I should take the time to write a proper blog post. This is from an email exchange regarding Comcast-NBC.
Will be interesting to see if they [Comcast] can pull it off. If I was placing a bet, I’d say they will mess up NBC.
Of course, all of this [decline of cable] will take a long time (I’d say substantially more than 10 years to really play out). Cable will be around for a long time. It will die a slow steady death.
There is something else at play on the production side that I haven’t crystalized. When looking at the digital media categories subject to distribution channel disintermediation:
1. Print news (local). Very little content production cost. Easy to report on happenings at City Hall. I would include classified ads under this category (REALLY low production costs)
2. Print news (national/international). Relatively higher cost. Funding the Moscow bureau is a major investment.
3. Music. Very low production costs. It’s pretty easy to record high quality music and there is a lot of talent out there. Cutting through the clutter is the challenge with music (with, I suppose the goal of selling seats at a performance).
4. TV. TV industry has an advantage over music and news. It costs a hell of a lot to create Lost and 24. Costs have certainly decreased, but relatively speaking, it remains expensive and always will. Sports is a bit different. Having exclusive distribution deals is key (the Blazers keep me coming back to Comcast).
5. Movies. Safer than TV. Extremely high production costs to create Iron Man.
What I’m saying is that production costs are a big factor. Relatively high production costs make the transition to digital somewhat less dangerous for the content guys. I agree with you that we are willing to pay for the content we want.
High production value content is the “king.” Low production value content is royalty, but not the king.
Comcast has the right strategy. I’m guessing they will fail in the execution.
Also, have to think about the role that content piracy plays. To the extent that it’s easier to steal, pricing is held in check.
I think that there’s a nice structure to put around all of this (e.g., distribution, production costs, piracy).
