The New Economics of Quality Television

The scheme worked. And it’s about to work again, this time in a way that nobody anticipated.

First time out, it was the early 1980s, and the new cable industry was winning a lot of franchises from municipal governments, and making a lot of promises. Among them: all sorts of new television channels. The scheme: customers pay a few dollars each month, and if enough households subscribe, there will be enough money for lots of new television programs. These days, over 100 million subscribers pay over $150 per month—that’s $150,000,000 x 12 months each year, enough money for Comcast to buy NBC and Universal Pictures.

Alpha House

Here comes the next scheme, the next game changer. You’ve probably heard about Amazon Prime’s entry into the television programming space. According to the NY Times, here’s how the process worked:

After an invitation by the company, some 5,000 scripts were submitted last year, and in the spring, 14 pilots were commissioned. Amazon then stood back and watched what 215 million active customers clicked on.

There are no commercials. There is a kind-of, sort-of subscription fee. Amazon is a company that sells a lot of products by mail. They compete with other companies that sell a lot of products by mail. One way to encourage Amazon customer loyalty is with a loyalty program that involves discounts. Amazon’s discount program is called Amazon Prime. You pay $79 per year, and you don’t have to pay for shopping. As an incentive, you can watch a growing number of television shows and movies. Some are free. Most are available pay-per-view for a few dollars.

In days past, television programs were produced to “sell soap.” The commercials paid the cost of operating the network and the cost of producing the program.

Now, television programs are being produced to “pay the shipping cost of the soap.” Somehow, this seems lower on the food chain. Will it work?

Amazon Prime offerYup. Why? Because Amazon, and Netflix, and to some extent Hulu, are not carrying 20th century baggage. They operate by analyze the actual viewing habits of real customers. It’s a good model and a not-so-good model. The good: their judgments will be right much more often than they are wrong. And that provides a solid foundation for a business. The not-so-good: gut instinct, loyalty, and softer judgments will ride a rougher road. In an extreme situation, where machines make all of the decisions, there would be no Seinfeld, no situation where an eager program convinced other executives to stick with a show despite its crumby ratings. In real world, that programmer’s ability to persuade will be blunted, not all of the time, but often, because the “data doesn’t lie.”

Of course, the arguments crumble when the actual process of making television programs enters the argument. Writers don’t much care about data, they care about story. As long as the distribution is reaching a large audience with sufficient promotion, and as long as they are paid a good fee, actors and directors don’t much care about the intricacies of new media distribution. Or do they? That’s the part where the game could change. The economics of Amazon and other data-based program services are vastly different from advertising and subscription models.

Why? Because data-based services do not solely rely upon the old-school revenue streams. Amazon’s game is global branding to drive mail order purchases for every available product in the world to every country in the world. If they need to pay John Goodman a dozen times what NBC would consider reasonable, that’s fine with Amazon. Their purpose changes the economics of the game. And because Amazon and its kin are working with data and  operating without the need to fill a 24/7 schedule, they can focus their resources on actual viewing habits, actual consumption patterns, and they can provide producers and writers and directors with moment-by-moment viewer data (when the viewer paused, when the viewer dumped out, how often the viewer re-watched the episode). When creative people learn to use this information in a productive way (imagine the creative battles before all of this settles down), the paradigm will shift, and no film student will graduate without a thorough understanding of data analysis in the creative process.

Armed with endless data, a global marketplace, (effectively) endless cash, and the ability to engage the biggest stars for whatever purpose Amazon deems necessary, the game change is about to begin.

BTW: I thought the Alpha House pilot was very good, entertaining, unpretentious, avoiding the nasty tedium that ultimately limited my fascination with House of Cards. Whether a computer made the judgement, or some clever program executives made it happen, I’ve gotta say “good job.” I look forward to watching the episodes in series, and discovering what else Amazon is unleashing.

The Big TV, Part Two

Yesterday, I wrote about big TVs in general. Today, it’s the specific–the 60-inch screen that we now watch every day. It’s a Samsung plasma screen with many of the latest features.

