Tag: television

Television and interior design

One of the most under-rated developments in the world of architecture and interior design has been the rise of the flat-screen television. Its earlier avatar, the Cathode Ray Tube version, was big and bulky, and needed special arrangements to keep. One solution was to keep it in corners. Another was to have purpose-built deep “TV cabinets” into which these big screens would go.

In the house that I grew up in, there was a purpose-built corner to keep our televisions. Later on in life, we got a television cabinet to put in that place, that housed the television, music system, VCR and a host of other things.

For the last decade, which has largely coincided with the time when flat-screen LCD/LED TVs have replaced their CRT variations, I’ve seen various tenants struggle to find a good spot for the TVs. For the corner is too inelegant for the flat screen television – it needs to be placed flat against the middle of a large wall.

When the flat screen TV replaced the CRT TV, out went the bulky “TV cabinets” and in came the “console” – a short table on which you kept the TV, and below which you kept the accompanying accessories such as the “set top box” and DVD player. We had even got a purpose-built TV console with a drawer to store DVDs in.

Four years later, we’d dispensed with our DVD player (at a time when my wife’s job involved selling DVDs and CDs, we had no device at home that could play any of these storage devices!). And now we have “cut the cord”. After we returned to India earlier this year, we decided to not get cable TV, relying on streaming through our Fire stick instead.

And this heralds the next phase in which television drives interior design.

In the early days of flat screen TVs, it became common for people to “wall mount” them. This was usually a space-saving device, though people still needed a sort of console to store input devices such as set top boxes and DVD players.

Now, with the cable having been cut and DVD player not that common, wall mounting doesn’t make sense at all. For with WiFi-based streaming devices, the TV is now truly mobile.

In the last couple of months, the TV has nominally resided in our living room, but we’ve frequently taken it to whichever room we wanted to watch it in. All that we need to move the TV is a table to keep it on, and a pair of plug points to plug in the TV and the fire stick.

In our latest home reorganisation we’ve even dispensed with a permanent home for the TV in the living room, thus radically altering its design and creating more space (the default location of the TV now is in the study). The TV console doesn’t make any sense, and has been temporarily converted into a shoe rack. And the TV moves from room to room (it’s not that heavy, either), depending on where we want to watch it.

When the CRT TV gave way to the flat screen, architects responded by creating spaces where TVs could be put in the middle of a long wall, either mounted on the wall or kept on a console. That the TV’s position in the house changed meant that the overall architecture of houses changed as well.

Now it will be interesting to see what large-scale architectural changes get driven by cord-cutting and the realisation that the TV is essentially a mobile device.

The problem with premium ad-free television

I watched snippets of the just-concluded ICC WorldT20 final using an illegal streaming service, which streamed content drawn from SkySports2.  The horrible quality of the streaming aside (the server seemed to have terrible bandwidth issues), the interesting thing to note was that it was completely devoid of advertisements.

With the quality of cricket coverage in India currently being abysmal due to the frequent cutting for advertisements (I remember getting thoroughly pissed off with the cuts for advertisements before the replay of a wicket was shown during the India-Australia series earlier this year), it made me think about the economics of a separate premium service that is ad-free.

The infrastructure for delivery is in place, given that internet-based legal streaming services are fairly common now (the likes of HotStar). Internet-based delivery also makes it easy to charge pay per view, so payment is also not a problem. This raises the question of whether it is a good idea for channels to monetise the demand for ad-free cricket by providing the service through online streaming, leaving the mainstream broadcast to be monetised via advertisements.

While in theory this appears like a good idea, the problem is with the kind of people who will migrate to the new service – they will be people who have the ability and willingness to pay for a higher quality broadcast. Such people are likely to belong to two overlapping categories – loyal fans of the game and people who can afford to pay a premium.

It is unlikely that the union of these two sets will comprise of too high a proportion of the overall viewership of the game, but the point is that these are the two groups who are likely to be most lucrative to advertisers – the loyal fans watch regularly and the people who are able to pay have more disposable income.

Moving such customers to an ad-free online channel might reduce the supply of advertisements which can be used to reach them, and this might not make advertisers happy. And given that television channels have cosy relationships with advertisers (or at least media buyers), they are unlikely to piss them off by moving the most lucrative customers to a premium platform.

