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Unbundling in the Air?


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#51 OFFLINE   tonyd79

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Posted 06 March 2013 - 07:13 PM

Notice he's left my chip statements alone, possibly because they are indisputably different.

Analogies suck at some point, regardless. They often start off completely true, but quickly devolve into rubbish.


They don't have to go off the rails before they leave the station. And pieces of different systems can be compared to desperate pieces of other systems as long as you don't fall into the trap if trying to make the entire systems match.
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#52 OFFLINE   Laxguy

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Posted 06 March 2013 - 08:11 PM

They don't have to go off the rails before they leave the station. And pieces of different systems can be compared to desperate pieces of other systems as long as you don't fall into the trap if trying to make the entire systems match.


No, they don't have to. But too many people think that just because one or two parts of an analogy are correct, the rest are.

Desperate people seeking disperate pieces?
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#53 OFFLINE   Diana C

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Posted 06 March 2013 - 08:18 PM

Actually, yes, a hit software product does suddenly cost a lot more. Many more technical support people. An intensive demand for more features and higher quality....Lots of software startups fail - most in fact. We can go round-n-round forever on this. Those in the TV industry believe it is a totally different. They have to in order to continue to justify the price of the product. I don't believe it.


Yes, well....keeping a TV series successful IS like producing a new hit software product...every week! :)

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#54 OFFLINE   pdxBeav

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Posted 06 March 2013 - 09:42 PM

Yes, well....keeping a TV series successful IS like producing a new hit software product...every week! :)


!rolling

#55 OFFLINE   Satelliteracer

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Posted 06 March 2013 - 10:17 PM

Actually, yes, a hit software product does suddenly cost a lot more. Many more technical support people. An intensive demand for more features and higher quality.

As a Directv employee you should know that. I'd call the DVRs successful. I'd say there is a big demand for features. I'd say there is actually a massive demand for higher quality.

Of course other forces allow Directv to be successful with DVRs even when the software is not so great. Microsoft knows all about that as well. In enterprise software this certainly happens as well but generally there is a whole lot more pressure - like actually losing significant business if problems aren't fixed.

Lots of people can work as programmers. Not so many are good at it. Even fewer know how to make a robust product and keep it that way. They too cost more. Everybody in the food chain of the software industry expects better pay at a successful software company.

Lots of software startups fail - most in fact. We can go round-n-round forever on this. Those in the TV industry believe it is a totally different. They have to in order to continue to justify the price of the product. I don't believe it.


The support costs for the DVR (your example) are part of doing business but have nothing to do with the cost of producing that DVR. Apples to oranges. A successful series means the cost of producing THE SERIES got a lot more expensive. That was my example. If we want to go down that path, the successful series not only costs more to produce, but much more is paid in other areas to make sure the investment pays off...more marketing, for example.

And yes, labor costs more in any segment the better someone is, but not sure how many programmers out there are making a million a week which is what a successful season can lead to. Or a sports fee where the salary cap can literally double in a 5 year span and drive costs as a result.

I'm sorry, I don't see any parallels. There are disrupters in every business segment. If it was as easy as you state, there would be someone out there doing it and making a lot of money at it. The cost structure is totally different from every other business. You kill the revenues, you kill most of the content because the content is people driven, unlike most other industries that are goods driven. Even service industries, where salaries and other costs increase...they do not do so at a level like sports or entertainment which drive the expense side so fiercely.
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#56 OFFLINE   pdxBeav

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Posted 06 March 2013 - 10:42 PM

Lots of software startups fail - most in fact. We can go round-n-round forever on this. Those in the TV industry believe it is a totally different. They have to in order to continue to justify the price of the product. I don't believe it.


The highlighted text is the most accurate statement in this entire thread. And not only that, but they have to perpetuate this belief in order to keep everyone in line. ;)

#57 OFFLINE   unixguru

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Posted 07 March 2013 - 03:45 PM

Notice he's left my chip statements alone, possibly because they are indisputably different.


I didn't respond because it wasn't worth a response.

Yes, well....keeping a TV series successful IS like producing a new hit software product...every week! :)


No, it's not.

Keeping a TV series successful is like producing new software releases on a regular basis. Several minor releases and one major release a year isn't unusual in software. Minor are similar in scale to a 1 hour episode. Major are a lot bigger.

The kind of software I'm talking about is well over 10 million lines of code. Not tinker toys.

Your "every week" reference is misleading. Nowhere close to 52 episodes a year. Try 10-12.

The support costs for the DVR (your example) are part of doing business but have nothing to do with the cost of producing that DVR. Apples to oranges. A successful series means the cost of producing THE SERIES got a lot more expensive. That was my example. If we want to go down that path, the successful series not only costs more to produce, but much more is paid in other areas to make sure the investment pays off...more marketing, for example.


