i don't think this is as bone-headed a move as you are all suggesting. they aren't thinking about how many new customers they might get at $2-3 an episode, but how many they are going to LOOSE at $20 a month if they do it. and i'm with the execs in assuming that number is going to be way bigger. how many people do you think subscribe to HBO to watch movies they've already seen? just about none. the original shows are the draw. it would be like cable companies giving us the option to pick individual channels at a buck each. yes, it would be great for us, but their revenue would plummet.
They could charge $10 for an online subscription and pick up hordes of users.
This. What the execs, and you klaustrophobia, are discounting is the sheer number of people who torrent/download/stream content illegally because they have no (1) simple and (2) economical alternative for their usage desires. Used to be providers could count on the monopoly effect - if you wanted only some content, you either ponied up the ridiculous subscription fee, or you said forget it. Now, users are setting the terms of content delivery, and if providers don't oblige, users will get it without paying for it. Much as I loathe piracy, I actually think it serves a very important function - it makes creative providers rethink business models, and make a ****load of money in the process. Look at the unqualified success of iTunes - NO ONE in the music industry wanted to monetize music on a per-song instant-download basis. 12-13 years after Napster got big, and the amount of money made off iTunes and comparable services absolutely dwarfs the amount of money potentially lost to pirates.
I've made this argument before, and it's worth repeating. There are essentially 3 types of content users out there (group 2 can be further broken down, but I'll leave it as an umbrella):
1. "The honest folk" who will always pay for something, even if they are ripped off, gouged, disrespected, or otherwise damaged by the business practices of the provider. This is a small minority. Includes the vote-with-your-wallet crowd.
2. Pragmatists, who prefer to pay for content and do things above-board, but who demand services be reasonably-priced, easy and convenient to use, and hassle-free. These people used to be part of the vote-with-your-wallet paradigm, but now they also [can] obtain the content anyway (illegally) while denying providers revenue. The overwhelming majority of the Internet-savvy generations fall into this broad category, and this is where providers are losing a ridiculous amount of revenue when they pull stupid stunts like HBO. Instead of getting $10/mo online subscriptions from even a modest number of users, they're getting $0/mo and the users are getting the content anyway. This is the group that politicians end up legislating against, instead of who they think they are legislating against, which is
3. Pirates, who will never pay for anything, ever, be it because they're cheap, broke, or just on whatever principle they use to justify it to themselves. There are a lot fewer of these people than providers and politicians think.
Valve proves this every year with Steam sales - to simplify, if you sell 10 units at $50 apiece or 50 units at $10 apiece, you still make $500 either way. The difference with the lower price is that you broaden your consumer base tenfold, which translates into broader exposure, more referrals, a broader userbase, and higher overall revenue. Valve has repeatedly commented that they make far more money in Steam sales with reduced prices than they make the entire rest of the year with titles at regular price. They've also mastered the art of induced scarcity, which makes more people make the purchases at reduced prices in a shorter timeframe than would do so if the price was set at that level throughout the year.
These same concepts apply to content providers in all media forms. Most of them just have directing officers that are too out of touch and just don't friggin' get it.
