Blood, peanuts and the future of television

May 25, 2008

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It’s been two months since CBS cancelled one of its most popular scripted dramas, Jericho, starring Skeet Ulrich and Lennie James, the show that fictionalizes a possible aftermath of nuclear fallout in the U.S. Even if there has not been much concrete news lately, the hope that the Jericho story may be continued is still very much alive.

Producers Dan Shotz and Karim Zreik posted this update on the CBS boards the other day:

“We can’t share too much, but meetings are taking place and we are doing everything we can to find us a new home in many different incarnations. Your work is helping as always. Your dedication is unmatched.“

The burning question left hanging in the air after the cancellation of Jericho is the following: how does a show that can attract an estimated six million viewers to sit down in front of their TV sets, top the numbers on iTunes, and launch a number of unbelievably disciplined and organized fan campaigns, not get picked up for a third season?

The question was revisited last week, when CBS announced their decision to cut another puppy loose. This time, it was Moonlight, a vampire/romance/detective drama starring Alex O’Loughlin and Sophia Myles.

In a move echoing the efforts of the Jericho Rangers, Moonlight fans have decided to run ads for their show in Variety and the Hollywood Reporter to let networks know that the vampire saga has a loyal following of eight million viewers who will stick with the show wherever it goes.

That’s eight million viewers acknowledged by the Nielsen ratings system. The difference between those numbers and the real ones is, well, currently not something that can be measured by any standardized ratings system.

THE OTHER SET OF NUMBERS

Two recent Accenture studies illustrate the proportions of the disconnect between television networks’ business models based on these ratings and the real number of viewers who tune in to see the latest episode of their favourite show week after week.

The 2008 Global Content Survey involved over 100 senior executives in the media and entertainment industry in North America and Europe. 70 percent of them said that they either derive some revenue from the new media (on-demand TV programs, digital advertising, etc.) or can’t determine how much money they make from these sources. Most of them said that the growth is tremendous and that revenue streams from new media are substantial.

More than 56 percent of the executives are already pursuing business opportunities in the realm of social media and user-generated content while 68 percent acknowledged these as high growth opportunities. Over a half of the execs believe that digital advertising will eclipse traditional advertising in five years’ time.

Most importantly, two thirds don’t think that there is a chance that the Web 2.0 “bubble” will burst within the next two years.

CBS Entertainment President Nina Tassler apparently isn’t one of them. In a recent statement regarding the cancellation of Moonlight, she said that the network’s experience with Jericho has taught them that, as Variety puts it, “creative efforts from passionate fans don’t translate to sustainable Nielsen ratings.”

Nielsen ratings.

Edward James Olmos summed it up nicely last year at a Battlestar Galactica convention. “Nielsen needs a hole in the head,” he said, explaining that the current ratings system excludes too many viewers to be reliable. In light of the current global business trends, that really would be the no-nonsense way of putting it.

TV networks and advertisers, however, are not quite there yet.

Ms. Tassler’s statement essentially reiterates what most people already knew: shows like Jericho and Moonlight cannot survive on a major network under the current business model, one that has not yet discovered a way to turn Web 2.0 and its “architecture of participation” into adequate sums of advertising dollars.

And six million viewers, as counted by Nielsen, are still not enough to ensure a safe spot on U.S. primetime on a major network.

THE TROUBLE WITH U.S. PRIMETIME…

… is that it does not belong to the U.S. alone anymore. It hasn’t for years.

It takes maybe 30 minutes before a new episode of a popular show, freshly broadcast on television, finds its way to the Internet via different peer-to-peer networks.

Even though both Asia and Europe have more Internet users than North America, streaming TV content on official channels is generally an option limited to U.S. territory, so international fans of any particular American TV show do not have a civilized way of showing up for the headcount.

Most of these viewers belong to the Millennial Generation: born plugged in, avid consumers of meaningful content, used to instant gratification and, according to some, sporting the attention span of a goldfish. (But do revisit the last part after reading about the fan campaigns.)

The outlook, however, is not that bad.

