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Here’s a conversation I had this morning on Twitter with Peter Kafka (reporter at AllThingsD) and Rich Greenfield (analyst at BTIG), two of the smartest minds on cord cutting and the future of digital media.
The fifth season of Breaking Bad — in my opinion, the best show currently airing on TV — premieres tonight on AMC, so I figured it would be worth checking on the viewing options for cord cutters. It’s quite interesting.
For a while now, it’s been possible to catch up on the first four seasons with Amazon, iTunes, or Vudu. HD-quality episodes generally cost $3 each, but season passes range — on Amazon, for instance — from $16.50 for season one to $31 for season four. Netflix customers paying $8 a month have been able to stream the first three seasons, but the fourth was only added today. Presumably, AMC’s strategy was to hook viewers with Netflix binges, wring as much revenue as possible from season four, and, in the process, build an audience for the new season.
But what kind of audience? AMC earns most of its revenue from retransmission fees paid by cable companies, so the network certainly hopes a lot of us watch tonight’s premiere as it airs on TV. But cable audiences are flatlining, perhaps decreasing, while companies like Dish Network attempt to hold the line on the fees they pay for AMC’s programming (which is why Dish customers can only watch tonight’s premiere online). That revenue stream may have hit its limit.
To reach an audience beyond what Dish, Cablevision, Time Warner Cable, etc., can provide, AMC makes its popular shows like Breaking Bad and Mad Men available on iTunes very soon after airing on TV. Usually, though, it’s not quickly enough for people on the East Coast to watch new episodes before coming into work on Monday. I’ll be watching to see exactly when new episodes appear on iTunes because, for a buzzy show like Breaking Bad, watching a day after everyone else can be frustrating. That’s the cable TV advantage, more or less. I wouldn’t be surprised if AMC, which is already out ahead of other networks on this score, makes tonight’s premiere available for download almost immediately after it airs.
In any event, AMC has priced the new season very aggressively on iTunes, charging just $22 for every episode. By comparison, the fourth season costs $32. That seems like a strong enticement to cut the cord, at least for viewers who enjoy Breaking Bad but not much other programming that comes with their cable subscriptions. Networks with those kinds of shows — yes, HBO foremost among them — have plenty of leverage, it seems, much as Dish and other cable companies will certainly complain about the $22 pricing. Man, that’s cheap.
[Update: One reason the season costs $22, I realized, is that it’s only eight episodes long. Well, technically, it’s 16 episodes split into two parts, the second of which will air next summer, but I assume the iTunes season pass only gets you part one. I still think $22 is cheap, but that helps explain the pricing discrepancies.]
It’s not clear whether Breaking Bad will be available as quickly on Amazon Instant Video as it is on iTunes, which could be unfortunate for people like me with a Roku box but no Apple TV. Still, it’s striking that the question is whether the new season of a major TV drama will provided to me by Apple or Amazon. In this situation, the cable companies look a lot like Gus at the end of season four: outmaneuvered and without much face to save.