TV Economics 101: Why you can't watch every show online for free

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135 Responses to “TV Economics 101: Why you can't watch every show online for free”

  1. yer_maw says:

    Fine, ill bite.

    Doesnt explain time lag though. You think there is any excuse for an already established show to wait months before showing it in another country.

    The bbc run mad men. It should be on the same week as in the US. No excuses, until this happens keep all your theories to yourself.

  2. Anonymous says:

    We’re going back and forth, trying to get a solution to the problem of how to make this convoluted arrangement of producers, distributors, channels and advertisers work together.

    As I see it, the main problem is that the channel’s real job of maximising revenue is getting in the way of their apparent job of providing content to the viewer.

    There is an alternative model, which would solve this problem, but will probably place several cats amongst the pigeons.

    The BBC.

  3. Cruftbox says:

    Disclosure: I work for a large media company.

    “Cut out the middleman & go direct!”

    Well, turns out that doesn’t work. The cost of producing shows and movies are in large part people costs. People involved with creating thigns want to get paid. The actors, writers, directors, composers, musicians, cinematographers, electricians, make-up artists, gaffers, painters, set builders, wardrobe, effects, craft services, etc. all want to get paid. And they have good unions to represent them that insist on minimum levels of pay and hours worked that are part of agreements with production companies.

    In other words, the costs of making a show are in large part due to the fees of the people needed to make the show. Sure, if you get people to work for free, your costs are low, but that is not a realistic model. You won’t get many talented people, even if you pay the standard day-rates. Good people want good money.

    Cutting out the middleman doesn’t change the cost of production.

    Trying to make shows for cheaper is possible, but if you want something like Battlestar Galactica, it costs money because it takes a lot of hard for a lot of good people to make.

    Yes, pirated content is available and competing business model. Many in television have tried to make shows available for free the next day after airing to please those looking to see the programs. Unfortunately, the revenue from this does not equate to the same revenue from cable subscriber revenue and advertising dollars. A web only model cannot sustain the costs of production for any modern television program.

    The Long Tail idea is interesting, but largely impractical to the same rights issues mentioned previously. Going back and getting the rights from the actors, writers, musicians, etc. to re-air old programming on the web is expensive, let alone the costs of steaming it to a tiny set of consumers. 1000 true fans cannot cover the costs of bringing back a series from the 80s, clearing the rights, and publishing it to the net. We’ve done the math, it just doesn’t pencil out.

    I wish I had the answer as to how we all will make the transition away from the traditional subscription TV model. I’d be rich if I did. But no one does.

    In the end, people want to get paid. The old system of cable pays. The web doesn’t pay anywhere near as good. Until that changes somehow, we all will be stuck with rights issues and geoblocking.

    Welcome Craig, good to have you at BB.

  4. Anonymous says:

    Reply on behalf of Norway: ok, we’ll keep downloading for free through p2p then. As a bonus, we’re getting so cultivated in p2p downloading that we’ll prefer it even when the series’ show up on TV, thus slowly eroding the TV userbase and the ad revenue stream.

  5. Zadaz says:

    What an awful mess.

    There’s not just one middleman, but at least two. There are the networks, who offer production companies money in exchange for putting their ads all over their content. (ick.) Then they in turn must work through the cable companies, who have huge infrastructures to support. (ugh.) Take out those two giant revenue sucks and suddenly there’s a lot more money available to the production company. Take on a partner like Google, who already has an established, streamlined network for selling advertising to targeted and localized markets (through AdSense) and there’s your funding. And Google (through YouTube) has the infrastructure to distribute your videos and charge people to watch episodes if that’s something you think is worth exploring.

    What can I do to kill the old business model faster? I don’t really watch that much TV, but it looks like its time to put this horse out of its misery.

    • Anonymous says:

      Zadaz, you’re just trading one middle-man for another. Google still needs to make money and shoveling TV over tcp\ip is way more expensive than cable\sat.

      You might save something but it’s probably not as much as you think. Last I checked, the cable co’s make about $0.25 per subscriber per month off SyFy so if you might make 1/2 that back. Enjoy your 12 cents!

      • Zadaz says:

        Of course Google would be a middle man, but 1) It’s only one. 2) It’s one with the power to do what neither of the others can do: market, deliver, sell, and advertise to a completely global audience. And they could do it for a small fraction of the current cost.

        However it would put the burden of being profitable back onto the production company. I can’t see Google paying for a series or ten. Mitigating this is the long tail of the Internet which means that the long-term profitability is easier, even for one-hit wonders since they’ll still be available to generate revenue. This is in contrast to current shows where not all make it to DVD and far fewer make it into syndication. When they die they die and make not a penny for anyone.

  6. Plato says:

    I’ll second Norwegian Reader up there. Living as I do in Norway we get a lot of American and British television, though delayed of course. And there are certainly some shows I just choose to watch when they air here. But some stuff that does not make it here I do indeed download. And other shows, like LOST, which I used to watch when it aired here I now do not have the patience for so I get the right after they air in the States.

    Yeah, I know, it isn’t right. Just adding my 2 Kroner.

  7. Chris Tucker says:

    I’m a big fan of Time Team, an archeology series produced by Channel 4 in the U.K.

    We will never see the series in the U.S., as it’s just too British. In point of fact, there was a Time Team special about Stonehenge. I torrented the Channel 4 version with Tony Robinson, Phil Harding and the rest of the crew. It was delightful, with lots of details and insights provided by the Time Team archeologists.

    A year later, it showed up on the Discovery Channel. No Tony, no Phil and with narration by (IIRC) Donald Southerland. It was a weak and pale shadow of the original.

    So, I will download Time Team (And Doctor Who and Merlin and any other U.K. TV series I fancy watching) Because I can and I will not settle for chopped to pieces version suitable for American TV.

  8. ghostbuster says:

    Thanks Craig, but here is something else I don’t understand, now that I DO understand why I can’t watch online for free.

    Why…

    I have cable; used to be Comcast, now it’s TWC. They have something called OnDemand. Why are SOME shows from a given network available and others aren’t? If you are an NBC/Universal channel, you seem to be stuffing lots of commercials in there, so why isn’t EVERYTHING available via OnDemand for at least a short time, much like the Hulu model? I am already PAYING for cable TV after all.

  9. Ernunnos says:

    All essays of this type can be losslessly compressed by replacing them with a short video clip of John Goodman in The Big Lebowski intoning, “We can’t do that, Dude. That fucks up our plan.”

  10. Daedalus says:

    Really interesting look at it.

    It’s interesting to see that the studios follow the “blockbuster” model (one big hit pays for a million little flops} that movies and music also follow, and that the internet poses the same basic risk (not being able to make as much money on blockbusters).

    However, I think for better or worse, TV is going online. I don’t even HAVE a TV in my apartment — everything I watch is from Hulu or Netflix — but my TV show viewing has skyrocketed since discovering the services that, essentially, allow me to control the shows I watch and when I want to watch them. Without having to pay extra fees for a DVR or a monthly fee for cable (though the cable company also supplies internet, so they’re getting my money either way).

    So the blockbuster is dying, and the mass market doesn’t exist any more. How do you make money in that climate?

    A: Cultural Floatsam. Collectibles (like boxed DVD sets, or limited-edition toy lines), easter eggs (Warehouse 13 Brand Purple Goo), Simpson/Star Wars-style hyper-branding (Syfy cookie jars!), events (SyFy Con for public consumption every year ($20 tickets! Costume contests for cosplayers!), actors who perform scenes or even special, limited-run episodes on stage, etc.).

    Many TV stations and studios seem to be under the mistaken impression that they need to sell access to their product in order to make a profit.

    They don’t.

    They need to sell things.

    Combine that with a massive industry re-structuring, jettisoning middle-men like studios (each “channel” is a brand that finds its own shows, looking to fan-produced material on YouTube and the like to find cheap but viable programming, actors, effects guys, shows…), and I think you have a pretty viable alternative business model.

    The challenge is in shifting from one to the other, and ignoring the cries of middle-men all along the ranks who claim you can’t or shouldn’t do it.

    SyFy should produce and broadcast its own shows, with as big a net as possible, and sell ways for people to engage with the shows and the network itself, rather than access to the creative works.

  11. Osno says:

    BTW, it’s really cool to have you here. I love all the Stargates, BSG, Caprica, etc… and I really think that these arguments may be useful for all of us.

