Robert’s interesting post on Shemaroo in “End to end digital content business” helps clarify that one of the issues with cable and PayTV services as currently constituted is that they are still organised around the old model of defining market segments and trying to sell them a subscription for what they want plus a whole lot of stuff they don’t need.

You can do this if you’re an ISP charging for broadband data because it’s a substitutable commodity - I might be paying for way more of a data cap than I’ll use this month, but I’ll do it because I might just use it if I spend more time downloading movies or get some time to watch some NCAA basketball.

With pay TV it’s more problematic - I’m paying for not just unused capacity to watch, but really specific content which I might not actually like in my bundle, and have a negative reaction to close to billing day. Pay TV hasn’t always had the capability to go a la carte with programming, but more importantly they’ve not pushed toward it because they’ve had a largely ologopilistic business model where they can maximise revenue per user (ARPU) by bundling channels.

As Robert points out, digital changes everything and Shemaroo become a great source of inventory for the platforms which need a la carte content, such as AppleTV. As Carl at Blackfriars suggests, the availability of that content is really going to put a dampener on the value of the channel bundle - why would I pay for 24 hours’ content when I only have time to watch 1? A new distribution chain is opening here and however the technology platforms play out, it’s clear that Shemaroo are well-prepared for the future.

This entry was posted on Monday, March 26th, 2007 at 9:30 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.