The most important feature is, of course, the screen itself. It’s extraordinary. Great color, great detail, wonderful contrast, never a ghost image, rarely any digital lag (sometimes a concern with fast-moving sporting events and slower-moving processors).

Second most important is sound. As I’ve written previously, most large TVs are made with the assumption that an external system will be added. This particular TV is fine, but on some frequencies, there’s a bit of distortion. Doesn’t happen often. Shouldn’t happen at all. A common problem, but it goes away with an external sound system. (Note the loudspeakers below.)

Samsung-2013-interfaceThird most important feature is the interface–the ways that we interact with the TV set. This requires some explanation.

Mostly, we work with two remote controls. One is used to switch the cable channels, a feature we’ve never quite mastered within the Samsung interface, so we simply switch the channel on our original cable remote and put it aside. The main remote is the Samsung, and like most TV remotes, it takes a bit to understand most of the features, and, like most remotes, it contains buttons and features that I will never take the time to comprehend. Mostly, it’s useful for volume up-down, and for maneuvering a cursor around the on-screen interface.

This interface is a point-and-click design, limited in its alphanumeric capabilities. Mostly, we select an app from the Smart TV interface, then scroll through a series of visual menus to find the movie or TV show that we want to watch. There’s an Amazon Prime app that we’ve used to watch every episode of “Arrested Development” at no additional charge, and there’s a Netflix app that we use to watch “House of Cards” and the strange assortment of movies and documentaries that is rich in niche material and (happily!) lacking in major mainstream movies. These work well enough, but everything falls apart with the oh-so-promising YouTube app–no fault of Samsung here, for YouTube develops its own software. It’s one of those circa-1983 interfaces where you must use the up-down-left-right arrows on the remote in order to choose each individual character, each space, each deletion of an error. For YouTube, with its many idiosyncratic titles, it’s simply dreadful.

There are some other useful apps–one to watch TED Talks videos, another to check the weather, another which provides access to what may be the slowest internet web browser I have ever encountered. In truth, these criticisms are beginning to melt away because each year’s models tend to improve upon the (few) weaknesses of predecessors, and here, I’m discussing a 2012 TV set, ancient in current technology terms.

If you look closely at the above picture, you’ll see that the 2013 Samsung interface is clean, easy to use, and features a tremendous number of apps (you can add or delete them at will). You are, of course, looking at the future of TV on this screen. There’s an app for YouTube and CNBC, another for USA Today and TED, one for HBO GO, and one for Netflix. Each of these is an independent experience essentially unaffiliated with Samsung, but it’s all here, all easily accessible in its “am I a TV channel or a web site? glory? There is so much video, so many images, so much text to be read on a screen that offers abundant clarity and contrast. It is now reasonable to read the Sunday paper on your TV set, stopping to check in, via Skype, with relatives calling from far away, checking email, doing all of that. At long last, we have arrived in the future, and so far, it seems to work pretty well. (See my comments about processing power in the yesterday’s post.)

And then, there’s 3D. This mystifies me. Yes, there are 3D glasses. Yes, they feel really silly. Yes, the effect is still that vaguely grainy, slightly out-of-phase experience. No, I have not felt much of a need to watch anything in 3D for anything more than a family demonstration. Maybe some time in the future.

How much does all of this cost? Less than $2,000, even for a larger screen.

So what else is new? The answer is clearly articulated, with only a modest amount of marketing-speak, on this page from Samsung’s website.

Changed Channels: 2011 to 2013

All My ChildrenOn January 5, 1070, the ABC Television Network debuted a new half-hour soap opera series called All My Children. After seven years, the series was sufficiently popular to win an hour-long time slot. It remained on the air until September 23, 2011, cancelled due to changing audience and lifestyle behaviors.

