Online Entertainment: NOW is the time.

[DennisD]

Nobody seems to be taking online entertainment seriously. I'll assume it's because you're not paying attention to what's going on in the entertainment landscape.

GoogleTV, AmazonTV, AppleTV, Hulu, Netflix, Microsoft Marketplace are all competing for your viewing attention. More people are watching "On Demand" content, and less people are watching traditional TV. It's all changing. It's only a matter of time before advertisers start paying internet channels more money than they're paying television networks.

As such, these content distributors are all spending TONS of cash to get their hands on exclusive programming for that competitive advantage.

• Netflix spent $100m to produce two seasons of house of cards (3.8m/episode). They made their money BACK within a quarter by gaining 3m new subscribers due to the show (worth $21m/month). They have a STRONG incentive to keep producing new content, and keep buying exclusive deals.
• In Oct 2011, Youtuber Freddie Wong crowdsourced $273K for season 1 of a web series called "video game high school". Netflix bought exclusive rights to the series, banning Hulu/Amazon from airing it. Two years later Wong raised another $808K for season two, and is rumored to be in the midst of season 3, sans crowdfunding.
• Producer Felecia Day scored a deal to release 7 seasons of internet show "The Guild" through Microsoft's Xbox Marketplace, Zune, and MSN Video. She used the funds to start internet channel Geek and Sundry which has been constantly expanding since it's formation. Just 2 months ago, she scored a deal with Hulu for exclusive rights to a few shows (Flog, Tabletop, Written By a Kid) and she premiered Caper on Hulu.
• In 2010 Nerdist Industries was founded, it was comprised of a single podcast. Within 2 years it grew to a point where it had a reach of 15million users across multiple platforms. It was acquired by Legendary Entertainment in 2012 (just two years later). This lead to dozens of new web shows and podcasts, a BBCA show, and a new daily Comedy Central show.
• Even former Disney CEO Michael Eisner's getting in on the action. He formed a company called Vuguru which has been going around buying over a dozen web IPs and inked distribution deals with AOL, HDNet, Yahoo!, Hulu, and YouTube.
• Even though it's not what we think of when we think "web TV" Discovery Network has been buying up web properties as well. They bought Revision3 for $35m in 2012.

My point?
THERE'S A BIG BAD CHANGE COMING
Internet Television is speeding up and growing exponentially. In television, massive growth took 6 years. On the internet, it was4 years. Now it takes MONTHS.
MORE THAN HALF OF ALL INTERNET ACTIVITY IS VIDEO.

This isn't a bubble. Netflix and Hulu aren't going anywhere. The popularity of WebTVs is growing. Mobile viewing is growing.

I want you all to pay close attention to the entertainment landscape.
This is going to be very interesting.

 

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[Tiago]

I didn't know Netflix had bought Video Game High School! But yeah, nowadays people are wanting more and more to watch on their time. People don't care anymore if something airs Wednesdays at 8PM, they want to watch things when they feel like it, not some prescribed time.

 

[DennisD]

I didn't know Netflix had bought Video Game High School! But yeah, nowadays people are wanting more and more to watch on their time. People don't care anymore if something airs Wednesdays at 8PM, they want to watch things when they feel like it, not some prescribed time.

What's crazy is that Nielson (and all advertisers) basically disregard DVR numbers. They only count what people watched live.

Shows like American Idol do particularly well because they're BUILT to exploit these systems. The whole "live voting" and "reveal show" is created so you HAVE to watch live or the show will be "ruined" for you by people at work the next day.

As more and more advertisers wise-up to the fact that live television is antiquated, they're going to spend a LOT more cash on Internetainment.
We're just about at the tipping-point right now. Neilson's monitoring Twitter activity now. Advertisers aren't paying attention to it yet, but it's still a big deal.

 

[DennisD]

After an interesting discussion with a business contact via twitter, I wanted to point out one more thing:

The traditional television model is not going anywhere.

Why?
Because traditional television is the path of least resistance between a slowlaner and an 'escape'.
They come home from work and don't WANT to think. They don't want to choose from thousands of options.

