I found what I think was an excellent post over at Fred Wilson's blog today. 

In it he uses his children's behavior to try to ferret out trends in media.  I think there are some really interesting observations in it and am seriously considering coming back to it in the next week or so to tackle one or two more of them.  But for this post I wanted to look at one in particular. 

In his first point he says...

1) When they walk into a DVD store, they rarely walk out with a movie. It’s almost always the first season of a TV show they’ve heard is good. They’ll go see a movie in the theater but don’t really enjoy watching movies at home or on their computers. They feel that TV shows are better written and more interesting.  And the entertainment value is certainly more compelling. For roughly $40US, they got something like 25 episodes of Brothers and Sisters. That's almost 17 hours of entertainment for $40. That's hard to beat. And they get the bonus of being able to stat watching the show on TV once they've caught up.

It makes me wonder where this is headed. I don’t know enough about the economics of TV shows versus fims, but it may be that digital technology is changing the way the younger generation will consume filmed entertainment in some important ways.

I really think that is starting to be the case.  One show to watch in the coming weeks is Fox's "The Sarah Connor Chronicles" which is a continuation of the blockbuster Terminator 2 film from 1991.  I am told from people who have seen previews that the graphics in that show dwarf those in any of the previous terminator movies. 

I bring this up for two reasons: (1) because sci-fi is the most dependent on expensive special effects and (2) because I think the Terminator movies hold up well and could (in theory) be released today and still make a decent profit in the theatres. 

What I think that points to is the line between Movies and TV getting very, very thin.  I often think back to a three-part story on a show that just recently went off the air called "The West Wing".  The three parts consisted of the episode entitled "What kind of day it has been" as well as part 1 and 2 of an episode entitled "In the shadow of two gunmen".  In regards to these episodes I'm willing to say right now that they are as good if not better than any movie I've ever seen.

(All are also available on iTunes or Amazon's Unbox by the way and I'd strongly suggest everyone pick them up even if you don't agree with the show's politics)

Plus, they were produced at a fraction of the cost.  The average hour of scripted network TV costs about $2 million vs the average movie which costs $100 million (at least in 2006).  That disparity is just too much. 

Which brings me to my final point and the thing I think is going to turn this industry on its head and that is the rise of original programming on cable.  As DVD sales of "Full Season Packs" go up the majority of the profit in creating a TV show is going to shift from the original airing to the DVD sales afterwards and as that happens you'll start to see the quality of cable shows rise to that of their network counterparts (its already pretty close).

Many creators see the world of cable as the ultimate experience for them because they can create what they want with a lot more freedom and a lot less studio interference.  So as the monetary compensation gets closer and closer to what you see in film more and more creators will be enticed to move to cable TV instead.

So now you have a confluence of factors working in TV's favor including better and better home theatre systems, rising sales of TV on DVD, cable networks wanting original programming, rising pay on that original programming, falling cost of digital production, and creators who are getting more and more annoyed by studio interference.  Given all that how could there not be a shift in the coming years?

If Mr. Wilson's above observations are even a little correct I suspect the smart money will be in TV for the next few years.

Damon Lindelof, producer of the TV Show Lost and poster child for all that is wrong in the world of Comic Books, recently penned an article for the NY Times entitled “Mourning TV”   In it, he goes on to say how unfair it is that LOST has been streamed millions of times and he hasn’t gotten paid for it.  To quote the article… 

My show, “Lost,” has been streamed hundreds of millions of times since it was made available on ABC’s Web site. The downloads require the viewer to first watch an advertisement, from which the network obviously generates some income. The writers of the episodes get nothing. We’re also a hit on iTunes (where shows are sold for $1.99 each). Again, we get nothing. 

Now the issue here is that there’s a big assumption in the above paragraph.  Mr. Lindelof is equating “revenue” to “profit” which is a huge assumption on his part.  I’ve consulted for a couple of digital media startups and I can tell you firsthand that bandwidth is not cheap.  I very sincerely doubt the studios are doing much more than recouping their costs off online streaming being that they can only scare up one advertiser per show right now.   

As for iTunes, I don’t know what deal the studios have with Apple but I’ve noticed that most aren’t rushing to sign up all their new shows which makes me think the revenue is minimal.  It’s a topic for another time but iTunes has always seemed like more of a marketing channel than a revenue channel to me.   So really you have a situation where the writers are asking for a chunk of money that very well might not be there. 

Which brings me to the second part of my point which is this...Mr Lindelof, I hate to be the one to break it to you but you and your colleagues (writers, directors, producers, et al) are overpaid.   You know why you don’t see unions in the computer field?  Because everyone knows that a programmer is of some value so they don’t need one.  Developers don’t demand more stock options from a company they just threaten to go somewhere else.  In contrast everyone in Hollywood is in a union because they know that they really aren’t that valuable and that there’s some kid writing plays in Pasadena that could probably do their job better if given the chance.   This brings me to the line in the article that I just found offensive.  Mr. Lindelof says… 

But I am willing to hold firm for considerably longer than three months because this is a fight for the livelihoods of a future generation of writers, whose work will never “air,” but instead be streamed, beamed or zapped onto a tiny chip. 

To that I say BULL$#@^!  This is a fight over RESIDUALS, a.k.a. the money you get paid on top of the 6 figure salary that you already got paid.  No one’s livelihood is in the least bit of danger right now.   That brings us down to the harshest truth of all which is that Hollywood is eventually going to have to bend to technology.  Technology forces products to be sold for their true market value and not an artificial high created through scarcity. 

