Adam Kalsey

This is the blog of Adam Kalsey. Unusual depth and complexity. Rich, full body with a hint of nutty earthiness.

Business & Strategy

Subscription TV

6 May 2002

Another thing that Kellner said that I found a little goofy is that he’d like to see a model where people can pay a subscription fee to the network for the privledge of watching TV without ads.

There’s several problems I see with that, ones that a TV exec should have already figured out.

First, a model where some people get advertising supported content and others pay for it has problems. A network that does this is cannibalizing their existing revenue stream. Since only the most dedicated TV viewers would pay for ad-free TV, the number of ad-supported broadcast hours will seriously decline. Advertisers won’t be willing to pay as much for the ad space, because the network is delivering less impressions.

Secondly, PBS is viewer supported, and they still have ads. Even HBO shows ads (for their own content) on their ad-free channels. Consumers that pay for ad-free TV, will want completly ad-free TV. I doubt the execs could resist having a few ads, even if they were all house ads.

Another problem is that of time slots. To show an ad, the TV show must be interrupted. So a half-hour block of TV contains less than a half-hour of the show youare watching. Some of that time is comprised of ads. So what happens to your scheduling when some of your viewers are getting an ad-free version of the show? Their version of ER ends 15 minutes before the ad-supported version. What will the network show in those 15 minutes? Do they start the next show? If that happens, by the end of the day, the paying viewers are watching shows several hours ahead of the non-paying viewers. Something will have to be shown to subscribers that fills the void.

What happens with live shows? Most live shows have breaks scheduled so that ads can be shown. If I’m watching an ad-free version of a basketball game, what do I see during the time-outs? What does the subscriber see during the ad breaks in the nightly news?

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