Earlier today I was driving home from work and chatting with a friend of mine about “The Vampire Diaries”. I convinced her to start watching the first season via Netflix, and now she’s blown through seasons one and two and is totally hooked. Unfortunately, she’s coming into season 3 partway, and so Hulu and CWTV aren’t offering the early episodes. She’ll have to wait until the DVDs are released, likely at the end of this summer. We commiserated about how annoying it is that she can’t track down season 3 yet, and moved on…but I’ve been on both sides of this conversation where it’s been simply mind-boggling that XYZ show wasn’t available, and how dumb is that…and yes, I’ve had friends who have shrugged and essentially said “Well, you can always watch it now for free if you know where to find it.”
This attitude has always driven me nuts. You can’t justify shoplifting because a store’s prices are too high, so complaining that you can’t get a television show or movie on demand from your streaming or download service of choice doesn’t justify piracy. But nothing sums up the reasons why piracy isn’t the answer better than the AV Club’s article, “Patience and Piracy: Why Helping Yourself Hurts Good TV” It asks, and then answers, the question of “Why CAN’T I get my favorite premium show digitally right away?” as well as explains why stealing it doesn’t help!
Essentially, the answer is that making shows costs money. Lots and lots of money. More money than Hulu, iTunes or Netflix can provide, especially in contrast with cable subscribers, advertising, and network subsidies all giving the “traditional” route a big economic boost for now:
The real fear for HBO is similar to the real fear for FX: If too many people start watching online (legally or illegally), then the network will lose the money it uses to develop the programming that makes HBO a must in many homes. HBO is the market leader because it’s developed a reputation for having the best, most cutting-edge programming on TV, programming that includes hits like Game Of Thrones, yes, but also far less-watched, riskier programming like Enlightened, Treme, and Luck. Unintentionally, HBO has boxed itself into a corner where it needs to keep following the old model—even if it increasingly makes less sense—if it wants to keep making the kinds of programming that made the old model work so well. The kind of shows HBO makes are expensive. Game Of Thrones costs, conservatively, around $5 million per episode, and that’s not including the costs from the pilot’s set construction, which are spread over the length of the production. The only way to find that kind of money continues to be in the subscriber model. There’s a reason HBO has been by far the network that acts most quickly to stop Internet piracy of its programming. If those shows are out there for free, it chips away at the whole business model.
Let’s do a bit of basic math. Earlier in the article, the AV Club referenced 20 million subscribers to HBO, with a cost per subscriber of (roughly) $15/month. That’s $180/year, or $3.6 billion. Now, keep in mind how much of that goes to cable companies, as well as media companies for movie rights. So the actual amount to developing new shows is much smaller, but it’s still a nice cushion that allows them to try “Game of Thrones”, “True Blood”, and “The Sopranos”, and still stomach flops like “John from Cincinnati”.
Let’s say HBO decides to release a new show, “HBO’s download experiment” on iTunes only. It costs them the same as Game of Thrones per episode ($5 million) and they will be selling it for $5.00 an episode. HBO needs to sell 1.4 million episode downloads just to break even (since they lose $1.50 per episode to Apple). And if all they do is break even, there’s no more money to make new exciting shows.
That’s effectively what the AV Club concludes, though they use less math. Unfortunately, they have no better solution, and can only urge patience over piracy. It may be painful to wait, but in my view they are correct. We have seen technology outpace business at an untenable rate, and the only thing to do is wait for the business side to catch up…that is, unless you want all the shows you watch in the future making an episode of “Charmed” look like cutting-edge special effects!