Media companies thrive on one thing -- monetization of content. Owning thousands of hours of library product is no good unless distributional channels create demand. According to news reports, CBS
The theory is this: consumers may want to see old pieces from the past, or perhaps order something more current that they may have missed. Instead of waiting for, say, a repeat of a 60 Minutes broadcast -- or, for that matter, hoping that it will indeed be repeated -- a viewer can go to Amazon and buy a DVD with the desired content. The DVDs will be made to order via Amazon-owned CustomFlix Labs.
I personally love this type of scheme. I remember way back in the day when I used to make custom-music cassettes for myself down at the local record shop (yes, all you young kiddies out there, there used to be something called a "record" before there was something called a CD). I relished such flexibility and service; the concept eventually evolved to music downloaded over the Internet, which is now dominated by Apple and its iTunes juggernaut.
The CustomFlix initiative is something that should retain value over time. That's because a large library of programming is a complex thing to exploit -- there will always be a ton of hours lurking in the vaults that won't justify mainstream distribution in major channels. With CustomFlix, digitized content can be turned into a physical disc when someone orders it, eliminating the need to hold inventory. And while many out there are perhaps wondering if customized-disc manufacturing might be a redundant scheme considering the fact that we're in an age of Internet and iPod distribution, keep in mind that there probably will always be a sector of consumers who won't use such options. Some people would rather have a physical DVD (just as some people will always drive to Blockbuster to rent a movie as opposed to engaging the much more convenient pay-per-view method), or they might not have access to a broadband connection.
All the media conglomerates are trying to find the best practices in terms of developing relationships between their content and their consumers. Companies like Disney
The challenge for CBS and others with such a made-to-order method lies in the marketing aspect -- they'll want to make sure that consumers don't view this as just another novelty to try once and then forget about. And they'll want to move beyond news and into older television programs, entertainment interviews, and so forth -- content that will interest consumers even more than the journalism genre.
If CBS keeps the economics in check with this scheme, then I think the company may have something here. The ability to forego inventory levels implies efficiency, as well as not having to predict what content people will want at any given time. Buyers will tell CBS what they want -- and, most importantly, they'll get it.
Related reading:
- Time Warner uses In2TV to monetize old content.
- Alyce Lomax wrote about a service called Vongo back in January.
- Disney is into downloading its content.
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Fool contributor Steven Mallas owns shares of Disney. The Fool has a disclosure policy.
