Comment by dangrossman | Hacker News Reader

Comment by dangrossman | Hacker News Reader

Parent Full thread

There's a wildly successful and profitable business model for getting money for TV content. It's cable and satellite subscriptions. More than half of all households in the US pay for a cable subscription.

Everyone (in the US) gets TV content from the major networks for free -- just connect an antenna to your TV. You can pay to get more content, and access to previous seasons, by subscribing to cable or satellite. Subscribing doesn't reduce the ads at all, just gets you more things to watch.

Hulu is an exact replica of the business model, except using the web instead of radio and cable lines, as the delivery method.

Everyone (in the US) gets TV content from Hulu for free -- just browse to their website. You can pay to get more content, and access to previous seasons, by subscribing to Hulu Plus. Subscribing to Hulu Plus doesn't reduce the ads at all, just gets you more things to watch.

The only difference is that a cable subscription averages more than 10 times the monthly cost of Hulu Plus. To expect to not only pay 90% less than cable, but also eliminate the advertising, is unrealistic.

Netflix seems to be able to do it.

They're not. Netflix doesn't carry any currently airing season of network or premium television. Netflix is the new Blockbuster, Hulu is the new cable company. Both of those consumer models have to exist for the content production funding model to continue working the way it works.

Netflix isn't going to produce a full prime time lineup of shows every year on $8 per subscriber. Not at the costs networks currently pay for production ($1.5-2 million per episode generally... with hit shows up to $10-15 million per episode). Either the ads stay, or they figure out a way to produce shows of the same quality for much less money.

To give some perspective, more than $60 billion is spent on TV advertising per year in just the US. So if everyone were to just sell subscriptions at Netflix's price, in exchange for new television without ads, they would need to get... every person in the United States (including all the babies) to subscribe. Twice, per person. Just to make up for the ad revenue, ignoring all the lost revenue of people dropping cable subscriptions. Otherwise, the money that currently funds producing these shows just won't exist, so there won't be anything for them to sell you.

There is no future with everyone on an ad-free Netflix for new TV with content that costs as much to produce as today's network television.

The obvious answer seems to be that the cost of production needs to come down. I wonder how cheaply today's shows could be made if they didn't have the bureaucracy and bloat of the major content publishers behind them?

Reply on news.ycombinator.com