How Cable TV Works

Lesson Details

Subject: Business

Title: How Cable TV Works

Description:

<p>The video business, unlike almost any other business, is almost entirely driven by technology.</p> <p>Understand the implications of each new kind of technology and you will understand how to make money from that new technology.</p> <p>Before cable, there were only a very few broadcast networks. The basis of the video business is getting the content into people's homes. If no one sees your video, it is as though you never made it.</p> <p>The advent of cable took lots more content into people's homes. We went from 3 broadcast network to 500+. That meant a big spike in demand for content. Even if you owned a cable channel, you had to have someting to put on it, all day long.</p> <p>In the days when there were only a tiny handful of networks, the networks like ABC or NBC or CBS could produce their own content. In those days, there was a demand for 45,000 hours of content a year. In a world of 500+ cable channels, that demand for content suddnely went to 4.5 million hours a year</p> <p>Who was going to make it?</p> <p>Why not you?</p> <p>Particularly as cable still pays upwards of $250,000 per half hour.</p> <p>Still a good business.</p> <p>If you can create the content they want.</p> <p>Particularly if you can create it with an iPhone.&nbsp;</p>

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Transcript
 

In the 1980s a new piece of technology came along called cable.  And cable originally was designed simply for houses that couldn't get these through the air signals, because there was a mountain in the way, or it was too far away, so some enterprising people put up antenna on top of a mountain ran a cable down to that antenna into people's homes was called CATV community access television. But they suddenly realized that cable to carry more than just the three networks the cable carry 30 channels and then 50 and then 70 and suddenly this was a way to get more channels into more homes and pretty soon everybody, in the United States for the most part and the world, was cabled, andn the idea of pushing signals through the air whet away. That and can easy on top of the Empire State building that was originally a television transmission antenna for New York today everything comes through cable.

Well cable, if you look on this chart, cable took us from three networks to 500 or thousand, or whatever it was, and of course as the number of networks went up number channels went up from three to 500 to 1,000, the average viewership per channel began to collapse, because they were still 100 million households more or less in the United States — it hasn’t change that much in 40 years — but now instead of being divided by three networks it was divided by 500 channels: Discovery, TLC, National Geographic everybody had a channel, or 1000 channels or 2000 channels. The more channels you got on the more the audience got factionalized the smaller the audience got.  As the audience got smaller each network of charge advertisers less and less because now instead of being in 100 million homes or 30 million homes you are in 20,000 homes or 30,000 that which is actually daytime for a lot of cable channels you can charge people a lot of money for putting an ad that's only seen by 20,000 households so as a result it's a funny dichotomy we see this number go up which is demand for K for content this number explodes astronomically.

In 1973 the total demand for television production in the entire United States was 64,000 hours in a year, in a year that's pretty shocking I mean it's next to nothing, and that content could pretty much be covered by the three networks that produce all her own stuff internally. So if you want a job in the television or video business the 1970s you went to work for a network of local television operation was there was nobody else and they produced mostly their own stuff without some deal with Hollywood studios or few independent production companies.

By the 1990s and cable really takes off we've gone from demand of 64,000 hours a year to four and a half million hours a year, that's a huge jump, and 4 and a half million hours of content, because you had to fill all those cable channels there is no point in only a cable channel if you dont put something on it, so every cable channel had to be filled that was new content a new programming all the time.  Well the demand for content went from 64,000 hours to 4 and a half-million hours at the same time the viewership per channel dropped and so did the revenue per channel drop. As there are fewer viewers there was less money per hour there was less money per hour would be made from advertising it was less my to spend on the programming.

© Michael Rosenblum & Lisa Lambden 2016