Intermission 010 - Making things on the TV box. (Page 4 of 5)

Actually I think this is going to end up being pretty much the only way to make anything that isn't crassly commercial. Imagine what would have happened if, instead of canceling Firefly, the studio had put a second season option for it on Kickstarter and asked fans to pay upfront to have it made?

Even if everything drops down to 70's BBC budget levels, I doubt it would work

I hope the model won't move towards Kickstarter-funded cable programs (which Trey pointed out the flaws of) but towards something like HBO. You pick the channels that produce shows you like and pay for them rather than paying for all of cable. People who subscribe to HBO for the hits - Game of Thrones, True Blood - also prop up the lower rated shows. Which would mean that the artful shows that nobody watched - like Firefly - could exist along with the big hits.

heh, I dunno if you've been on the Internet lately, but.... 

Only the most commercial things have ever been supported by advertising.    Or to a lesser extent, the subscription model as Allison pointed out.    The only new development is that eyeballs are now moving to the Internet... and advertisers are moving with them.    You can watch a cat video on YouTube and it'll come with a pre-roll and a banner overlay now. 

Some companies will make the transition, others will disappear and some new ones will take their place.   The game is the same, just the players are changing.   The belief that "teh internet will democratize all creativity!" lasted about six weeks, and ended years ago.  Now everyone's chasing the money, just like before.

Hulu, for example, offers both models - ad-based for some content, subscription-based for more content.  Newspapers and magazines are moving to online models, but only as fast as advertisers are willing to buy ad space to make it worth doing.   

The only holdup is that advertisers still aren't willing yet to put money into internet ads as much as the tried-and-true existing venues - because even now the internet as a whole still can't guarantee the number of eyeballs that  traditional media can.   But some companies (like Hulu) are getting close to that point, enough so that they've started to put money into original content.    As is the subscription-based Netflix.   But to get their money, you have to convince them that your product will retain their audience... which means it's already exactly like TV and movies have operated for decades.  Just with less money involved. 

As of today we're still not at the point where an online model of any kind can justify the expense of making The Avengers, or Lost, or anything of that level.   Kickstarter seems unlikely to ever fill that gap, either.    So the question is - will a Hulu or Netflix ever reach the point where they are greenlighting hundred-million dollar projects?    (Or maybe the question should be -  how soon will they?)

To be honest, I haven't seen advertising on the internet in literally years, and I don't think I'm the only person to block ads when they browse.

I'm not sure that I would agree that only the most commercial things have ever been ad supported - I think there was a 'golden age' of ads when people watched broadcast TV and could not skip the ads, but that train has truly sailed at this point.

There was certainly enthusiasm for internet ads, and you certainly still see them, but the initial enthusiasm for that is being radically readjusted as advertisers realize just how ineffective internet ads are in the main. Partly because people interact with content differently, and partly because most content that is time-shifted (DVRed or torrented or whatever else) doesn't even have ads.

Hulu and other streaming models are an interesting phenomenon, and it will be interesting to see how that plays out, but magazines and newspapers are, for the most part, finding that online ad based models are not paying their bills - the New York Times online moved back to a subscription model after not being able to make ads work.

I think the reason that advertisers are not willing to put money behind online ads is not because the are unwilling to try it, but that they have tried it and know that it doesn't work.

Ads have a future in reality TV shows and sports broadcasts, but not in quality programming, which is going to be paid for in the future by some kind of direct payment, whether it is after the fact subscription or before the fact sponsorship through kickstarter or something else. Netflix sponsoring some original content is not quite the democratization that we all hoped for, but it's a step in that direction. Smaller funders making more niche programming and recouping their costs in more creative ways (largely ad free) is the future.

Last edited by TheGreg (2012-08-23 03:29:42)

Well Netflix IIRC has no ads, and is entirely subscription - my premise is that that is the future for interesting content - either pay beforehand through something like kickstarter (you're commissioning a piece of work in the way art used to work), or pay after the fact through some kind of subscription model.

I'm not sure I understand how pirating has any impact on either of these models. Time-shifting / ad-blocking / watching on netflix all eliminates the need to track viewers, since you're no longer interested in how many people see it. Netflix doesn't care what you watch, they just care that you pay the fee. If I pay for Netflix (or if I don't) it makes no difference at all whether I pirate something. What matters is that enough people pay in some way to support the production. Focussing on the people who don't pay is a red herring - producers need to focus on the people who do pay, and figure out how to add enough value so that people do pay.