As the 2008 Accenture Broadcast Consumer Survey reveals, a growing number of viewers (a sample of 7,700 adults in eight countries including the U.S. and the UK) are willing to either pay or watch ads to be able to download shows online. (43 percent of those aged 25 or younger and 45 percent aged between 25 and 34 would pay while 42 and 39 percent in the same age groups respectively would watch commercials.) For reference, 74 percent of the respondents in the first age group and 65 percent in the second enjoy watching some kind of programming on their computer.

With international audiences impatiently trying to keep up with latest episodes of their favourite shows and having no legal way of going about it, a huge potential chunk of the market is going down the drain right there.

TRADITIONAL ADVERTISING VS. NEW MEDIA

Even though Internet advertising is more expensive than traditional one, the technology boom over the last several years has cemented several advantages that no business is able to overlook anymore.

The main ones are the fact that consumers get faster access to the product than they would in traditional offline marketing channels, while advertisers get global branding and marketing opportunities and — compare this to the Nielsen-dependent model — fast and easy direct access to consumer data via web analytics, which allows them to not only see more accurate numbers, but also conversion rates across different distribution channels and geographies (i.e. how many people who have seen an ad actually end up buying the product, where these people live and where they have seen the ad.)

Television networks are not keeping up with these opportunities. As much as aftermarket sales count for quite a bit, TV programming still lives on commercials during live broadcasts.

The biggest profits are earned from the ever so cost-effective reality shows, while top quality dramas – ones not bound by the imperative of catering to the lowest common denominator – can mostly be found on cable television these days.

And that is where the hope lies for both Jericho and Moonlight. Back in February, Jericho showrunner Carol Barbee revealed that she had already started looking for a new home for the show, saying: “There were other people who were interested in us to begin with, and now, I think, with the whole nuts campaign, and also with the amazing reviews that we’ve gotten for these seven episodes, I feel like we have made this franchise more valuable to a cable network who would want to take us on as a niche market.”

After the show got cancelled, there were rumours of a move to the Sci Fi Channel or CW and talks of Comcast possibly helping out with the budget. There have been no updates on the Comcast deal yet, but the possibility definitely points to another new business model worth exploring.

It is a positive move, at any rate. Innovation is one of the leading trends in business today - not just for the purpose of improving upon existing revenue streams, but to survive on the market to begin with. With such rapid development of technology, it is no surprise that both broadcasters and advertisers are bashing their heads against the wall trying to find a new business model that is more in tune with a few very simple facts.

The main one? Networks don’t have a clue to whom they are delivering their programming anymore.

As the Accenture consumer study shows, consumers take in 70.6 hours of media per week. The catch? A traditional TV device is involved only 23 percent of the time.

Another thing that should come as no surprise is that 64 percent of viewers named commercials as their pet peeve when it comes to watching ‘live’ television.

“People want content more than ever,” says Newscorp chairman Rupert Murdoch. “Quality is more important than ever because the marketplace is more ruthlessly competitive. Options are not merely one click of the remote away; devices undreamed of a few short decades ago are at least as tempting as a change of the channel.”

Fox, for one, has been quick to react to these trends.

Formerly the embodiment of the proverbial trigger-happy network and online fans’ favourite whipping boy, Fox has announced plans to test a new model on the two of its hottest upcoming shows, Joss Whedon’s Dollhouse and J.J. Abrams’ Fringe.

The “Remote-Free TV” experiment consists of adding extra time of actual content and having episodes run for at least 50 minutes while at the same tome limiting time for commercials to five minutes.

Interestingly, fans who have followed Joss Whedon since the days of Buffy the Vampire Slayer, Angel or Firefly and saw the last two prematurely cancelled, have already started a Save Dollhouse campaign.

That the show’s pilot, Echo, does not air until January 2009 illustrates the level of dedication that years of quality content can inspire. It’s a history very few shows can lean on nowadays, when you consider the average life span of a series with something of an arc on a major network.

CHANGING PLACES

Variety recently reported that Fox has overtaken CBS as the most watched network in the U.S. and that it is the only big television network chalking gains this year - five percent - while CBS is on the opposite end of the scale and 19 percent down compared to 2007.

In light of all this, it is difficult to see the long-term benefits in insisting that a show or its fans have somehow failed based on a perspective dictated by the old model, one that does not even allow a network to reap sufficient profit from viewers as involved in the fate of a show as Jericho fans have been for the last 12 months.