  12. Razzabeth says:

    Craig, here’s the deal. That was a very nice explanation and all, but it boils down to this:

    If Bob in Norway wants to watch Boing Show, he can and will watch it for free on the internet. Bob loves Boing Show and would like to watch it on Boing Co’s website, so that he can contribute to Boing Show’s future by dutifully watching the 3 minute ads that give the show revenue (however small this revenue may be). But, if Boing Co won’t/can’t make that available for him, it’s not going to stop him from watching Boing Show. He’ll just watch it online, for free, ad-free. Like you can with every other show.

    A more accurate title for this article would be, “Why TV companies shoot themselves in the foot by not making all of their episodes available online where they can get revenue for them, since every show is already available online for free whether they like it or not”

  13. Anonymous says:

    I don’t really care about SyFy (sorry Craig), but when I read this I’m not surprised. With pretty much no actual knowledge of the inner workings of the TV industry, this still seems depressingly obvious: The system is outdated.

    The solution is as obvious. Have regional advertising firms separate from the actual channels streaming the show, so you can easily stream Norway ads for IPs from Norway and US ads for IPs from the US, on the same site. It will take forever for this to work out, but that’s the only sensible solution. Unfortunately, this would make many traditional TV channel models obsolete and they will fight like a raging giant till the end. Until then, Norwegians will continue pirating.

  14. Anonymous says:

    Because I choose to watch Doctor Who commercial-free in high def on the day of broadcast rather than 2-3 weeks later in lo-def and edited down to make more room for commercials I’m a pirate. Color me ‘Arrr’. If lovin Who is wrong, I don’t wanna be right. Global culture needs global distribution. Let me pay the BBC License fee, I’m begging you!

  15. Anonymous says:

    So say I am in country X and I want to see the show A now, you tell me “well, you see we have this really complicated system of contracts and intermediaries and territorial rules that we established decades ago and doesn’t make any sense today, therefore you can not see A, maybe next year, maybe you will have to buy DVDs that you don’t really want to see it, and it will have this drm system that doesn’t let you use it if you move too much from where you bought it, and unskippable ads at the beginning…”
    Then I just download it the very next day and it gets called piracy.
    You can’t compete with piracy on price, if the product you are offering is also significantly worse you are screwed.

  16. Johnny Coelacanth says:

    TLDR, but your premise is faulty as it assumes there’s anything worth watching on ‘SyFy.’

  17. alisong76 says:

    This argument failed to address why I pretty much stopped watching broadcast TV altogether and started downloading/buy DVDs exclusively – TV networks (Australian ones, anyway) thinking they’ll be cute and schedule my show 10 minutes late, then kicking it to a different timeslot altogether, then taking it off indefintely, then bringing it back at 11.30 on a Monday night…I got sick and tired of the obstacle course that is following a show on TV. THESE GUYS are the ones who shoot themselves in the foot, over and over again. How is a show ever supposed to garner a following when they make us hunt for it?

  18. Anonymous says:

    wonderfully informative and educational(even though i couldnt care less about the topic since it doesnt really pertain to me, however i will log it away in my mental files for later use if the topic ever comes up in conversation so i can seem like a pompous ass/KnowItAll). i applaud you Craig for being able to write concisely and making such a complicated explination easy to understand. no joke about the pompous ass thing, im totally going to do that should the opportunity arise.

  19. Anonymous says:

    So here’s my question: Instead of ad revenue, why don’t stations like SyFy put the content online, streaming or download, and charge a subscription fee for it?

  20. bshock says:

    I must admit that I found the title of this piece a bit confusing at first. “Why you can’t watch every show online for free?” That’s silly — you can watch any show worth watching online for free. You just can’t watch it via sanctioned, one-off, poor-quality streaming video.

    I apologize for sounding like one of those cruel pirate types (which, coincidentally, I am), but doesn’t it seem like your lesson in supposed economy reality is just an excuse to maintain economic irrelevance? If I want to watch a show, I torrent it or download it directly. Sure, you could hunt me down and sue me, but while that’s a comfortingly familiar scenario for you, it’s not a very practical, profitable business model for your company.

    Instead of going out of business while crying about the impossibilities of your current business model, wouldn’t it be better for everyone if you came up with a business model that actually worked? It’s up to you and your corporate masters, of course. I just want the occasional piece of entertainment, delivered as quickly, easily, and in the best quality that I can get it. I have nothing against you personally, but if you’re not doing anything for me, I have to say that I won’t even notice when your company hits the skids and you lose your job.

    My apologies, but that’s the real economic reality of things.

  21. gATO says:

    Maybe a part of the problem is seeing the Internet as a competition, instead of an alternative distribution channel. You could have your current deals for TV, but also make shows available (for a fee) on the Internet just after (or concurrently with) episode premieres; that way, I could use the TV to channel-surf, check out new shows, or watch those ones which I’m just a casual fan of and don’t need to catch on first-airing, and then use the Internet to watch those ones which I’m a real fan of, those shows I really want to watch whenever a new episode is released.

  22. dougr650 says:

    It sounds as if SciFi (sorry, I refuse to even type the official abortion of a name) is so focused on maximizing the number of “hit” shows that they’ve fallen into the same trap that many video game publisher have become victim to. The only bets worth making (in this view of the world) are safe ones. This means risk-taking is punished and exploiting known quantities is rewarded. Hence, “sequelitis” becomes the new programming norm.

    BSG was a great show and did great things for the SciFi channel. Caprica is just awful. Airing old monster movies on weekend afternoons probably brought in lots of viewers. Now we are inundated with incredibly lame made-for-SciFi-Channel movies like “Stan Lee’s Harpies” and “Chihuanhas.” Wrestling and reality TV have built-in audiences of young viewers, so now SciFi has mutated into that other monstrosity containing the letters “S.F.” which shows professional wrestling and reality TV series.

    All of these “safe” changes have steadily eroded the initial fan base. SciFi channel used to be one of the 3 or 4 (out of the 500+ that my cable package provides) that I watched regularly. Now I’ve deleted it from my favorites rotation because all they show is crap that has little to do with science fiction.

    All of these arguments about why shows can’t be broadcast online to multiple countries is just rearranging deck chairs on the Titanic. The big problem that SciFi has to solve is how to return to what made it a great channel in the beginning and win back the fans that made it a ton of money with original, good, real Sci Fi shows like BSG.

  23. Osno says:

    Listening to the “people is expensive” argument reminds me of the fact that this world seems to believe that actors, sportsmen and rock stars should be multimillionaires. I never understood why.

    • HarriedGuy says:

      I don’t know what you’re picturing but we’re not talking about money for a few stars. An hour television drama will have over a 100 people working on it for six to nine months. That’s where most of the money goes. We’re talking about grips, construction workers, drivers, greensmen, prop folks, accountants… these are real, live people who are necessary and deserve to be paid.

      • Osno says:

        Yeah, I get that… but I still don’t see it: do you really need 100 people to produce TBB (or Lost, or 24). I see the point in stuff like Stargate (or BSG) if the sets are real… but now that everything is using chroma key, I simply don’t see it. And even so, what’s the monthly wage for crewmen? 15k each? That will be about 150k total personnel cost. The only way a single show (2 weeks – 1 month in front of the cameras? I sincerely don’t know) can cost 2M is overpaid actors.

  24. Ceronomus says:

    The reasoning here makes perfect sense. What, in the bigger picture, really irritates me though? As one of the people who actively campaigned for and went to conventions and got petition signatures to support the creation of the Sci-Fi channel…the re-branding to SyFy and airing of Wrasslin’ is just a slap in the face.

    So, that makes me an irritated ratings household who gave up on the channel that I once championed.

  25. m95lag says:

    While the post make sense in its own way I am afraid it doesn’t change anything, and it does not create any real sympathy for either producers nor for SciFi in this case.

    Clicking a link on BB, twitter, or somewhere else and then realizing it is not available in the country you are connecting from is annoying. No one will go out of their way to see whom has the rights to air the show in their country. They will go to youtube or TPB. Because those sites are globally available (more or less) and known. A non working link also means SciFi’s reputation is going down just a little bit. (Honestly, people linking to hulu and other restricted sites are not very popular.) I understand that it is not your fault.

    But it _is_ your problem.

    You have to fix those non working links. Redirect to whomever has the airing rights in the country of the user for instance. If there are none: sell on demand video for a few bucks. Make it google checkout or similar. Easy and fast. Convince the producers, because if you do not you will be cut short pretty soon. Either by global producers selling directly or by torrents.

