Tuesday, July 24, 2012

The Modern Alchemy

The biggest problem facing anyone interested in IPTV, or internet TV is the inefficiency of the market. Unlike most markets, you can't charge what the viewer is willing to pay for a piece of content since the delivery industry isn't built that way.

If it were, there would be punters willing to pay $30k to view a first run or premier or preview, whereas there are millions of people out there who would love to pay 5c for content they can't access at all. In fact the market for live tickets, such as the Olympics or Wimbledon, totally demonstrate this issue.

However, the result in the content market is that winners can become losers overnight, as the latest figures from Netflix show and companies like Seesaw and Setanta have proven in the past. Netflix' traditional by mail business made a massive $134 million in profit on $291 million in revenue. Streaming video was far less profitable, bringing in $83 million from $533 million in revenue.

Not owning your own rights makes you a broker, not a business. And that's exactly what Netflix and Hulu are, which is why they have no real value, since their suppliers can turn off the tap at any time.

Just think of all the money it takes to make a good TV programme. Showing it once on TV ain't going to pay that back.

If you own rights, you have some value, to the total of those rights, and if you can take rights and turn them into profits, then that's the modern alchemy: it's what the old broadcast model now needs.

That is now our mission at TV Everywhere. We aim to be modern alchemists.