Hulu Realizes That It Can't Go Public Because Its Business Plan Is Hindered
from the you-don't-revolutionize-from-the-inside dept
We've been pointing out for a while that Hulu, as well designed as the website is, is always going to run into trouble as long as it's controlled by the TV companies who won't let the company do the disruptive things it really needs to do to move the industry forward. For example, rather than really innovate, Hulu's been focused on this disastrous attempt to create a paywall, that has been such a disaster that Hulu has even admitted it sucks, and has already dropped the prices, because very, very few people subscribed. Hulu had announced plans for an IPO a while back, and there have been rumors ever since it did that Wall Street just didn't buy Hulu as a sustainable company. In fact, we've heard that the key driving force for creating the paywall was to try to show Wall Street that the company could make money beyond advertising.However, with the failure of the paywall, the IPO plans have now gone away as well -- and with it, the hundreds of millions the company hoped to raise. The end result may mean that the company will need to go back to its current entrenched TV company owners for more cash, which will only make Hulu even more beholden to them, making it that much harder for Hulu to do the truly disruptive things it needs to take things to the next level. Instead, it's going to be some upstart (whether legal or not) that will convince people that TV online can be done quite differently than it's being done today.
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If the TV wasn't tied so closely to my internet plan, I'd get rid of it. As it is, I haven't actually watched anything on the TV in close to a year.
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Now, try to make that actually work with paid for content, and suddenly there is no workable business model. The number of commercials required versus the content delivered just doesn't line up with what the public expects. So you have a shortfall of revenue that makes it a non-functional business model.
Remember this: If enough people "cut the cord" there won't be enough people left paying the bills. Then all the wonderful free content you are enjoy disappears. Cause and effect in media.
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here here
I got max cable, I dvr for the ratings on the shows I like.
But I still download most of the TV shows, as they do not have the commercials in them.
I keep thinking about getting rig of cable TV, I might do it one day.
I do wish I had FIOS availability where I am.
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Want to be disruptive create something that don't depend on the TV guys.
Youtube, Vimeo and others will be the next big thing.
People are starting to find themselves in better positions producing things for it, but something like Jamendo for videos is going to happen sooner or latter.
I think I saw Cotsco in the U.K. financing producer to produce content they can sell for cheap, that is the way forward produce content, forget about trying to deal with the old guys they don't know how to make money on the internet and will go away. Trying to deal with them is a waste of time and money.
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Unfortunately, it's much harder to get away from this in the TV industry than in the recording industry. Nowadays, a talented musician can make and distribute an album without the huge upfront cost that it use to require. But making a TV show requires a lot of capital (there are some exceptions, like It's Always Sunny, but in general this is true), and unless there's a generous benefactor out there willing to grant a ton of money to some producers, we're kind of stuck with the shitty model from the 1950s.
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How can one provide ad-free, overlay-free, running ticker-free, up-to-date and a broad selection of content with a business model that does not rely upon a paywall?
There are some of us who simply want to watch shows without being innundated with smiling people who just used K-Y, commercials for prescription drugs, etc., all of which under ad supported models pop up about every 10 minutes and run for about the next 5 minutes.
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See, it's easy!
Oh, they can also sell t-shirts and hoodies. A whole bunch of them.
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Seriously, show me something like HBO and maybe I can get on board.
Whether or not people care to admit it, the vast majority of high end content is coming out of the doors of the malor players in the TV and movie industries.
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Re: Frustration...
Here's one way to raise money and funds
Here's another!
You don't need an advertising model to find ways to promote yourself. You need to be able to execute the idea in your head. That's what matters most.
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Yes, as broadcast TV has been free of charge to the end user for decades, I'd say that model is pretty well proven.
"Remember this: If enough people "cut the cord" there won't be enough people left paying the bills. "
Why? What, exactly, stops them from being able to deliver quality ad-supported or subscription material in the same way that business has always done? Why can it not work, simply because it gives the end user a choice?
I'll be over here, with cash waiting in my hand for any business that the TV companies actually allow me to pay for the content I want - the content I'm not allowed to pay for due to silly licensing rules.
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Seriously, you should do so. There's a place for people to make storyboards of their own, where people can foment ideas about upcoming episodes, and find new ways to make the show "theirs" so to speak. Of course, there's the regular writers, but this is the first show to actually include the audience in the process.
That's pretty damn innovative. You can't get that by just thinking a quick glance at the site tells all about it.
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Which is a tragedy, although I'd happily swap Bruckheimer's shows in for half the crap that passes for entertainment .
