Ins and Outs: Is buyshifting the future of television? (part 1)

This week we're also happy to announce another new column. Written by Jeremy Toeman, Ins and Outs picks up where The Clicker left off with insights and opinions on entertainment technology:

The advent of the VCR in the 70s first introduced the concept of timeshifting, which allowed the viewer to record programming, and thus shift their television viewing schedule away from broadcast dictates. But that was never the VCR's primary function, as manually programming recordings proved far too vexing for most home theater geeks. In the late 90s, another huge development in timeshifting came along: TiVo and other DVRs didn't just allow viewers watch their favorite shows on their schedule, they made it easy, and automatic. This, of course, forever changed the way millions watch television. In 2004 Sling Media (a company I used to work for) introduced the Slingbox, which lets people watch their television anywhere they please; this is now known as placeshifting.

Over the past few years, another trend has emerged, where viewers are buying TV shows on-demand and á la carte from digital resellers like iTunes, or on plain old DVDs. And these consumers are buying a lot of them. At the time of writing, seven of the top 25 DVDs on Amazon are TV shows, and one in five DVDs rented on Netflix is a TV show. Furthermore, many cable and satellite companies have teamed up with the networks to provide on-demand episodes available as early as the day following the original live broadcast -- that is, if their customers aren't among those who've bought over 50 million TV shows through iTunes. And with recent moves by major players such as CBS and NBC, as well as technology startups like Brightcove and Joost, it's clear that buying television episodes á la carte is no mere novelty -- nor is it going away. So perhaps it's time we gave this phenomena a name: buyshifting. We'll use that to refer to broadcast TV programming that you don't just watch -- you buy or rent. But where does buyshifting stand today? And is it really the future of television?

There are often arguments about who will win the wars between cable and satellite, or cable and the telephone company, or broadcast TV and IPTV. But it seems increasingly complicated when you factor in the fact that a growing number of consumers are just as happy to skip traditional (and, might we remind you, commercial-laden) means of television distribution to buyshift their programming through, say, Xbox Live Marketplace or Netflix. With so many means of paying for content, consumers tend to make a lot of assumptions around the costs and benefits of each.

For example, some people think buying DVDs of TV shows is a rip-off, arguing that "it's free on TV anyway". Other people are at another end of the spectrum, and they assume buying individual episodes on an á la carte basis is cheaper, since you buy only what you want when you want it. There are certainly debates regarding what might seem like unfair pricing, as 30-minute sitcoms cost the same as 60-minute dramas ($1.99 for either on iTunes). On the other hand, numerically speaking, 8 hours of a complete TV season on DVD at $27.99 (a typical price) is a bargain compared to $19.99 for a 2 hour movie. But the bottom line surely won't be that surprising to most couch potatoes: assuming certain "normal" viewing habits, when it comes to the costs involved in acquiring content, (broadcast TV excepted) the cheapest method of delivery still remains cable.

To properly analyze some of the finer points of the economics of buyshifting, we built a model based entirely on the assumption that people only watch a certain number of shows per year, and they watch every episode of each show, and nothing else -- if you watch any TV at all, we have a feeling you'll fit somewhere in that model. And that's what we'll get to in part 2. See you then!

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Jeremy Toeman is an expert in digital media and consumer technology. Over the past ten years he has designed, built, and marketed numerous award-winning products in the "convergence" space. Jeremy is currently a consultant advising companies on product marketing strategy.

[k.r @ May 4th 2007 7:34PM]

I think you're close but not quite there in your thinking. I think internet delivery will be huge, no more channel surfing no more having to wait for what you want to watch just pick a show and watch.At the moment if I ever miss a television show most of the time I can find it for download somewhere and I think a similar system will be were mainstream media ( tv,movies) will be delivered in the years to come.

[Dan @ May 4th 2007 7:35PM]

Good article. Looking forward to part 2.

[Juaquin @ May 4th 2007 7:58PM]

Joost rocks. It's not great quality, but there's a lot of great content on it. Less commercials too. Wish some more major shows would be available on it.

[RyanTV @ May 5th 2007 9:04AM]

bittorrent is the future of watching tele... and it's happening right now.

[Jeff @ May 4th 2007 8:35PM]

Uh, the obvious argument against "buyshifting" being the future of television is that by and large, people are buying DVD's (and to a much, much smaller extent, buying paid downloads) of TV shows they have *already watched*. Nobody's going to buy a TV show that they have no idea whether or not they're going to like. The whole reason why DVD's of TV shows are successful is *because* of linear television. Take away scheduled television and sales of DVD's will plummet, because then you've added a whole lot of risk to every potential purchase that was never there before. In a sense, linear television is acting as marketing for DVD purchases right now. That's necessary in order to inform purchases.

