Video content has never been more popular, nor have television profits been higher. Original programming has greater strategic value than ever, but this same content is struggling on both the revenue and cost sides of the profit question. So what’s happening?
Television has a business model problem. And it’s killing good TV.
What we’re seeing is not irrational content investments, but the expiration of the traditional TV model. The real problem isn’t a surfeit of “good TV”, it’s the economic model behind it. For close to three decades now, the major network groups have had an incentive to add or spinout a new channel whenever possible. Though consumers came to ridicule channel proliferation and protest its effect on cable bills, this strategy benefited everyone in and around the TV business. Each additional channel not only expanded viewer choice, it led to both greater content variety and the Golden Age of TV we all know and love today. And of course, it ushered in record industry profitability. Year after year after year.