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!