Showtime's Brilliant Blunder

"It's not TV. It's HBO."

For years, that's been the party line at Time Warner (NYSE: TWX  ) , owner of the premium cable channel HBO and purveyor of such high-quality fare as The Sopranos and Band of Brothers. But as avid couch potatoes know, a new millennium has dawned in television, and HBO is no longer king. All together now, say it with me:

"It's not HBO. It's Showtime."

With The Sopranos just one last gasp from cancellation, and worthy replacements Deadwood and Rome being given the back of HBO's corporate hand as well, the network has been doing a fine job of shooting itself in the foot already. The last thing it needed was for Showtime to give viewers a reason to switch loyalties. But now that the CBS (NYSE: CBS  ) subsidiary has discovered how to make compelling television in its own right, HBO is on the ropes. Showtime's Weeds, created by movie house Lions Gate (NYSE: LGF  ) , has won both critical and popular acclaim. Showtime's disturbingly creepy serial-killer, er, serial, Dexter, is gaining ground as well. And in striking contrast to HBO's ratings fixation, Showtime is about to release the latest installment of its Sleeper Cell miniseries, due out Dec. 10. Which brings us to the "blunder" part of Showtime's newfound brilliance.

Like an ordinary network broadcast miniseries, Showtime intends to broadcast Sleeper Cell: American Terror in eight episodes airing on consecutive days. But subscribers to DirecTV (NYSE: DTV  ) , Dish, or any number of cable providers offering Showtime's "On Demand" video-on-demand service have another option: immediate gratification. According to a report in next week's TV Guide, Showtime is making all eight episodes available for immediate download on the day the first episode premieres.

That's a blunder?
Indeed it is. Granted, it's also another mark of Showtime's brilliance. The network's bow to viewers' desire for immediate gratification sets a new level of customer service in the television industry. Meanwhile, Showtime gets to highlight the advantages video-on-demand has over, say, Netflix's (Nasdaq: NFLX  ) watch-it-all-a-year-after-it-aired business model.

Still, from a pure, rapacious capitalist perspective, I have to point out Showtime's blunder here: In offering this unique service, the company's giving away something it could easily charge to provide. charges extra for next-day shipping of purchases. FedEx gets a premium for overnight delivery. Heck, even the post office is in on the immediate-gratification-for-a-price game. Simply put, by not charging for the privilege of gorging on eight hours of primo television right out of the gate, Showtime (and CBS) is leaving money on the table.

Not that this Fool is complaining.

For more on the premium cable channel wars, read:

Amazon, Netflix, and Time Warner areMotley Fool Stock Advisorpicks. To see why, take a free 30-day trial today.

Fool contributorRich Smithdoes not own shares of any company named above. The Fool's disclosure policy is available on demand.

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