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For The Content Hungry: Cloud Or Cable?

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For The Content Hungry: Cloud Or Cable?

Facebook Inc (NASDAQ: FB) is working on developing original, long-form entertainment, according to a Wall Street Journal report.

The company’s goal is to begin releasing TV-quality shows by late summer and has been in discussions with Hollywood studios over buying the rights to cast off shows as well as creating wholly original content.

The report’s sources indicated that Facebook is willing to put as much as $3 million toward the production of each episode, in line with high-end cable-TV shows.

As part of an aggressive push to own its own content, Facebook is also exploring moderate-cost and short-form content, all aimed at the 13–34-years-old demographic.

The company is the latest to join a crowded field of internet companies producing their own shows, and will be competing against the likes of Netflix, Inc. (NASDAQ: NFLX) and Amazon.com, Inc. (NASDAQ: AMZN).

Related Link: Netflix Vs. Amazon Prime: The Battle For Apple TV Screen Time

Cloud Or Cable?

Facebook’s shows are expected to carry ads, but it’s not hard to see the company adopting the subscription-based model employed by Netflix and others.

With so many different streaming services available now for monthly fees, it begs the question of whether having them is still cheaper than cable, which besides being ad-free and online was the major driver behind Netflix.

One of the benefits of cable was that, before the rise of online production studios, all the content people were watching was available in one package.

Now, assuming consumers want to watch the original shows of each major company, they have to sign up for each one. Although individually they are all much cheaper than cable, the cost quickly adds up.

Here are the monthly fees for the biggest subscription video-providers that produce their own original and/or exclusive content, based on the cheapest tier with full program offerings:

  • Netflix: $8 per month.
  • Amazon Prime: $8.33 per month (sold as $100 per year).
  • HBO Now (Time Warner Inc (NYSE: TWX)): $15 per month.
  • Hulu (a joint venture by Walt Disney Co
    (NYSE: DIS), Twenty-First Century Fox Inc (NASDAQ: FOXA) and Comcast Corporation (NASDAQ: CMCSA)): $8 per month.
  • Showtime (CBS Corporation (NYSE: CBS)): $11 per month.
  • YouTube Red (Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL)): $10 per month.

Subscribing to each platform would add up to just over $60 per month, or $724 per year, before tax.

For comparison, Comcast’s Xfinity, the largest cable television provider in the United States, charges $62–69 per month before tax for its Digital Starter TV package, based on the customer’s region. The package is the lowest tier that includes all the major channels.

Xfinity does have it’s own online streaming service, but has no original programming, whereas Netflix, Hulu and Amazon Prime all have non-original shows and movies as well.

Amazingly, even signing up for all six platforms would still be cheaper than cable — not to mention the extra benefits that come with Amazon Prime.

That said, Facebook employing a subscription model would push the total cost to at least the high-end of cable’s. At that point, the matter is purely a value judgement.

Related Links:

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Facebook, Cannes And The Future Of Entertainment

 

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