"Seriously, show me something like HBO and maybe I can get on board."
There's technically nothing to stop HBO from accepting payment for their content free of licensing restrictions and ties to cable companies. They just have to sort out their business model so that they don't need to get every penny of their operating budget from US-based cable subscribers. Many people - myself included - would happily pay were we to be allowed to do so.
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I just don't see it happening. I do think it's more likely that a company like RedBox would expand to a 2 or 3 channel distribution types aligned along the copyright holder's requested royalty rate.
Even contenders such as AppleTV and GoogleTV have a dubious future at this point because the ISPs are running around like chicken little saying "The sky is falling and we don't have bandwidth" when in reality, capacity is increasing and there's still copious amounts of dark fiber in the US. Only about 35% of fiber-optic lines across the US are actually in use and in the past two years, there have been discoveries to make lit fiber 10x more efficient. So there's no reason to upgrade or lease addition lines because in many cases it costs less to do an upgrade.
The bandwidth is there, it's just a big shell game.
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Netflix isn't free, people pay. What are they paying for, timeshifting of the product, easy low cost one time (or a few times) access, delivery to them NOW (timeshifting would be collecting all the eps of a season into one session).
So, demand, money, legality. All there. MMORPG's, facebook, online porn are or will build the infrastructure. Networks made money when homes had 3 channels and a 50 mile at best pickup. Now I could get a tv show live from Japan if I wish in Nova Scotia for the same cost of a TV station down the street. Yet, I can't get a ball game one state over due to blackout rules, guess I'll watch a Japanese girl cook yogurt in a bikini and a ducks head.
Why can't I? Lawyers and 'business models'. Put content out, give me a way to pay, and let me give you money. It would work for MLB it would work for Jerry Bruckheimer. Oh and by the way, Jerry Bruckheimer has had plenty of flops too-he just keeps going.
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If you're trying to say that you DVR the shows you like to help their ratings, even though you actually watch the show via downloads, then don't bother.
Unless you're a participating member in the Neilsen TV ratings program, no one gives a crap what you watch on your DVR, and whether or not you record a particular show on your DVR will have no effect whatsoever on its ratings.
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the race is not always to the handsome
I'm all for innovation, and you may turn out to be right, and I hope so, but your argument doesn't seem strong. Yes, if HBO dies then its audience will go elsewhere, that's sort of an ecological/evolutionary argument. But evolution tends toward survival, not sophistication; HBO's successor will be better suited to make a profit (or at least stay afloat) in the new ecology, but that doesn't mean that what it produces will be better art.
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Isn't that cable? If you mean that it has to be online, digital, free of obnoxious DRM (pardon the tautology) then do you really mean you'd pay for material that's available free online (as it will be five minutes after it's broadcast from the primary)?
The whole idea of cable was that for a price it would provide television that was of higher quality and/or less cluttered with advertising, as an alternative to free broadcast TV. And it did a booming business. Therefore it was providing something that broadcast TV couldn't.
Broadcast TV migrating to the internet? Sure, I suppose (although the viewers' new abilities to expunge advertising will be a challenge to the old model). But cable? With the quality that cable viewers have come to expect? That basically can't happen unless the producers can find new business models that are as rich as the old ones-- read that again before you rush to rebut; there are new business models, sure, and there will be edgy and innovative internet TV, but that alone doesn't mean it'll be as good as what came before.
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Here is the meat of what matters IMHO....
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Re: the race is not always to the handsome
The content you enjoy costs money to make. It cost a lot of money to make. Yes, you can make it cheaper. Yes, you can make it for free. But you won't make it to the same high production standards, you won't get people to give up 46 weeks a year for free, the writers, producers, the actors... none of them will do it for free for very long.
It is just a simple concept: Somewhere, sometime, somehow, someone has to pay for the content to be made.
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Re: the race is not always to the handsome
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There a few reasons here. First is the basic concept of a generation who refuses to watch any commercials, gets incredibly upset when there are any ads before or during their programs, etc. Internet, TiVO, and downloads have taught people that there should be no commercials.
Quite simply, if there was a commercial in it, someone would download it, edit the commercials out, and put it on TPB (or wherever). There is a mental block against commercials.
Second, there is audience aggregation: You have to be in a position to have an almost assured number of viewers to make it worth doing. When network TV sells 30 second spots in the $250,000 range on a regular basis, it is part of the process that allows them to commit to taking 26 episodes of CSI for the year. Without the assured income (pre-sold way ahead, because the advertisers are betting they will produce even more eyeballs), they wouldn't be able to do what they do.
