Category Archives: TV

What’s In It For Doogie Howser?

Writer/director Joss Whedon released a fun little project that he worked up during the actor’s writers’ strike. “Dr. Horrible’s Sing-Along Blog” is a terrific story that I watched several times, shared with the wife and kid, etc. As I watched it for the second time, I got to thinking about the business behind this, since Whedon has stated that this is an explicit experiment in seeing how far a talented, experienced team can go (on an artistic and, presumably, business level) without the advice, support and constraints of an established movie studio or television network.

There’s an enforced scarcity at work with the Dr. Horrible project that I think is smart if you’re really trying to make this into a business. They put the three episodes online to view for free for a few weeks five days but they took them down yesterday; you can only view them on iTunes now — by paying $3.99 for them. So if we’re going to do a profit/expense spreadsheet on this, the first question is “how many people will pay for this now that you can’t get it for free?” We don’t really know the answer because we’ve never seen anything quite like this before — certainly the notion of purchasing videos on iTunes is not new, but they mostly carry movies that have already been in theaters and TV shows that have already aired. But iTunes is the only place you can get Dr. Horrible now; you can’t even get it for free. So for someone who hasn’t seen it yet, you have to pay.

Just from a content perspective, what Dr. Horrible lacks in production value it more than makes up for in terms of plot, humor, and lyrical complexity. For example, musical theater aficionados will note that a few of the Dr. Horrible numbers feature two distinct countermelodies. It’s difficult to parse a melody and a countermelody lyric in real time, much less two distinct countermelodies being sung along with a melody part. To get it all (and rabid Whedon fans will want to), you’d have to listen to it at least three times. So Dr. Horrible seems specifically engineered to be watched again and again. This means that people (like me) who use iTunes and own (multiple) iPods but have never purchased a video on iTunes (because of onerous DRM restrictions, etc.) might now feel compelled to purchase the video. They’d do this even though they’ve already seen it for free — because they want to watch it again, they want to share it with people who missed it the first time, they find Felicia Day’s overbite adorable and find themselves thinking about her in the shower, etc. It’s premature to think of Dr. Horrible to be the birth of a genre or a business model for online content (and ultimately, who knows whether reruns of “Two And a Half Men” are doing well on iTunes), but if the business behind Dr. Horrible works, it could signal the beginning of the end of television as the medium of the least-common-denominator and the beginning of the profitable niche market.

So my original line of inquiry for the notion of “The Business of Dr. Horrible” was: What’s In It for Doogie Howser? It’s definitely the case that actor Neil Patrick Harris’ performance was a significant contributing factor to the series’ success. Assuming that the business of Dr. Horrible works, can independent producers expect to be able to lure “name” talent like Harris as a matter of course in the future?

Let’s assume that Harris worked for AFTRA scale on this project. There are specific AFTRA rates for “interactive media” performers; if he worked for scale, he probably got the weekly rate of $2,634, and we can guess that this project represented maybe 2-3 weeks of his time (maybe more, maybe less, but if he worked for scale it’s safe to say that as a sitcom regular, his up-front paycheck for Dr. Horrible will be little more than a rounding error on his 2008 tax return). If we think in terms of expected rate of return, there’s a bit of a wrinkle here because his expected income from new projects during this time would have been zero (since this project happened during the writer’s strike). Ultimately, though, it seems likely that Harris (as well as most if not all of the actors and crew on the production) were principally paid in points — a (likely small) percentage of any profit that will be made from the production in the future.

Whedon has said that Dr. Horrible cost “in the low six figures” to produce. Let’s assume by that he means a maximum of $250K. If the only revenue stream for this is iTunes, then he will have to sell about 70,000 copies of all three episodes to break even. (This assumes that his net revenue from iTunes is about $3.59 per unit after Steve Jobs takes his 10% cut, and that virtually no one will purchase just one episode.)

So to continue, let’s say that Neil Patrick Harris’ deal with Whedon was for AFTRA scale plus 3 points. If 100,000 copies of the series are sold on iTunes, that generates revenue of $359,100, and a profit of $109,100, of which $3,273 goes to Harris (again, this is assuming he owns 3 points of the series, which is probably not an unreasonable guess). This is definitely the kind of paycheck that a network series regular like Harris would stick in a folder labeled “I Did It For My Art”. But if the series were to sell a million copies, he does considerably better: $100,230 for (presumably) a few weeks’ work. This is about what the cast of Friends were making per after season 2 of that show, but a fraction of what they were pulling down ($1 million per episode each) during that series’ final season.

