By Dom Serafini
As we know, the major studios have the product to attract buyers (both in terms of quality and quantity). That's why they don't have to sell, but merely take orders. But what about the indies? What do they have to do to navigate and find revenue in the jungle that the TV business has become?
Unfortunately their findings will amount to what the studios have left for them: Basically 20 percent of the business divided among 10 mini-majors and some 500 smaller companies worldwide.
A&E's Steve Ronson, Kate Winn
Naturally, trying to maximize rights exploitation and figuring out what can be held back is time-consuming and at times offers few results, but if producers and distributors are shut out from the major distribution systems (such as broadcasters) there is really no alternative.
According to New York City-based Entertainment Studios' Tom Devlin, who's considered a king of the jungle, stations bet on familiarity: "Fresh and innovative product scares them," he said.
On top of this, there is the inequitable competition from larger outfits. A Las Vegas-based program distributor complained that, in Latin America a producer from the U.K. and one from Canada sell children's animation for just a few dollars because their main revenue comes from merchandising.
One thing is clear: Indies will have to spend more money and man hours than the studios do to make any sale. And, the jungle out there only allows for the survival of the smartest. This is because the television programming sales business is now very complicated.
Without considering variation and sub-variation (e.g., subscription VoD and a la carte VoD) of various distribution outlets' licensing, there are at least 15 main ways to sell content rights with opportunities to repurpose existing content. But, even though there seems to be a good number of ways to exploit rights, program producers and syndicators still have to find new ways of generating revenue, keeping in mind that small indies often cannot reach big buyers and there are only three ways to make money with content: through advertising, licensing and direct sales.
For example, for Montreal, Canada-based XII Tribes Entertainment's Michel Zgarka, "viral revenues (i.e. YouTube) represented major revenues for Gummibar & Friends. With close to two billion hits and having been able to monetize the hit, it was for us a key element in the financial structure of the TV special and series."
Indeed, if revenue from major TV outlets can be called "macro," "micro," is a myriad of little payments that producers and distributors can extract from the online universe. This is a good way to monetize content that is difficult to sell to TV outlets (e.g., comedies) or that are outside the popular cycle (e.g., primetime soaps). Older archives are also perfect candidates for micro-payments. Researchers in the U.K. have found that, for such content services, consumers are willing to spend anything from 10 cents to $3.25. Micro-payments for digital content are estimated to have reached worldwide $12 billion.
Los Angeles-based Opus Distribution's Ken DuBow has found a good strategy in shared windows, though it's not a new concept. This adds revenue when a station that acquired a few plays over several years allows the distributor to sell the same movies outside those plays to other outlets.
What can be considered a new development — and it is not barter or product placement — is sponsorship, or selling to advertisers. As explained by Toronto, Canada-based TLN's Aldo Di Felice, this latest development is used especially by German car manufacturer BMW, Nike and Gillette as ad-funded programming that is given to broadcasters for free (though Red Bull tries to sell such programming). Nike, for example, tends to fund documentaries that, at times, do not even show their brands.
An example of ad-funded content business direct to consumer is New York City-based Screen Media's Popcornflix.com, with 350 movies available for free and supported by advertising.
Another aspect of the business that's not to be underestimated is DVD. It still brings big numbers for a "dead business." In 2011 the DVD business in the U.S. reached $18 billion. Even though some erosion is expected to start this year, it will nevertheless remain a robust market, in the view of Steve Ronson, EVP at New York City-based A+E Enterprises. The erosion is caused by the fact that single TV episodes and movies go digital rapidly; therefore, the U.S. studios are slowly reducing dependence on the packaging business, causing a drop in volume.
"I see a great opportunity in the DVD business, especially if big studios are curbing their involvement," said Ronson. A+E Networks Home Entertainment puts out some 200 new titles a year on DVD with quantity ranging from 5,000 to 250,000. "The break-even point is rather low," said Ronson, "about 2,500 units."
A+E Networks (recently rebranded from AETN) has a library of 10,000 titles on DVD, and in 2011 put out 15 million DVDs. A+E Networks' DVD sales are done directly through its own Web Store (which represents 25 percent of total sales), wholesale stores like Wal-Mart and "Incos" (Internet companies) like iTunes, Amazon, etc.
Asked whether piracy is more problematic for DVD or digital, Ronson answered, "if fairly priced, piracy is not a big problem for either one."
Among the newest revenue-producing streams are the Web Channel outlets of the type pioneered by Google's YouTube. The Inco has come out with 100 Web Channels with a total of 25 hours of daily original programming. The channels comprise 19 categories, including pet and animal (by FremantleMedia), fitness (by Lionsgate), wrestling (by WWE) and satire (by The Onion publications).
YouTube gives content providers 55 percent of the ad revenues, after recouping the money advanced to producers. Content remains exclusive to YouTube for 18 months. So far, YouTube has advanced a total of $100 million to content providers. Each channel gets from $3 million to $5 million advances.
Among the many ways of splitting content syndication "hair," there is the so-called "interstitions," where short programs (the type favored by mobile operators) are inserted between longer programs. A typical example of such a service is what Miami, Florida-based NewsProNet offers. The company produces two to three minute short-form programs to be inserted into TV stations' news programs and one to two-minute clips for online TV channels.
Finally, in some instances, a content owner can monetize the program soundtracks by placing them in platforms such as iTunes or Amazon, which happens to be a good business model for companies like the London-based Entertain Me Group, a production company that recently launched a distribution division for its music and documentary programs.