  26. Anonymous says:

    You know I would pay for good “Stargate” programs. If revenue is such a concern, why dilute this kind of programming?

  27. Robert says:

    I totally get what Craig is saying, and I totally get that there’s this one producer who spends X per episode, and that has to get recouped by a whole bunch of middlemen each paying a fraction of X, so the more middlemen the better.

    My one issue, apart from being annoyed with the plethora of seemingly useless middlemen, is with the magnitude of X. I’ve heard about Hollywood Accounting. Is it possible that X is too large because of that?

  28. JustOk says:

    Make the “to home” ISPs the new TV stations.

  29. elondaits says:

    I live in Argentina. I, like many people here, follow a lot of american and british TV programs through p2p. That includes programs that are not and will not be shown here, those that are shown with a considerable delay, and those that have a minimal one (about a week). Reality TV shows and suspense serials like Lost or Prison Break have globalized TV viewing needs… we can’t wait to find out the resolution of a cliffhanger or the winner of a contest. I even got rid of my TV set and cut the cable service, since AVI files are much more convenient and my computer monitor is pretty big.

    … And yet I feel sorry that I’m unable to watch these programs legally, since I’d have no problem to download official AVI files even if they come with commercials. I would also consider paying for episodes if the cost is low enough. Google already has figured out how to sell advertisement globally for any web site (right now I’m reading BB with geographically targeted ads in spanish), so that part of the deal is already solved.

    I understand there are a lot of legal and licensing issues… but it’s very sad that you’ll probably figure out how to sue and fine people in Argentina before you figure out how to sell us your product.

  30. Anonymous says:

    Thanks for the article Craig.

    Sorry for the loads of commenters who don’t know what they’re talking about.

  31. funwithstuff says:

    Middle men and distributors do make a difference. I’ve had a free iPhone app (a kids book) on the app store for a couple of months. It’s free, and yet I’ve had under $1000 downloads. Promotion is hard, even for free, and I can’t imagine many TV producers fancying their chances on direct iTunes downloads.

  32. Anonymous says:

    Provide your own online paid subscription model.

    There are thousands of people that no longer have cable, and are left to watch shows online via services like Hulu. I’ve got Caprica and SGU in my queue, but if I knew about more of SyFy’s shows, I’d likely watch more of them.

    I know this would upset the Comcasts and DirectTVs, but it would likely push the cable / sat providers into a la carte packages in order to keep existing customers from bolting. I mean after all, who needs 120 channels??? Me, I just want 8: SyFy, Discovery, National Geographic, ESPN, ESPN2, FoxSports, NFL Network and Comedy.

    I’d pay $2~$3 per channel per month; I bet that’s more than you get, indirectly from cable and sat providers.

    How about it, SyFy? Care to let me pay you $2~3 a month to get to watch all your shows online in the US, with ads?

  33. Anonymous says:

    Copying isn’t getting any harder. It may be that this big, impressive system that produces TV and broadcast media will die or polarise. We will be left without complex series to squee over, good actors to fantasize over and twisting plots to dissect. All that will be left is the confused, chaotic media of the internet crowd, reality and game shows and big,bland 3-D cinema movies.

    Read Peter F. Hamilton’s Misspent Youth for one way this could go down (he even set the date of the Mediapocalpse – 2010).

    And I’ll look at all those glittering edifices left behind, the stories they told… and I’ll do something else. Maybe get a job carving plastic and telling stories around the fire, when the lack of power caused by the power shortages make the Internet brownout.

  34. Kozlow says:

    It’s too bad the powers that be decided that SciFi was too specific. I thought advertisers liked narrow demographics so they don’t waste money on delivering messages to people who will ignore them. Why compete with the hundreds of other channels that deliver the exact same content when you could fill a niche?

  35. Anonymous says:

    Just putting my two cents it – whilst viewing tv online can definitely be more convenient, what about those people that will never get the internet but will always have a tv? They do exist, I know many of them. If programs were to move completely online, they would lose a massive audience who simply aren’t able to access them.

    As some others have stated – I watch online, but then I more than often watch on tv as well… and buy the dvds and other related merchandise. The fact is that if people love a show they want to watch it over and over again, not just the once on television. So I can understand the desire for online availability.

    But that’s just me rambling… very interesting article from Craig. Certainly explains a lot!

  36. shadowfirebird says:

    The thing is, you can make a TV show for a great deal less than $2m. But, it won’t look the same. More plot, more dialogue, less action.

    There *are* shows out there that go straight to the internet. Dr Horrible has been mentioned; Sanctuary started out that way; others exist.

    And if you look at the history of SF TV you see shows that were made for a pittance that are still just as gripping today, if you’re prepared to suspend disbelief for a bit (and isn’t that what SF is supposed to be about?) — have a look at the original Quatermass TV movies, that were done live with just two cameras!

    I suspect that big business TV and film will be with us for a long while yet — but I hope that guerrilla internet shows and movies will become a bigger part of our watching habits in the future, too.

  37. Anonymous says:

    And thus the reason internet piracy is at an all time high. It’s a vicious circle.

  38. Apreche says:

    It sounds to me like the answer is really simple. Syfy, and other TV networks, are just obsolete and useless middle-men.

    The TV producers should take all the shows they make, and put them online themselves. Make them available to the entire world simultaneously and directly. Sell their own ads, sell their own DVDs, sell their own HD downloads on iTunes. They won’t have Syfy, or other networks, taking a cut. They won’t be missing out on money from fans simply because they happen to live in a less populous country.

    If they put the episodes up immediately after producing them, they can get immediate feedback as to which shows are hits, and which are not. They then won’t lose nearly as much money producing bombs.

    What I propose is almost the same business model as used by web-comics. Create free content. Be quality and grow a fanbase. Sell merch, sell ads, sell print editions. Sell directly over the net, and don’t let middlemen get in your way.

    • macrumpton says:

      By dubbing versions of a show in different languages you could target specific countries with the embedded ads and using bittorrent for your distribution you can keep distribution costs to a minimum.

      What to do about people stripping the ads out and torrenting the ad-free results? Just make sure your own torrents are the best seeded and not get too greedy with the ads and people will not bother with the ad stripped versions.
      When I watch a show on Hulu I don’t mind the ads because they are few and far between.

    • Jer says:

      “It sounds to me like the answer is really simple. Syfy, and other TV networks, are just obsolete and useless middle-men.”

      Did you even read the article posted? The purpose of Syfy and the other networks is to provide the guarantee of funding to get the series off the ground in the first place. Much like the purpose of movie studios. They put up the promise of money to get the series made. That’s not “useless middle men” – they’re mitigating the risk that the show’s producers have to front to get the show made in the first place. As the article points out, shows lose money in general.

      That’s not to argue that this is a good system – clearly it’s a system that has a lot about it that sucks. And better systems are probably also going to crop up as new technology makes new methods of distribution more attractive to producers. But the networks are not yet at the point of “useless middle men” if they’re the primary source of funds to get new shows off the ground.

    • Anonymous says:

      Or to restate it – Their job as a middleman is to funnel money from advertisers to the producers of the show, and they’re extremely bad at it. So bad that they can’t even manage to sell ads to the local businesses that might want to connect with the shows viewers.
      They have no idea who is watching the show, they don’t know what they like and they don’t know how much money they have to spend.

      FFS, just turn the advertising over to the professionals (i.e. Google adwords) – They’ve figured out how to display relevant ads, how to serve markets large and small and how to reach global without having to pound the streets looking for advertisers.

    • jackdavinci says:

      Only problem with that is the huge proportion of the population that doesn’t want to watch tv on their computers. Or figure out a way to stream internet tv to their tv somehow. This problem will likely be solved at some point in the future, but it hasn’t found a widespread KISS solution as of yet.

      • alisong76 says:

        I keep hearing this one. I know it doesn’t work for streaming, but it’s really not difficult or expensive to find a DVD player tha plays .avi files straight into your telly. I think I bought one for $40. And looking at some of the monitors available these days, they’re often as good as or better than a telly.

    • oohShiny says:

      See, to me it sounds like the cable companies are the useless middle men. Why can’t I just buy just the SyFy channel over the internet, with anytime streaming of all its shows? Why do I have to buy a package deal through a cable company and get Fox “News”, or the post-Conan NothingButC***s? SyFy at least puts together and promotes content I enjoy, and I’d pay someone to do that for me.

