For the past couple of months I had been semi-seriously concocting a business plan around the sale of downloadable television in a multiplicity of formats (Quicktime, DivX, MPEG, etc.) and resolutions (320x240 up to full broadcast HD). The keys to this plan were an entire line of sexy networkable media appliances which ranged from handheld up to huge home theater devices and, of course, a web-based Video Store for the content. The time, I felt, was right. I figured I had about a year before anyone major got into the game with the specific caveat that, and I quote from my lengthy notes, "Whenever the iPod Video appliance comes out the game is over."
Obviously I was wrong about the one year lead time. However, what I was eerily right about was the price point. My conundrum was how to approach the networks and convince them that money more or less equivalent to ad revenue could be made via direct sales, and also how to keep the price down at what I felt consumers would pay for customer service and quality assurance. Here, quoted again from my notes, are my results:
How much should the content cost?
For serial programs, what are now “tv shows”, I need to see how much networks earn per viewer per show by comparing Nielsen ratings with how costly ad time is during highly rated shows.
The number one non-sports show right now is CSI with 12,854,000 viewers. It is rated #3. I need to divide the amount of ad dollars collected by the number of viewers to get an idea of how much money networks make per viewer per episode.
Hollywood Reporter, in this article, claims that :30 of airtime during CSI goes for $465,000. If one assumes 17 minutes of commercial time during a one-hour program that is a total of $15,810,000 in ad dollars per episode. Mathematics tells us that CBS receives approximately $1.23 per viewer per epsiode. If the company charged $1.50 per episode… maybe $2. $5 for a feature film.
I am obviously a brilliant media pundit. However, doomed now never to be rich.
crossposted to my livejournal