Support was only part of what I said.

The large successful product I was involved with was <50 people in a dump building with inadequate infrastructure when I started a dozen or so years ago. Now it's several hundred people in a large new building with massive lab equipment just at the development center; not counting a lot more worldwide (which includes sales, support, marketing, etc). I'd guess the annual cost is probably around 50X larger now.

Too bad details are confidential in all these examples because then we could prove that the investment lifecycle of a software product is in fact similar to the investment lifecycle of entertainment.

Those that support the entertainment model theory are sounding a lot like Wall Street. We're special... don't touch us.

I'd also point out that I lived the software product lifecycle for 30+ years. How many of you actually work at places that create content?

#58 OFFLINE   unixguru

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Posted 07 March 2013 - 04:07 PM

Heh. But unlike TV shows, a successful run of xyc chips has a profitability curve very unlike a successful show. And chips don't cost more to make in large long runs; they're less. Unlike a hit on TV.


Since you wanted a response...

The thing you are missing here is you think about it in terms of a single chip (model). Which in this comparison is similar to a single episode. Just like a chip model the episode gets used over and over again and the older it gets the cheaper it becomes. Manufacturing = distribution.

Is a new company started for every new model of chip? No. The same companies create new chip models continually. Just like episodes. Similar to software.

Do chip (/software) companies fail? Yep. Do people leave chip (/software) companies to start new companies? Yep. Maybe not as often as in the entertainment industry - because there is a bigger barrier to entry.

To those that think its hard to get funding for an entertainment project... it's just as hard to get venture capital for a tech company. Been there and done that too.

#59 OFFLINE   tonyd79

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Posted 07 March 2013 - 05:37 PM

Do chip (/software) companies fail? Yep. Do people leave chip (/software) companies to start new companies? Yep. Maybe not as often as in the entertainment industry - because there is a bigger barrier to entry.

To those that think its hard to get funding for an entertainment project... it's just as hard to get venture capital for a tech company. Been there and done that too.


You still don't have the software/chip company thing aligned properly to the TV series thing.

Yes, a new episode is more like a new version but not quite. I don't know many designs that are updated every week, plus there is no reuse other than the characters and the theme song. The rest is a brand new product every week.

But, why do you continue to compare a startup company to a new TV series? It is more akin to an existing company starting a new product.

Failure rates are far lower in that case for software/chip design than they are for new TV shows. Far lower. Any company in design that fails as many times a pilots are rejected would be out of business. Don't try to sell us otherwise.
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#60 OFFLINE   Laxguy

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Posted 07 March 2013 - 08:22 PM

This thread has morphed to prove my point: analogies are a waste of time and effort as they invariably fail, and the "discussion" turns to the inaccuracies contained therein, not to the meat of the matter.
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#61 OFFLINE   tonyd79

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Posted 07 March 2013 - 08:42 PM

This thread has morphed to prove my point: analogies are a waste of time and effort as they invariably fail, and the "discussion" turns to the inaccuracies contained therein, not to the meat of the matter.


True dat.
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#62 OFFLINE   pdxBeav

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Posted 07 March 2013 - 09:29 PM

This thread has morphed to prove my point: analogies are a waste of time and effort as they invariably fail, and the "discussion" turns to the inaccuracies contained therein, not to the meat of the matter.


I agree. Lots of inaccuracies.

#63 OFFLINE   unixguru

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Posted 08 March 2013 - 08:27 AM

You still don't have the software/chip company thing aligned properly to the TV series thing.


Lots of things are similar but not exactly the same. They don't have to be exactly the same to see my point.

The argument for entertainment price is that the cost model is totally, completely, absolutely different than everything else.

My analogies are to show that there are many similarities, not that they are exactly the same. The root of it is whether entertainment is similar enough to say that it doesn't deserve the different business model that it has.

Yes, a new episode is more like a new version but not quite. I don't know many designs that are updated every week, plus there is no reuse other than the characters and the theme song. The rest is a brand new product every week.


There is not a new product every week. You consume it every week for a few weeks at a time. When doing an analysis of whether I should keep sat I looked up the cost of buying premium series and found the following:

Dexter (SHO) 12 episodes/season
Homeland (SHO) 12 episodes/season
Borgias (SHO) 9 episodes/season
True Blood (HBO) 12 episodes/season
Game of Thrones (HBO) 10 episodes/season
Strick Back (MAX) 10 episodes/season

So many expensive series are 10-12 episodes a year. A maintenance release is similar to a single episode. A major release is similar to 4 or more episodes. 4 maintenance & 1 major a year is similar to 8 episodes. You can play with the numbers all you like but there are many software products that cost more per year to produce than TV series.

