boffin drag and hsn dynamics

My understanding (personal take) of HSN goes like this.

Boffins are a big fixed cost.
If Boffins aren't busy there is a big drag on the company (although there is some long term gain as they are deployed in making product improvements).
Contracts are priced at or near the cost of the Boffins (very thin margin).
Over the life of a contract inevitable updates are needed.
These are charged at full Boffin rate. However much of this work can be done by far cheaper Experts (who are a variable cost). So Boffin drag is replaced with Expert grease.
Similiar contracts again allow for Boffin drag to be decreased and Expert grease to be increased as development costs are shared over them.
HSN owns the program so every time it makes an improvement it keeps it. Increasing the considerable barriers to entry from new competitors also putting pressure on smaller or less efficient competitors. HSN and its small number of competitors should be able over time to extract oligopoly benefits.
Many customers, geographic spread of business and long term deep relationship between HSN and customer plus hosting add security to earnings.
Deregulation is being embraced around the world, the wind is in HSN sails. If it can manage its ship properly there is lots of money to make.
HSN has a list of Boffins it wants not a list of companies. It is debt free. Free cash should flow to shareholders.

(the above is for discussion purposes only, please do your own research for investment purposes)