Here are just some of the things they have done as part of the campaign to save and promote the show:

They have launched several letter writing campaigns, addressed both to CBS and potential new homes for Jericho.

In a deal with Amazon, they have raised money to send Jericho DVDs to U.S. troops is Afghanistan and Iraq last year and are doing the same now.

They started preordering season two DVDs.

They raised money for full-page ads in Variety and the Hollywood Reporter.

They are still working on getting a Jericho ad on primetime.

They raised some more money for a billboard in Studio City. Some of the funds were collected by auctioning items on Ebay. Several members of the cast and crew – Skeet Ulrich, Alicia Coppola and Brad Beyer among others – came out to sign the items to help them out.

A faction of the fans launched the Nuts to Nielsen campaign, sending peanuts to a Nielsen Media Research centre and an additional 26 cases to the Variety newsroom to get the effort some media attention and to protest the inadequacy of the current ratings system.

And that’s without even counting the massive initiative in the social media to put Jericho in the spotlight.

These days, the fans’ eyes are on Jerichon, the convention that takes place in Oakley, Kansas over the Memorial Day weekend.

Moonlight fans have not been lazy either. They rallied in front of the Warner Brothers studios in Burbank yesterday to show support for the show. The WB studio is where Silver Pictures, a production company behind the show, is based.

To ensure the survival of their show, they have also organized the Moonlight Blood Drive in cooperation with the Red Cross.

This weekend, they are gathering at Moonlightcon, the first convention for the series. With the help of a rep from the National Bone Marrow Registry, they are offering free bone marrow testing to everyone who is interested. Really. They are.

To go back to CBS and the lesson learned… It is hard not to wonder what the purpose is of discouraging future fan efforts to promote their show in a high growth medium such as the Internet simply because the old glove doesn’t fit anymore.

It’s simple, really. People like entertainment. They like their entertainment to be a social experience. Web 2.0 delivers. No bubble in that.

Fans can work unlikely wonders on the web, but they have no say in the legalities that constitute the current plumbing of the entertainment business.

NBC’s project Hulu, for instance, serves content from more than 50 providers including NBC, Fox, MGM and Warner Bros. Yet if you live outside the U.S., there is a catch:

“Sorry, currently our video library can only be streamed from within the United States. Hulu is committed to making its content available worldwide. To do so, we must work through a number of legal and business issues, including obtaining international streaming rights. Know that we are working to make this happen and will continue to do so. Given the international background of the Hulu team, we have both a professional and personal interest in bringing Hulu to a global audience.”

The day content becomes available to international viewers may not be today or tomorrow, but Hulu is certainly on the right track.

THE BIG PICTURE

As bleak as things seem for American major TV networks this year, there are several very basic things to keep in mind.

Entertainment and communication have always gone hand in hand. Communication is only becoming more global. Out of the 6,7 billion people living in the world today, 1,4 billion use the Internet and the growth rate is about 21 percent.

This puts television into a very special position in the greater scheme of things. Not only has it become the go-to medium for a weekly dose of compelling original fiction, it also provides a common frame of reference that people across the globe can always use as a springboard for meaningful discussion on an endless number of issues. Politics. Religion. Life. Relationships. The environment. You name it.

So, with audiences migrating to the Internet in growing numbers, what can networks do to keep up?

The Accenture study concludes with four steps for media companies to take if they want high performance in the future:

Think global and act local
Build a robust capability to productize and monetize content managing rights, technology and content formats to ensure that content can be repurposed, packaged and bundled quickly and effectively across different devices and geographies
Implement the right product creation and delivery infrastructure
Create differentiated customer service capabilities because consumers worldwide want access to content anytime, anyplace, and they want it to work the first time

The technology is there. The potential viewers are there. The only obstacles are international streaming rights and the dependence on the Nielsen model.

Finally, to end on a high note: in March, Variety Asia reported that Jericho was one of the shows that would soon premiere in Japan on the Sci Fi Channel, newly launched as the first pay TV channel in the country.

Japanese audiences are well known for their passion. Imagine the scenario in which they get an instant opportunity to catch up and even tune in for a possible new season on the very same day that it is aired in the U.S.

The scenario has been happening worldwide for years now. And networks have earned exactly zilch from it.

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