Something doesn’t add up here for ads.


Let’s look at the simple math: current model for CPM based advertising on network TV is a $15-40 CPM with about 16×30 second ads shown (that’s 22 minutes of content and 8 minutes of ads, 6 national and 2 local).


If you take the top range of all of this $40CPMx16 ads you get $.64 of ad revenue.  Content producers are now proposing to charge $.99 per episode to watch ala carte which is an almost 55% increase in the cost to the viewer (and a hard cash cost, not a soft time cost).


Granted content producers (and networks) also pick up revenue from cable and other providers as content fees which increases the $.64, and probably substantially, but at $.99 per episode, even with a hefty distribution cut to Apple or others this still just doesn’t seem like a good value for viewers, especially given then can already time shift the shows and skip all the ads effectively bringing their cost to pennies.


Consumers want on demand content, but at what price?


Additional posts:
Top Droid Apps | Nike+ vs Cardiotrainer accuracy