    • bcsizemo says:

      I’ll agree with the basic idea of cutting out the middle man, I don’t think you can compare it to a web comic.

      A web comic isn’t taking much in the way of resources, a few peoples time, some computer power, maybe graphic tools (like paper, pencil, ect..). A large TV show would need equipment, sets, lots of people to manage and run everything, not including the actors.
      Just imagine Star Trek TNG, which I think had over a million dollar per episode budget (and that’s back in the early 90′s). I’d think that would be hard to recoup with just ads, dvds, and merchandise.

      Either way I think it’s a good idea. Frankly if SciFi had given me the option to donate to a season 5 of Farscape I’d been right there.

      • Apreche says:

        True that TV does cost more than a web comic to produce. However, that price drops substantially. I think the problem is that they keep their production values too high. Yes, the more expensive cameras and professional editors will produce a much higher quality product. The thing is, I don’t think the customer demands that high quality anymore. Maybe in movies, but not TV. They will be satisfied if you make the show with two camcorders and a copy of Adobe Premiere. They could produce these shows for a lot less than they are spending.

        • hounddiggity says:

          actually i think that is what is done with the weekly (or nearly) made for syfy saturday night movies. only instead of cutting out the middle-man, the cable channel becomes the producer. i’m sure that there is some seperation of the production company from the cable company for tax or legal reasons, but that has to be reason. once all factors are figured in there has to be a break even point on how much a given movie can cost. come in under that budget and there will be a profit in making the movie, with very little risk of downside.

        • Driftpeasant says:

          Yes, you could (and they probably do) make Big Bang Theory or any other OneSetSitcom relatively cheaply. But SyFy’s type programming, the Stargates, BSG, etc are NOT cheap. We watch science fiction to see great stories. But because they’re science fiction, we expect to see the fantastic. That costs money.

          So even if you assume you can make an ep of KillMiddlemanShow for 10k an episode, that’s still 130k for a 13 ep show. That’s a LOT of t-shirts, DVD sales, plush toys of the mutated Jack Valenti from episode 8, etc. that have to be moved before it makes costs back.

          While some day this might be a viable model, I just don’t see it at the moment. The way it will come about is a bunch of VCs investing in low cost shows on a platform like Hulu that itself puts in advertisement. Which sounds… a lot like current TV actually. Even webcomics run Google Ads or Project Wonderful banners. It’s not practical for the most part to exist solely off merch sales.

        • Anonymous says:

          I can’t wait for your brave new world of entertainment, in which we all suffer crappy quality television all because of the horrible injustice that people who live in Norway have to wait a year to buy the DVD. If you think quality television can be made with camcorders and a computer program, you clearly have no idea what goes in to making a program like BSG.

          We’ve never had such incredible distribution of high quality media content on all platforms as we have today, and yet, as the comic Louis CK pointed uot “how quickly people feel entitled to something they didn’t even know existed 10 minutes before.” The reason shows like The Wire, or Deadwood, or BSG exist is because of the support of networks like HBO and ScyFy, which is made possible by the fees these networks get from cable providers. I can’t even imagine what kind of crap we’d be seeing if every pilot episode was subject to a life of death vote by some kind of Nielsen’s mob–and who’s going to pony up all the money to advertise so that people know your camcorder web video show’s going to be available?

    • Anonymous says:

      Genius

    • Anonymous says:

      @Apreche

      completely misinformed. online ad revenue is miniscule compared to what television ads go for. you have to understand how expensive it is to produce a television show or movie. even if it’s a smash hit on the internet, it would take decades for the producers to even break even with what they spent to produce

      yes, the idea of static, old-school television is obsolete, but not for the reasons you mentioned.

    • Brainspore says:

      It sounds to me like the answer is really simple. Syfy, and other TV networks, are just obsolete and useless middle-men.

      Middle men can serve an important purpose too, especially for smaller companies. Just because your production company is good at making a TV show doesn’t mean you have the expertise, resources or inclination to successfully market and distribute what you’ve created.

    • jesseewles says:

      Right on! And if anyone would like to get the ball rolling, I’m available for productions in Toronto. :)

    • lasttide says:

      You seem to have missed one of the writer’s points about regional advertising. American advertisers don’t care about audiences in Norway, just as Norwegian audiences aren’t interested in American products (depending on the product, but the ad would still be in the wrong language). A TV production company would have to branch out into ad sales and marketing in order to “cut out the middle man” of TV networks. Of course, this would depend on online ad revenue being able to outperform licensing offers from TV companies getting cable fees and TV ad revenue, which is currently unlikely if not impossible.

    • Anonymous says:

      That sounds like the Funny or Die & College Humour business model.
      Funny enough Funny or Die is now producing for network TV. So that business model sort of works, you just need bucketloads of talent, some heavy backing or really good day jobs, tons of luck and good timing to make it.

      So pull out your cameras and start shooting folks.

    • Anonymous says:

      Although I think it’s true that the current business model is out-dated, It isn’t so easy to replace.

      You say that the TV-channels are useless middleman which add no value. But think about it. TV-channels provide the studio’s with money, right away. They advertise the shows, because it’s in their own interest. They provide a medium (cable).

      TV-studio’s don’t want to be responsible for advertising and putting their content out there. They don’t want to collect money from every user out there, counting dimes. It’s a huge burden to them. Very unefficient.

      If online TV is ever going to succeed, then it will be through ‘online tv-stations’. And those will buy the shows, advertise them and collect the small change.

      There will always be a middleman.

  39. automaton_be says:

    I live in Belgium, so we get the Norway treatment a lot. It’s a very frustrating situation. The market is tiny so economically not interesting enough for anyone to secure the rights to a niche show. Yet, at the same time, we are told that it is wrong to download illegal copies or use a proxy. Which is it going to be? From my point of view, I just want to watch Show X. I don’t want to wait six months and buy it on DVD at a ridiculous price (TV shows on DVD routinely cost €60 or more here), I just want to watch it, that’s all. Since I’m in good ol’ Belgium, basically my only option to watch it illegally, even if I wanted to pay you I couldn’t.

  40. Anonymous says:

    Sci-Fi had some shows that I loved, like MST3k and Farscape. SyFy doesn’t have a single show that I want to watch. Maybe Stargate CSI (it… is inevitable)…

    Anyway, maybe the answer is in-show product placement, hopefully in a less clunky and obvious manner than Burn Notice had with MGD64. Globally, though, I guess you’d be stuck with everyone drinking Coca-Cola while eating McDonald’s in their Nikes.

    • orwellian says:

      I remember when Burn Notice did a product placement for a car. It involved driving it through a house. Best product placement ever!

  41. Anonymous says:

    Problem is, channels and cable providers are both middlemen. Unless they can add value beyond producing and webcasting the show, neither the producers or consumers will want them.

    Also, only one middleman is even possible in a climate of view-on-demand. Here the cablecos have a head start.

    So that means your product is variety, with discretion. Somehow you need to leverage an essentially ‘critic’ role into a business, using the internet. I don’t envy your position here.

  42. JohnCJ says:

    File sharing is simply a reality. Hoping and wishing it ain’t so won’t do much to stop it.

    This means you are faced with a choice: (1) modify your business model to conform to reality, or (2) Modify reality to conform to your business model.

    (I highly recommend option 1)

    • Tynam says:

      JohnCJ: True, but unhelpful. What is your proposed alternate business model that conforms to reality?

      m95lag: Your last paragraph is exactly the point most commenters are failing to state. Thanks.

      CraigAtSyfy: See m95lag. I’m in the UK. Everytime I see the Hulu ‘cannot be streamed outside the US’ screen – instead of being sent to a streaming service from whoever you did license the UK rights to – you’re losing my eyeballs, and the license revenue and DVD sales that go with them. It’s not your fault. But it is your problem.

      And thanks for joining us; discussions of these issues online are usually fuelled by too much heat and too little factual knowledge of the industry. (Thanks cruftbox, for the same reason.)

      • JohnCJ says:

        If I knew how to save the entertainment industry I would be making millions in Hollywood. Just because I don’t know how keep the boat afloat doesn’t mean I can’t point out the damn thing is sinking.

        Right now the entertainment industry is trying for option #2, conforming reality to their business model. By purchasing draconian legislation around the world (see, e.g., the Digital Economy Bill) they seek to prop up their version of reality by rule of law and sovereign power. This leads to absurd results like suing a woman for 2 Million over downloading 24 songs.