That doesn’t factor in potential DVD sales, though, which Whedon has said will take place later. So we can pretty much assume that Doogie will do okay over time. Joss Whedon, as the principal investor behind this production, naturally stands to do much better. If we assume that Whedon set aside 20% of the profits for cast and crew, as the principal investor in Dr. Horrible, that means Whedon owns 80% of whatever’s left. If the show sells 100,000 units on iTunes, he makes $229,840 $87,280; if it sells a million copies, he winds up making more than four million dollars more than $2.6 million on his original “low six-figure” investment. And that’s before the DVD even comes out. It may not be the kind of bucks he could make from writing and directing a feature film, but very few feature films make millions of bucks in profit (and bear in mind that Whedon’s own feature films haven’t actually done so well, his rabid fan base notwithstanding). The Internet freemium model may be just what Dr. Horrible ordered to enable him to connect with his fans, get the artistic freedom he needs, and sustain himself in a business sense with a niche fan base.

So while this experiment certainly hasn’t played itself out yet, it may light the way for a future in which online content generates revenue without sucking. But the remaining question from a business standpoint is: is this model replicable to other content creators? To what extent is the Whedon factor at work here? Say that a group of four university film students come up with a story that’s even funnier and more heart-warming as Dr. Horrible, and they come to an investor looking for $100,000 (or heck, even $10,000) to pull it off. If they’re even able to locate an investor, what’s that investor’s expected rate of return? If this group just puts their video on YouTube, by the time it gets a million views, it might be too late for them to monetize it as Whedon is attempting to. But it seems to me that the key to this working as a long-term trend is for bright (and niche) content creators to get access to the experienced help and talent they need to bring their visions to life. In the past, filmmakers turned to Hollywood studios for this. Tomorrow, who knows.

A lot of this is back-of-the-cocktail napkin guesstimation, so if my numbers or assumptions are off anywhere I’d be happy to hear from you in comments.

Update: I’m seeing a lot of comments following a link from the Whedonesque blog, so howdy do, Whedon-a-rinos. It’s not possible for newbs to post on Whedonesque, or else I’d post this in that thread. So here are some more thoughts. First, a bunch of people dissed me for not “doing my research”. But I say over and over again that all of these figures are guesstimates, not facts. That said, a bona fide entertainment industry executive (my friend Matthew) did mention in comments here that my profit/loss figures are probably not far off the mark. If you have some specific information (or better guesses) you’d like to share, then by all means, speak up.

A few people seemed to get hung up on the notion of how much acting time went into the production (whether it was six days or 2-3 weeks as I supposed). Joss Whedon did indeed say that there were six days of shooting time for the series, but if you’ve ever done musical theater (and I actually have) you know that music requires a lot of preparation and rehearsal time. Since NPH and company were definitely not learning the songs at the same time they were shooting, I am guessing that the whole thing consumed two weeks of his time, minimum. But whether it took ten minutes or six weeks doesn’t matter in profit/loss terms, particularly in this case since (as I also pointed out) there was a strike on and nobody was making anything during that time.

To the guy who theorized that the actors did this for the love (i.e., for free): not a chance. Whedon actually stated in the Washington Post article that there was a business arrangement; all I did was to try to come up with figures that seemed plausible given what we know. (Union scale plus points is actually a not-very-revolutionary artithmetic when an independent filmmaker wants to attract non-unknown talent to a promising project; the only unknown here is how much did Whedon share with cast and crew. I guessed 20% but it could have been much more or a little less.)

Finally, to the dude who faulted me for calling NPH “Doogie Howser”: these are things that we like to refer to as “jokes”. They are things we say because they are “funny”. The main thing is, I don’t like to use Neil Patrick Harris’ actual name in a blog post because of the element it attracts — who needs an unbearable deluge of Neil Patrick Harris fans posting their onerous, pedantic screeds on my blog? Not me, I assure you.

Update 2: Joss-the-man-himself chimed in on the blog to confirm that my numbers are “not far off”. He also made his own Doogie joke. Sweet vindication.

DialIdol Predicts Call-In Vote Winners

Link: DialIdol.com – Measuring the busy signal

DialIdol is a piece of software you can install on your computer that uses a modem to auto-dial call-in numbers for contest shows like American Idol. The interesting twist is that the software records whether it receives a busy signal each time it calls in to vote. The software then aggregates this information among all its users as a way to predict who will win. The makers of the software claim to have a 97% success rate in predicting the winner of American Idol each week.

