The Broadcast Flag... and the PAY-PER-SHOW Model

Posted on Sunday, February 27, 2005 5:14 PM

The broadcast flag is used by content producers to prevent consumers from recording TV for private use (eg. Personal Video Recorders or DVD Recorders). That's just evil by definition. Consumers will not be served fairly by a broadcast flag, because once again our rights are being stripped away...

What went wrong? How could this happen? Because the broadcast flag will prevent consumers from skipping commercials with a personal video recorder (aka. TiVo, Media Center, or brand X from your cable company), the advertisers have went straight for the jugular... and involved the FCC so that their pathetic excuse for ads are forced upon their consumers. This whole fiasco just goes to prove how bad the current system is.

I mean really! Why are we paying a cable/sat provider for channels that were designed to be free? We should be paying them for SHOWS. I'm pretty sure that 5 million viewers paying $3 per show could net a show at least $10million (after the local cable/sat provider takes). How much does it cost to make a single episode of Stargate or Battlestar Gallactica (BG)? Sure SCI-FI Friday (@$1/show; 2xStargates - $8/mo; BG - $4/mo; Star Trek: Enterprise $4/mo) would cost me as much as $16/mo, but they be commercial free, with no ad-skipping required and in the end you would "own" the content as if you had purchased a DVD. Watch it when you want, archive it, whatever - it's yours. The studios could even offer a DVD season pass where they send you the DVD of the season when it's produced at a significant discount (eg. $4/ep for the DVD, for a grand total of $5/episode; 5x26 shows = $104 for a season). It's time for PRIME TIME shows to go to a PAY-PER-SHOW model!

But isn't this all just a pipe dream? With the content producers locked in by advertisers... who have lobbied the FCC to come up with this bogus "Broadcast" flag how do we regain control? I'd rather ask this question: How many shows have failed under this model because of poor program directors? How many freedoms are we going to allow the "man" to strip away? Already Babylon 5 was cancelled, brought back, and canceled. Already Farscape was killed off, and yet due to demand was brought back as a mini-series (to wrap up the season cliff-hanger). Already Enterprise has been cancelled in its best year yet (poor writing killed the first year, and then a program director decided to move it to Friday opposite SG!). Already we've seen the HBO's of the world give up on Stargate - which is just dominating on the Sci-Fi channel.

So then, how could a PAY-PER-SHOW model work? Let's use three shows as an example. Exhibit A shows why we can afford it, and Exhibit B shows why the studios can afford it.

1. Enterprise: Fewer viewers, thus more expensive per episode (just to keep it alive vs. cancelation - initially ;).
2. ER: More viewers, mid-range cost per episode.
3. American Idol: Highest Nielson ratings with the MOST viewers (note: I hate this show), should yield the lowest cost per episode.

Additional Studio Costs: The studios are required to pay a fee to the networks of up to $2M just to host their show. In my model this fee goes away, and instead is replaced by Pay-Per-View fees to the Cable or Sat provider. This could occur as a percentage of cost.

Additional Studio Revenue: Most studios have a number of schemes to add to the bottom line which I don't count here. These include merchandising and other such innovative money grabs as the pay-per-vote American Idol.

Package Deals: Studios and operators could offer package deals (the season pass is one example) that would include discounts for purchasing multiple shows (eg. ER + Enterprise).

Advertisements: The market would bear this one out, but some shows could afford to drop commercials entirely - or make BIG bucks on just a couple. No more local affiliate garbage cluttering up the show.

Seasons are calculated based on 26 episodes (except American Idol - 20). Seasons last 5-7 months. Therefore a season of Enterprise costs less than the cost of the Sci-Fi tier with your operator (assuming $15/mo for 6mos).

To recap, the advantages of the Pay-Per-Show Model are:

1. Flexible Time Slot: Operators could plug the show in multiple times, on multiple days. Users could record it anytime they want to watch it anytime they want to. What channel is it on? We don't need no stinking channels!
2. Studio's Maintain Profit Margins: They have more direct control of their product, bypassing the affiliates entirely.
3. Reason for Broadcast Flag REMOVED: The network is out of the loop - they can't set it if they wanted to; and why would a studio set it? They're getting paid directly through the channel. Like Mark Cuban says: "We don't need the broacast flag. It accomplishes absolutely nothing..." - and now we have the formula to convince the studios.
4. Cancelation? Schmancelation?: The networks program directors would now longer have the ability to kill off our favorite shows by placing them opposite more popular shows (which leads to a lower Nielsen rating).
5. Nielsen Ratings Disappear: Why would we need them? All you'd have to do was look at your invoice statement. Done, right down TO... THE... PERSON... No longer will Nielsen rate my shows lower than they should be.
6. Poor Performing Shows: If a studio doesn't like the profit margin - they can raise the cost, require pre-ordered season-passes... and decide if the market can bear it.

This is my idea, and I license it under Creative Commons' Attribution-NonCommercial-NoDerivs. So if you are a studio looking to try this idea... contact me for permission to use it.