        The simple fact is when you take a resource totally lacking in scarcity and you impose an artificial scarcity, you subvert natural market forces. This creates black markets and black markets are a sign of a regulatory scheme which is suffering from an unsustainable insane delusion. The larger the black market, the more unsustainable and insane the delusion. Sooner or later, the invisible hand of Adam Smith will give you an invisible backhanded pimp slap.

        To avoid getting pimp slapped by a dead 18th century economist you need to step up the innovation and stop pretending the world is as you want it.

  43. Damon_TFB says:

    It seems like Netflix could eliminate channels completely and turn Cable providers into just the pipe. All they’d have to do is buy the licenses from the show producers directly.

    I’d love to see an option to have zero-advert TV at a subscription level comparable to my cable bill.

  44. legionabstract says:

    And this is why, if I want to watch Leverage here in Canada, I have no (legal) choice but to wait until the DVDs are released.

    Sour.

  45. Anonymous says:

    The lastest issue of The Economist features a special report on the state of the television medium. I recommend checking it out.

  46. dequeued says:

    Heh, I’ve been downloading all of my tv shows for free on my computer since 1999, when I got my first dsl connection.
    Back then I had to use irc, but it really didn’t take that much time, and there was something satisfying about “working” for my entertainment, plus, it didn’t have commercials and I was free to archive it however I wanted for later viewing.

    Nowadays, I use a vps instance for bittorrent, and, through a series of scripts, automate downloading of my favorite tv shows right on schedule.
    Several people chip in for the cost of the vps instance, and it comes out to about $5/month.

    No streaming flash bs.
    I can access them from anywhere in the world.

    I would be willing to pay for content if they offered it in a sane, industry-standard format.

    In my eyes, they’ve already lost. HARD.
    They lost me, and many of my classmates and friends about ten years ago when we discovered filesharing and high-speed internet access.
    I think, in the last ten years, I’ve paid for less than $50 worth of content.
    Any many of the people I know are the same.

    Only now are they just beginning to get some of us back, but it’s still not worth it, much of the time.

    I will admit, a few times, I’ve watched The Daily Show or South Park the “official” way, but only because I wasn’t able to access my filesharing resources.

    So often they try to make me feel like the “little guy”, but, in regards to what I buy and what content I get, I’m firmly in control.

    And if they want me to take them back, they’re going to have to make some major changes.
    Stop these stupid lawsuits, start distributing content in a rational way.

    I like the iTunes store interface.
    Maybe something like that, except distribute it in unencrypted open formats.
    And charge about 1/5th the price, too.

    If they did that, I would never pirate again.

    The price of distribution is negligible, they have no excuse to charge A DOLLAR per song, that’s outrageous.

    • J.dV says:

      I agree with SFedor, you’re never going to get what you want with so miserly an attitude. Especially since – lets face it – science fiction fans are in the minority.

      Fortunately for us we’re also the people who are contributing most to the proliferation of filesharing within and across these contractually bound regions. Which should be enough reason for TV producers and networks to listen to us:

      -We prefer to view the shows we like on demand.
      -We prefer not to pay for shows we don’t like.

      This is a problem solved for us by filesharing (which may or may not lead to the purchase of DVDs).

      Lamentably though for them and us both, filesharing does little to prevent the cancellation of the shows we do like – there is still room for improvment (read ‘profit’). Because there’s a third caveat:

      -We are willing to pay for what we do like.

      Personally I love the online streaming, limited as it is, because it can only evolve into what we want from here – all the shows we want to see on demand, at a price that keeps them airing.

      I think they’ve already thought this through and cleverly, it will not remove the middle man or regular TV. Computers are being sold with TV tuners much like the latest ipod has a radio tuner.

      For the sake of my favourite shows, I just hope they’re quick about it!

      • dequeued says:

        You really think I’m being miserly?
        Sending 5M over the internet doesn’t cost nearly $1!

        Any claim that they may have had to the retail cost incorporating the costs of manufacturing/distribution are OUT THE WINDOW

        Right now, prices for content are simply too high.

        They want to charge me the SAME PRICE for a book that has to be physically manufactured, and sent thousands of miles to me?

        Once they reached a certain level of cheapness, almost any pirate out there wouldn’t bother pirating it.

        Why is it so radical for me to propose that they stream content, unencrypted, with commercials?
        They’re doing that RIGHT NOW over the air.
        OMG, anybody can intercept and copy their content!
        How will they ever stay in business!?

        This is not a partnership, or a compromise.
        I don’t have to patronize these multibillion dollar international corporations if they don’t offer me EXACTLY what I want.
        The entertainment cartel is dragging its feet, because it can get away with it.
        They don’t need us, the consumers, to pander to them and give them an A for effort.
        And, is what I’m asking for that extreme?
        Reasonable prices, open formats?

    • SFedor says:

      The price of distribution is negligible, they have no excuse to charge A DOLLAR per song, that’s outrageous.

      ******

      Uhm, ok. So because your media does not meet all you needs (distributed how you want, when you want, where you want), it’s free in your mind? But if they meet all your demands…it may be worth a $.25? If media is of so little value to you, why do you even bother with it?

      • Osno says:

        “If media has so little price to you, why you even bother with it?”

        FTFY

        • SFedor says:

          “If media has so little price to you, why you even bother with it?”

          FTFY

          … but now that everything is using chroma key, I simply don’t see it.

          *****

          Is that a fix? Maybe you’re right. We should increase the price and cut off the digital versions! Go theater model and make sure there is only one version available and charge $40-300 per viewing. Instead of seat position, it will be based on bit rate.

          Glad to see you also think compositing is so easy too. Just a chroma key eh? I guess most of us must suck at vfx, pulling 10hr days on norm, 20hr days during crunch with no overtime paid.

          Please tell me what you do for a living. Because I see that I am a fool for using my extended years of math and computer science education as applied to entertainment is of no value. What job do you feel is worth being paid for?

          • Osno says:

            Sorry if I offended you (I don’t understand how I offended you, but anyways)… I was just pointing out that another post confused value with price.

            And yes, I do think that chroma key will be cheaper than full sets. I never suggested charging absurd fares and cutting anything. As for the work-hours you put in the content industries, that’s also part of the exploiting problem of the old model I was pointing out earlier, where most of the 2M that an episode costs goes to overpaid actors. The rest don’t even get overtime.

            I’m a software developer, and I obviously do respect your profession. Sorry again for the misunderstanding.

          • SFedor says:

            Sorry I got a bit ornery. That’s why I shouldn’t drink & post! We’re good!

          • Osno says:

            No problem at all here. It is a touchy subject…

  47. Anonymous says:

    If I download a tv show, will it help end this stupid business model? If so, great, I would be glad to help!

  48. ookla says:

    Regardless of whether I think this set-up kinda bites considering the ‘borderless’ direction that our world is taking (particularly when it comes to media production and consumption) I certainly appreciate you explaining it in a very clear way.

    Thanks.

  49. SFedor says:

    While a big fan of Dr. Horrible, it is a horrible reference as what tv production should be.

    The show is a total of 42 minutes. That is about the equivalent of a typical tv hour long episode. But Dr. Horrible only had to produce that once. A typical season of 23 or so episodes would be a whole different story.

    Famous & skilled actors getting paid scale – only going to happen for a short one off. D.H. was shot in 6 days. If you start shooting for several months, no way you’ll keep that pay rate.

    Shooting on donated Universal Studio lot space – I don’t know how that happened even once, but again if you think you can consistently have a set on a lot for long term…

    Crew of unpaid/underpaid friends – Yep, I’ll help my buddy out for a few days. Unfortunately, I can’t work for free for a long period of time.

    Borrowed equipment/gear/props – all this stuff can be done for a couple day shoot, there is no way you’d be able to have the set made with the same props long term for free.

    So while it has an approximately $250K budget, there is no realistic way to keep that level over multiple episodes.

  50. Eirki says:

    As a norwegian, what really bothers me isn’t that some shows are never aired here in Norway. Thing is, most big US shows are aired in Norway, but they are usually delayed, some times up to six months, or even more.

    Why is this? Is it stipulated boing co.? Or does Syfy demand that Boing Show be aired later outside the US? Does the Norwegian channel Syfø a/s accede to the delay in order to get a discount on boing show?