Why Don’t More Writers Use The Net to Bludgeon the Studios?

I’ve seen a few posts about the writer’s strike in the past few days to the effect of "ha ha, those evil Hollywood studios and networks, this will be the last nail in their coffin." Maybe, maybe not. I generally sympathize with what the writers are demanding (of course they should get residuals on online sales of their work, jeez). I should mention that my support for unions in general isn’t as mindless as a lot of people who sit with me on the left-ish side of the political spectrum — my feelings about this are informed on the one hand by the fact that I grew up in L.A., I was a professional writer for a few years, and my dad worked as a IT manager for various Hollywood studios for much of his career. But on the other hand I am also an entrepreneur who bootstrapped his life starting from absolutely nothing. I’ve never bought in to traditional notions of job security (and I don’t think anybody should, when you get right down to it).

But this morning I found myself wondering: why aren’t Hollywood writers doing more to disintermediate the studios? It’s not like there are huge barriers to entry anymore. Why are they waiting around for a thin slice of residuals from poorly-conceived ventures instead of just going out and doing their own thing?

I mean, gossip blogger Perez Hilton is barely literate, yet he has a frighteningly large following and has an impressive business. He undoubtedly has some geeks to help him, but it’s probably not extensive and certainly not cost-prohibitive. What if real writers with chips on their shoulders and nothing to lose started pro blogging?

Why aren’t there more sites like FunnyOrDie.com or Improv Everywhere? It’s true that Will Ferrell kickstarted FunnyOrDie (and based on his participation in the business, someday we may discover that "The Landlord" is one of the most expensive short films ever produced). But couldn’t you imagine that someone like Mindy Kaling (who plays the crazy girlfriend on The Office and is an absolute scream) could get three or four friends together and do something online that would generate as much dough each year as the minimum price of a union-authored screenplay (which, we learned this week, is $106,000)?

I’m talking about this to a friend in L.A. who is a (non-union) writer. Her position is that the writer’s strike is about writers going after what’s theirs, which is totally fair and absolutely correct. But my point is, writers shouldn’t have to wait around for the studios to cough up; these discussions are always much simpler when you own the keys to the front gate and the check is in your hand. The writer’s strike (as I understand it) is about making sure that writers are fairly compensated for any one of a number of current and future online ventures that the studios want to engage in. But why wait around for these ventures to make money when writers could just go out and do it on their own? What value are the studios bringing to the online space? It’s not like they have this closed-off duopoly control of internet infrastructure the way they do with broadcast distribution. And it seems like if they were going to light the world on fire with compelling online service, they’d have done it years ago.

NBC To Launch Loathsome, Defective Video Download Service

The other shoe has dropped in the Apple/NBC divorce. NBC announced plans to launch its own online video service this fall (which suggests to me that they’ve been working on the service for some time now — without a doubt they had this plan in their back pockets during their negotiations with Apple).

I can already tell you that the NBC store will suck because it does so much less (and, if NBC has their way, will eventually cost much more) than the iTunes store. The NY Times story describes it in these less-than-mouth-watering terms:

"The NBC service, called NBC Direct, will begin a testing period in
October with plans to be operational in November. The service will
allow customers to download full episodes of NBC shows for seven days
on Windows-based PCs. The file will expire after the seven days."

"Seven days on Windows-based PCs" is the tipoff here — the Times reporter doesn’t say this explicitly because he doesn’t want to damage our tender little brains, but seven days/Windows-only only suggests to me that NBC plans to use Windows Media DRM. This means that it won’t work on any other operating system, which means NBC has denied itself access to 10-15% of the U.S. market (and even more overseas).

The fact that the NBC service will be "free" is what the NY Times writer chose to lead with. He buried the real story, which is that this is really a rental service, not a store — it will be a totally different business model from iTunes — more competitive with Blockbuster, really, than iTunes.

Here’s the bit the writer really screwed up, though: the terms under which NBC wants to "sell" you videos are not just worse than iTunes, but worse than every single video delivery system that has ever existed. Consider the alternatives you have for watching recorded TV programming today:

  • Taping a TV show to a VHS cassette lets you watch it as much as you like forever and play it back on any VHS player anywhere.
  • Recording something to Tivo lets you watch it as much as you like forever on several different devices (if you have the right Tivo model).
  • Netflix lets you rent a DVD and keep it as long as you like.
  • Amazon Unbox lets you keep a pay-per-view program for 30 days before the movie kerplodes.
  • Even Blockbuster is a better deal, since they adopted the Netflix business model and don’t charge late fees anymore.

