The present and future of post production business and technology

At the NAB 2009 Supermeet I revealed, and sold, the first copies of my new book - The New Now: grow your production or postproduction business in a changed and changing world.

This is a new venture for me for two reasons: as the title suggests, this is my first business book and this is also the first time I’ve used a print-on-demand service.

The second is easier to explain. I contemplated going with print-on-demand for 2008’s HD Survival Handboook (about to be revised for the 2009 edition) but the cost of a color book of that size made the selling price, I thought, unattractive. But The New Now is a black and white book only so the economics work out. For anyone interested I’m using Amazon Createspace who handle the whole thing – ISBN number, listing in Amazon, Print-on-Demand, Shipping and I still get a decent cut of the selling price.

I will be interested as to the balance of PDF vs Paperback purchasers there are given the price differential: PDF download is $9.95, while the paperback will sell for $18.95 plus shipping etc. 

As to why a business book this time. Because this knowledge needs to get to people in production and postproduction businesses. The principles would apply to any service-oriented business but the examples are for production and postproduction people.

I also wrote, in part, to force myself to focus on, and analyze the application of, a whole range of new communication forums – blogs, social media, twitter – and new ways to do branding, PR, marketing and advertising that don’t involve the cost structures of more traditional approaches (which still work well for those who can afford them). 

I’ve learnt a lot writing the book. Some of which I’ve been able to put in practice already, and some of which I still have to apply for myself. I could have waited until I had personal results to report, or I could get the knowledge out there so other people could start to benefit from it asap.

The current economic downturn just exacerbated changes that were already happening, but instead of happening over the next five years, they’re happening much more suddenly. The demise (or imminent demise) of newspapers foreshadows the dangers for television and production industries if we don’t adapt. 

I also think that I’m well positioned to write a business book for the production and postproduction industries because I’ve owned and operated businesses in those industries since 1987, and been digital NLE since 1994. We’ve adapted and will adapt again. One of the lessons I learnt along the way is the value of owning content. It’s the last section in the book but the most valuable lesson I learnt in business, other than to keep my prices higher, in some cases doubling the price on products we created and sold. 

So, I’ve bundled up my 36 years of business experience – 22 years of them in production or postproduction – and learnt how to apply all the new techniques and The New Now is the result. It’s an easy read, packed with information that is guaranteed to grow your business, whatever the economic circumstances.

I’m so pleased you asked

The Ken Stone Sessions: Recorded at Ken Stone’s Studio in January 2009, these two interviews feature founding members of the LAFCPUG talk about what the digital video scene was like at the time. We relive the excitement of what can be described as a technological and creative revolution, and give insight into where we’ve been and where we’re going. As well as myself, the interviews feature Andrew Balis, Michael Horton, Ken Stone. Produced by Rick Young.

The Ken Stone Sessions Part 1

The Ken Stone Sessions Part 2

Sync-N-Link for Final Cut Pro demonstrated at the Editor’s Lounge Jan 30, 2009

Online Video: Codecs, Encoding and Compression for Debra Kaufman’s summary of my Codecs, Compression and Encoding presentation for the Digital Cinema Society, Feb 7, 2009. The video is available for Digital Cinema Society members.

The  original presentation of The Assistant Editor: taking the work out of editing (which became First Cuts upon release) at the NAB 2008 Supermeet. 

There is another interview with me by Rick Young from NAB 2009 where I talk about the philosophy of Assisted Editing and my history, called Philip Hodgetts: Digital Video Pioneer.

There certainly wasn’t much new in NLE at NAB. Avid had already announced, Apple are keeping to their own schedule that apparently doesn’t include NAB (although Apple folk were in town) and Adobe have a 4.1 update coming for Premiere Pro CS4. The only new NLE version was Sony’s Vegas, which moves up to version 9. With, of course, RED support. Can’t forget the RED support – it was everywhere (again). 

Lenses for RED, native support, non-native support: everyone has something for RED, or Scarlet/Epic coming up. Lenses are already appearing for those not-yet-shipping cameras.

