(04-10-2013 11:14 PM)blunderbuss Wrote: (04-10-2013 10:19 AM)arkstfan Wrote: Riffing on Frank's comments.
Recently one of the executives at Netflix said they are racing to become HBO before HBO becomes Netflix. That is they want to be a content producer who makes must watch shows to get that subscription fee and handle delivery before HBO severs its marriage with cable/sat.
I read a recent article where an agent or producer said the budgets for shows on HBO, AMC, Netflix are huge compared to ABC, NBC, CBS, Fox because they have to have a show that people will not give up. If I tried to cut AMC from our package my family would kill me before they'd let me give up Mad Men and Walking Dead. But the funny thing is, we never watched a Mad Men episode when it aired until Sunday. We started watching on Netflix got caught up, then watched last season on demand with our satellite company. Walking Dead we started on Netflix as well.
AMC dramas are the only one's I ever watch and I watch all of them. Most of the rest of the crap I'm paying for is just that IMO, low quality crap. There's a lot of folks like me. So, I disagree completely with Frank that AMC wouldn't survive in an a la carte environment. I think they're one of the few existing cable networks that would do well.
Right now ESPN gets $5 something per subscriber. It is generally estimated that in an ala carte environment that ESPN would have to charge $30.
I dropped the $5 a month sports package on ATT because I rarely watched it and I'm a big sports fan but I'm not sure I care enough about ESPN's content to pay $30. I almost never watch Monday night football, I don't watch ESPN or MLB. They've lost the EPL and MLS that I do watch.
I watch college football but the season is 14 weeks long and at least 6 of those weeks I'll either be at a game or traveling to/from and see none of the games that Saturday. $120 is a lot of money for 8 weekends of viewing.
Same math hits AMC. They were getting around 25 cents per subscriber they've been seeking 75 cents in renewals. Currently they are in just under 100 million homes, so they bring in $75 million per month if they get all their renewals at the level they want. Realistically they are probably making more like $30 million per month.
What happens if ala carte hits? There aren't 100 million homes that consider AMC must watch. There might be 20 million. So they in theory could get by with charging $1.50 a month to get current revenue and would need around $3.50 to get what they think they are worth.
But it's not quite that simple. Now AMC has to aggressively market to attract subscribers and insure they remain must have to their current subscribers that could easily eat up 50 cents per subscriber.
To market effectively the game changes. Right now they hold up the cable and sat companies telling them pay up or your subscribers will go elsewhere and clog up your customer service in anger. In ala carte cable and satellite tell consumers "you want it, this is the price, pay it". But do you want that if you are AMC? No. You want the cable and satellite companies to push it to their customers. So you are going to have to make it worth their time, and what's more why would Comcast collect and remit $2 a month for AMC for nothing? So now you have to set a price that allows you to pay Comcast for collecting your money and flipping the access switch off or on depending on subscription status. And you want them to push the product not just collect the money.
You can easily push AMC into the $5 territory and then only if you are keeping 20 million households and that may be optimistic. Mad Men has gone off its peak of 5 million viewers to just over 3 million. The Walking Dead season finale drew 9 million on first airing and 1.5 million on the repeat immediately following.
If those numbers represent the "must haves" AMC might be at a price point of $10 to $12 a month.