this post was submitted on 14 Nov 2024
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Explain Like I'm Five
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People 15 years ago used to pay for most television from cable. Netflix, back then renting DVD's, made a paid streaming service by buying the rights to stream for pennies on the dollar.
We're now at a point where streaming is what makes money for most shows, so there isn't the subsidy coming from cable or broadcast like there used to. A TV show is expected to only make its money on streaming.
It turns out people don't want to pay the full price for content, so streaming companies are experimenting with ads to fund the difference.
Who exactly determines what "full price" is? This reads like a statement from music executives in the 1990s when they were charging $25 for a CD with 10 songs on it and claiming piracy was costing them quadrillions of dollars. With inflation, that equates to just under $50 per CD today. Is that full price or is full price whatever people are willing to pay at any given time?
Full price is being able to guarantee that you make your money back on the average release.
That isn't really possible to calculate for as you don't know how many people will buy 'XYZ' until after the fact.
Say two separate movies cost $1M to make and only 5k people watch Movie A while 100 million people watch Movie B. According to this, Movie A would need to cost $200 per copy, while Movie B would cost $0.01. The "full price" would be constantly fluctuating so how could you apply it to the first hundred people who watch the movie? What about the last hundred to watch it?
Full price is just code for "what we want" not necessarily what it takes to recoup their investment. These companies want profit and they want every release to be as popular as something like End Game so they're going to claim "full price" is whatever it takes to reach that $10 billion goal.
It is possible to price because studios are playing the odds. They might make money on one show but lose money on three others. Uncertainty gets baked into a lot of the initial decisions.
And we are seeing that production budgets are getting slashed on television shows compared to a decade ago because the streaming money doesn't compare to cable money.