Netflix showed us with HOUSE OF CARDS that if you trust the talent and give them enough money, they can create premium content anywhere. We no longer live in a world where must-see-TV can only be produced, and more importantly, distributed by studios and networks. Moving forward, we'll continue to see premium content emerging from distribution-driven models, but replicating quality and reach is only half the equation. I don't mean this in a bad way. I think it's extremely important that Netflix is putting their money where their mouth is, effectively saying, hey we tap talent like you, we spend like you, we get to "jog" with you. Anything short of that would have given them excuses to make in the face of a potential failure. But we only had Canadian actors, for instance. (For example, see Halo 4: Forward Unto Dawn.)
The Veronica Mars movie funded on Kickstarter, will hopefully reveal the second half, in my opinion the more important half, of the equation. I'll pose it as a question. What is the real cost of ninety minutes of content created by premium talent using premium technology, but working for ownership in the negative instead of upfront fees? Based on this campaign, as well as financial models and budgets I deal with on my day-to-day, the answer is somewhere right around here: $2,000,000. The campaign does state that obviously all proceeds over $2million will go into the budget, which I'm sure they'll be happy to have. Again, I know for a fact that this number is feasible providing you leverage the correct talent. (I'll probably write more about that in the future.) To be fair, Warner Bros. does own the underlying IP and they're hard pressed to give up ownership. Sources tell me they may pony up production funds (in addition to a domestic limited theatrical release, no doubt to leverage oversea sales (and likely canabilize a digital window)), which would no doubt contribute to fees, but the model can work just the same with ownership pooled for talent.
Now, it's speculated that HOUSE OF CARDS came in at around $3.8million per episode, on the cheap end. And going forward, the same speculation suggests Netflix will continue pushing budgets around $4million per episode for future shows.
So, the implication here is that it's quite easy to spend a 100% premium between fees and production costs if given the opportunity.
But what happens if you're not given the opportunity?
Tighter budgets and back-end compensation seem to suggest an emerging model for digital content that might just allow creators and consumers to have their cake and eat it too: Greater numbers of niche shows/films/experiences of premium quality created on smaller budgets, reaching pre-engaged audiences on different-sized screens.
Engaged, niche audiences. Low production costs. Premium IP.
Which brings us to our... third half...
Brands want in.
They don't all know it yet, but some are coming around.
Edelman nabs a Machinima content programmer.
Conglams are leveraging their brands across networks. Conde Nast launches a digital network programmed by its biggest brands.
The brand play makes perfect sense. We're talking marketing budgets in the billions, especially in automotive and consumer electronics. Why just spend it on commercials? They're expensive. They air a few times. Sometimes they're cool, but with time, they always become invisible. Here's an opportunity to build content libraries. Products unto themselves. Consumable. Re-consumable. They garner empathy and fans. Serialized or episodic, you can track engagement.
So simple, right?
Here's (some) of the reluctance: But what about GRPs?
I have this conversation all the time. Brands love their GRPs.
I'm always talking to engineers on the analytics side. I usually like to scream at them. It goes something like this:
What the fuck? Your network has upwards of 500 user touch-points. Why is your latest, greatest product a GRP solution? It doesn't make sense! Why don't brands use these touch points? If the brand is the content instead of just the interstitial, they'll understand, won't they? Who gives a shit about GRP? It's a Furry Convention Time Travel show, not a fucking billboard on the way home from work! And that 250k buy from The Tampon Company that's rendering 75% on ustream? Those views are in front of a drunk college girl showing her tits to stoners, you don't need GRP to know you're completely missing! Please tell me why you do this!
I always get the same answer. It's a version of this:
You are absolutely right. But you're going to have to wait for some very stubborn people in some very important positions to either retire or die. It's just the way the world works.
I don't want to wait for people to die! It's 2013, we just cured HIV! That could take forever!
I want brands, no more precisely, I want agencies that represent brands to get their heads out of their asses and start taking risks on content and metrics in a meaningful way so that I never have to see a tampon commercial ever again and my wife never needs to see a sportscar commerical ever again.
Okay, go support Veronica Mars on Kickstarter. Seriously. It was like the best show ever.