The Television Will Be Revolutionized, and Vice Versa
The
television industry has been a relatively stable medium, with production,
distribution, scheduling and advertising formulas established in the
early 1960s and holding steady for close to four decades. Even the advent
of cable and subscription services like HBO and Showtime, although affecting
the overall level of network audiences, had little effect on how the
industry conducted business. This decade, however, has seen astonishing
changes in all aspects of the medium, and those transformations are
both outlined and discussed in Amanda Lotz’s recently released
book, The Television Will Be Revolutionized.
Lotz divides
these advancements into five areas: technology, creation, distribution,
advertising and audience measurement. In the days of old, for instance,
one could only watch television on a television, but recent years has
seen a multitude of technological advancements, such as the DVR, Video-On-Demand,
portable devices like the iPod and even a growth in mobile phone capabilities,
that allow television viewing to no longer be limited to the home. More
importantly, the audience is no longer a slave to the scheduling whims
of network executives, as these new devices allow for the viewing of
a television show any time, as well as any place, one is inclined to
do so.
The more
intriguing elements of Lotz’s analysis, however, is how all these
changes on all these levels will increase the potential for a wider-ranging
and more diverse level of television production. HBO and Showtime have
obviously had an effect, bringing what Lotz calls an “artistic”
approach to television production by creating “content with budgets
and production values once common only to films produced by major studios.”
But even the way these channels schedule their shows, their use of storytelling
structures that do not have to rely on commercial interruptions and
the lack of advertising revenue to turn a profit has also had profound
repercussions.
The cause-and-effects
that Lotz discusses go deeper than cable channels, however, as the author
argues that even the lower revenue now generated by networks and studios
will play a role in allowing a wider-variety of programming. In the
past, the predominant method of producing a television show was through
deficit financing, where a studio suffered an initial loss in making
a series with the hope and expectation that it would both recoup those
losses and show a profit through the eventual selling of syndication
and international rights. This philosophy led to a boom in the 1990s
when not only comedies like Friends and Seinfeld turned
into billion dollar syndication empires, but even the drama ER
was able to muscle substantial licensing fees—what a network pays
per episode for a television series—from NBC. But as network viewership
drops and television-watching becomes fragmentized, those levels of
financial rewards dwindle as well. The past few years, therefore, has
seen a rise in financing experimentation, including “cost plus”
(where a network pays the studio production costs plus a ten percent
profit for all rights associated with a series), single sponsorship
and the creation of shows with varying expense structures and syndication
values. Conventional wisdom, for instance, has always held that a series
created for a cable network could never be later sold into syndication,
but F/X’s The Shield and HBO’s Sex and the
City have recently proved that wisdom wrong. Freed from needing
a Seinfeld to turn a profit in syndication, networks and studios
will be more inclined to experiment with grittier, cutting-edge shows
now that the potential for financial reward has been established.
The advent
of reality shows has also assisted more creative and risk-taking endeavors
make it through production and onto the airwaves. Networks were able
to reduce expenses in the past by broadcasting reruns of a series at
no additional cost, as licensing agreements allowed for both first-run
and second repeat airings of a show. Cable and subscription channels
like HBO, however, began broadcasting entire seasons straight through
with no repeats, and it wasn’t long before the networks experimented
with such scheduling arrangements as well. The WB was the first, splitting
a time slot in 2000-2001 with both Felicity and Jack &
Jill, but this meant the network was doubling its costs by paying
for two shows where it formerly only had one such expense. Reality shows,
however, make it more feasible because of the lower expenses associated
with the medium. Despite the grumblings that both critics and fans of
quality television make in regards to the perceived amount of reality
shows on network television, the smaller costs do help subsidize the
higher-risk series that don’t repeat as well, such as 24
and Lost.
DVDs have
had another profound affect on television profits. Although industry
insiders were initially skeptical about the success rate full season
packages of television shows would have on DVD, in 2005 sales of TV-On-DVD
reached $2.6 billions dollars. Even “less popular” shows,
i.e., series that did not rank high in the Nielsen ratings, rang up
remarkable numbers; by the end of 2004, for instance, Buffy the
Vampire Slayer had earned $123.3 million from DVD sales. Wonderfalls,
a FOX series canceled after only four episodes due to poor ratings,
sold twenty-five thousand copies in the first two weeks it was released
on DVD, while Firefly, another FOX series canceled after eleven
episodes, sold five-hundred thousand copies in less than two years.
Ironically,
some of the more popular series on television are also the weakest DVD
performers, including the CSI franchise. Such statistics reveal
that niche and genre shows in both style and substance have a stronger,
more viable fanbase from which to exploit profits, and while there once
was a limited quantity of these shows because of low ratings, DVD sales
prove they are a profitable commodity. The advent of downloadable episodes
from Apple’s iTunes has also had an affect on the money-making
ability of shows with marginalized ratings. The Office, for
instance, saw an increase in its network ratings when episodes were
first made available on iTunes, and new episodes consistently rank in
the upper echelons of iTunes downloads.
While little
concrete information is available on the iTunes profitability margin,
industry insiders have speculated nonetheless. An article in Business
Week, for instance, reported that Desperate Housewives
generated $11.3 million in network advertising revenue per episode,
which in turn amounted to forty-five cents per viewer. If ABC receives
$1.20 of the $1.99 per iTunes download, as is generally estimated, the
profit-margin per viewer is obviously significantly higher online. Could
this in turn lead to a television series relying exclusively on the
iTunes model for production and distribution? Lotz believes so, and
offers Arrested Development as an example. The FOX comedy averaged
4.3 million during its final season; using the standard production cost
of $1.8 million per episode, it would take only 1.25 million viewers
paying the iTunes $1.99 to cover such expenses. Of course, a new television
series produced exclusively for iTunes could never garner the necessary
publicity to attain even that low of an audience, but Lotz foresees
a future where network television acts more like an “advertising”
medium, with first seasons initially broadcasted in the traditional
form before the lower-rated shows are then moved onto the Internet for
later seasons.
The future
that Lotz describes is one where the audience is king, with advanced
capabilities for viewers to dictate the types of shows that are produced
in ways more diverse and financially potent than simply tuning in on
a specific day at a specific time. Still, the author is cautious about
such a future. “Although expanded viewer sovereignty still seems
possible in this nascent stage of the post-network era,” she writes,
“the history of distribution tell a different story. All too frequently
emergent technologies provided multiplicity and diversity in their infancy,
only to be subsumed by dominant and controlling commercial interests
as they became more established.”
Yes, the
television will be revolutionized—and vice versa—but the
future of that revolution is also uncertain, and the definitive battles
have yet to be fought. As Lotz herself writes, “Stay tuned: a
battle royal has just begun.”
January
28, 2008
