Is On-Demand Coming? Soon? More then I thought?

Okay I admit that I'm coming to this conversation really really late. To say that I had an epiphany about on-demand is like saying you didn’t realize you were hungry until you’d already starved to death. It sure seems obvious now.


Now before I go on, I’ll re-iterate as usual, I know of nothing specific here, these are just some late night ramblings from a guy who has a teething kid and isn’t sleeping enough.


However I’ve really been thinking about this a lot. Not to take away from the cable card announcement at all (as I’ve been dying to talk about it). I think it is really important for today’s market and is a giant step forward.


But what about in 10 years? 5 years? With the AOL announcement, the whole Apple and video iPod and even the 10ft Akimbo plug-in are we moving very quickly into a fully on-demand world? Would a subscription model work? Can it be inexpensive enough - but profitable enough to allow you to get ONLY the content you want?


Imagine that you no longer get TV shows from the networks. Imagine you no longer get football games from ESPN. What if you got sports, in high quality, directly from the leagues? For a subscription fee? And what if those fees would vary. You could get a choice of a specific team, the whole league, a certain game. Maybe the fees go down if your team isn’t doing so well. Heck you could get Australian Rules football in America and get American Football in Germany. Your choice.


But take it farther out. What if you could subscribe to Lost for the year? Or all of the shows from ABC? Or beyond that what if you could subscribe to Lost and all other shows by the Lost creators?


I mean can you have simple interface where you can get any show ever made? Ever game every played? Can you watch the 1968 Olympics whenever you want? Could you skip to certain scenes? How cool would that be?


Does this model even work? What if you wanted local news? How would an emergency broadcast system work? How about people who couldn’t afford broadband? Would it even be profitable?


With all the talk about creativity lately on this blog – would it hurt creativity? I mean would a production company risk money on a new type of show without a bunch of marketing dollars behind it – and ad revenue? Look at HBO? They seem to be doing well with subscriptions.


I don’t know. Just some random thoughts on the subject. It just feels like the world is about to shift on this subject. Maybe it already has.

Comments (16)

  1. Ian says:

    Good questions, I can see it working, at the moment most TV I watch is recorded by Media Center first anyway, so that kind of is the same model

    One thing a on demand model may miss is that you currently may watch somthing because it’s on and then you find you like it, where as you may not have bothered subcribing to it.

  2. Thomas Hawk says:

    David. The utopian dream — from a TV perspective of course. What every consumer ultimately wants. The technology is almost here to do it today. The problem though is the economics of it all.

    The content providers have a tendency to want to hang on to old dead models despite their inefficiency and unnatractiveness as long as the economics are more compelling. It would be difficult for them to give up the current model which is based on advertisting and DVD sales primarily for a true commercial free on demand vision where they would not make near as much money.

    When you have the director of research at NBC coming out and telling us that "God" intended for us to watch TV live and the Chairman of Turner broadcasting saying skipping ads is "stealing," you will not see your vision anytime soon.

    The archive of television is rich indeed. My parents appeared on the Newlywed Game Show in 1966. I was not even conceived at the time. I’ve never seen the show (this is probably not the best example because I understand the older Newlywed Game episodes were destroyed) but how cool would it be for me to serve this up on demand?

    Fiber optic homes will be here much sooner than the content providers will be willing to let go of their model though. HBO is an odd exception that has worked primarily because they produce some of the best and amazing shows on TV today. Take away Six Feet Under and The Sopranos, etc. and HBO is nowhere near as compelling. It is a good model to visit as a successful subscription one but most of television is nowhere good enough to demand those kinds of premiums and even then the revenue that they make pales in comparison to ad revenue and DVD sales.

    I did a post a while back comparing the pace of change in the TV world with the pace of change in the downloadable music world:

    A downloadable on demand world is probably still at minimum 10 years away. It’s what we all want of course.

    It’s great to see people at Microsoft thinking about this late at night — you guys of course would stand to gain perhaps most of all in an on demand world. An a al carte vision would also create a really super meritocracy for TV where much of the bad shows would not get made at all because they wouldn’t be bundled with the hits.

  3. Matthew says:

    David – I’ve been writing and thinking about this alot lately, and I work in the ent. business, I think you’re absolutely right. Whether we like it or not, we’re moving toward an on-demand world. ABC’s deal w/ Apple. CBS’ satellite deal. NBC’s PPV. Now AOL will distribute TV content(albeit dead titles) from WB’s library. Except for ABC’s deal, these are "baby steps" because if you examine each of them carefully, they don’t fundamentally compete against each network’s own TV business model. The guilds are only pissed off at ABC right now.

    However, I believe that MS is poised to become a major player in this area. With MCE and the Xbox 360- they’ve got the foothold they need. The Apple model demonstrated that it’s really about the combination of devices and distribution which builds the consumer base, one or the other isn’t enough.

