Random Lessons in Building an Indy TV Show

We’ve all had to wear so many hats around here, at Colony Bay, that we pick up our business lessons on the fly, between producing shows.   That may not be the wise way to do it, but if you look at most scripted television these days, the big boys don’t know how to do it either, so, at least for my own benefit, I’m recounting the partial truths I pick up along the way:

Entertainment is a Tremendous Bargain: When someone rounds up the money to build, say, a truck-making assembly line, you can’t imagine the end product being available to millions of people for just about nothing.   But the odds are you may watch a $300 million dollar movie at your friend’s house for just that — nothing.   If you buy 55 channels of Dishnet for $19.99 a month, assuming you watch one of those channels 24 hours a day, you are paying two pennies an hour.  Indirectly, you’re paying a bit more when you buy the products advertised on those shows, but, still, it’s a screaming good deal.

For some people, it’s still not cheap enough:  Many American households are dumping cable, satellite and digital delivery, opting for internet services like Itunes, Amazon, Netflix, Roku,  or for DVD sources like Redbox.    The last two years have seen the first declines in the number of households with cable/satellite service.   This could be the recession/depression we’re enduring, or it may mean some people see more value in picking the entertainment they watch and deciding when they watch it.

The Binge Series Viewer: My boy Gabriel, and my nephew Ryan have seen every episode of Mythbusters, through our Roku connection to Netflix.   They watch them one after the other.  In the old days, we had to wait for the next installment of “The Six Million Dollar Man,” but now you can buy the box DVD set or stream the whole series on the internet.  Watching a show, commercial free, when you want to watch it, represents a substantial change in the way people consume entertainment.  Outfits like Netflix love the binge-viewer because they spend less time browsing for content, and more time on the next installment of their favorite show.

Advertising >= Content:  You would think that an animation giant like Pixar could just more or less announce their new show and get a huge audience, but when Brave rolled out, you saw posters in elevators for it.   You couldn’t get a shopping cart at the grocery store without seeing that cute little red-haired heroine looking back at you.   When the last Batman movie came out in theaters, I actually saw trash cans at the U.S. Surfing Open with the Batman logo on them.  Depending on who you believe the advertising budget for any feature film has to be 40 to 100% of the actual production cost.   Make a film for $10 million dollars?  Spend another $4 million advertising it — at least.   I’m guessing there is some basement level on this expense too.   My bet is that almost any show or film would require at least $500,000 to introduce it, credibly, to the American audience.

..But Content is Still King:  A few years ago, the AMC channel branched out from showing classic feature films into serial episodic drama with shows like “Mad Men” and “The Walking Dead.”  You may or may not like the world view of these shows, but most people agree the storytelling is generally more intelligent than the stuff you’re likely to see on the big three networks.   Subscription based television (cable, satellite) is based on “carriage fees.”  If your channel is in demand by viewers, the cable company pays you a carriage fee for your content.  If you’re trying to build demand, you pay the cable company carriage fees.   Here’s a really interesting article about the fight between Dishnet and AMC.   AMC, with its hit shows, wanted Dishnet to pay $0.76 per month per subscriber, about 3 times what they had been charging.  Dishnet refused and now you can’t get AMC on Dishnet.  Since AMC was earning something like $290 million a year from Dishnet’s carriage fees, you have to believe it wouldn’t make the price increase demand lightly.  Someone is paying for those shows, and AMC seems pretty confident about it.

Our Lessons:  Combining a lot of this, while the need for better, more intelligent programming is substantial, so are the barriers.  We are up against very, very cheap alternatives.   We use literally all of our resources producing the content, and we have very little left over to advertise. Our resources are largely directed towards getting editorial attention, but that’s a Catch-22. Even some Christian ministries won’t review your show unless you have an advertising budget, and it’s difficult to get an advertising budget unless you have a chance of getting reviews.  My sense is that social networking, in the near future, will steeply reduce the need for conventional advertising, but it will never be eliminated, nor will conventional delivery of content.   Advertising is not a bad price to pay, ultimately, for as much content as Americans get.

Our Conclusions:  While not for everyone, our show has a very large potential market and stands to be something like a “Madmen” or a “Downton Abbey.”  We can always improve, but content is not our problem.  We have the production part down.  Our sense is that we need to seek venture capital and create a separate entity to share revenues with a forward-thinking cable company that needs to boost its original content programming and thus increase its consumer demand in the cable delivery markets. Likewise, we need to use affiliate marketing and social networking to increase the “pay-per-watch” revenue.

Okay wisdom, now grow some feet!