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Out with the Old

I have been puzzling as to why my Time Warner stock is such a dog. They own all the marquis brands and are rolling out web services and even phone services to a captive market – you would think that’s a recipie for success….

But looking at the Video Ipod and watching more and more video on the web I have come to realize that the cable companies are just middle men, essentially delivery people for other people’s content and the web will soon enable the creative types to go directly to the consumers.

For example, the latest Star Trek was just cancelled because UPN could not recoup the $2M per episode average cost. This cost included all salaries, sets, expenses etc. The show had 8M viewers, not much in TV land but get each of those people to give you a quarter and everyone gets paid!

If Sienfeld could have gotten a dollar an episode from each of its 20M fans that watched it every week it would probably still be on the air – heck you’d have to drag them off! Maybe you could even get the Sopranos team to show up more often if they could cut out all the people who take a cut of what they earn…

So we have in the cable companies (and ultimately, in the networks) an antiquated system for delivering your entertainment. It may not go away tomorrow but it will be going away.

By about 2015 your TV will essentially be a computer and you will decide what you want to watch as easily as you decide what web site to visit. I don’t know who the winners will be, there is so much competing technology out there, but I do know the losers will be the cable and satellite providers and, ultimately, the networks. We will probably Google the top 20 shows and watch previews before purchasing.

Currently a channel like comedy central gets 50 cents per subscriber per month from the cable company. If you paid just 25 cents per episode of South Park, they would come out ahead. Also, they would not need to produce 50 other shows to fill the time, just the 10 shows people actually wanted to watch.

Sure there will be piracy and bandwidth issues and 100 other things to work out but with hundreds of billions of dollars at stake, you can bet the finest minds on the planet will be hard at work looking for new ways to entertain you.


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