What they want to do is sit down in their recliner, press a button, and be whisked away from their miserable life.
Advertisers like Coke, Walmart, KFC, and any Hollywood blockbuster have a perfect audience on traditional television sets.
Bulletproof Coffee isn't going to find any success by taking out ads against Jersey Shore.

What I am saying, is that WebTV will rise as a cash cow in addition to television.
People who watch WebTV are smarter, richer, and more technically savvy than your television watcher.
They're also more likely to use credit cards,.. making direct marketing campaigns much more profitable.

It will become profitable for web-tainment peeps to sell their own products through their own shows.
I just can't believe it isn't already happening more often.

 

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[LOYD]

That business is huge and still growing. Not just in terms of actual streaming services, but also the hardware to utilize it.

-The WWE recently launched their own on-demand network that racked up 667,000+ subscribers just in the first two months and they only launched in the US. When they go international, hitting 1 million+ will be no problem. They were sitting on decades of classic wrestling footage and finally realized that they could capitalize on it.

-Amazon just released their Amazon Fire TV which is basically their version of Apple TV or the Roku. Clearly, they see the growth potential in the streaming service market.

 

[CommonCents]

I watch very very little 'live'. All DVR with exception of some news and sports. Watch when i want, and cuts 20min of commercials out of an hour w/ the skip button. I showed my parents how to use DVR, literally a button push or two for directv but they refuse to use it, it's too complicated, heheh. I'm guessing your DVR data gets collected and advertised against.

 

[TeflonDon]

I noticed the other day that some adverts do not record on to my box, which is odd. Only certain ones though. Is it possible that they are charging for ads to be recorded, or am I missing something here?

 

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[DennisD]

I watch very very little 'live'. All DVR with exception of some news and sports. Watch when i want, and cuts 20min of commercials out of an hour w/ the skip button. I showed my parents how to use DVR, literally a button push or two for directv but they refuse to use it, it's too complicated, heheh. I'm guessing your DVR data gets collected and advertised against.

I know that the DVR numbers are collected... but advertisers don't pay for them regardless of if the commercials are watched or not. Only programs watched live are counted by advertisers.

It should be simple: Show an ad, pay some cash.
Idk why there's preference as to if the ad was 'live' or not if the end user watches anyways.

I noticed the other day that some adverts do not record on to my box, which is odd. Only certain ones though. Is it possible that they are charging for ads to be recorded, or am I missing something here?

That's strange! I haven't heard of this. What box are you using? Is it an 'adskip' feature or something?

What happens in your box? The ad is just missing? They stitch up the content around it? Is there blank space? Very interesting.

 

[FoxFire21]

It should be simple: Show an ad, pay some cash.
Idk why there's preference as to if the ad was 'live' or not if the end user watches anyways.

But the end user doesn't watch commercials on DVR. That's why the ad is preferred live.

 

[DennisD]

But the end user doesn't watch commercials on DVR. That's why the ad is preferred live.

I agree with THAT logic... but that's not the logic advertisers are using.

Unless I misunderstood, @CommonCents said that their parents DO watch ads on the DVR. I know that DVR skip data stats are tracked and are accessible by network television.

All I'm saying is that for the DVR ads that are watched through to completion, the advertiser should pay at full price.

Plot-intensive shows targeted at a younger/smarter audience (30-Rock, Community) have been in danger of cancellation EVERY SEASON due to shaky numbers... Fans of these shows are smart enough to actually know how to use a DVR... which means a higher percentage of them DO use a DVR.
Had DVR numbers had been taken into account at full value, the shows would have performed much better.

Instead, low-brow programming is artificially persisting longer than it should... not due to it actually generating more money for advertisers, but due to an antiquated system of measuring viewer activity.

 

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[CommonCents]

my parents don't use the directv DVR function at all, 1 or 2 buttons are too complicated

 

[TeflonDon]

That's strange! I haven't heard of this. What box are you using? Is it an 'adskip' feature or something?

What happens in your box? The ad is just missing? They stitch up the content around it? Is there blank space? Very interesting.