On April 29, 2013, All My Children returns, with stories and many original cast members intact, five days a week, in its original half-hour form, but the series will not be seen on broadcast television. Instead, the series will be shown on Hulu’s website and on iTunes (if you want to watch on a tablet or phone, you must subscribe to Hulu Plus). One further inducement: in addition to All My Children, another long-time ABC daytime staple, One Life to Live, is also returning.

Taken as an isolated incident, the return of soap operas (or, politely, daytime dramas) is interesting news for the advertising and television industries. It’s not an isolated incident. Somehow, sometime between 2011 and 2013, something happened.

In my house, we occasionally watch a network television series at the time that it is being broadcast, but this is no longer routine behavior. Instead, we DVR anything we want to watch. The ease of simply pressing a button to record a program–a button that may be remotely operated by smartphone or tablet–turns out to be a radically new idea, different in both utility and convenience when compared with, say, VHS tapes. Alone, this convenience did not shift our behavior. Video-on-demand is also an interesting idea, but we have not used it as often as we thought we would. So that’s not the big shift.

Mel Brooks, Carl Reiner and Jerry Seinfeld eating corned beef sandwiches at Carl's place.

Mel Brooks, Carl Reiner and Jerry Seinfeld eating corned beef sandwiches in Carl’s living room.

Turns out, the big shift is the apps that are now on my TV, computer, iPad and iPhone. At first, I didn’t really understand the importance of the software. For me, HBO GO was the tipping point. The network offered not only current programs, but complete collections of all of their popular series, essentially for free to anyone subscribing to their cable service. Showtime has done the same with its Showtime Anytime app. Between HBO and Showtime, I have access to enough original programming to keep me busy for a decade. Still, the overall composition of our family’s media diet didn’t change as much as I thought it would. Then again, that was only 2012. By 2013, the shift occurred. The tipping point was a new TV set and one app in particular: Amazon Prime. Why this one? Well, it was kinda-sorta free: we buy enough books to justify the $75 annual “free shipping” charge; with this package, Amazon Prime comes as a bonus. We started by catching up on a whole lotta Twilight Zone episodes, then switched to Arrested Development. When we feel like “just watching TV,” we watch three or four Arrested Development episodes. And if we’re more ambitious, we choose a movie. Or, we fill-in with Jerry Seinfeld’s Comedians in Cars Getting Coffee via the Crackle app (two of the best episodes: the one with Carl Reiner and Mel Brooks, and the one with Ricky Gervais). I haven’t yet seen Crackle’s popular thriller series, Chosen starring Milo (Heroes) Ventimiglia. We haven’t yet bothered with Hulu and we’ve just signed on to Netflix, whose selection of online movies is  embarrassing and not worth the money.

House of CardsWe are not, however, subscribing to Netflix for the movies. Instead, we’re watching its well-publicized entry into the world of high-end television drama: House of Cards with Kevin Spacey. We don’t have much interest in Netflix’s next series, Hemlock Grove, which begins on April 19, because we’re too busy watching West Wing reruns to bother with a werewolf thriller. Netflix has announced a pilot with WGBH for a new children’s series, and will launch its first animated children’s series, made by Dreamworks, based upon its motion picture, Turbo: F.A.S.T. Also from Netflix: a new Ricky Gervais comedy series called Derek seen on TV in the UK on their Channel 4, but here in the U.S., it’s not on TV, it’s on Netflix.

We may, however, sign up for Hulu+, in part because (guilty pleasure) I used to watch All My Children, but mostly because the app/channel (not sure what we’re supposed to call these “not-quite-networks”) is launching four new series, including a promising comedy spoof from the funny Seth (SNL) Meyers, The Awesomes.

On YouTube, you can watch more than forty original episodes of H+ The Digital SeriesThe first episodes ran in August. It’s a sci-fi thriller. Battlestar Gallactica: Blood & Chrome is the prequel to the cult-fave TV series seen on both YouTube and SyFy.

A scene from Tom Hanks' elaborate new Yahoo! Screen animated post-apocalyptic series, Electric City.

A scene from Tom Hanks’ elaborate new Yahoo! Screen animated post-apocalyptic series, Electric City.