Finally, there is a question of time. A couple of million views over a year for something online sounds great, but that is for the entire world. A single episode of CSI on CBS might be seen by 20 million people on a single night, and they do that for half the year, and then repeat the episodes to about half that many people all summer. That is somewhere between 750 million and 1 billion views - US ONLY! The list of internet websites getting that sort of traffic a year is a pretty short list.
Finally, you may have cash waiting in your hand, but you are a rare bird. For the most part, your generation doesn't want to pay. That is the real sickness in all of this, 99% of the people are waiting for 1% to pay the freight. Soon, that number will be more like 99.9% waiting for 0.1% to pay, and so on. When everyone learns not to pay, it takes a very long time to change that. Piracy doesn't just give someone a free copy of content, it erpdes the market for it, and makes it harder and harder to produce on a reliable, profitable basis.
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Just because you're blinded with the old-school way of thinking "gimme money for DVDs/plastic music discs/lightning in a bottle" doesn't mean the world isn't going to keep moving on and past that.
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Re: Re: Frustration...
Pay for production? Sure. I think they call that PPV these days, the only difference is someone else pays for the product, and you are "paying them back" when it is done. It removes the risk from the viewer, who only has to pay for the good stuff, not the junk and failed products that never get made.
See? your "new" models is just the "old" models with a new wrapper. If the people aren't willing to pay, it doesn't matter.
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Re: Re: the race is not always to the handsome
The problem is that the ads are loud, annoying and rarely entertaining. Also, they last for 5 minutes and there are 5 sets of them in a 60 minute show. The only failures here are the ad agencies for making shitty adsads and the networks for allowing so Science damned many of them.
Further, many of us do not want to watch a TV, we are busy, mobile people who want to watch on our phones and netbooks and tablets and laptops. We are offered pathetic attempts to give us these options, so naturallynaturally we go elsewhere for what we want, and as you said, no one cares if the new source is unauthorized.
Don't blame us because they have failed.
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Re: Re: the race is not always to the handsome
I'm sorry, could you point me to any place where people are saying this isn't true?
I would actually say that you have summarized the entire philosophy of this website nicely, somewhere, sometime, somehow, someone has to pay for the content to be made ... but that doesn't mean it has to be any of the current or traditional ways in which people have paid.
You talk a lot about how much it costs to make content, but the problem is ... a large portion of the cost of modern entertainment is artificial. Studio heads making tens (or hundreds) of millions of dollars per year doesn't tend to improve the quality of TV. There is a lot of cost associated with licensing background music, overpaid actors, set perks like food, masseuses, lavish trailers and green rooms, etc. Most movies and TV shows could be made for half the cost with the same level of quality, for a "creative" industry the movie and TV biz doesn't seem to have any creativity when it comes to efficiency and cost cutting.
I've got a place to start - Charlie Sheen is pulling down millions per year and using the money to hire and beat hookers. Maybe we could replace him with someone who would do the show for a few hundred thousand and be a semi-decent human being.
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Second, you basically sound like a ranting old man talking about how the kids won't get their motor bikes off your lawn.
Times change and things tend to improve. Your nasty attitude about "this generation" (of which I'm not even a part) is the classic attitude of elderly people who have romanticized their own lives and childhood and now believe that every aspect of their lives and their person are superior to then next generation.
News flash, people thought that books would turn to crap when they introduced the printing press, your fears are even older than you are.
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No, it's content that I'm geographically prevented from accessing - and that I'm willing to pay for (Netflix, Hulu, any of the other companies who aren't allowed to offer me a subscription).
Some shows I have to wait months or years for. Some never get offered to me legally at all. But, I'm "stealing" if I download them from the "pirates" willing to offer me the service. The internet should free these companies from certain restrictions, enabling them to offer their content directly to everybody on the internet, not just US cable subscribers. That they fail to do so is a shame, and rather short-sighted.
"Therefore it was providing something that broadcast TV couldn't."
...and yet free-to-air broadcast TV still exists. There's room for both, just as there's room for free internet TV, paid-for internet TV, free & paid downloads and all sorts of other business models to exist in the modern world.
Why do you pretend that only one model is viable?
"that alone doesn't mean it'll be as good as what came before."
There are those who feel that quality TV peaked before cable came along and diluted the market. Does that invalidate made-for-cable content? Hell, check out some of the first shows made directly for cable - it wasn't all high quality, was it? Yet, that didn't invalidate that particular business model in any way.
