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Penpusher Responds: Internet For Entertainment and Profit

June 30, 2010

I’ve been ignoring Hulu.com for as long as I can, because they obviously have been in “try to make money” mode for awhile, keeping their precious National Broadcasting Company content exclusively to themselves (unless you’re a tall, red headed Irishman who used to host a certain late night talk show or two for them, in which case, you’re deleted).

However, as Snarky’s Machine (and the rest of the world) has noted, Hulu.com has offered up a new 9.99 per month service expecting people to line up and pay for the privilege of getting the same stuff they used to see for bupkis. But the question of price points for content isn’t a hulu issue. This is an internet issue, and is one that bears examination. With that in mind, let’s look at this Internetwork problem.

  1. Television is scared of/doesn’t understand computers. The networks are aware enough to realize that the computer is the future of entertainment, but it’s pretty clear that they’re out of their depth when it comes to handling it. The biggest revelation to the networks was probably that people are not only willing to miss a week of their shows, but often wait for a full season to end before viewing it so they can watch a marathon of commercial free eps and not have to deal with the cliffhanger answers each time. That seems like a major threat to these broadcasters, who first saw their pie sliced up into pieces by basic and premium cable, and now have to deal with the even bigger (and more threatening to their profits) internet. At least on cable, they could buy up the other stations/networks and still maintain some control and some cash flow. But on the web, everyone is providing content, and many of the clips on youtube are better than anything you see on the boob tube… “Dr. Horrible’s Sing Along Blog” and “The Guild” are two high profile examples produced by people who have taken their experience in TV and adroitly put it to work online. But the proof of how badly television missed the boat on this was NBC’s sad attempt to cash in on an “internet phenomenon” by purchasing webisodes of “quarterlife” and showing them on air, only to have everyone ignore it because we already watched it on the website, months before that! The point here is that in the wild wild west of the world wide web, TV shows are just another thing people can either look at or ignore, and the suits are starting to see that their product ain’t the “must see” they used to be. Why else are they trying to shove those high definition screens down our throats?
  2. The Million Dollar (or Billion user) Question: How do you get someone to pay for something they already paid for with their cable bill? Or, more universally (forgive the Comcast word), how do you get someone to buy stuff you have been giving them for free? And yeah, this is an issue everyone from the above mentioned TV networks to The New York Times to twitter has been puzzling over for several years now. The answer is multifaceted, and I’m not so certain can be done at this point, at least not by all providers; at least not by these “high profile” providers. But let’s stay optimistic for their sake and at least imagine they can! How *might* it be done?
  • Great Content. Let’s start with the obvious. If you’re one of the networks, you have the choice of all sorts of brilliance. There’s no excuse for airing a show that sucks, even WITH William Shatner! So be smarter. Be edgier. Be intelligent. I don’t want to see something that is a total waste of time, unless I get to choose when I watch it, so program something worth seeing and leave the trash on the curb, not on my TV or computer screen.
  • Offer options. I think networks have been watching their own content so long, they forget that not every hospital has the ability to run every medical test on every patient that comes in, and not everyone lives in sprawling multi bedroom apartments in New York City on a struggling actor’s salary. It might seem reasonable to charge 10 bucks a month to the people who are getting the paychecks for starring in those programs, but a major number of viewers are college students, and/or dealing with survival jobs. Let’s just piss off the biggest part of the equation and your most valued demographic in one swoop by putting “the good stuff” out of reach!

Okay. Let’s say that television has created the next great phenomenon: some water cooler program that everyone is talking about. Now, what if they offered the option for you to see the NEXT episode in the series that week? That might be a way to attract viewers to your internet content. What if you could see the next six episodes? What would you pay for that? People like the chance to be “insiders” so this is a hook that might actually catch some fish.

In other words, Hulu’s model is bass ackward. People don’t need the shows they’ve already seen. In fact, they probably either purchased the blu-ray or DVD of the previous season they saw and liked and will ignore this service completely!

Of course, TV is in a “cut off your nose to spite your face” situation here, especially if they use my suggestion, as their broadcast advertisers will certainly see an even bigger dip in ratings if everyone is watching programs on the net and seeing shows before they air. Maybe they run a lower quality version for the net and save the better one for the HDTV cast? That’s for them to decide.

But, let’s finally talk about the elephant in the room: The fact that content can’t be fully secured on the internet.

Just as Napster changed the market for music, torrents have changed everything for film and television producers. So, once you put something out on the net, or release it on disc, how do you secure it? That might be the issue that networks really need to resolve if they plan to stay solvent. But is there an answer for that issue? That’s another tome for another time.

Ultimately, the real future of internet broadcasting is in providing different content from the shows that air on our HD flatscreens…

If I were a network exec and had to deal with this situation, I would immediately form an Internet branch, start working to program material on a regular basis that was a lot more edgy, a lot more risqué and a lot more to the point for viewers. People may not have an hour (44 minutes without the commercials) to find out which Marine did the deed on “NCIS,” so come up with ways to fit more story into less time and make that exclusive! They could also run crossovers with characters from various series interacting with each other. There could be “unrated” material during eps (!!!!!). Can’t you feel those memberships rising?

But let’s try to help everybody, not just those poor, poor conglomerates over at CBS/Viacom, ABC/Disney, NBC/Universal, Fox, Time/Warner/Turner, and the DuMont Network! If we wanted to try to actually make a profit from the internet, how would we do it?

Well, the “Great Content” and “Offer Options” ideas would still apply, but really depends on what you want to do. Are you in a crowded market, like “celebrity gossip,” where anyone could potentially scoop you on the story of the year? Maybe that’s not the smartest choice. So being the best in a less populated area is highly advised or at least putting a new and different spin on the story would be worthwhile. And if you’re offering something everyone likes, great! You have a big step up on the folks with deep budgets and shallow creativity.