The only way this can be replaced is by moving to a system where TV shows debut as a free stream on a web site. But that's really no different than regular old TV, it's just a different pipe. People will still gather around a screen at a certain time every week when they know a new episode will be released. And then they'll go and buy the DVD *after* watching.

By the way, I work in TV, and while the writeup above doesn't really directly imply a breakdown in DVD purchases vs. downloads, it indirectly implies that they're roughly equal in the amount of space devoted to each. And downloads have a lot of the hype right now. Thing is, though, that DVD purchases are roughly 95% of all TV show purchases, and iTunes makes up the vast majority of all downloads. The market share of the remaining download players is practically non-existent - yes, that includes XBL.

It's going to be a LONG time before downloads drive any changes in TV viewing habits. DVD purchases *may*, but it's clear to me that they're acting as a supplement to regular TV viewing for most people right now, not a replacement. Even those who do use them as a replacement have to hear about these shows from somewhere first. Most of those people are still seeing ads for those shows during other TV shows they're watching, or hearing about them from others watching linear TV. It's a rare case indeed of a person who has never otherwise heard of a show and then bought a DVD based on a review he read at Amazon, which itself was written by somebody in the same situation.

In other words, linear TV is not going away any time soon.

[FreeRange @ May 4th 2007 8:56PM]

Call me crazy but I buy TV shows on DVD that I've never seen before all the time. I prefer my shows this way as I get to watch the show "in bulk." My friends and I will ignore an entire season of 24 so we can marathon it together. We were annoyed with the mini-cliffhangers every week so we started to TiVo the shows and, before long, we filled the harddrives and had to watch up to the last recorded show. And then we had another huge cliffhanger that was no self-imposed. So we stopped watching the shows entirely until the whole season was done and then we just bought the DVD. The TV viewing habits you are discussing simply don't exist for me anymore.

Family Guy was a show that was cancelled due to low ratings but the DVD sales were so high they brought the show back. If that many buyers were also viewers, the show probably wouldn't have been cancelled in the first place, right? I'm not saying you're wrong, necessarily, but I do believe Jeremy is making a good point and so I look forward to part 2.

[Ed @ May 5th 2007 5:21AM]

Sorry Jeff, but I think you live in a cave.

People pay for things they haven't watched yet all the time... They go to movies they haven't seen, they rent videos of movies and tv shows they haven't watched yet, and they buy whole seasons of television shows that haven't been broadcast yet off of iTunes.

DVRs have already ensured that people don't anticipate linear television any more: I know droves of people that never watch a single show at the network-specified time slot, so in many respects linear television is already dead: it just hasn't realized it yet.

Add to that a little (free) program I have on my mac called TVShows that automatically adds new broadcasts to my bittorrent client as soon as they're available on a tracker and I see what life would be like if a store like iTunes had even more shows available for subscription purchase. I haven't turned on my television in weeks and can't fathom why I'd want cable or satellite. If I could purchase the shows I download without waiting for DVD I'd happily do it, directly funding the show I enjoy and avoiding dealing with commercials. Shows with small devoted audiences who'd be willing to pay more to keep the show going would survive network cutbacks in ways that advertiser-sponsored shows never would.

Believing that a television model that most likely began decades before you were born will last forever is just silly. It's dead already.

[Big @ May 4th 2007 8:39PM]

The "Digital Age" is all about instant gratification.
Cd's, DVD's instantly able to playback media for the consumer.
Video Games and entertainment available ON DEMAND.

People nowadays are entrenched with occupations and no longer have the time or the energy to be in front of their Televisions ar a specific time of the network's choosing.

YES, that is why VCR's and Tivo style devices are so important. People are willing to pay almost any price to receive their media fix.

I disagree with the finding that the cheapest method of delivery is Cable. Rather, I believe the cheapest method is the internet and DVD media.

You have to pay upwards of $50 a month for basic cable packages (in NYC) while a DSL line typically costs about $30 - $40 a month. DVD's are cheaper than having to purchase media through a cable company.

The industry is currently trending towards downloadable media via the internet - and for good reason.

#1 It is faster and easier to obtain - no more trips to the stores to purchase a disk.
#2 No DVD disks to scratch up
#3 It is more secure to deliver content via the net simply because it won't fall prey to piracy.

Eventually video game consoles and the PC gaming community will get rid of optical disks and go for encrypted downloadable media. It makes considerably more sense to do things this way considering how much money is being saved avoiding piracy. What we will really need for this advent will be NAND (Flash Hard Drives with no moving parts) so our information will be accessed quicker.