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"That isn't an audience, that is a crew of freeloaders who gets upset when you suggest they pay for anything"
Every thing you said can be shot down by pointing to history ...
Cable TV is a recent development. Up until the mid 1980's people did not pay for TV. That is where things are going again.
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I don't get this article at all
I mean has no one noticed anything that's been going on with "free" video sites in the past few years. Fewer and fewer sites on the web offer to stream free TV shows. The few that do are either loaded with ads or give you a video window the size of a walnut. It's expensive and dangerous (legally) to stream this kind of stuff. Ask YouTube, because that's exactly where they were heading before Google bailed them out.
Even now when people talk to Google about how much revenue YouTube pulls in the reports are sketchy at best. Which leads me to think if it's profitable it's not that profitable. So to sum it up Hulu probably should just keep on moving how it's doing and built itself up as the next Hulu/Netflix so people won't feel like they're getting cornholed when they give Hulu $10 a month.
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I don't think Masnick realizes that his post is evidence of epic fail when it comes to the idea that professional content can be free. Very amusing.
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Re: Here is the meat of what matters IMHO....
The same is happening with TV. Why pay $$$ for a 200 channel cable subscription when you don't even tune in to 95% of the channels? Why subscribe to movie channels when half of them play the same 10-15 movies every day? Why subscribe to music channels when half of them don't play your kind of music (or even play music at all), or sports channels when the games you actually want to watch are regionally restricted or PPV? There's a big market out there for people who would happily pay, but don't want to be tied down by an expensive, largely useless subscription bundle.
The answer for the industry should have been to find a way of doing business that doesn't depend on this kind of bundling, but (as ever), the "pirates" made it there first. Their response has been to try and force the same kind of paid-for bundling on an unwilling audience and then get surprised when it fails...
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I think that truth is going to sting a lot more than anything Masnick says.
...or you know, maybe people DON'T just want things for free, and will pay, as evidence has shown time and time and time again. Maybe the problem is that businesses expect EVERYONE to pay.
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Re: I don't get this article at all
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Let's put it another way. 20 million people watch CSI. They sell about $10 million of ads during the show. That means there is 50 cents per viewer of raw ad revenue. That doesn't include ads sold locally by affiliates (or their internal promotions) in that hour that pays for the transmission and distribution.
All of that "for free", because you didn't pay for it directly. But it isn't free.
All I can say is that your attacks are baseless and rude. The "new generation" apparently hasn't figured out that you have to pay for stuff in order for someone to be able to afford the time and the equipment to make it.
Wake up! When you graduate and get a job, you might have a different feeling. As long as mom keeps feeding you and keeps your tush warm and dry, you never have to realize it.
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HBO is already half way there.
As an option that was always payware, it might even be in a better position to survive the current media upheaval. They have always sold themselves on being "better" and worth paying a "premium" for.
They are already an ala carte service and always have been.
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Texaco just won't pay anymore...
In the past, commercials helped get around this issue.
Now, commercials might not be good enough. That's the real problem here. It's not that people are freeloaders, it's that the advertising aspects of the new media are questionable.
Stuff might actually have to be "good" in order to be produced. TV might end up being more like Hollywood where you spend a lot of money in making a show and the whole thing is a huge gamble.
In that light, the cost of season of a TV show is not that bad compared to a single 2 hour movie.
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TEEVEE
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maybe your content just isn't worth it?
no offense to the old media guys, but you can price your content as high as you want. if nobody is buying it, then it just isn't worth that much. unfortunately for you, you don't get to set the value of your content.
want to know what it's worth? fortunately for you, it's not $0 as you might suspect! how do i know? because netflix streaming content accounts for 2.5 times the bandwidth of bittorrent downloads.
here're all the pieces you need to do your new math:
- netflix has less than 1% of the total catalog of bittorrent.
- that tiny fraction still accounts for well over twice the use.
- people pay at least $8 a month for netflix. $0 for bittorrent.
see? people want to pay.
people just do NOT want to pay what YOU think your content is worth. they want to pay what THEY think your content is worth.
if you don't like that? if you want it to be like it used to be when you were the sole gatekeeper of content? well, buh-bye. the world needs bartenders too, you know?
there are no middlemen anymore.
m3mnoch.
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Re: maybe your content just isn't worth it?
Netflix has it all figured out. People want a large catalog of current content, available on demand for a low, flat rate monthly fee. It really isn't that hard to figure out!
