If we paid for TV per episode, could we cover advertising costs?

Cafe Society
1

Not sure if this is GQ or Cafe Society, but anyways:

If we were offered downloadable television on a per-episode basis, for 50c (US) per, how many people would have to pay and download it to cover the advertising that would normally be placed amongst it, and so that it would demonstrate how popular a show really is (instead of that Nielsen Ratings nonsense)?

i.e. what do advertisers pay to networks for placement around a popular show? How much would we as consumers have to pay to cover that or better? Could we basically fund television by only paying for what we view, totally revamp the Ratings measurement in doing so, and perhaps give a beefier budget to shows that deserve it?

2

I can’t be bothered to download individual shows. It is much easier to pay a monthly rate to my cable company and watch whatever I want, or not watch. There are also people who are opposed to even paying for cable/satellite TV and prefer to continue to watch over the air broadcasts. I’m in favor of continuing to have advertisers pick up the production costs of shows. I also like knowing my cable bill is one flat rate per month so I don’t have to keep track of individual charges.

3

Well, I started a thread not too long ago speculating on just how much TV shows make, though it very quickly died, Ambiguous007 suggested the average sitcom will pull in about $400,000 per 30-second spot.

4

Part of the problem is getting the cable networks to go for it. One of the ways they can get a new network on the various cable services (and satellite as well) is by telling them that if they want high rated channel “A” that the network produces, then they’ve also got to take the new (or low rated) channel “B.” ESPN demands the most money from cable providers of all the cable networks, and because they’re controlled by Disney, the cable companies all roll over, since so much could be yanked from their system if they refused to comply. Presently, there’s an effort to get this changed, and one is a system where you only pay for the channels you want, the other is that you pay only for the shows you want. My understanding is that the former would lower the average cable bill, while the latter would increase it.

I suspect that we’ll see some hybridization of the two ideas before too long (at least I hope so, I hate sports, thus ESPN and it’s spawn are useless to me).

5

Okay, so if we say $10mil per half hour, that’s 20 million people would need to pay 50c to cover that cost. That could work.

If an episode actually only costs $1mil to make, which is probably true for most 22 minute sitcoms, most likely less, it’d probably be a lot less than $10mil as executives would be forced to not overestimate anymore, real active numbers would prove certain things forcing their greedy cheating arses to change tack. Maybe.

6

Don’t forget that one-third the U.S. population does not get cable. This scheme would immediately disenfranchise them.

7

I agree with Tuckerfan in that what we’ll see is a hybrid system. That’s what I’d like to see anyway.

If we assume everyone in the country had broadband internet and could download what they really want on an a la carte basis, advert-free, we could probably say goodbye to all the cooking shows, the remodeling shows, the wildlife shows, the history shows, etc; etc. The advertisers, cable and satellite companies need to fund the networks to get most of that produced so I can veg out and channel surf on a Saturday afternoon. I’m not paying to download America’s Next Top Cake Decorator Challenge 2006, but I still want the option of watching it anyway.

But downloading shows a la carte could be very healthy for the TV industry. Let’s say you’ve produced a pretty good show but the evil network took a chance and pitted you against The Really Popular Show on a competing network in the same time-slot. You lose, the network cancels you. Goodbye Pretty Good Show.

But you know your downloads are doing well so you tell the network to bugger off and you continue to produce your show and sell it on-line.

It takes $2 million/episode to produce, but you’re reasonably sure you can get 10 million downloads per ep, plus over time the eventual downloads/ep approaches something like 30-40 million downloads per ep. You’re still in business. You don’t have to wait for your show to go to re-runs to make some more money nor do you have to wait for it to go to DVD to make more money. Your show is a proven success and you’re no longer a slave to the networks. You’ve got money coming in all the time.

8

The hybrid idea was, indeed, at first exactly what I was thinking. And levdrakon described it better than I managed to. I am hopeful that it is as workable as that, too. Basically, it’s a parallel to iTunes vs CD sales, I suppose. Kind of.

9

While your argument is generally true, ESPN is a “must-have” by cable operators because it airs live NFL games. At this point in time, something like 9 of the 10 top-rated broadcasts in cable history have been NFL games. They generate huge ratings, most of it is the coveted 18-49 male demographic, and the drawing power has been consistently strong for a very long time.