It’s not even worth my time to download a TV show for free if it’s going to expire in just seven days, honestly.

Update: The Federal Government of News ran a second story about this with some more detail and some more humorous quotes about how scared the network is of nasty evil internet video pirates. This piece discloses NBC’s fantasy price point for video downloads ($4.99!), suggests that they’re going to support Macs and iPods Real Soon Now, and specifies that the free downloads will contain commercials that can’t be skipped. Just what I was hoping for.

Update: This has now launched. All the reviews I’ve read about it say that it sucks just as much as we suspected it would. I wouldn’t know because I’m using a Mac and the service doesn’t work with Macs. Doesn’t work with Firefox either. Pass.

NBC to Sell New TV Shows on Amazon Unbox

Link: NBC to Sell New TV Shows on Amazon Unbox

"On Friday, Apple said it will not sell any of NBC’s programs for this fall season on iTunes. NBC and Apple have a contract that expires at the end of the year; Apple said NBC wanted to raise the prices for its content, a claim NBC has denied.

NBC Universal…has said it wants to package programming in different ways at different prices, something Amazon is willing to consider, according to Jean-Briac Perrette, president of NBC Universal’s digital distribution division."

So let me get this straight: NBC is saying that they don’t want to raise prices, they just want to change prices. Check. You’ll pardon me if I don’t hold my breath waiting for the price to go down.

Good for Amazon for throwing an elbow in iTunes’ direction, but is anyone besides me thinking that floating the price of downloadable media is going to cause the price of that media gravitate downward instead of upward? I suppose this wouldn’t be the first time that old media has shot itself in the foot in the face of technological disruption.

A Variation on the DVR, Without Ad Skipping

Link: A Variation on the DVR, Without Ad Skipping

"’We have a particular sensitivity to the needs of business in every stage in the value chain, because we’re part of a diversified media company,’ Mr. Stern of Time Warner Cable said."

This fascinating new-economy corollary to "the customer is always right" must make Time Warner Cable subscribers feel pretty warm and fuzzy.

Has any customer in the history of DVR technology ever stepped up and said "you know, this DVR thing is terrific, but what I’d really prefer is to lose the ability to skip commercials so that I can satisfy the needs of businesses in every stage of the value chain?" Customers who aren’t on crack, I mean.

Early in my history as a participant in the corporate value chain I decided that the cable companies would never get a nickel of my money. Every so often, something like this comes along to validate that rule.

Amazon Unbox: Day 2

We’ve watched our second free Unbox movie on Tivo and I have to say I’m warming up to it. I still don’t think it’s a better value than Netflix (we’re particularly missing DVD special features, which we enjoy mightily and Unbox doesn’t provide). But when I am sitting at my desk at 2pm and I think I want to watch a movie that night, waiting for the postman to deliver the next Netflix movie isn’t gonna cut it.

As I browsed their list of movies that you can download to the Tivo, I was surprised to see some recent releases priced at $14.99. Holy crap — who would pay $14.99 for a movie with a 24-hour expiration date when you could buy the DVD (or actually go to the movies) for about the same price? I was surprised to see that that price point is even there, but I suspect that this pricing is a studio thing and not Amazon’s choice. (Update: As my pal Marc points out in comments, the $14.99 price point is for movies that you can download indefinitely — so that’s better, but nowhere near as good as just buying the DVD outright so you can get the special features and play it on different devices.)

The second movie we rented was Accepted, about a guy who doesn’t
get accepted to any college so he and his friends invent their own. It was pretty funny,
but not quite as good as my two favorite tales of college life, Animal
House
and the very underrated Porn ‘n Chicken.

Accepted did evoke some of my favorite warm and fuzzy feelings about college (we are now college-age adults so let’s get a six-pack and go sit by the ocean) and I kept thinking "this movie is about how the UCSB College of Creative Studies must have been invented."
But it also seemed to reflect the emerging DYI culture in general. Maybe this was intentional: I’m not sure
how much of Accepted was informed by stuff like Bar Camp, but when the students
put up a board listing the classes they wanted to take (like "Walking Around
and Thinking About Stuff" and "Rocking Your Face Off 202", they self-organized
in the exact way that Bar Camp does.