The problem is the content industry cannot wrap its head around the fact that people don't want to pay what they think they should be paid. Under $10/mo is a perfect price point for mass adoption. All of the AC's keep going on and on about "how much it costs" to make TV. Well your choices are the status quo (which everyone seems to agree won't work forever), a Hulu like model gimped with commercials, Netflix like streaming or piracy. Why not choose a method that the consumer likes using and pays for and make it as attractive as possible?
Instead we get insane licensing agreements, blocked content, missing content and lately a push to kill Netflix streaming altogether.
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All I can say is that your attacks are baseless and rude...
Wake up! When you graduate and get a job, you might have a different feeling. As long as mom keeps feeding you and keeps your tush warm and dry, you never have to realize it.
Baseless and rude, huh?
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All cable really does is enable a second type of TV viewing, which is pay for channel or pay per view. Both of those models are also a victim of piracy. If you can get what is on HBO tonight and download it an hour later for free, why pay? if nobody pays, there is no content.
Pay doesn't always mean money, it the exchange of something valuable to obtain something you want. Your attention is incredibly valuable. The younger generation has chosen to now longer use their attention to buy anything, they now just want to obtain it for free. They don't want to give anything to get what they want. Hell, they even complain about their internet bills or sponge off their neighbor's open wireless.
So no, you don't shoot anything down, you just point out that you don't understand what it means to pay for something.
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The problem isn't that The "new generation" apparently hasn't figured out that you have to pay for stuff in order for someone to be able to afford the time and the equipment to make it.
The problem is that people like you think that a show needs to make $10 million dollars of revenue PER EPISODE in order for it to be produced or remain profitable. CSI is an exception to the typical television model - not the norm.
Also, I don't believe anything in your post refutes any aspect of my post. You have romanticized the past and now you demand that we keep living in your fantasy world of how things used to be.
Just because you like what is currently on TV and you enjoy the current model doesn't mean that I have to. No one is forcing television networks to continue producing TV, if they can't do it profitably how is that my problem? The issue isn't that "I don't want to pay." It is more that I already pay too much. I pay for cable, Netflix, internet, satellite radio, devices to connect to those services, and have subscriptions to some other services. The "entertainment industry" gets plenty of my money and only in your head do people "refuse to pay for things."
But enough. Your vision of the future is so limited, so narrow, and so pessimistic discussing this with you is pointless.
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I say the problem is with the TV producers not with the market.
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Willfully ignorant?
Maybe ... Maybe not ...
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I honestly don't know where you got that.
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As I see it, the industry still hasn't come up with a business model I consider acceptable. I used to enjoy watching TV, on TV, but I don't any more. The networks have killed whatever desire I had to watch TV "live". The amount of commercials keeps increasing, product placement is getting ridiculous and now they use popup ads to not only advertise other shows, but also products as well. You can't actually read the cast list at the end of a movie anymore since they shrink the credits and run them by at about 4x normal speed. Not to mention the damn logo plastered down in the corner of the screen. When they start getting rid of all the crap on the screen and scale back the amount of commercial time per epsiode, maybe I'll go back to watching the shows when they air. Not that it would make any difference, since I'm not a Nielson member.
As for the pay channels, I haven't had any of them for years now. You either have to pay for higher tiers of service, or pay steep fees to add just the pay channels you want. Back when I was still on dialup, I had no practical way to download TV shows, but it didn't make me go out and subscribe to the pay channels. I simply went without.
Now, try to make that actually work with paid for content, and suddenly there is no workable business model. The number of commercials required versus the content delivered just doesn't line up with what the public expects. So you have a shortfall of revenue that makes it a non-functional business model.
The industry still has no clue how to come up with a proper business model for people who no longer watch TV in the traditional way. Sure, you can watch some shows on Hulu, if Hulu carries that show and if it hasn't been taken offline. Of course you need to use the POS Flash plugin to view them with and you can't easily save them for future viewing. Then there's iTunes, for which you need special software and have to deal with a bunch of restrictions.
Why can't they put up a site that covers all shows and where you can buy a single episode of a show, with no special software or monthly subscription required, then download it in a standard, DRM-free format?
Remember this: If enough people "cut the cord" there won't be enough people left paying the bills. Then all the wonderful free content you are enjoy disappears. Cause and effect in media.
I guess all the people who are ditching cable for over-the-air signals are killing the industry as well. Why doesn't the media ever vilify them?
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Re: Re: Re: Re: the race is not always to the handsome
* assuming a car that's neither the fastest nor slowest
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