You devalue TV series when you say little reuse. It's not just the characters, theme song, production, etc. The very basis of the story line is a huge value. Each episode is an evolution of the story line. The story line is the high risk initial investment. Yep, similar to software (or hardware).

But, why do you continue to compare a startup company to a new TV series? It is more akin to an existing company starting a new product.


It doesn't matter. Some of entertainment is like that. A good deal is not like that. It isn't the network that starts a new entertainment product, it's a production company. The network may or may not have an initial investment but they rarely own the whole thing. These production companies invest in the initial development and then they have to sell distribution rights. The same production company may sell one thing to one network and different thing to another (even one network selling to another: 60 Minutes Sports on SHO). It's not unusual for production companies to pop into existence and then vanish later. Mostly it's just pseudo-independent people that form companies for the purpose of a single production. Even when the production company goes on and on the bulk of a series are contract writers, actors, crew, etc.

Failure rates are far lower in that case for software/chip design than they are for new TV shows. Far lower. Any company in design that fails as many times a pilots are rejected would be out of business. Don't try to sell us otherwise.


You see failure as black and white. It's not. Many software/chip are extremely weak from a business perspective. They may not get killed completely but they also don't make enough money to support a company. Lots of companies can't innovate so as long as products make some profit they remain. One step above a failure. Lots of TV series are like this as well; they stay on the air but the viewership is barely enough. Both have an ROI and it's poor.

You just argued that TV is about existing companies starting new products. If so then they rarely have everything riding on a single product. They too create new products all the time. They may have products that aren't hits but do make enough money to stick around. When a product doesn't pan out... the people just get moved to a new product or their contracts are terminated.

#64 OFFLINE   Laxguy

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Posted 08 March 2013 - 10:54 AM

Lots of things are similar but not exactly the same. They don't have to be exactly the same to see my point.

The argument for entertainment price is that the cost model is totally, completely, absolutely different than everything else.


I stopped reading there. No one has asserted what you've just stated.
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#65 OFFLINE   unixguru

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Posted 08 March 2013 - 03:12 PM

I stopped reading there. No one has asserted what you've just stated.


Really. All the justifications for the current business model claim that it is different from any other industry and it has to be that way or it will either fail miserably or drastically reduce content.

I have not seen a single other industry named that is similar to entertainment. Not one.

Edit: let me rephrase that... Supporters of the TV business model have never named another industry that was likewise special and deserving of a different approach.

Edited by unixguru, 08 March 2013 - 03:26 PM.


#66 OFFLINE   Diana C

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Posted 08 March 2013 - 06:18 PM

Really. All the justifications for the current business model claim that it is different from any other industry and it has to be that way or it will either fail miserably or drastically reduce content...


Actually, what most people would, I think, agree to is that there are many different models under which the broadcast entertainment industry could operate. The broadcast industry could be non-profit, for example, and be supported by a TV tax instead of subscription fees. The United Kingdom operated under such a model for years. It produced some extremely high quality entertainment, but only supported 3 channels.

It could also operate on a fully advertising supported model, where no one pays any subscription fees for content. The United States operated under such a model for many years. That supported 1 to 6 channels, depending on size of the broadcast market.

It could operate on a fully subscription based model, with no advertising at all. HBO, Showtime, Starz and Epix operate on this model, and it supports 4 services across about 50 or so channels, but only a small amount of original programming.

Or, it can operate on a mixed subscription fee and advertising model, where each provider markets a "package" of channels and, to maximize advertising revenue, they strive to be distributed to as many viewers as possible. This model is what we have today in multi-channel broadcasting. It supports almost 300 channels of varying quality and originality, but with a wide breadth of diversity in content.

Finally, it could operate under a combination subscription and advertising model where each channel is offered individually, without any packages. This model was implemented in C-band satellite broadcasting for a few years. It has also been experimented with in Canada. It remains unclear whether or not the costs to the consumer for such a model would be less or more than the package model, since in every case where it has been tried, it has "piggybacked" on the package model.

To be clear, any of these models are viable. They have all been tried, at least partially. However, the marketplace lead to the current model in the US. Some people may feel that this model is unfair to them. Others feel differently. Some feel we should try the a la carte model, but unless and until it were THE standard model, it would be impossible to say whether it was successful.

Personally, it is my opinion that the current model seems to work best IF your goal is breadth of diversity and choice. If your goal is something else, then one of the models may work better. I like the breadth of options I have when I turn on the TV and am trepidatious about altering the model by government fiat, without any evidence that it will deliver the promised benefits.