Even camera technology seemed to take a year off. I certainly became convinced of the format superiority (leaving aside lenses, and convenience factors) of AVCCAM, which is a pro version of the consumer AVCHD, with higher bit rates. The evidence supports the hypothesis that AVCCAM at 21 or 24 Mbits/sec should produce a much higher quality image than MPEG-2 at the same bitrate. Before this NAB I was only convinced “in theory”. Of course, choose the AVCCAM path and you’ll be transcoding on import to FCP or Avid to much larger ProRes or DNxHD files, which is an optional (and recommended) path for HDV or XDCAM HD/EX.

Everyone has a 3D story to tell. Panasonic promise 3D-all-the-way workflows “coming” and there were all sorts of tools on the floor for working with 3D, projecting 3D, viewing 3D…  As one of my friends quipped “The presentations were amazing. What’s more I took off my glasses and the 3D experience continued around me!”

I confess to being a little torn on 3D (and Twitter, but that’s another post). I’ve seen some really amazing footage, and some that simply tries too hard to be 3D.  I also worry how we’ll adapt to sudden jumps in perspective as the 3D camera cuts to a different shot. I noticed a little of this when viewing an excerpt from the U2 3D concert film. There are natural analogs to cutting in 2D – in effect we build out view of the world from many quick closeups, so cutting in film and TV parallels that.

I can’t think of an analog for the sudden jumps in position in 3D space and perspective that would help our brains adapt. Maybe we’ll just adapt and I’m jumping at shadows? Who knows. I don’t plan on 3D soon.

Nor do I expect to see Flash supported on a TV in my home for at least a couple of years. That’s the problem that Adobe faces in getting support for Flash on TVs and set-top boxes. For a start it will require a lot more horsepower than those boxes have already, but Moore’s law will take care of that without a blink. A bigger problem is the slow turn-over cycle of Televisions. Say it’s 6 months before the first sets come out (and none are yet announced). It’s probably ten years before any particularly provider can rely on the majority of sets being Flash enabled. Assuming it catches on.

So I rather see that as a non-announcement. Remember the cable industry already has it’s own Tru2way technology for interactivity on set-top boxes. 

I am much more interested in Adobe’s new Strobe frameworks, even though it could take some business away from my own OpenTVNetwork. 

For the geeky, my favorite new piece of technology for the show would have to be Blackmagic Design’s Ultrascope – an HD scope package, just add PC and monitor to the $695 hardware and software bundle for a true HD scope at an affordable price. 

I’ve already given my opinions on the Blackmagic Design announcements, AJA announcements and Panasonic announcements during the show.

Two more trends this year: cheaper and better storage and voice and facial recognition technologies are becoming more widespread. 

I am amazed at the way hardware-RAID protected systems have fallen in cost. Not only the drives themselves but the enclosures are getting to the point where it’s no longer cost-effective to build your own, certainly not if you want RAID 5 or 6.

Five years ago the only company demonstrating facial and speech recognition were Virage, who I didn’t see this year. But there are an increasing number of companies that have speech recognition that seems to be, overall, about the same quality as that bundled with Adobe’s Premiere Pro and Soundbooth CS4, i.e. it can get reasonably high in accuracy with well paced, clean audio and no accent. Good enough for locating footage.

Facial recognition seems to be everywhere, from Google’s Picassa to news transcription services. Not only do they recognize cuts but they also recognize the people in the shots, prompting when a new face is recognized.

How long before the metadata that powers First Cuts doesn’t have to be input by a person, again? That’s what really excited me about NAB 2009.

NAB 2009 is now finished, gone and done. The annual meet-up in the desert is over for another year, and this year, I’m over it. Well, Las Vegas for sure. Driving out I was not in a happy place and, for the first time, I was a little jaded by NAB. But I think that’s just me.

For the first time since I moved to the US in 2001, I wasn’t speaking in any part of the official conferences. That was a change for me. In fact, I was heading to Las Vegas and NAB 2009 with no official role(s) at all, apart from an offer to “help” Larry Jordan, Cerina and Debbie, and their amazing crew, with the NAB Show BuZZ. This year the Digital Production BuZZ was the official podcast of NAB and I couldn’t have been more proud. How the show has grown under Larry’s guidance!