    The real question is, how can Microsoft make On-Demand Programming a "value-added" experience? Apple does it by putting hit TV series on an iPod for .99. But I don’t think MS needs to copy Apple. I think the answer is in HD – because cable really hasn’t cracked the HD market open yet. MS can bring value to the HD experience by making it "on-demand." They can also bring value by pioneering interactive television – and MS is uniquely positioned to do this w/ Vista. So iHD is part of the future for this strategy also. But ultimately it means putting a business model together that makes sense for networks and for content creators – finding ways to reinvigorate the advertising and subscription models, so that revenue streams are clearly delineated and bankable.

  4. MSDN Archive says:

    Thomas – I read your article and I think I read it before as well. I should probably just say you gave me the idea. 🙂

    Honestly though I agree with both the last comments here by Thomas and Matthew. I think it is a dream. I think there is too much money to be made right now and I think that there needs to be a lot more value.

    I often think of shifts such as these – and it reminds me of the shift from cassette to CD. It worked because there was value for the consumer. In this case it was durability, choice, features (skipping tracks, etc), CD changers.

    Choice is a piece of value – but you have to offer something more. An innovation that people "can’t live without." The question, of course, is how would you make On-Demand something that people couldn’t live without? What Apple is doing is cool – but like several people have said, you’re paying for something you can get for free. My MCE records my shows now. Of course if my power went out or something I might like to be able to get it from the iTunes store. But that is a rare occasion and it is more a novelty then a shift.

    I think the HD idea is good, but not enough. I don’t really care about Welcome Back Kotter in HD. I care that I can get it – when I want. But beyond that I want something more then just being able to get a show. I want more info about the show. Other shows I might like.

    I’m a huge fan of Napster. Not only can I get the music I like (which others usually don’t like) but I can find stuff similar. I want to have someone smarter about music then myself help me find new things I might like.

    These are some of the things that a huge library could offer. It would also be cool to link it to the new and have your favorite shows there as well.

    Just more ramblings. 🙂

  5. I was just thinking/posting about this very thing as it relates to the XBOX 360. I think the XBOX Live Marketplace could turn into an on-demand client with a huge install base. I am excited about the prospect.

  6. Matthew says:

    I agree about the marketplace.

    (everyone: I’ve enjoyed reading your blogs on this topic, too…)

  7. Edwardk says:

    On demand absolutely makes sense but to make it simple, you still need an aggregator. I agree that studios should have the option to offer subscriptions to their content directly but the average user will find it difficult to find this content without a middle man.

    So I was thinking why not leverage MSN as that aggregator. Come up with a version of MSN Search target to multimedia content. An integrated GUI in MCE/Xbox 360 could allow users to either browse by content or search for their show. Once I find my show, I can subscribe to it just like I do currently with the MCE guide. I can then be given an option to either pay for the show or watch it for free in exchange for watching a few commercials.

    My ideal world is one where I can watch or record live content if I choose, but also easily search for shows that I may have missed or that may not be available in my region, and watch them on demand.

  8. George Handlin says:

    EdwardK is right that average computer users will find it difficult to locate the stuff they want. I also like the idea of being able to subscribe to it or watch it with commericials for free. This way you could check it out first and subscribe afterward if you like it. Quite frankly, most things out there I wouldn’t pay for.

    Another comment about revenues, I’m sure there are revenue streams in the ‘hidden’ advertisements in movies/shows. I can’t imagine that the Coke can is always facing the camera with the name showing by accident. 🙂 That kind of advertising doesn’t bug me like commericials do, and when you think about it, it’s probably more effective. What do most people do when the commericals come on? Go the bathroom or get some food (or fast-forward if it’s on tape, pvr or whatever).

    I won’t even listen to ads on the radio when they come on. I switch the station immediately and if all the stations I listen to are running ads, I turn it off.

  9. George Israel says:

    A la cart television can get very expensive very fast. I think that the strongest value-proposition for MCE is to capture as much value from the flat-monthly fee that we pay. In other words, I get to watch all of the shows that I paid for, on my terms. Now the television service providers are smart and like to bundle shows to force the consumer to purchase more than they use, (IFC and the Sundance Channel are usually in separate bundles forcing the consumer to pay for 10 additional channels that they may not use). It’s the music model.

    Obviously, companies like Napster are changing the way we consume music. I for one love the fact that for a low flat monthly fee I can stream and download as much music as I want. Now Napster needs to do this because they don’t have the market penetration that iTunes has. This leads me believe that since the current Television service providers are essentially an oligopoly that they will try to maximize profits (which will be determined by test marketing the a la cart concept adoption and based upon those findings we may begin to see unbundling). However, the power lays with the content owner’s (studios, artists) not the service providers and they could make their content directly available over the internet through MCE and some enterprising company that can provide a superior value-proposition like Napster and the like.

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