I'm using a Sky HD+ box, and am a UK viewer. The ad just seems to disappear, but it only happens with certain ads. The box plays straight from the add before it, and on to the ad afterwards, as if it hadn't existed. The only reason I know this is because my other half saw a movie advert the other day, whilst recording a program, that she thought was good. Of course, being as it had only been on a minute or two prior, she rewound the feed to show me. Except it wasn't there, anywhere in the ads. Later on in the day, I saw the ad myself and mentioned it to her right as it finished. She suggested rewinding to see if it was there this time, because she insisted it had disappeared before, while I was a little skeptical. Sure enough, the same ad was gone again. .

This was last week at some point, I hadn't actually given it much thought at all until I read your post here.

Also no, we don't use any kind of ad-skip.

 

[DennisD]

I'm using a Sky HD+ box, and am a UK viewer. The ad just seems to disappear, but it only happens with certain ads. The box plays straight from the add before it, and on to the ad afterwards, as if it hadn't existed. The only reason I know this is because my other half saw a movie advert the other day, whilst recording a program, that she thought was good. Of course, being as it had only been on a minute or two prior, she rewound the feed to show me. Except it wasn't there, anywhere in the ads. Later on in the day, I saw the ad myself and mentioned it to her right as it finished. She suggested rewinding to see if it was there this time, because she insisted it had disappeared before, while I was a little skeptical. Sure enough, the same ad was gone again. .

This was last week at some point, I hadn't actually given it much thought at all until I read your post here.

Also no, we don't use any kind of ad-skip.

wow! That's so interesting!
Really good info to have,

I doubt people are paying extra to get their ads recorded,
more likely the movie producers paid extra to make sure it WASN'T included.
Might have been they were split testing engagement rates between different trailers and didn't want evidence of the test,
or maybe there was some sensitive plot information in one of the shots, or it wasn'ta locked final picture.

Super interesting stuff. I wonder if I've ever overlooked anything like that in my own experiences.

 

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[Stephanos83]

TV is dead. Business model sucks even with on demand. This is simply because they make you pay for packages with channels you don't want. I believe the future of TV is to allow subscribers to build their own packages by choosing channels a la carte. Give me the option to remove adverts at premium pricing competitive with what I can get on the interwebs and we have a deal.

I live in the U.K and only pay Sky for phone and broadband because of this. They've spent a bunch in direct mail trying to regain my business.

 

[Leo Hendrix]

I havent completed the thread...but being a fan of the Vice Network for a while and watching the co-founder speak about his business model to the AOL CEO...I compartmentalized this 'industry' in my mind...independent, startup original content...could be a winner...if you can get viewers with your content...

 

[rkmalo1]

After an interesting discussion with a business contact via twitter, I wanted to point out one more thing:

The traditional television model is not going anywhere.

Why?
Because traditional television is the path of least resistance between a slowlaner and an 'escape'.
They come home from work and don't WANT to think. They don't want to choose from thousands of options.

What they want to do is sit down in their recliner, press a button, and be whisked away from their miserable life.
Advertisers like Coke, Walmart, KFC, and any Hollywood blockbuster have a perfect audience on traditional television sets.
Bulletproof Coffee isn't going to find any success by taking out ads against Jersey Shore.

What I am saying, is that WebTV will rise as a cash cow in addition to television.
People who watch WebTV are smarter, richer, and more technically savvy than your television watcher.
They're also more likely to use credit cards,.. making direct marketing campaigns much more profitable.

It will become profitable for web-tainment peeps to sell their own products through their own shows.
I just can't believe it isn't already happening more often.

Great post(s). I found them insightful. I agree with you about Streaming content and your point about TV not going anywhere is solid. I question that traditional TV (cable and satellite providers) can survive though. Once TV on the internet becomes so easy that it is as simple as pushing a button and having a Google or Apple TV (my guesses as the two companies who will get this right OR one of us?!) as your TV in your living room, I think that those providers will disappear.

Let's be honest, there's a percentage of people who only have cable/satellite for live sports (myself included), once ESPN, etc goes to an a la carte type payment system (pay $20 a month - get the sports you want live streaming or something AND it's incredibly simple to use), I think traditional tv companies like Comcast are toast.

Again, great posts. I enjoy this topic.

 

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[loop101]

I know a little bit about the entertainment industry. Episodic programming ("TV shows") is considered to be the future. The day's of going to the theater to see "Beverly Hill's Cop" are mostly gone. Who wants to sit in a dark room, in a sticky chair, with potentially violent strangers?