[Mike @ May 4th 2007 9:07PM]

Hmm, personally I think the term "buyshifting" is pretty lame. Buying TV shows has the same purpose as the timeshifting VCR...to be able to watch them whenever. So wouldn't "shiftbuying" be a better term. You aren't shifting the buy, you are buying the timeshift.

[TimD @ May 4th 2007 9:54PM]

"You aren't shifting the buy, you are buying the timeshift. "

This is a very astute observation. The point behind buying "Friends: Season 2" on DVD is not because you are choosing to buy the DVD instead of "buy" it by tuning in and (presumably) watching the commercials. It's because you are paying someone else to do the hard work of recording it onto a DVD and editing out the commercials, then playing it at your convenience. You are paying for the privilege of timeshifting. And really, anyone that engages in timeshifting pays for the privilege one way or another... you pay for the DVR, or you pay for a DVD Recorder and recording media, or even just for a VCR and VHS cassettes (in the latter two cases, you're also investing your time in setting up the recordings). I would even go so far as to say watching a rerun/syndicated show is a form of timeshifting.... you invested all the time you've waited for a particular show to come on again (maybe even on a different network) so you could watch it at a time other than its original air date (an extremely low-tech version of timeshifting, to be sure).

But really, the main argument against the term "buyshifting" is that saying we're "buying" a first-run network TV show episode by watching it at the scheduled time is pretty weak. Even if you're talking about a cable network, and consider the cable subscription "buying" the show. If you pro-rate your cable TV bill based on how much TV you could realistically watch, what's a 30-minute sitcom work out to? A few pennies? Four hours of TV a day on a $60 basic cable bill breaks down to fifty cents an hour... I'd say $1.99 on iTunes is a huge ripoff at that rate - you're better off just making time in your schedule to watch the show when it airs. But some people are willing to pay a 400% markup for the convenience of watching TV at their leisure. More power to them. But they still aren't buyshifting... they're timeshifting.

[k0a10 @ May 4th 2007 9:12PM]

I agree on bittorrent, it's the best solution for anything but live events.

[Ariza @ May 4th 2007 10:36PM]

People are still tied to paying for cable in order to watch live sporting events and live news coverage I dont see a mass shift to "buyshifting" any time soon.

I would much rather pay for a cable package with hundreds of LIVE channels and have the ability to DVR shows that I can later convert to a file I can play on my laptop or iPod than have to switch to an expensive á la carte model.

[obiwan @ May 5th 2007 1:00AM]

Buyshifting is not the right word. It's timeshifting, the same as using a VCR, TiVo, or buying the DVD.
Sure, it's getting more popular. It's a good deal, I suppose. If your TiVo craps out on you and misses an episode of Survivor, you can just buy it. Nice.

Me, I was a TiVo addict. I was coming home every day to four or five hours of 'homework' on my TiVo. I had those core shows that I planned to watch, but faithful TiVo was so good at finding me things I couldn't miss, either. Plus, with commercial skipping, watching TV became so much more efficient! I'd come home from work, go straight up to the bedroom, and start while I was changing out of my work clothes. Sometimes I'd stop for dinner with the family, but mostly I would eat leftovers before bed. One day we cancelled TV, and we've never looked back. Best move ever.

[colin @ May 5th 2007 2:29AM]

I'm sure most geeks had no difficulties setting a VCR.

This missed the transition between VCR programming and the EPG select-to-record. That was the recording shortcode - very popular in the UK. You got a short numeric code from the newspaper and typed it into you VCR and that was it. Some UK broadcast TV also added a program number so the recording would be automatically extended if it started late - bloody sports programs.

[cottonwood44 @ May 5th 2007 9:38AM]

This article really spoke to me. I dislike renting a physical medium that I have to return and don't want to pay a fee that forces me to rent when I really don't want to watch a movie. The only way I currently watch movies is renting online and downloading to my laptop. When I want to watch, I hook it up to my TV. I don't see much difference in quality from a physical DVD. I am really looking forward to getting rid of cable and having everything on demand from the internet. The more on demand things that are out there, the more I want and expect. I look forward to Part 2. I have you in my Google Reader.

[Jesse David Hollington @ May 5th 2007 9:24AM]

I think the reality here is that as with anything else we'll spend a lot of time straddling a hybrid model of content consumption.... This will not be a revolutionary process, but will instead happen over time.

I have not cancelled my basic cable, mostly due to the ability to still get local content and live news coverage. I don't see basic cable going away any time soon for me, as this is still the most efficient delivery method for that type of content.

With the advent of TV content on iTunes, however, I cancelled ALL of my premium cable content, coming to the realization that I was paying for 300 channels for the sake of watching three or four programs. The net reduction in my monthly cable bill was around $60 (this was on top of basic cable). Instead, I now purchase content via the iTunes Store (which basically covers what I'm interested in watching), and has even encouraged me to discover some new shows that I otherwise wouldn't have bothered tuning into on cable.