Greg, my long term partner, had a much more clearly defined role as streaming engineer – basically fixing anything podcasting, internet or web page that needed fixing. He was pretty busy all week. Ultimately I did some special reports and contributed to the regular news feed while everyone’s attention was focused on putting out 37 shows in six days.

My first impression of NAB was that it was quieter. That was on Saturday before the show opened, but the show floor was cleverly hiding a distinct drop in floor space – more aisles, three carpet aisles and lots of comfortable seating areas each one representing a no-show to the show.

Attendance was officially down – about 17-18% in pre-registrations for a start. Tuesday turned out to be the busiest day of the show floor as many people planned their trip to avoid the Monday crush! So many that Monday felt like a regular Thursday it was so quiet.

As well as registrations being down, I got the feeling that people came for fewer days. I heard of a number of people who caught early flights into the show and a late flight out that same day, and people staying two days, instead of three or four. But the quality of attendee was very good.

It seems that the economic conditions weeded out students and tire kickers. Exhibitors report good sales leads and quality attendees, which is good.

Socially (well, that’s the main reason I go to NAB now) the week went well. The highlight had to be the AJA party at JET in the Mirage. They booked out the nightclub and invited a couple of hundred of their dearest friends. A great night was had by all and the AJA guys should be very proud of the Ki Pro, Io Express and Kona LHi announcements. I hear they had a good year last year and this year’s shaping up to be even better.

Monday night’s MediaMotion Cafe was a less formal version of the regular MediaMotion Ball, set in what felt like deep suburban Las Vegas, even though it was really only a couple of blocks past The Palms. A lot of great friends, although the night was a little dampened by the loss of Mik Vitti but brightened by Blackmagic Design’s sponsorship. A good time was had by all because by the end of the night the sponsors had more free drink tickets than takers!.

Monday was also both the formal and informal Avid Events, which I had planned to attend as well as the MediaMotion Cafe but logistics – the Cafe was further from the Strip than I expected) made that a little difficult. I hear it was a good night as well.

Tuesday night’s Supermeet was the other highlight of the week for me, since I’ve been part of that community since it’s inception and worked with Mike Horton on the BuZZ and count Dan Berube among my friends. (Real friends, not just Facebook.) 

It was also the formal, if that could be said, launch of my new book The New Now: how to grow your production or post-production business in changed and changing circumstances. A little bit of a departure for me, this being more a business than technical book, but I think the content is great. More of that in a subsequent post but the digital download is live now, with paperback coming shortly.

The only presentation I did all week was on the subject of Growing your business in a recession at the ProMax Digital Lounge. It seems to have been well received – both the talk and the new format from the new ProMax. Over three nights, instead of the one big event, they packed the program with informative talks and presentations, great food (best of the show from our experience) and good quality surroundings.

Then it was off to the RED User party to get the only mind boggling information of the week. Graham Nattress has managed to develop a distribution codec for RED that puts full 4K of pixels down a 10 Mbit/sec pipe. That’s pretty amazing, well incredible.  I could see no difference in quality between this year’s show reel, played out uncompressed, and last year’s show reel at 10 Mbits/sec. That’s within the bandwidth I get from my cable service here in Burbank, so they could be streaming me 4K! 

Well, not soon as it needs hardware assisted playback afaik, but I think it’s an amazing piece of technology.

Our own technology face-off caught me off guard. First, the dates got all confused and they were busy reshuffling the Superbooth schedule to get us back into it. I had a nasty piece of bad health all morning (Unfortunately NOT caused by over-indulgence) and was delighted when Jim Mathers from the Digital Cinema Society had already selected two booth pieces and had them on the show floor. Saved the day because I was running very late thanks to the health problem. 