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#67 OFFLINE   tonyd79

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Posted 08 March 2013 - 06:46 PM

Beautiful post, Diana.
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#68 OFFLINE   Justin23

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Posted 08 March 2013 - 06:57 PM

Beautiful post, Diana.


Agreed...one of the best ever on this forum.

#69 OFFLINE   pdxBeav

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Posted 08 March 2013 - 07:43 PM

....To be clear, any of these models are viable.....


Exactly! Well said. The current model isn't the only one that can work. I agree with you 100%.

#70 OFFLINE   unixguru

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Posted 10 March 2013 - 05:44 PM

Todays newspaper contained a www.parade.com magazine insert with an article titled What People Earn.

It says Mark Harmon, the star (and exec producer) of the CBS series NCIS (#1 TV show), is estimated to make $38 million from his new contract. Says a "healthy raise" over his previous 2-year contract for $500,000 an episode (google search has many estimating $700,000 per episode).

As a side, for those that were bemoaning music industry salaries in the other thread, it also says Adele is estimated to make $32 million.

Obscene. Wealth Inequality in America

#71 OFFLINE   sigma1914

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Posted 10 March 2013 - 05:49 PM

Todays newspaper contained a www.parade.com magazine insert with an article titled What People Earn.

It says Mark Harmon, the star (and exec producer) of the CBS series NCIS (#1 TV show), is estimated to make $38 million from his new contract. Says a "healthy raise" over his previous 2-year contract for $500,000 an episode (google search has many estimating $700,000 per episode).

As a side, for those that were bemoaning music industry salaries in the other thread, it also says Adele is estimated to make $32 million.

Obscene. Wealth Inequality in America


If someone was willing to pay you millions for a skill you have, then you'd decline?
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#72 OFFLINE   dpeters11

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Posted 10 March 2013 - 06:06 PM

Todays newspaper contained a www.parade.com magazine insert with an article titled What People Earn.

It says Mark Harmon, the star (and exec producer) of the CBS series NCIS (#1 TV show), is estimated to make $38 million from his new contract. Says a "healthy raise" over his previous 2-year contract for $500,000 an episode (google search has many estimating $700,000 per episode).

As a side, for those that were bemoaning music industry salaries in the other thread, it also says Adele is estimated to make $32 million.

Obscene. Wealth Inequality in America


And how much does Adele make for her record label? If she makes that much, you can bet the label that pays her makes much more. If she didn't make what she does, the label would be even richer off her talent.

#73 OFFLINE   Tom Robertson

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Posted 10 March 2013 - 06:13 PM

Haven't we had these cost analogies already beated to death (multiple times) in another thread?

And to move things back on track, this is not a wealth inequity forum, much less this thread.

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#74 OFFLINE   unixguru

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Posted 11 March 2013 - 01:38 PM

If someone was willing to pay you millions for a skill you have, then you'd decline?


Of course not! If they are that stupid then so be it.

I would like to decline to contribute to anyone in the TV business that makes anywhere close to that much. But I'd have to stop using TV delivery services entirely. (Ironically, I'd still get to watch that guy for free OTA.) I do feel stupid that I pay what I do for the entertainment I get. There doesn't seem to be much I can do about it other than go cold-turkey.

Like CEOs, pro sports, etc, nobody is justified in making 100's of times more than the average person.

Haven't we had these cost analogies already beated to death (multiple times) in another thread?


How is Mark Harmon's pay an analogy? He is an actor and executive producer of a TV series.

The arguments have been about how they need to make big bucks on the series that are successful to pay for the 70% that fail completely. Mark Harmon and others like him are not a network or a production company. That's his personal pay. How much do people think he turns around and risks on new entertainment projects? I'd bet zero.

He can't be faulted in any way for doing this. It's the system he works in and if he doesn't take all the money he can get then others will. It's the system I have a beef with.

#75 OFFLINE   Diana C

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Posted 11 March 2013 - 01:56 PM

...I would like to decline to contribute to anyone in the TV business that makes anywhere close to that much. But I'd have to stop using TV delivery services entirely. (Ironically, I'd still get to watch that guy for free OTA.) I do feel stupid that I pay what I do for the entertainment I get. There doesn't seem to be much I can do about it other than go cold-turkey....


You'd also have to stop buying cars, food, soft drinks, and anything else that is advertised on TV. The VAST majority of the money that Mark Harmon earns comes from advertisers, not the relatively tiny amounts the affiliates collect in retransmission fees. Advertising rates on NCIS run around $170,000 per 30 second spot. With an average of 20 minutes of advertising per hour in primetime, CBS is collecting almost $7 million per episode.

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