This raises an interesting point in terms of what a previous commenter said about not wanting to invest the money in a show that you don't know much about. Note that I don't think that buying box sets of "24" really count in this case, as you do know what you're getting -- you've just chosen to buy it instead of watching it, and I've done the exact same thing as a previous poster in regards to 24. However, I agree that I'd probably be reluctant to take the plunge on an entire DVD set just because it might be interesting.

However, this is where the $1.99/episode model of iTunes is so brilliant. There are a couple of shows I've sort of heard of (recommendations from friends, news bits, whatever), and if I'm curious, I can grab an episode and see if I like it or not. If I like it, I might buy the whole season, if not, then I'm out the price of a decent coffee (which I should be drinking less of anyway :-) ). Add to this the fact that many new shows come onto iTunes with free episodes available for download, and you've got a great model for delivering of TV content for first-time consumers.

The upshot of this is that I've actually discovered shows on iTunes that I wouldn't have otherwise watched. The standard EPG on my cable service is a difficult-to-navigate wasteland of junk, and I find you don't often stumble across shows on cable in the same way that you would on an online service like iTunes, or even when browsing the shelves at your local DVD retailer.

As for the cost versus cable? It depends on how much you watch, but for somebody with a job and an otherwise active lifestyle, four hours of TV per day is probably the most on the extreme edge of that, even including things like news broadcasts. If you do the math, this puts the hourly cost of television content from the iTunes Store reasonably in-line with what you'd be paying for cable.

[James @ May 6th 2007 12:53PM]

"As for the cost versus cable? It depends on how much you watch, but for somebody with a job and an otherwise active lifestyle, four hours of TV per day is probably the most on the extreme edge of that, even including things like news broadcasts. If you do the math, this puts the hourly cost of television content from the iTunes Store reasonably in-line with what you'd be paying for cable."

Uhh... wha? How do you figure? 4 hours x 30 days * $2/hr (the cheapest cost-per-hour for iTunes TV shows) = $240 per month!!! If your cable package is costing you that, I think you need a new provider. The sole reason I don't buy iTunes (or, to be fair XBox Marketplace) shows is that the price is so far off base I don't know whether to laugh or cry. I can record the broadcast shows on my MythTV box for free. Most broadcast networks have their major shows available to watch on their website now. My library has most TV show DVDs, if you're willing to wait for them to be in stock. I can get basic cable for $35/mo. I can get select TV DVDs for $1 per disc per day from Redbox -- you could easily watch a season (22 shows, 3-6 discs) for about 10 bucks, much much less than iTunes charges, plus you don't need a net connection. I think pay-for-download TV could work, but in its current structure, it doesn't work for me.

If you're listening, providers, here's what I'm willing to part with: $10 per season for half hour shows, maybe a few bucks more if they're an hour. I don't mind being forced to sit through ads, though fewer than are in a typical broadcast show would be nice. Much better would be $20-40 for all-you-can-eat of at least 3-5 good shows; again, more would be better. As long as cheaper alternatives exist, I'm not going to bite on expensive TV shows.

[Eric Law @ May 7th 2007 12:17PM]

Allow me to buy the last 8 episodes of LOST that I haven't seen yet,
allow me to buy the shows I miss because my cable company just moved that channel into the higher subscription service (HGTV), or let me grab those NOVA shows from PBS so I can watch them later,
and I'll buy one of those apple TV things and I'll cancel my cable subscription completely.

Oh, and since I'm buying, make sure there are no commercials.

[consumer_q @ May 7th 2007 12:22PM]

My tv series viewing is - for the most part - via DVD from the public library.
I am forever surprised with what my library system carries on DVD. I can queue up a bunch of stuff via "request/hold", then walk a 1/2 mile to my local branch and pick it up after I receive my "it's here!" email. I will also use a Netflix subscription on & off to supplement anything the library does not carry.

[Matthew Shaver @ May 8th 2007 2:35AM]

I bought an Apple TV and turned off my cable service. For years before this I never watched anything live anyway. Always used a DVR. But even with a DVR you are at the mercy of the networks when the run programs 5 minutes over the top of the hour or when 3 networks schedule programs you want to watch at the same time. ITunes has most of the programs I want to see and I don't watch much sports anymore. Those programs it does not have I can catch later on DVD.

[mm @ May 25th 2007 7:28PM]

More and more people are living alone & lead busy lives - anyone who thinks this kind of person watches 4 hours of TV every day, or wants to mess around with file sharing on their PC in order to watch TV, is out of touch.