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  • Mexican Standoff

    By: David Evans on August 20th, 2007

    Getting everyone on board is one of the biggest problems faced by the catalysts that are trying to shake up and create new industries. Randall Stross’s article in Sunday’s New York TimePass the Popcorn. But Where’s the Movie.—highlights the problem faced by video-on-demand. The cable television guys needed to get content owners—the studios that make and own the pictures—to come to the party to ignite their slick video-on-demand businesses. But so far the studios have mainly sent their ugly wallflowers leaving video on demand with too few interesting videos to get much subscriber demand.

    Stross suggests the studios are being shortsighted and could make more money if they provided the cable guys more content. I think it is more likely we’re seeing a Mexican standoff between the cable guys have a lock on a huge base of subscribers who might like video on demand and the studios that have a vast amount of content people want to watch. The cable and studio guys haven’t been able to agree yet on how to split the video on demand pie. Each wants a bigger slice than the other is willing to give up.

    Of course while the cable systems and the content owners stare each other down the world is moving along pretty quickly. Like an increasing number of people I rely less and less on my cable television provider—I’ve watched three seasons of Lost on my iPod and have never seen the show on the television set. Then there are the really cool new entrants like VuDu which distributes content—including lots of movies—through a peer-to-peer network. Meanwhile the barriers to producing and distributing content are falling and the studios are facing lots of competition for eyeballs.

    My guess is that the cable guys are going to have to give in a bit to the studios. The studios have lots of ways to get their content out there and don’t really need to rely on cable to do that. The cable guys on the other hand don’t have a lot of ways to get content that’s going to make video on demand interesting to their subscribers. Like all catalysts, the cable systems have to get the pricing right for video on demand. They may be the short-sighted ones in insisting on too big a piece of the pie. What do you think?


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