisterJ said:
This is the same "Digital distribution > Blu-Ray" Argument we've been having for years now.

BD is the future, and DD isn't. Simply put.

 

You've got that last part backwards. Blu-ray is now, and digital is the future.

Blu-ray is really the best thing Sony has going for it right now. The adoption is coming along pretty well. Better than I thought it would.

Digital distribution has all the technology it needs, all that's missing is a business model that really works. The biggest stumbling block is that the content providers are afraid of it, just like they were afraid of mp3s. Blu-ray doesn't scare them, so Blu-ray will rule for the next few years until somebody cooks up a business model that does for videos what iTunes did for audio.

 

 I think the big stumbling block with the business model is that most people like to get their content on the web for free. They've grown accustomed to Hulu, Youtube, BBC iPlayer, Joost, ITV Player, 4oD, etc... where they can watch what they want for free, whenever they want.

I think Virgin may have it with their business model, though. Subscription based. People feel like they're getting a good deal because they can watch whatever they want, however much they want, but Virgin know they're winning, in the end, because the novelty dies off, yet they're still stuck in a contract.

I'm about to do a little maths:

I discovered that Virgin have to pay Sky 1p per viewer per time slot when someone watches a Sky channel on Virgin Media. Now, let's assume that these rates translated through to on-demand TV (and why shouldn't they?).

Let's also assume that a customer is really sad and decides to watch 24 hours of content for 31 days. That equates to 744 hours, or 1,488 half hour time slots. This would mean that this customer would cost the company £14.88 in royalties. The firm could then charge a subscription fee of just £15 and making 12p on top of royalties.

That isn't profit, of course, as you still have running fees, but whacking an unstoppable advert at the start or end of the program could cover those costs, and the costs would become diluted with the more customers received. And, obviously, no one is going to be watching that much TV in one month.

Get 5-6 million customers watching 4-5 hours of TV a day and you'd be quids-in.