Wednesday, 24 June 2009

The film industry joins forces for a new business model

I’ve covered different business models for TV several times before ( here and here, as well as in a recent post titled Is cable subsription model under threat?) - indeed it is something of a recurring theme. However, a new joint movie studios initiative announced last week by Lionsgate, Paramount, and MGM has the potential to really shake things up.

Epix is an new HD TV network that will air movies after they have appeared in the cinemas but before they are released on DVD or BlueRay. But consumers won't pay a subscription or pay-per-view charges, nor specifically need to request the channel is added to their package; and the service will have no advertising. Even better, the same content is available to Epix customers at at 720p resolution.

So what is the business model and how can the movie studios afford to do this? Well for a start, Epix is only available to customers who are taking their tv providers' TV service and Internet service. Epix believe that their service can act as a key differentiator when customers choose a TV package. Epix are also planning to install caching servers directly in the provider’s datacenter thus avoiding the need to stream HD video over second or third party Internet connections. Epix can thus take a slice of the bandwidth cost savings that their caching servers realise for the operator. Epix aren't interested in relationships directly with consumers - they are looking to build partnerships with the cable, Internet and satellite companies.

Looks like Epix could be one TV network to watch.

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