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!
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.