The ideas are good, but your numbers are off. 10 million viewers isn’t terrible; a network would likely work with a show pulling 10 million. 30-40 million? Wow. To my knowledge, the only shows to ever generate those kinds of numbers are Superbowls. Blockbuster shows draw in the low 20s. American Idol’s biggest draws may have reached the mid-to-upper twenties. No way is the “little show that could” going to draw 30-40 million downloads. (Each week Entertainment Weekly lists the top 10 rated shows. It is rare for more then two to be in the twenties, and it’s not unheard of for the top rated show to be in the high teens.)

Frankly, I’d be surprised to see any show draw 2-3 million downloads if it involves a computer and the internet. Maybe using a cable system’s on-demand feature, but even then I’m not optimistic.

10

Also, consider an example of a huge draw on broadcast air that went pay-subscription: Howard Stern. I can’t seem to dig up hard numbers, but from what I’ve read it seems he lost somewhere around 75% of his audience.

11

My numbers could well be off. But when I said 30-40 million I meant over time. I’m not talking about the number of people sitting at home on the night it premiers and downloading it. You only get those numbers for something live like the Super Bowl.

I’m talking about all the people who eventually download it over the next six months or so. That could potentially be a large number of people who didn’t watch it “live.”

For instance, I didn’t know much about Firefly when it first aired but later after I heard the buzz, I’d have downloaded it. So the producer of Firefly could have been making money whereas the system now is such that once Firefly was off the air that was it. No money until it eventually went to DVD and then still later, Scifi Channel picked it up and showed re-runs.

12

I pulled out the latest EW to cite some concrete numbers, and notice that they list the top 20, not 10. Last week, the top rated tv shows were:

1 Desperate Housewives (22.3 million)
2 Dancing with the Stars (22.0)
3 CSI (20.8)
4 Dancing with the Stars (20.7)
4 Grey’s Anatomy (20.7)
6 Sunday Night Football (19.4)
7 Dancing with the Stars Recap (18.2)
8 Criminal Minds (17.6)
9 Lost (17.1)
10 CSI Miami (16.8)
10 CSI NY (16.8)
12 60 Minutes (16.2)
13 House (16.1)
14 CMA Awards (16.0)
15 NCIS (15.4)
16 Without a Trace (15.2)
17 Extreme Makeover: Home Edition (15.1)
18 Cold Case (14.8)
19 Deal or No Deal (14.7)
20 ER (14.6)

Eliminating all reality shows, sports events, news magazines, and awards shows, we’re left with only 12 scripted shows that generated at least 14.6 million viewers. And 25% of those were part of the CSI franchise. It’s damn hard to get 15 million people to watch something; getting 10 million to download (or order via On-Demand services for a fee) would, IMO, be near impossible.

Your original hypothetical was for a struggling show that couldn’t make it on the networks but had enough quality to be saved by a different model. Friday Night Lights might fit that definition, being a critical darling, but it only brought in 5.9 million viewers last week. (EW noted it in a blurb beneath the top 20.)

While you are absolutely right that the backend model would drive up revenue since the money would still be coming in 6 months later, can you fund a show that way? Does the cast work for nothing but points, and the remaining production costs get paid on credit? Even worse is the advertising. Are you going to spend money on advertising for those six months, or just bank on word of mouth? The latter clearly doesn’t work, as Snakes On A Plane bombed horribly despite unprecedented word of mouth.

Whatever delivery method you use for a subscription model, the consumer will have to do something in order to be able to use it. Do they need digital cable? A computer with broadband internet access? An Xbox Live subscription? Sirius Satellite hardware plus subscription? That requirement put a hurting on Stern’s audience, and he was the top dog in radio for decades.

Also consider that tv shows are very sensitive to lead-ins. If you change nothing about a show except what was on right before it on the same channel, the ratings will fluctuate. ER lost a million viewers when its lead-in was changed from Deal or No Deal to the struggling sitcoms NBC has been pushing. Asking a viewer to go to extra effort to watch a show, and then charging them for their trouble, is going to have an effect several orders of magnitude larger than simply changing the lead-in.

While I love the idea of a la carte cable, I don’t think a pay-per-view model for television is viable. People are too fickle about scripted television to make it worth the risk. Hell, the Sopranos never cracked 10 million viewers, even when you added in all the subsequent re-airings throughout the week plus all the On-Demand orders, and it was arguably the most popular subscription-based tv show in history.

