Multichannel news had a story up last night that was mostly a story about how Comcast’s plans for Internet video on demand wouldn’t cannibilize its cable business, but there were some gems in the article (thanks to Liz Gannes at NewTeeVee.com, otherwise the article would’ve slipped past me!)
From the article:
Today cable, satellite and telco TV providers pay an estimated $22 billion per year in programming fees, Gilford noted. “It’s pretty hard to imagine that revenue stream going away,” she said.
Asked about “cord-cutting” — the notion that cable customers would cancel their pay-TV service and obtain all their video content online — Gilford said that remains a theoretical idea rather than a real trend.
“It’s something people are talking about, but it’s not actually happening right now,” said Gilford, formerly vice president and general manager of Yahoo Entertainment.
Who wants to imagine a $22 billion revenue stream going away!?!
For MTV Networks, online video as a business is profitable, said Greg Clayman, executive vice president of digital distribution and business development — but “the bad news is it’s still a small one, certainly relative to the rest of our business.”
We’ve been saying such things for so long, it’s good to hear the executives finally saying it in public. Even Jeff Zucker at NBC is saying similar things with regard to Hulu.
ABC.com is profitable on a gross-margin basis, which means every episode streamed from the site generates a profit, according to Albert Cheng, Disney/ABC Television Group executive vice president of digital media.
“It took us a while to do that… but it’s been really a good business,” he said.
Compared with broadcast, however, Cheng said “we have a way to go” in terms of getting to the point at which ABC is generating the same amount of profit on each episode no matter where it’s viewed. “As successful as we are with ABC.com, most people still watch TV,” he said.
Cheng has a different take on it than Jeff Zucker though:
The tradeoff is not the proverbial “analog dollars for digital pennies,” Cheng added. The difference between Internet video and TV is more like comparing “a teenager to a full-grown adult.”