Ask the music industry who used to charge $20+ for a CD and they’ll (grudgingly) tell you I’m right.   

Its time for TV to be given to the consumer for what it is worth and that means that Studios, Writers, Producers and Actors are going to have to live with a little less and honestly I don’t have the least bit of problem with that.  The studios are already being forced to face these facts with the shrinking margins produced by digital content but it’s now the writer’s turn (and the actors, producers, et. al will soon follow)   Honestly, maybe the writer’s should just be happy to make 6 figures doing something they love.  That’s certainly more than all the stage hands, extras, and other low level workers who HAVE lost their livelihood to this strike are making.

So, a little more on what I was saying yesterday.   

I didn’t really intend on making a big post but as I got to typing I realized that I had a lot to say on the topic.  I live in Southern California and went to High School living with a Dad who liked to act in live productions (I eventually got drawn into the technical side of it myself) so I have a lot of friends who act.  If you’ve never been around a group of actors let me tell you that they are normally insanely creative people.   So I always wondered why they didn’t strike out on their own.  With all the digital alternatives available and a friend to help them navigate through them (a.k.a. me) they could strike out on their own for pennies. In trying to convince them to do something like this I came to a couple conclusions… 

1. They’re not self motivated: These people are my friends and I care about them deeply but the reality is that most actors aren’t going to get anything done if there isn’t a director or stage manager around to push them.  Once they get the push things tend to go pretty well but they’re nothing without that push.
2. They hate technology: Anyone who has tried to teach a “creative type” how to use a computer knows what I’m talking about here.  There are exceptions but for the most part they not only don’t know how to use computers they are flat out intimidated by them.  The only people I know (in my age range or younger) who managed to make it through school without using a PC or notebook are actors.

 Those two facts made striking out on their own, even with my help, next to impossible.  But I can’t help but think things would be different if they just had someone who was willing to devote themselves to the project.  If someone could sit behind them and push them to harness the creativity they have I could almost guarantee you’d get something entertaining.     I guess what I’m trying to say here is that this is an area that is ripe for the picking if you are a VC.  A little structure and these people will perform miracles for you and, as I said yesterday, the price isn’t that high.  Most VCs I know seem embarrassed when they give less than $5 million to a company so why wouldn’t you give this a try?  If you succeed you’d be at the forefront of the digital revolution, the first web based Television Network.  The Network willing to take risks that not even HBO would take because they can. 

Now that I think about it, that’s exactly what this is…the chance to become the next HBO except you don’t have to build out an entire infrastructure because the web provides it for you.  The truth is, the web offers the same opportunity that early cable stations had at a small fraction of the price.   I think that digital content has been so bad in its early stages that people think it can’t be taken seriously.  That’s true to an extent in that people expect original web content to be “lonelygirl quality” stuff.  But it doesn’t have to be.  Invest in the right equipment, hire a professional crew and try to produce something TV quality and I’ll be you’ll succeed.  Anyone who has visited ABC.com lately can attest to the medium’s ability to deliver a quality broadcast (ABC.com currently streams shows in 720p HD).    

Anyway, file it under ideas I’d like to try some day once I finish the other 1,000 or so prospective projects that I have bouncing around my head.

Addendum: It looks like Quaterlife, the show that inspired yesterday's post, might end up on TV after all due to the writer's strike.

An interesting article over on TVSquad.com about two fairly well know producers who are creating an “internet only” TV series.   I have to admit to having never seen the shows these producers are known for (“Thirtysomething” and “My So-Called Life” were before my time and “Once and Again” is just a show that I never watched) but I think they all had some degree of success (I know the names at very least). 

A lot of the article focuses on the “why” of the whole thing which basically boils down to the producers not liking all the restrictions put on TV by the FCC.  I’m sure that part of it is interesting to some people, but not really to me (at least, not when I’m in a “tech centric” mindset) 

 Here’s the part that I found the most interesting… 

According to Herskovitz, you can produce an hour or content on the internet for as little as $30,000. In contrast, it takes millions of dollars to produce content for TV. This is why many of the people I know (independent filmmakers and struggling TV and film writers) are excited about the prospect of launching our own projects on the web. If it works -- and if someone like Herskovitz and Zwick can prove it works -- then what's to stop the rest of us from following this DIY model of TV production? 

Now I’m sure this does not include the money needed to actually pay for all the viewing bandwidth but that is still pretty impressive.

If true that means a company could, in theory, create their own primetime network for $660,000 a week (3 hours per night and 4 on Sunday).  That really isn’t terribly expensive particularly when you consider the fact that one hour of Reality TV costs $700,000 and one hour of regular TV can cost up to $2 million. 

Plus, since the rules and regulations are far fewer (going back to the complaints in the TVSquad article) you’d be able to draw creative people who want to do more than TV will allow them to do.  It’s basically the long tail theory applied to the Television industry.

I certainly don’t think anything like this is going to materialize anytime soon and there are some serious quality issues to consider here (I don’t think anyone believes a show like LOST could be produced for $30,000 an episode) but it’s still an interesting thought.  If you could have 20 primetime networks instead of just 5 you’d have a lot more content to choose from. 

This is an interesting topic to me so, in lieu of a really long post, I’m going to come back to it tomorrow with some other thoughts.