I think commercials are here to stay. Without them, the producers would have to treat every single episode similar to a new movie release. i can’t imagine anyone – producer and consumer alike – really wants that kind of headache.

13

Let’s think globally. It might be tough to get 10-15 million American viewers sitting in front of their TVs as 9PM Thursday night but it’s not that tough to get 10-15 million more viewers worldwide to download a show. You’re example of Snakes on the Plane isn’t quite fair. It was virally spread through word of mouth but first, it’s a movie and no one had seen it. Second, once it was out word got around it sucked.

We’re talking TV. Battlestar Galactica is a proven success. I wish I had numbers but I don’t but I can tell you within hours of its broadcast here in the States file sharing websites all over the internet, all over the world light up with downloaders and you don’t need any advertising at all. Everyone knows when there’s a new episode up and people worldwide want that show.

Right now American Networks make deals with foreign TV networks and you simply can’t get Battlestar Galactica in the UK, Australia, Korea, Japan, South America, etc. They won’t show it for months and depending on the country, they might not show it at all.

I read an article on-line about how France limits the number of hours of American TV can be shown. Part of the reason for that was young people started showing up in court and addressing the judge (or magistrate or whatever) as “Your Honor.” They’d picked that up from watching too much American TV and France decided people were getting too much American culture. But even if France limits the numbers of hours of American TV that the networks can broadcast the internet completely sidesteps that and I’m certain there are lots of people in France downloading Battlestar Galactica every week, even without subtitles. What if the producers of BSG hired some translators and started subtitling it for other countries? Imagine if people in India and maybe even China could start downloading BSG? How many potential viewers you have then?

I wholeheartedly agree you though advertiser supported broadcast TV is here to stay, but it’s time to seriously explore alternative channels of distribution in addition to broadcast TV.

14

Don’t forget that downloading shows makes product placement within the shows that much more appealing to advertisers. Frankly, I’d rather see someone on a TV show cracking open a bottle of Bud, Corona, or what have you, than a bottle of “Beer.”

15

Battlestar Galactica was broadcast on Free To Air TV here. I can’t remember which channel- it was either 7 or Nine- but it was definitely on.

16

Only 1.6 seasons of it.

17

Even so, it was broadcast- certainly enough so that anyone who did want to see more could get the DVDs from Amazon.com or somewhere.

18

Something else occurs to me. It’s not just gaining a larger international audience for American TV, it’s Americans gaining access to international TV.

My roommate is a reality show fanatic. Everything Survivor, Amazing Race, America’s Next Top Whatever.

He’s discovered YouTube and just this morning I found him trying desperately to catch up on Survivor South Africa and Amazing Race Asia on YouTube. He loves both those shows just as much as the American versions. After a little questioning I found out there’s a Survivor; UK, France, Latvia, Russia, Norway, Sweden, Scandinavia, Finland, Japan, and Turkey vs. Greece. At least.

He loves America’s Next Top Model and there’s a version out there for all sorts of countries.

There are Amazing Races for all sorts of countries.

For TV reality show fanatics like my roommate there’s a limitless amount of programming out there he wants but can’t always get.

I asked him this morning how much he’d pay to download nice quality versions of all these shows. He said “a dollar?”

I said, “how about $.50?” He said “sure!”

There’s a lot of money to be made out there once someone figures out how to do it. iTunes charging $1.99 is too much.

19

On the surface, it seems like this would be an easy model to shift into. With the hybrid method, people could watch the free broadcast with comercials or pay to watch it on-demand without comercials. If viewers shift to the on-demand method, fee revenues would rise and broadcast ad revenues would drop. I suspect the curves might not be equal and you might make less money in the middle (50% broadcast, 50% on-demand). The biggest trick would be setting the right price. 50c for a half-hour show and $1 for an hour show seems pretty cheap. $1 for a half-hour and $2 for an hour might work well. That would be half the cost of what it is now, right? I guess we are just in the first stage of this model and they’re charging $2 for the early-adopters.

But ESPN/Disney must pay a fortune for the NFL rights and that has got to “eat into” the money they make from the rolling-over they get. Otherwise next time the NFL contract comes up, another station would jack-up the bid for the same muscle. It doesn’t seem unfair.

20

Does to me. I don’t give a shit about sports one way or the other. The only reason why I watch the Superbowl is for the commercials. Why should I have to pay for something I’ll literally never watch? Certainly unfair to other people to have them pay for channels I like that they’ll never watch.