No, the real super duper secret to providing content that people will pay to see online is one where you get good stuff, you get exclusive stuff and you get it in digestible pieces. And so, with the need to avoid “giving away” too much content on the internet and with those just stated secret points in mind, this essay is complete.

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9 Comments leave one →
  1. June 30, 2010 11:19 pm

    But let’s try to help everybody, not just those poor, poor conglomerates over at CBS/Viacom, ABC/Disney, NBC/Universal, Fox, Time/Warner/Turner, and the DuMont Network! If we wanted to try to actually make a profit from the internet, how would we do it?

    This post was incredible. It was exactly the analysis I didn’t get despite searching all over the net for it. Instead I got nothing but regurgitation of the HULU press release and no analysis. I agree the best way to get folks to pay for something, is make it worth paying for. I’m sorry, but there isn’t one TV show worth paying for on the networks. It’s not even that good. Now stuff on HBO, I was willing to pay for that. Hell, I’d pay 9.99 cashmoney if they had an “on demand” HBO streaming site where I could watch Deadwood, SATC, The Sopranos, Curb Your Enthusiasm and Six Feet Under!

  2. July 1, 2010 9:07 am

    @Snarky’s Machine Thanks so much! I am positive that most of the internet providers who started as “something else” never really consider their price points from a consumer position, but just from a vendor position! This is a huge error is concept. I guess they’re content with between .01 and 2 % giving them the amount they ask for, rather than the majority of visitors tossing in a smaller amount.

    Of course, HBO is the cutting edge in broadcasting, and I’m sure if they set up an HBO On Demand site, it will not only be the great programming they have provided for just about ever, it’ll be designed really well. Their current HBO.com site is almost what you’re asking for, now!

    Finally, with a model like twitter, much like LiveJournal or any blog site, the content is provided by the users, so that model, if you’re being fair, really has to be set up in a different way, and maybe that needs its own post for me to comment about it!

  3. July 1, 2010 9:14 am

    I like that Netflix — on the verge of being pushed out by streaming movies, pirated movies, and blockbuster-mailing and Redbox — got smart and bought up all sorts of cheap movies and made deals with tv shows and set the bar for streaming now. I am very happy to give them my money every month, because it feels very much worth it. Hulu would do itself well to model after premium cable channels now, I think, and it can keep the rinky dink movies on file as back-up.

  4. July 1, 2010 10:58 am

    There’s an even bigger issue here, and that’s the perception that the Internet itself is “free.” Yes I know a lot of people do pay to get internet service at home through companies like TimeWarner, Comcast or Verizon. But we also expect free WiFi nearly everywhere (of course, as with ad-supported TV, we’re expected to eventually buy something, whether it’s a Starbucks latte or a book at B&N). And don’t get me started on unlimited free email, which is the reason spam is such a big problem. This all goes back to the Internet’s roots as a research tool… Universities and government agencies have been burying in the overhead the ever-increasing costs for servers and bandwidth for years.

    So getting anyone to pay for anything over and above connectivity is a huge hurdle, one that many providers of excellent content have tripped over — remember the NY Times efforts at selling online access?

    But I agree with pretty much everything you’ve said, and I think the key to making money here has to start with realistic expectations as to just how much money there is to be made, and how long it’s going to take until it starts flowing in.

  5. July 1, 2010 11:09 am

    @redlami: I was thinking something similar about the timeline — part of the problem is people want INSTANT CASH! and aren’t thinking about the long term and sustainability. and good point about the free internet assumptions. in theory, i like the idea of internet being part of infrastructure, no different than highways and ports and phone lines, but i think it might be too late for the government to get in and do that correctly, since they’ve been slowly privatizing and mucking up infrastructure for years.

  6. July 1, 2010 7:21 pm

    @redlami – Everyone wants everything for free! And yes, the model The New York Times is trying to use seems better, but of course they have the archives of the United States to offer. I suspect only the Library of Congress has a more complete history! But you raise an important point about the use of the internet just generally. In fact, I do believe that either Comcast or AT&T was doing some test marketing for higher priced internet service… like considerably higher. People have no clue what it takes to make it all work. They just flip on the switch and expect everything to be there!

    On the other side of that coin comes the need to cover costs and maybe actually make a bit more and that’s the issue folks like Hulu are trying to negotiate. It seems like everyone is thinking in terms of the most they can get from whomever is willing to pay, as opposed to getting the most people to pay whatever in order to get a bigger result, and that’s just not the smart way to go. Henry Ford would not be impressed.

    @raymondj – doing something that others aren’t is really a key element, and I see and understand how Hulu is trying to keep the NBC stuff exclusive to them. But there are other elements, like all the great television programs that were canceled too early or that people just haven’t seen, and other forgotten films. There’s a lot of room out there for improvement and areas that people maybe haven’t considered yet.

    I think you’re right. Had this been laid out as the interstate highway system was, it might have been a completely different experience, and one that providers like Hulu would have benefited from, but in a way, the system as it is, as sloppy a mess as it is, gives everybody a chance to do exactly what they want, and that might not have been the case in the other model.

  7. July 2, 2010 1:24 pm

    Has charging for content on the web worked for anyone except pr0n sites and super specialized things (Like Wine Spectator)?

    I’d be interested to know this stuff. From my own observations, it hasn’t.

  8. July 2, 2010 1:27 pm

    For $9.99 readers can pay for I Fry Mine in Butter Plus!!! We’ll keep the good, non Rocky IV related content behind the pay wall. Cheers! Changes are a coming.

  9. July 2, 2010 1:30 pm

    Oh sweet. Your Friday Five will become Your Friday Paycheck! Loves it.

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