08 Dec 2006

Why Don’t Television Networks Get With the Program?

On Friday, Techcrunch reported on a rumor that the major television networks were planning a joint effort to create their own video web site that would offer the networks‚Äô own content…. Alas, these plans soon fell apart when individual networks started to take favor with Google-owned YouTube after receiving payoffs. Not only is this a great case-study of game theory, it is also an excellent example of missed opportunities and foregone revenue.

08 Dec 2006
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On Friday, Techcrunch reported on a rumor that the major television networks were planning a joint effort to create their own video web site that would offer the networks’ own content. This seemed like a logical move to regain revenue lost to websites that profit from illegally disseminated property belonging to the networks. Alas, these plans soon fell apart when individual networks started to take favor with Google-owned YouTube after receiving payoffs. Not only is this a great case-study of game theory, it is also an excellent example of missed opportunities and foregone revenue.

Why don’t the individual networks make content available on their own websites?!

The other day, I missed an episode of my favorite show, Heroes. The first thing I did was to navigate to the Heroes section of the NBC web site. I found the episode that I had missed, but because I prefer to view shows and movies on my television, I decided that I wanted to download the full episode. After frustratingly poking around, I found out to my astonishment that NBC does not provide its episodes for download. Now, I am hooked on Heroes, and I was willing to pay a handsome fee for getting my episode. I really, really wanted to buy it from NBC, but they just did not give me the opportunity. Instead, I had to go to the iTunes store to buy it.

I am unsure why NBC refused to take my money, and drove me instead to fill Apple’s wallet. Considering all of the tremendous advantages of hosting their own content, it seems like a no-brainer that the networks should get with the program.

Networks have a couple of advantages over user-driven video sites like YouTube. First, they can control the quality of the content that they put up for viewing or downloading. Second, they can easily make money by charging for high-quality downloads. Third, they can drive more traffic to their websites and thereby expose users to other programming by cross promoting. Forth, they can make it easy for users to find the content that they want. Let’s not underestimate the incredible power of a good user experience. It is nearly impossible to find a full-length episode on YouTube; one has to wade through hundreds of twenty-second outtakes before finding the full episode. I would gladly go to the source if it would spare me this painful experience.

Beyond this, television networks are missing out on a boatload of indirect revenue from their web properties by failing to make their content available in a centralized location on their sites. (Read ‘Unconventional Ways Web Sites Generate Revenue‘ to learn what kinds of revenue they are foregoing.)

Undoubtedly, I am over-simplifying the complexities of this strategic move, but given all of the potential benefits of hosting their own content, I find it very difficult to believe that a business case can be made for staying course rather than getting with the program.

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  1. HeroesFan December 8th, 2006 9:05PM

    The networks do not allow you to download the episodes for free because when they stream them to you they can include comercials which you are forced to watch. You can download all episodes from http://www.heroes-tv.com click on “episodes”.

  2. Sergio Paluch December 13th, 2006 12:09AM

    Thank you for your response. You make a very good point. However, I wonder why they could not include the commercials within the episode itself. Alternatively, they could offer commercial-free downloads at a price a la the iTunes store. What’s your take?

  3. Rachel Mac January 4th, 2007 3:06PM

    I agree.

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