    The delay only serves to make me go and download the show, depriving boing co. of their well deserved profit. When I read a wired.com article about the Clone Wars og Stargate Universe episode that aired last night in the states, there’s no way I’ll wait six months to see it myself.

    • Stooge says:

      Eirki, why didn’t you consider the possibility that it’s the Norwegian broadcaster who chooses not to buy the show sooner? Because that’s usually the truth. Production companies would dearly love to pre-sell shows to broadcasters all over the world before the show goes on air because it reduces risk. Conversely, risk-averse broadcasters don’t like buying up shows before they know they won’t be cancelled half-way through the season or get weak ratings.

      • Osno says:

        I agree with Eriki. The worst part is the windowing. And I don’t think it’s speculative. Where I live, they delay Lost, The Simpsons, 24… there is no way they are not betting to those shows. That must be a contractual problem.

  51. Anonymous says:

    “Legally we CAN’T stream it in other countries.” Shouldn’t this read “Contractually…”? I’m still struggling with Criminal vs. Civil and Legal vs. Contractual. Copyright seems to be a case where breach of contract is (also?) illegal. Perhaps it’s the “stolen property” angle that makes it so. I’m not sure where else this applies.

    Also, sorry to hijack this comment thread.

  52. norskamerikansk says:

    While you clowns are figuring out how to make money from all that clunky old bureaucracy, we are watching all your TV shows for free on the thousands of “illegal” streaming sites available here in Norway and everywhere else. How about hiring some smart people and then listening to what they recommend?

  53. Anonymous says:

    Every single person commenting here does something to get paid. I want them to start doing it for free, because they are just middle-men, and I wish it to be that way. And wishing makes it so. So lead the way, guys and gals. You’ve convinced me that a five-year-old’s approach to the world is great. Now make it so.

    • alisong76 says:

      Anon #126, Many commenters here have explicitly stated that they are more than prepared to pay for the content.

    • Antinous / Moderator says:

      Every single person commenting here does something to get paid.

      As they say in the popular meme: Ah, mein fuhrer?…

  54. Anonymous says:

    Why are ad rates so much lower for online vs. cable? Is it simply an issue with volume (that there are more people watching cable than watching online) or is there some other reason for the rates to be different? Is an online viewer “worth less” to an advertiser than a regular TV viewer?

    To me, online\cable would seem equivalent, I don’t care if I watch something online vs cable except for the fact it’s harder to skip the ads when watching online :-)

    • jackdavinci says:

      Thanks for that, I too wonder if the disparity in ad revenue for online is due merely to numbers. Especially since it’s easier to force ad viewing, whereas DVR has made broadcast TV ads skipable.

    • Anonymous says:

      Ad revenues for on-line media are so much lower because you have a MUCH less captive audience, PLUS on-line usage is difficult to measure. What country are from you today? Oh, whatever country your IP comes up as on the masker. There’s too much “if” involved with on-line media. Not to mention piracy… easy transferable, being a non-physical medium, and all that.

      For television, it’s right there. It’s beamed to your house. Your house has an address. Your address is tied to your country. You are “monitored” with what programs you view (ever hear of Nielsen ratings???). Piracy in this format exists, but it’s not easily transferred. You have to distribute a physical product.

      So there’s a few barriers.

      PS – I hate the rebranding of “SyFy” as well.

  55. Astin says:

    Sure, go directly to the web. Every show will start with zero effects, poor lighting, amateur acting, no sets, and maybe some good writing.

    Shows can cost millions per episode. There’s no revenue model to make that back online. There’s a reason you can’t have a la carte cable offerings – packages subsidize cable channels. You may never watch Oxygen, but some of your cable bill goes to that channel. Someone else feels the same way about SyFy, but are still paying for it so they can get The Golf Channel or something.

    Right now, web-only television is in its nascent stages. Webisodes for larger properties during off-season, pet projects for people will some pull.

    There are examples like Dr. Horrible, which as prompted by Whedon wanting to do something during the writer’s strike and bringing some friends along. The Guild is a success story for web-based entertainment, but nobody can claim its production values are anything approaching even the cheapest SyFy offering.

    It’s a nice idea, but the reality is that web-only TV that comes CLOSE to what you can get from the traditional system is still years away.

  56. cory says:

    > Let’s assume BOING SHOW costs $2 million per episode to produce

    This is where I stopped reading. “I think I see your problem.”

    • HarriedGuy says:

      In your opinion, how much should it cost?

    • hounddiggity says:

      i always wondered why it cost so much to produce a movie or tv show. then i saw both shot around my office in philly. i now understand how they can cost that much. i’m not saying they should, i just get it now. the army of people involved in getting 10 minutes of TV made on location is simply astounding.

  57. Xenu says:

    Sounds like typical business squabbling. Man those MBAs really pay off for the rest of the world, don’t they?

  58. Anonymous says:

    Craig, that’s the problem though isn’t it? The media conglomerates complain about piracy, theft, rising costs, etc. but refuse to take advantage of the new way of doing things.

    Let me explain something to you. We dumped cable. Best thing we ever did. Ever. In doing so, I don’t watch your shows. I used to watch SciFi on occasion, meaning you had one more viewer than normal. Now however I stream directly to my TV whenever I do want to watch something, and there’s plenty out there. If SyFy were available to stream, I might watch something on occasion – I might even get hooked into one of the series, and you could get some of those coveted advertising dollars. But it isn’t. And it really doesn’t bother me.

    You, the producers, the record companies, etc. continue down this path and you WILL lose. Big. You can scream piracy or whatever you want from the rooftops but the fact is that there is a trend to break away from standard cable TV. You will assimilate. Or you will die.

  59. XenoTrout says:

    How do you pronounce Syfy? Siffee?

  60. CraigAtSyfy says:

    TV producers can take their shows directly to the Web if they want. They choose not to (so far) because there is (so far) no sustainable economic model to even recoup their costs, let alone make money. If there was, they’d be doing it already. No one is under any obligation to sell us a show.

    • hassenpfeffer says:

      Not trolling here, asking For Realz: Does anyone know whether “Dr. Horrible” has recouped its production costs, after iTunes downloads, the DVD release, and now Blu-Ray release? Granted, a Whedon/NPH/Fillion production has much greater visibility than a Joe Schmo/Jane Doe production, but did it bear out as a valid business model, even an experimental one?

      • Mighty Gaz says:

        as of November 29, 2008, Joss Whedon stated that they had been able to pay all their bills. meaning that DVD sales and itunes money had covered production costs. budget estimates were normally around $200k and i’ve seen it said multiple times that it made a profit from itunes profits alone. though how much i dont know. but yes, it made money, and given it did that just from itunes, probably DVD and bluray sales will help a bit so would assume it would be a sucess.

        • Brainspore says:

          Something tells me that they wouldn’t have been able to crank that thing out under $200k if the cast and crew involved had been paid what they’d normally make doing a network TV show.

      • Anonymous says:

        Supposedly “Dr. Horrible” did recoup costs, and it clearly worked as an experiment (and won an Emmy). But the catch is that the above-the-title names of course made a huge difference (and Joss Whedon’s fanbase is ridiculous–I say that as a proud member).

        A show like Felicia Day’s “The Guild” struggles more without any big names or backing–they subsisted, I think, almost solely on donations, though now they have some sponsors.

        All this says to me that it’s a valid business model in theory, but (I suppose, like any business), you’ve got to get lucky and find a bunch of people who want to buy what you’re selling. And especially in the free-content-dominated world of the Web, that’s not easy.

  61. Anonymous says:

    Apologies if this has been suggested before – it’s been a long day and I’m lacking the will-power to read 100+ comments.

    So current revenue is made by licensing shows to networks, who in turn license themselves to cable TV providers who then sell their packages to the general public and make revenue on subscriptions and ad sales.

    Part of the problem of illegal downloading of shows is that the US almost always airs shows at least a week and sometimes months or years before the rest of the world, so your average non-US user is paying his cable company money to not-watch shows that he’s already downloaded and seen a week ago. He then thinks “If I’m not watching DANGEROUS FISH on my cable box, then why and I paying for it?” and cancels his subscription, so the cable provider then has less revenue to invest in new shows and maybe decides that DANGEROUS FISH’s parent network is going to be dropped next season, which means the network has less to offer the production company who then can’t afford to make the show and everyone ends up missing out.

    Why not just license the shows directly to the public? Keep the ad breaks and use geo-ip technology to pull relevant ads. Either use a subscription model per season, or go direct to the ISPs and have them bundle various shows/genres as part of the users monthly bill.

