Dick Wolf, tv top producer of Law & Order fame, dishes it out in Variety. His subject: new delivery forms – and how to make money in a world which has gotten rid of the broadcast model of selling 30 seconds of air to advertisers.
I’m not sure if downloads are the worst thing that’s happened to content suppliers or the best thing, but you can do the math. Let’s say five years from now the ‘Desperate Housewives’ of 2010 gets downloaded a million times per episode. (At $1.99 a download), that’s a gross of $44 million per season. On the current two-thirds split, that’s $30 million for ABC for 22 episodes. That doesn’t include profit participants or the studio, of course, so let’s say ($30 million) is cut 50-50 with the studio and everybody else. To the network, that’s a grand total of $15 million — and 22 episodes of a hit like that are worth a lot more than that.
I’m not sure if he’s aware of the fact how utterly misleading this calculation is.
In 2010 PVRs and the networked home will have dented the traditional revenue model of the ad based network tv. But it will be strong enough to pay his bills for the next, uhm, decades. Why?
Changes in usage patterns take their time. It took multichannel cable twenty years to overtake the networks in cumulated prime time viewer numbers. But the media buyers still spend most of their ad dollars on network tv. Because their behavioural changes take even longer.
Even if everybody would switch to IPTV. What would be the difference? The cable guys would be out of business. And the telcos would deliver traditional tv channels into the homes. Because that’s what the consumers know, want – and mostly will get.
But where he really get’s it wrong is the model. If pay per downloads would really substitute broadcasting, one million downloads per show would be fairly meager. At least for the US market. Yes, audience size does matter. That’s why the production cost of a whole run of Desperate Housewifes can be somewhat on the same level as the GNP of a minor league country. If the Housewifes or Law & Order would deliver just those eyeballs, the show wouldn’t be worth a lot more than that but would have been canceled after airing the pilot.
More important: can $1.99 downloads substitute broadcast tv? Only if you’re a Hollywood producer. Or could you imagine every tv household shelling out $200 a month at least just for watching tv content (and that number’s not even based upon the real tv usage hours)? So even in a virtually broadcast-free world, we’ll have to look for ad support. Otherwise, people will have to find themselves some new (and cheap) hobbies pretty soon.
And finally: what content are people paying for? Usually, it’s brand names. Nowadays, it’s celebrity artists. Or physical goods like CDs and DVDs. Or premium channels. In an on demand future, brand name shows like the Housewifes or Law & Order might be in a good position to make some money on the side, too. Depends on your contract with the network. You get a little bit less from the network, and make your money with syndication and overseas rights. Wolf should be used to that.
Via Reinvent TV