Ins and Outs: Is buyshifting the future of television? (part 2)

Jeremy Toeman
J. Toeman|05.25.07

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Ins and Outs: Is buyshifting the future of television? (part 2)
Jeremy Toeman contributes Ins and Outs, an opinion column on entertainment technology:

Last time on Ins and Outs we introduced the concept of buyshifting -- what it means, what it is, and where it's going. But now it's time to get down to the brass tacks. That's right, we're talking about whether it's viable for the average consumer -- more specifically, where it falls on the cost scale. The results might actually surprise you. So let's dig in, shall we?

For the "standard" HD+DVR package -- your kind of baseline TV-consuming experience -- the monthly bill for San Francisco's Comcast digital cable service is $78. If the average household watches 8 hours of programming per day (yes, it's true), that comes out to about $0.32 per hour. Comcast also charges $0.99 per episode through its VOD service. iTunes, of course, charges $1.99 per episode, or $34.99 per season ($1.59 per episode at an assumed 22 episodes per season). Buying the DVDs on Amazon ranges from about $25-$40 per season ($1.14 to $1.81 per episode).

Since your cable bill is fixed (well, not really, as the cable industry has managed to increase billing at a rate that exceeds inflation for the past 10 consecutive years – big surprise), it comes out to $936 annually. (Side note: for simplicity's sake we'll assume that your average satellite bill is comparable to cable.) So let's see the results on a per-year, per-month, and per-episode basis, assuming one season per year, 22 episodes per season per show.

VOD price assumes $0.99 per episode, Comcast SF rates. Your price may vary!
Green: Least expensive option per show (as in program, not as in episode)
Yellow: Second least expensive option per show
Red: Most expensive option per show
Number of shows watched: 7, 10, 15, and 23 figures based on wholly unscientific analysis of popular programming. 7 shows represents household that watches only specific TV shows; 10 and 15 are households that watch a lot of hit shows, 23 are couch potato homes.

Annual price Number of shows watched
Delivery method 7 10 15 23
Cable $936 $936 $936 $936
VOD $152 $218 $327 $501
iTunes - buying episodes $306 $438 $657 $1,007
iTunes - buying seasons $245 $350 $525 $805
DVDs - cheap ($25/season) $175 $250 $375 $575
DVDs - expensive ($40/season) $280 $400 $600 $920

Monthly price Number of shows watched
Delivery method 7 10 15 23
Cable $78 $78 $78 $78
VOD $13 $18 $27 $42
iTunes - buying episodes $26 $36 $55 $84
iTunes - buying seasons $20 $29 $44 $67
DVDs - cheap ($25/season) $15 $21 $31 $48
DVDs - expensive ($40/season) $23 $33 $50 $77

Per episode price Number of shows watched
Delivery method 7 10 15 23
Cable $6.08 $4.25 $2.84 $1.85
VOD $0.99 $0.99 $0.99 $0.99
iTunes - buying episodes $1.99 $1.99 $1.99 $1.99
iTunes - buying seasons $1.59 $1.59 $1.59 $1.59
DVDs - cheap ($25/season) $1.14 $1.14 $1.14 $1.14
DVDs - expensive ($40/season) $1.82 $1.82 $1.82 $1.82

As is pretty clear, from a pure cost perspective, buyshifting is far and away the clear winner for the consumer. A cheap VOD service like Comcast's is handily the least expensive -- unfortunately, the above figures assumes VOD as your base cost, and do not factor in the cable service it's delivered on. (The "real" cost of VOD would be the most expensive by a large margin.) Still, second place (cheap DVDs) and even third place (buying seasons on iTunes) for cost-efficiency are very straightforward methods of buyshifting.

There are some other intangibles that haven't being addressed yet. For example, when buyshifting you have no access to live sports or news, nor specials (unless they too are released on DVD). Further, there's no opportunity for "surprise" with buyshifting, you watch everything deliberately. This is probably not the right thing for the typical "couch potato", but if you have an active lifestyle or just want to watch specific shows at your convenience, buyshifting is definitely the best bang for your buck.

Diving in further, it's interesting to consider the role technology is playing in enabling the buyshifted lifestyle. Prior to the October 2005 launch of the video iPod, the only cable-free means for buyshifting was via DVD, which implied renting or purchasing only. And as we all know, DVD release cycles are typically months after a season ends (gotta show the reruns first!), as there are a lot of laborious steps in getting the show from the original masters onto DVD, inside packaging, and then into the store (and of course, to your house). This is where IP-based delivery mechanisms have the real opportunity to shine.

Some networks, such as NBC and CBS, already air the shows on the internet a day after broadcast. Comcast's on-demand service has shows available for purchase almost immediately after airing. In some cases you can even buy an entire season of a TV show on iTunes before some of the episodes air on broadcast. Let's see you try that one, DVD!

The other piece of the puzzle for digital delivery is the platform. Prior to two years ago, save for a smattering of unsuccessful boxes with very little content, the computer was the only place one could watch any downloaded content (unless you wanted to burn a DVD). Now, in addition to the iPod, one can use their Xbox 360 game console, or a dedicated device such as the Apple TV or Netgear Digital Entertainer HD. (And let's not forget the still-present smattering of minor boxes with not a lot of content.) DirecTV further extends buyshifting capabilities through blending multiple technologies with their HR20 receiver, which is capable of live TV, DVR, on-demand, and streaming content from a Viiv-enabled PC.

At present, it's safe to say the two biggest hardware platforms for buyshifting digital downloads are the Xbox Live Marketplace and Apple TV, which offer two different philosophies for delivering video. On the Xbox 360, you can browse through content from numerous providers, ranging from NBC to Warner Brothers Studios; from the TV interface you can easily select content, pay for it (using Microsoft Points, although some is free) and begin watching it minutes later. The Apple TV, on the other hand, is still dependent on your computer and iTunes (by design, Apple claims). You select the content you want at the computer, but once it's downloaded you can sync or stream and watch it at the TV set. This is one rare moment where I feel Microsoft has outshined Apple when it comes to the user experience, but it's important to note that this is just the tip of the iceberg for both companies' visions and services.

My prediction is that with the combination of more options for less money, consumers will make buyshifting a vital component of TV watching in the future. I don't think it's as easy to predict which single platform (if any) on which this will occur; some will clearly flock to the minimal impact of doing it all via a set-top box, whereas others don't mind the additional boxes like a digital media receiver or a game console. It also seems straightforward to predict that many will still pay some form of a monthly fee, possibly for a select number of channels (a model already in place in Canada) to consume news, sports, special events, and old episodes of Cheers at 3 in the morning.

When I look at the amazing technology push toward the vision of consuming any content, anytime, anywhere, it seems to make the case that the future for buyshifting is looking pretty good. The technology trends only point toward more bandwidth (both cheaper and faster), with more mechanisms of delivery (cellphone, portable media device, laptop, IP-enabled set-top boxes, consoles, etc.). Will the networks even be networks as we know them in ten years? Who knows. But what's occurring right now in television is a fundamental change in paths to the consumer, and therefore empowerment by choice for an ever-increasing audience.

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.
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