The problem currently is that producers are marketing a product that is difficult to pay for and inferior to the free option. The future is in producing a product that is easy to pay for and ads value to the free option.

I don't know - perhaps prices will rise, perhaps we'll start taking a longer term view and producing things that will have a longer shelf life and recoup costs over a longer period of time, or perhaps we'll find a way to drive costs down, who knows? Advertising isn't going to be able to pay for interesting content in the future, I'm pretty sure of that.

I don't know that I really agree that costs would skyrocket if every production had to be paid for without ad subsidies though - I'm not sure for any given network what the balance of ads and fees are. The more that viewers pay for content though, the more that content will be produced for them rather than for advertisers, which has got to be a good thing.

I don't know - it's up to someone to come up with a method to pay for this - capitalism being what it is, I'm guessing that sooner or later someone will . Preserving the 'back end' is all about adding value. I buy DVDs even though I could rent, pirate, stream, or borrow them because they add value for me sometimes. It comes back to bottled water - how is it possible that companies can sell a product that people can get for free? Its because they manage to provide something that ads value, is at the right price point, and is more convenient than the free alternative.

Maybe, maybe not. I for one would settle for a few fewer effects based blockbusters and some more smart writing.

There's always going to be some market for effects based rubbish, it's likely that Michael Bay can continue making that using the current models - I'm talking about how artsy fags like you and I get smart things that we want to watch produced. I agree it's going to be hard...

Last edited by TheGreg (2012-08-23 04:22:02)

I think there are two issues going on here - the collapse of advertising as a model for recouping costs, and the idea that niche (read quality) programming needs to be paid for by the (smaller) group of people who want to see it.

I don't disagree. This means that if we want things like Firefly, we'll have to find other ways to pay for them, because studios are not going to make them under the current model of appealing to a huge number of people who are not artsy fags.

Good point, well made.

I totally agree on the bottled water thing - I hate it, it's just an example of a company somehow managing to sell a product that people could get free, in stark contrast to HBO, refusing to sell Game of Thrones to me even though I could get it for free.

I think this is the only industry where customers seem to feel that it's their responsibility to try to help producers and distributers figure out how to provide a product that they want to and are able to pay for. The netflix subscriber problem is certainly an issue for them, which is why I think the kickstarter model of subsidizing production of a show up-front is a more likely model in the future, but yes, people who make and distribute tv need to figure this out.

Well, that's one way of looking at it - another is that if I pay for netflix, but for whatever reason find that tormenting it for free is more convenient then that's a massive fail from Netflix - they have a paying subscriber, and are failing to ad value over the free product that is out there. That's unimaginable in most industries.

Well that's true - there are a lot of people who want to pay for Game of Thrones, for example, but HBOs business model makes it almost impossible for them to do it, while it's very easy to get the show for free. That's a big fail. iTunes and Amazon have figured out how to get people to pay for music downloads even though you can easily download for free - make it available easily with no DRM at a reasonable price. It took the music industry a long time to get there, and the traditional players didn't make it. It took new entrants into the market to see that selling music the old way wasn't going to work in the future.
I think the music example throws some real light on what is happening - there are some people who will never pay, don't worry about them, they don't matter. There are other people who will pay if you offer them what they want at the right time and price. That's economics 101.

Actually I think HBO looked at the actual numbers, and saw they lost money by selling it the way you suggest. They think they can make more money forcing people to buy the DVD or subscribe to HBO then by letting Netflix rent/stream the show or selling it cheaper. If you have to drop the price so close to free to get those extra sales, there is no point in doing so. After all, the goal is NOT to get he largest audience, it's the get the most money. As you say, those people are going to get it free anyway so HBO is ignoring them.

I get that - that's why for most of human history artists have been commissioned by the job by people who paid upfront. Its a relatively recent invention to think that you can work on something hoping to recoup the costs by selling copies of it after the fact. I think we're going to look back on this as a period where the normal rules were suspended for a while, but go back to the kind of model where people get paid based on the work they do, not on how many copies of it they can sell. It's going to be tough to figure it out, but technology and innovation will help provide a new (old?) business model.