  62. Anonymous says:

    But… I do watch every TV show online for free…

  63. texas cable guy says:

    I know this would upset the Comcasts and DirectTVs, but it would likely push the cable / sat providers into a la carte packages in order to keep existing customers from bolting. I mean after all, who needs 120 channels??? Me, I just want 8: SyFy, Discovery, National Geographic, ESPN, ESPN2, FoxSports, NFL Network and Comedy.

    I’d pay $2~$3 per channel per month; I bet that’s more than you get, indirectly from cable and sat providers.

    You’re absolutely right: “$2~$3 per channel per month is more than SyFy gets, indirectly from cable and sat providers.” Assume it’s only 50 cents. But SyFy gets that 50 cents from every subsriber, not just those that want it. Figure it out: if 10,000 cable/sat subs indirectly pays 50c/month for SyFy, that’s $5,000. But if only 10% of those 10,000 subs (assumed a-la-carte take rate) is willing to pay $3, that’s only $3,000.

    And that’s just the license fee revenue. SyFy would also incur a similar drop in advertising revenue. The inevitable result is obvious: SyFy would have to either raise that $2-$3 license fee (and its ad rates), curtail its production budget, or both.

    This is one of several unintended consequences that would result from a-la-carte. More info at my blog:
    http://theoldcatvequipmentmuseum.org/320/321/index.html#alacarte

  64. Anonymous says:

    I think, from reading this article and others, that the solution is actually staring them in the face. What is needed are global, online distributors, who handle ad and language localization as required and deliver the show to everyone at once. That simultaneously makes it more likely that the show will break even (due to a much larger subscriber/ad base) while functioning as a much more effective and profitable middleman.

    Such a provider could start with smaller, cheaper shows like Dr. Horrible and build their way into a position where they can start pitching for the $2 million shows. They also would have the advantage of precise numbers on viewers, since a streaming service automatically collects those statistics – they could even tell you how many people cut the show off in the middle (a bad sign, I would presume).

  65. Anonymous says:

    This may have been said already (unfortunately I don’t have time to read all of the replies right now), but I think this article is overlooking the crux of the biscuit: the reason TV productions have such steep budgetary requirements is because of the rampant waste that takes place during even low-budget productions. The entire industry is built around this fat, and everybody wants their cut from the star to the caterers (to the producers!). But the truth is: it really DOESN’T cost that much to make a quality television show. It’s just that all the middlemen would have to go get real jobs (or work hours resembling those of a proletariat) in order to maintain realistic salaries instead of just relying on the inflation of Hollywould.

    So what you’re saying might be true for the current production environment but – some of us are hoping – that sense of privilege could eventually give way to real, sensible production budgets.

  66. GeekDadCanada says:

    Try living in Canada. We can’t see any US sites that stream shows, then get blamed for piracy.

  67. jesseewles says:

    What’s also missing is the idea that a show on the internet doesn’t go away. It can live online indefinitely, collecting viewers and fans for years.

  68. Mighty Gaz says:

    ok, the title of this article is Why you can’t watch every show online for free.

    The elephant in the room here is that you can! Leaving aside the legallity for a second, the unfortunate fact is that if you want to watch a show online, you can, with no ads, for free, and in higher image quality than the legal options.

    this brings us to ratings. you hear a lot about these, cause ratings are the lifeblood of a show. Though i’m sorry to say the current ratings system is a bit of a mess.

    The fact is if you are not a nielson family then it doesnt matter how or when you watch, or if you download the show, cause the ratings will not be affected. Sampling error can also be massive. just cause the ratings say 4 million people watched a show, that doesnt mean it was actually seen by 4 million people!

    while efforts to reform it over the last few years will have helped a little, its still not a very accurate system. take college students for example. how many of them live in dorms in America? well only in 2007 did nielson start taking them into account. and they did this by measuring the viewing of 130 students. in total.

    That makes these people incredibly powerful. 2 examples are that when they started factoring in the data from these 130 people, drawn together on comedy central saw a bump of 163,000 male viewers in the 18/24 bracket. a 60% increase. greys anatomy managed a jump of 636,000 in woman in the same age group. over a 50% increase. the jump for drawn together, over 150,000, was becuase 12 students nielson monitored watched the show. just 12.

    nielsen took over a similar role in ireland around a year ago, and in recent months, media companies who rely on their data have called it disastrous.

    Now i used to work for Sky TV here in the UK. in 2001 they launched the Sky+ PVR. a feature that was planned, and in place, but never saw the light of day due to one reason or other, was that every person with a sky+ box could have there viewing habits sent to sky, and they were to the second accurate. even though the plan was to ask the user if they wanted to opt in during account creation, it never happened, probably due to privacy concerns or the like.

    My question is, if that was possible nearly a decade ago, why cant we have something like that now? only better! lets get real numbers. lets make it so if you watch a show, you know you have been counted. you know your helping your fav shows stay on air. and so everyone knows the numbers are real. right now its perfectly possible a show can get ratings of 4 million, week after week, but that there were actually 8 million people who watched.

    its not likely this happens a lot, but its statistically likely it does happen with some shows, given the sampling size.

    until there is real change, many, like me, will continue to download shows, for freee, with no ads, in HD, because it doesnt really matter if i do that or watch live or whatever. it doesnt make a difference!

    I’d love to feel like i was supporting the shows i like, but i’m not gonna inconveniance myself when at the end of the day, what i do is irrelevant.

    Gaz

    PS – post not checked for typos, i’m not stupid, just lazy :-p

    • Driftpeasant says:

      …except that it does.

      If your entire viewing pattern is based on downloaded shows, then you’re missing:

      1) Cable TV subscription fees which go to the networks to pay the production companies that make the shows
      2) You’re likely not buying DVDs of the shows, since you’ve downloaded them.
      3) If you change viewing patterns, the Nielsen families become irrelevant, and then we shift to a model where it DOES matter what you watch and at what time. Seriously, if DVRs from the cable company aren’t calling home now, it’s not a big stretch to get them to do so. Then the statistical modelling becomes insanely accurate.

      There are exceptions to 2 – my wife and I bought Big Bang Theory on DVD after watching a few downloaded eps. Similarly I downloaded Brimstone because I can’t buy it legally. But those are not what you’re describing.

      • Mighty Gaz says:

        those are fairs point you make to me. here are the answers.

        1) i pay for Sky TV. satellite in the UK. i’m international, so dont count as much, but since the best shows come from america, it matters to me that they do well.

        2) i am indeed, and have one of the largest collections of TV DVD’s of anyone i know. i have over 300 seasons of various shows on DVD, Bluray or for a few, HD-DVD. in fact for some shows i have copies on multiple formats.

        3) if a non nielsen family changes viewing patterns, how does it make the nielsen families irrelevant? when they are the ones being monitored? thats my whole point, no one knows what the viewing patterns of most people as they are not being monitored!

        my viewing in the UK isnt recorded. so it doesnt matter if i watch a show live. i often do, cause i enjoyed it and have no problem with watching again, but i’ve usually already seen it. but it doesnt matter if i watch live or not, cause no one knows i did. i’m not counted.

      • alisong76 says:

        I know I can speak only for myself and I’m only a sample of one, but I *regularly* buy the DVD sets of shows I’ve previously downloaded. My downloading habit is primarily a stop gap until the DVDs are available. YMMV.

        • Driftpeasant says:

          Many people do, but it’s not everyone, and there is some amount of piracy which I had to account for in my earlier post.

          • alisong76 says:

            Which is why I put the whole “sample of one” clarification in my comment.

  69. Anonymous says:

    I think anyone who feels we are moving into a borderless electronic future hasn’t been paying attention for the last five or so years.

    Territories seem to be here to stay.

  70. jeligula says:

    Thanks for the information. Now I know. My question is why the SciFi channel was renamed Syfy? That’s stupid and an insult to science fiction fans. Wasn’t a focus group consulted?

  71. Anonymous says:

    Just for the record my friends’ downloading has almost certainly made more dvd sales for The Wire than the local tv station (who bought the rights then screened it after midnight and I believe they also cut it off mid-season).

    Not only did he buy every one of the seasons on DVD as soon as they came out but almost everyone he distributed copies to has since bought at least one season (in fact our local Indie video stores makes dvd 1 of season 1 available for free…they do not lose money doing this).