On AOL On, On Yahoo! Screen, there’s a spoof of dating reality shows called Burning Lovebut the big news from this online channel is a new Tom Hanks project called Electric City. I’ve been having fun watching Video Game High School, which crosses reality and the cyber world.

Traditional television networks are trying their hand, too. FOX is debuting Short-Com Comedy Hour this summer.

More is on the way. And, I suspect, much of it will be better than average network fare for two reasons. First, creative decisions are being controlled by a smaller executive committee, and producers are being allowed more freedom (that will change, but for now, it’s worth savoring). Second, there’s a lot of talk about “the HBO Model” which assigns greater value to the quality of the property than to a third party relationship (in a typical network’s situation, every decision is affected by the opinion of the sponsor, and again, for this brief shining moment, the focus is on the creative work and not on the needs of the sponsors).

2013. The year that everything changed.

Amazon: The Sitcom(s)

Amazon PrimeWhat’s the difference between a bookstore and TV channel? Sounds like a riddle for a time traveler. Little more than a decade ago, Amazon started to pulverize the book business. Now, just about anybody with a computer or a mobile device (that would be, just about everybody) thinks about Amazon as the first stop for books. And music. And just about every other common retail item.

And now, Amazon is beginning its assault on (not sure whether to call it television, but let’s go with television for now). Here come the first six sitcoms from Amazon Studios, all intended to be shown, free, to Amazon Prime members (who get free shipping and other benefits from Amazon). These programs will be part of a rapidly growing (and pretty darned good) collection of available programming already in place. For example, Amazon Prime viewers can watch EVERY episode of Twilight Zone, Arrested Development, and other interesting TV series from the past, as well as a bunch of good moves (last night, we watched Good Night, And Good Luck). As Amazon Prime members, we keep forgetting that we pay Netflix money, too.

So, what are the series? List below. Most of them appear to be promising: the creative teams are experienced, and the concepts are less lowest-common-denominator than we usually see on TV. One new concept from Garry Trudeau that sounds promising. And I sure hope that The Onion does a better job with television this time around (past attempt: not so good).

The complete list comes from the story in Tech Crunch.

Alpha House – Alpha House was written by Academy Award nominee and Pulitzer-Prize winner Garry Trudeau (Doonesbury, Tanner ’88). Alpha House follows four senators who live together in a rented house in Washington DC.

Browsers – Written by 12-time Emmy-winning comedy writer David Javerbaum (The Daily Show) and to be directed by Don Scardino (30 Rock), Browsers is a musical comedy set in contemporary Manhattan that follows four young people as they start their first jobs at a news website.

Dark Minions – Written by Big Bang Theory co-stars Kevin Sussman and John Ross Bowie, Dark Minions is an animated workplace series about two slackers just trying to make a paycheck working an intergalactic warship. The pilot will be produced by Principato-Young (Reno 911).

The Onion Presents: The News – The Onion Presents: The News is a smart, fast-paced scripted comedy set behind the scenes of The Onion News Network that shows just how far journalists will go to stay at the top of their game. The Onion Presents: The News is from The Onion’s Will Graham & Dan Mirk (The Onion News Network, The Onion Sportsdome).

Supanatural – Supanatural is an animated comedy series about two outspoken divas who are humanity’s last line of defense against the supernatural, when they’re not working at the mall. The series, written by Lily Sparks, Price Peterson and Ryan Sandoval, will be produced by Jason Micallef (Butter) and Kristen Schaal (The Daily Show).

Those Who Can’t – Written by Andrew Orvedahl, Adam Cayton-Holland and Benjamin Roy (Grawlix), who were discovered through Amazon Studios online open door process, Those Who Can’t is a comedy about three juvenile, misfit teachers who are just as immature, if not more so, than the students they teach.

Just in case you missed it, this blog presents a useful introduction to one of the best TV series of all time.

Just in case you missed it, this blog presents a useful introduction to one of the best TV series of all time. To visit the blog, click on the image.

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