Content Revolution: Winners and Losers

This column was originally published on RealMoney on Nov. 10 at 4:03 p.m. EST. It's being republished as a bonus for TheStreet.com readers.

This week has brought a flurry of developments in the ongoing content revolution. Two of these developments got a lot of press, but only one really matters, as it is a positive for two of the companies involved in the future of video content.

• In a flash of corporate vision akin to the tobacco companies recognizing that smoking causes cancer, NBC and CBS announced that they will join ABC in letting people access their content in new ways.

• Yahoo! and TiVo announced a deal in which the two companies will work together to enable TiVo-recorded content to be more easily accessed from more places and in more ways.

• Grokster, the highest-profile P2P platform out there today, capitulated to the music industry and will no longer allow consumers to download its software.

So let's recap.

The fact that NBC and CBS will enable some of their distributors to make their respective content available to subscribers for 99 cents apiece after the shows have been broadcasted simply isn't big news.

Let's call a spade a spade here. Very few consumers are interested in paying for content they can get free -- at least right now. I mean, most of the people who are savvy enough to subscribe to video-on-demand are the same folks who can figure out a DVR, and they'll use that DVR to record those shows when they're actually broadcast. The networks will see some paid-for downloads, but this is not a sustainable business model for the near term.

In some sense, this is the network equivalent of the same "unbundling" theme that the labels have had to deal with. You do realize, of course, that the 30 or 100 or 200 channels you pay for on your cable bill are, by definition, bundled? And furthermore, each channel bundles its TV shows. If consumers have hated paying $16 for an album that contains only one good song, imagine how much consumers hate paying $130 per month for four episodes a month of five decent shows.

That's the catch, of course, and the reason why this 99-cent VoD model will fail. While iTunes has had huge success selling unbundled songs at 99 cents each, the same companies that have tried to force consumers to subscribe to a service have failed to catch any traction. You really think consumers who are already subscribing to bundled cable services are going to be willing to pay another 99 cents for downloads on their TV?

And thus we segue to the other two big developments this week and the actual future of video content.