All the best writers are working in TV, and now the best actors are coming over. Sir Anthony Hopkins said he considered Bryan Cranston to be the best actor he had ever seen. Episodic is huge because the best writers want regular paychecks, and are writing amazing content. Content companies want episodic because they can deliver a specific audience to advertisers.

Some theater films are expected to remain popular: immersive 3D, kids films, horror films, and "date films". Basically films where you want to get out of your house, or have to. If the action happens in the viewers mind, it's a better fit for the small screen.

 

[ilrein]

Can't forget, youtube to acquire twitch.tv for $1 bil.

 

[DennisD]

I'm a bit excited. 3 days ago Hulu hired a new head of Hulu Originals... I don't know much about her but I have a good feeling.
I wish my show was further along so I can pitch her. I'll work on it hardcore this week and try to wrap up episode 1.

Can't forget, youtube to acquire twitch.tv for $1 bil.

Now that twitch is intigrated straight into xbox one, we should be seeing interesting things from them.

 

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[DennisD]

It took me 2 months, but I finally copied and pasted my OP from here over to my blog: http://www.castleforgemedia.com/the-millions-being-spent-for-audience-eyeballs/

The facts and figures looked boring outside the forum, so I created these nifty infographics for each. Figured you all might appreciate them too:

 

[JustinBoshans]

Nobody seems to be taking online entertainment seriously. I'll assume it's because you're not paying attention to what's going on in the entertainment landscape.

GoogleTV, AmazonTV, AppleTV, Hulu, Netflix, Microsoft Marketplace are all competing for your viewing attention. More people are watching "On Demand" content, and less people are watching traditional TV. It's all changing. It's only a matter of time before advertisers start paying internet channels more money than they're paying television networks.

As such, these content distributors are all spending TONS of cash to get their hands on exclusive programming for that competitive advantage.

• Netflix spent $100m to produce two seasons of house of cards (3.8m/episode). They made their money BACK within a quarter by gaining 3m new subscribers due to the show (worth $21m/month). They have a STRONG incentive to keep producing new content, and keep buying exclusive deals.
• In Oct 2011, Youtuber Freddie Wong crowdsourced $273K for season 1 of a web series called "video game high school". Netflix bought exclusive rights to the series, banning Hulu/Amazon from airing it. Two years later Wong raised another $808K for season two, and is rumored to be in the midst of season 3, sans crowdfunding.
• Producer Felecia Day scored a deal to release 7 seasons of internet show "The Guild" through Microsoft's Xbox Marketplace, Zune, and MSN Video. She used the funds to start internet channel Geek and Sundry which has been constantly expanding since it's formation. Just 2 months ago, she scored a deal with Hulu for exclusive rights to a few shows (Flog, Tabletop, Written By a Kid) and she premiered Caper on Hulu.
• In 2010 Nerdist Industries was founded, it was comprised of a single podcast. Within 2 years it grew to a point where it had a reach of 15million users across multiple platforms. It was acquired by Legendary Entertainment in 2012 (just two years later). This lead to dozens of new web shows and podcasts, a BBCA show, and a new daily Comedy Central show.
• Even former Disney CEO Michael Eisner's getting in on the action. He formed a company called Vuguru which has been going around buying over a dozen web IPs and inked distribution deals with AOL, HDNet, Yahoo!, Hulu, and YouTube.
• Even though it's not what we think of when we think "web TV" Discovery Network has been buying up web properties as well. They bought Revision3 for $35m in 2012.

My point?
THERE'S A BIG BAD CHANGE COMING
Internet Television is speeding up and growing exponentially. In television, massive growth took 6 years. On the internet, it was4 years. Now it takes MONTHS.
MORE THAN HALF OF ALL INTERNET ACTIVITY IS VIDEO.

This isn't a bubble. Netflix and Hulu aren't going anywhere. The popularity of WebTVs is growing. Mobile viewing is growing.

I want you all to pay close attention to the entertainment landscape.
This is going to be very interesting.

I watched a seminar by A man named Gary Vaynerchuck ( Last names spelled differently) saying what you just said. You are right. It's coming hehe.