Then it turns out my editor didn’t turn up. Again due to the confusion and that he was setting up over at the Supermeet, so I had to step in and used a borrowed laptop and play the editor role, and try and MC. I can’t do both, so I fear the presentation was a little dull for the audience, for which I apologize. It wasn’t supposed to be that way.

As it turns out Finisher had a useful result faster. More on that later.

We also had some nice business leads. Not from anything planned, which pretty much takes me full circle to my post on why I was still going to NAB. The serendipity. The person who introduces you to someone else; the casual meeting in a line; or visiting a booth you didn’t know about. That’s NAB and that’s why I’ll probably be back for the 13th year in 2010.

More on the Finisher/Editor Faceoff shortly.

There have bene many tributes to Mik Vitti but I thought I’d add my thoughts.

When I heard the news Monday morning I went into a mild shock. Mik was a lot younger than I am, and that’s always scary. He also seemed the picture of health. If he knew of the condition that killed him, he never let on.

Mik was a friend both online and in person when I’ve travelled to New York and, of course, at NAB time. So many people have attested to his generosity of spirit, good humor and generally gentle nature.

Appropriately the 2009 NAB Supermeet was dedicated to Mik’s memory with tribute paid by Carey Dissmore and Rob Birnholz and a slideshow of Mik – mostly at user group functions – was presented by Dan Berube.

The International Media Users Group has posted a tribute page.

God speed Mik, you will be missed.

For the details of the announcements, see my news report at the Digital Production BuZZ.

Among a blizzard of NAB announcements Blackmagic Design’s Ultrascope is another of Grant Petty’s breakthrough products. Grant has always had as his goal to bring down the price of truly professional tools without sacrificing quality.

Until now, HD monitoring has not kept pace with the drop in prices for other parts of the HD production workflow. The Ultrascope runs on commodity PC hardware (i.e. cheap) and a 24″ display to bring six SD or HD Waveform Monitors into a single display, for a total investment of around $2000. The bundle includes a DeckLink card and the Ultrascope software for $695: bring your own PC and monitor.

Like the VideoHub router, Ultrascope breaks through the price/performance barrier. All we can wish for now are future software updates that add Vectorscope and other scopes to the display. (All things in time I guess.)

The optical fiber support in HDLink and a new DeckLink card positions Blackmagic Design well for the “big iron plant” business. Optical Fiber is a little out of my league but it is becoming increasingly important in those large facilities and previously needed to be converted to HD-SDI before capture. The new card takes the conversion out of the picture for direct capture to anything offered.

While I didn’t mention it in the main press release, I was interested to notice that there is now Linux support for Blackmagic cards and their Media Player software. Linux is not widespread in the post industry except in the large facilities that would also be likely targets for VideoHub and optical fiber support.

Seems to me that Blackmagic Design are providing more and more for the higher end facility while maintaining low cost products for the wider production community. And that’s a good thing.

For the details on the releases see my story at the Digital Production BuZZ  AJA’s NAB Announcements.

The Ki Pro is the most exciting announcement I’ve heard at NAB so far this year and is likely to garner a number of awards before the week is out. A direct shot at Panasonic who are constantly touting AVC-Intra as “pristine 10 bit full raster capture”, that quality is now available to any camcorder, regardless of format, direct to ProRes 422. It’s even possible to shoot with an SD camera and have the Ki Pro scale to HD before converting to ProRes. At $3995 it’s comparable to similar recorders from Panasonic for AVC-I and AVCCAM.

It’s a smart device – recording either to removable hard drive modules that come complete with FW800, or to Flash RAM modules in the ExpressCard 34 form factor that will go directly into any modern Mac laptop. I’m told there’s also an ‘exoskeleton’ that mounts the Ki Pro under the camera between camera mount and camera so it doesn’t need to hang off the camera.

This is a great product for those who mostly want to shoot, say, XDCAM EX/HD but require higher quality at times; or for those with older cameras who want to move forward to a ProRes workflow. Unlike the JVC GY-HM700 or GY-HM100 “Final Cut Pro ready” camcorders, the Ki Pro is full raster ProRes master quality while the JVC records in XDCAM HD within a QuickTime movie.