Of course if this segmentation (between ad-free and free broadcasts) is implemented, it will also impact the price of advertisements in the free broadcast. That will need to be taken as an input while setting prices for the ad-free service. In other words, pricing is going to be a challenge!

If some television channel wants to work on this, I’m available for hire as a consultant. I’ve done a fair amount of prior work on pricing and dynamic pricing, am pretty good at quantitative methods and am in the course of writing a popular economics book.

On Sony Six telecasting Pacquiao-Mayweather

Summarising the blog post:

1. Having paid for the rights to the fight, the incremental cost of showing the fight to a customer is negligible, making this a great case for “revenue management”.
2. Each television market is independent, and in each the holder of the rights indulges in “monopoly pricing”. The monopoly price for the US is $~100. For India, it is close to zero. 
3. Television is a two sided market, and by offering the content at Zero rupees in India, the rights holders are maximising the sum total of what they can earn from viewers (subscription fees) and what they can earn from advertisers. 

Now for the harikathe:

So the much-awaited bout between Manny Pacquiao and Floyd Mayweather is going to be telecast on Sony Six tomorrow, as per this tweet:

Some people are surprised that this fight is being telecast on a “normal” sports channel in India, considering that elsewhere in the world it is being mostly telecast on pay-per-view channels, with the payment for one connection running close to a hundred dollars. Yet, in India, we will get to see this without shelling out any incremental cost over what we have already shelled out to receive Sony Six (and most people who are interested in the fight are likely to have already subscribed to the channel since it telecasts the ongoing IPL. The difference between {people who want to watch Pacquiao-Mayweather} and {people who want to watch IPL} is infinitesimal and can be ignored).

So why is it that a fight that is being sold at an exorbitant premium in most places in the world, and billed as the most sought after boxing bout in over twenty years, is being shown at a throwaway price (close to zero) in India? The answer is simple – revenue management.

For the holder of the telecast rights of this fight, having paid for global telecast rights, any further costs of telecasting to an additional television set are marginal. In that sense, any marginal revenue that they make from the further sale of these rights goes directly to their bottom line. Hence, this is a classic case for “revenue management”, where they will try to maximise the revenues from the rights they hold.

Given that they hold monopoly rights over telecast of the bout, we can expect them to follow “monopoly pricing” to price their product. Monopoly pricing, as the name says, is how a monopoly would price a product, which is literally true in this case. For every price point, there is a certain demand, and monopoly pricing prices the product at a level that maximises revenue (price x quantity). And considering that television rights are usually at a national (or even sub-national) level, monopoly pricing can mean that there are different prices in different markets.

The US, for example, is a market that has an established model of pay-per-view, and the price they’ve arrived at there (of USD 90 per connection, or whatever) is a function of this history. Based on historical responses to such events, and what people have indicated as their willingness to pay, this rate has been arrived, and from what I notice on social media, it has probably been successful in terms of raising revenues.

In a market like India, however, firstly there is no established pay per view model, and no “channels” for exhibitors to show pay per view content (Tata Sky Showcase might be an exception but it’s too niche). Moreover, boxing is also not that big in India – while Indians (like me) might be interested in big fights like this one, it is not as big for us to actually pay money to watch. In that sense, even if the channels had offered this fight at a low (but non-zero) price, the uptake would have been small.

In other words, for an event like this one, the “monopoly price” that the owner of the content could charge in India would be extremely small, and even at that price, the number of people watching would have been small, leading to small revenues.

But then television is a “two-sided market”. The content is simply a platform to bring together the advertiser and the viewer, and the amount that an advertiser will be willing to pay for an advertisement can be considered to be proportional to the viewership. In India, where the volumes for a non-zero price will be low, the price that the broadcaster can command from the advertiser will also be similarly low, leading to low revenues all along.

Instead, by offering the rights to Sony Six, which will offer the content for “free” for all its currently existing viewers, the owners of the rights are ensuring that a significantly positive section of the population is going to watch the fight. Which in turn means that a significant premium can be extracted from advertisers, which will form strictly positive revenues for Sony Six, a part of which will go to the global rights holders. And these revenues are significantly greater than what the rights holders would have achieved in case the content had not been offered at all in India.