  72. Norwegian Reader says:

    The economics of this is very true, but as long as it remains this way sites like The Pirate Bay will flourish in international markets, undercutting the possibility shows have of every making international sales. Why would the BBC pay 250K for the rights to show BOING SHOW 6 episodes delayed, when the core audience has already seen it the day after it aired in the US?

    No one who tries to make a living off making film or TV likes this fact, but it is a fact and there is no way of stopping it. The business must adapt somehow. And soon.

  73. Anonymous says:

    Part of the problem skipped over in this article is that in order to license shows, the studios must first themselves pay license fees to third parties for the materials they used, which most often is music or some stock footage.

    Tracking those materials’ licenses in a manner that allows easy decisions as to who needs to be paid in order to license to a new country AFAIK has only been happening for the last 4-5 years or so.

    The upshot is that there is a huge amount of content out there where it’s not immediately clear whether it’s legal for studios to license them to e.g. Norway. Consequently, studios tend not to – research to answer that question is costly. Keep in mind that licenses may well include the media through which content is made available; just because you own a license for broadcasting a show on TV does not mean you own a license for putting it on your website.

    Brand new shows should by and large not have that problem any longer, and of course for older content someone may already have cleared those hurdles for specific countries.

  74. Anonymous says:

    I think that one thing you are missing here is that lots of people outside the US would pay if they could watch a series online/as a digital download as long as they don’t have to wait months.
    Very good article btw ;)

  75. Mighty Gaz says:

    have done some checking and it seems that dr horrible is believed to have made at least $300k over its budget. $500k in total. so at least over 100% profit, probably more now as these numbers seem to come from before the bluray.

  76. IndexMe says:

    One solution would be to sell to individuals online while inserting ads and potentially, reimbursing overseas television companies in the future who purchase the series. You can see on this thread there are many people who already watch your content without being part of your revenue stream and it is because you ignore the opportunity. I cannot fathom why.

    Certainly, online sales will provide you more instant cash to reimburse you for production and let you produce more great films more quickly, while also increasing the number of fans worldwide which is good for your sales efforts. You can point to those fans when you sell overseas.

    Let’s look at the film business. It is similar, with an overseas distributor paying a minimum guarantee (it was about $150K for a not so huge film in a single market) and then you get all the rights. Then if they want to do digital distribution there is the encoding and the percentage that goes to the digital network. What you guys should do is anticipate that. At least provide it to individuals who request it, regardless of where they live.

    One good thing is that if you do make any sales overseas, then say offer some of those proceeds to the overseas distributor who wants to pick it up, it will be that much cheaper for the distributor to purchase.

    Personally I would be willing to pay $10-20/month for 1080p high speed downloads of a handful of shows like SGU, Merlin, Doctor Who, and the like. They would look great on my MacBook Pro 17″ screen. And no DRM, no location based switches. I prefer no ads but would consider watching some.

    I don’t care how you guys aggregate it, just take my money – please! Yes of course it is all out there available for free but I want to pay for it and make sure you guys make more cool shows.

    P.S. I figure SyFy name change was to grab more female demographic. Correct?

  77. Darcy Fitzpatrick says:

    Something that was left out of Craig’s excellent breakdown of how a TV show gets produced and distributed:

    Most TV shows don’t even start production until they have at least one major broadcast deal signed. It would be insane to try and produce a show and then hope to sell it somewhere when it’s finished, be it on television, online, or wherever.

    Show’s get shopped around as detailed pitches first, a broadcaster (or broadcasters) signs on, buying certain rights to air the show, then the ball gets rolling and the show gets made.

    So like it or not, these “middle men” are a necessary first step in even getting these shows made in the first place.

    Good TV will always be expensive. If you want to watch TV made with two camcorders and a low paid cast and crew, etc, you have that option right now. It’s called reality TV, there’s a tonne of it, and it’s mostly filler.

    Along with the costs associated with gear, locations, etc, it takes a lot of people with a lot of talent, skill and experience to make good television. The overhead really is immense. And trust me, if producers could make a show and get the same audiences for less money, THEY WOULD.

  78. Blaven says:

    Part of the problem is we’re stuck with an antiquated delivery system. Why should I pay $100/month for cable tv access when I have an internet connection that can deliver the same content just as well? With a $8/month Netflix subscription I can watch unlimited online with no ads. Or on Hulu I can watch for free with only a few ads, unlike the 22 minutes per hour of ads we get on regular tv, which makes it too painful to watch.

    So like a lot of people, I turned off my cable tv last year. The entertainment establishment may not like online viewing, but like it or not, it is here. They can either fight this trend as their customer pool shrinks, or they can reinvent themselves and provide us with some better options.

  79. Osno says:

    I was reading the text and thinking of the useless middle man. The elefant in the room is also obvious. I live in a place where shows get windowed to about 1-3 months after their US releases and that’s simply loosing users. But I think the major issue is: a show doesn’t need to cost 2 million, not even scifi. I understand the only point of the middle man is to make money without troubling oneself with advertising and distribution. And so the middle man may be needed. What I think is that these many middle men is where the noise is coming from.

    Better idea: have a single middle man manage worldwide advertising, paste the advertising in the chapters and make country-specific torrents (with languages/subtitles). I bet most people won’t bother taking out the adds if they are short and fun. And subtitles is also not a problem in this world: give the chapters (with the ads) to the subs communities. They will even take care of publishing the torrents for you. Translation (meaning, voice) may be hard to do… but not needed in most of the civilized world which can read and already do for illegally downloaded torrents.

  80. Beelzebuddy says:

    So the reason we can’t have nice things is because your business model is dying and the remaining vultures, grown fat off real-life distribution monopolies, are too busy fighting each other over scraps to think up a new one?

    And here I thought colluding was your thing.

    Look, here’s the deal. Content on the internet is global. Ads within that content can be local. It shouldn’t be difficult to imagine a single content-delivery site the whole world could go to, with local affiliates intermixing their own commercials for a small fee. This is basically the model cable TV follows, so you really should be familiar with it.

    Now, the real problem, as I’m seeing it, is you’ve already sold your right to do just that, to the local affiliates who get to air the program in their countries, and also stream it to their viewers. This is entirely YOUR problem. If Sifi made a show and didn’t already license under those terms, you would be free to stream it to whoever you damn well please. If the BBC wanted a cut at that point, they could jolly well pony up then.

    So, whatever. If you want to spend all your time infighting instead of figuring out how to monetize your global web viewers, that’s cool. But hey, guess where *all* of your shows are already available, not just the last five episodes of currently airing programs? Where the shows arrive without any ads from anyone at all? Where more people are coming each day that you demonstrate your industry to be too inept to keep up with grandmothers who just want to see the latest Desperate Housewives?

  81. Anonymous says:

    A huge amount of the cost of producing a TV show is in the shooting. I’ve seen live sets and the amount of resources they employ is staggering. I stuck around for an hour and I reckon they shot about 15 to 30 seconds of useful footage. Plus they had wardrobe, makeup, and catering staff. it just seemed totally over the top to me.

    I think the future is on-line. TV sets already have internet connectivity and the next wave will be via YouTube and other streaming sites. TV shows will be produced with budgets ranging from nothing to professional. The channels they occupy will be fully loaded with feedback mechanisms and the viewers will decide, directly, if the show flies or bombs. TV networks will slowly fade into the background and new shows/talent won’t even consider them as a broadcast option. But as ever, the old model will cling on, trying to make its top-heavy structure remain relevant until they’re doing nothing more than running repeat after repeat of “I Love Lucy”

  82. Anonymous says:

    It just seems like companies would make so much more off advertising with shows streaming online because one countries people dont all like just one show their are huge syfy fans all over the world and the more people that like those shows watching the more people seeing the advertisements and most people dont see advertisements on tv anyway because they channel surf to aviod commercials. I actually like watching the commercials on the internet because they are shorter. I would not mind paying for the programming either because I get to watch the shows I like on my time. Another plus is getting to watch shows that normally air at the same time I love watching certain shows but used to have to pick between. I think cheaper alternatives to cable like netfix that allow you to see your shows when you want would benefit not only the viewers but the networks and tv shows as well. Some of my favorite shows have been cancelled because of the timeslot they are in arent conducive to their die hard viewers and must then watch them on hulu or anyother site that allows people to view 24 hours 7 days a week. When will the networks and people creating the shows see all the money that is to be made when they stop trying to tell the viewer when to watch their favorite shows and let us decide.

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