Definitely the Ki Pro is an amazing product, if only they could get the price down a little.

The Io Express appears to be a direct challenge to Matrox’s MXO 2, at a slightly lower price point. The key difference is that the Io Express, like the Io HD, converts to ProRes 422 in hardware before sending it to the computer. The MXO 2 pushes uncompressed video through the ExpressCard34 slot (or PCIe slot on a desktop) where it can optionally be converted to ProRes on the CPU. (Of course Matrox have new products as well, the MXO 2 mini at $449, which I’ll cover shortly.)

With fewer inputs than the Io HD (although not that many fewer, mostly reduced audio input support) the Io Express at US $995 is pretty darned cool.

Finally, the Kona LHi and Xena LHi (essentially the same card with minor differences due to platform support) seems to be everything the Kona 3 was with added support for HDMI in and out but at only US$1495 it’s cheaper than the Kona LH/LHe with more capability than the Kona 3 that was twice the price. Plus the new cards have analog input support missing from the Kona 3.

A great set of new tools for us all to play with. Now, let’s see what everyone else has been up to!

With Panasonic executives lining the wall, Nation Marketing Manager for Services, Jim Wickizer reminded the crowd of Panasonic’s role in the last 10 Olympics and revealed that Vancouver 2010 will be shot exclusively with Panasonic P2 HD -  the official recording format for the Vancouver 2010 winter Olympic games. Interestingly he noted the format would be 1080i60, which is not my first choice for fast action sports.

John Baisely, President Panasonic Broadcast waxed lyrically about MPEG-4 AVC (H.264) compression, commenting that it’s used in a “full range” of cameras, conflating the all-I-frame AVC-Intra used with P2 cards, and the AVCCAM range of camcorders featuring long GOP H.264 MPEG-4.

In probably the most exciting announcement, Panasonic revealed the P2 E series of cards. The E series are faster at ‘up to’ 1.2 Gbit/sec but more importantly, it is a more economic series, with 64 GB coming in under $1000 ($998); 32 GB $625 and 16 GB just $420. Unlike the original P2 media, the E series has a limited life of five years. The 16 and 32 GB cards will be available in May with the 64 GB coming in August. This significantly changes the cost dynamics of P2 media making it much more affordable to a wider range of people.

For the first time that I noticed, Panasonic have stopped using 720p24 as their benchmark for record time on P2 media, instead stating that a 64 GB P2E card will record one hour of 1920 x 1080 (full raster) 10 bit, 4:2:2 Intra-frame recording. With five slot cameras that’s a lot of continuous recording time at the highest HD resolution.

Director, Product Marketing Joe Facchini took the stage to reintroduce the HPX-300 – originally released just a few months ago – with 3MOS chips. 3MOS is Panasonic’s way of saying 3 CMOS chips. With 10bit AVC-Intra 4:2:2 recording, 20 variable frame rates and dynamic stretch it is a very nice camera. What was new is that there is going to be a customized studio configuration, for under $10,000.

Joe also addressed the rolling shutter issue that affects some CMOS implementations, like that in the HPX-300 (and most CMOS camcorders for that matter). He announced that a future firmware update for the HPX-300 will have “Flashband Compensation” to accommodate flashes that take less than a full frame, by borrowing information from an adjacent frame.

New to the P2 range are the:

AG-HPG20 P2 Portable 10 bit, 4:2:2 general purpose portable player/recorder weighing just 2.5 lbs (about 1 KG). The HPG20 has HD-SDI in and out for easy integration in existing workflows.

AJ-PCD35 five slot P2 card reader that connects to the computer via PCIe for high speed transfer.

AJ-HRW10 – a P2 ‘rapid writer’ that offloads up to five P2 cards at a time to two 3.5” hard drive RAIDs simultaneously. It includes the PCD35 and connects via Gbit Ethernet to the rest of your facility.

The only new P2 Varicam is the AJ-HPX3700, which outputs 4:4:4 RGB dual link signals live from the camera and records HD in camera to 4:2:2. It is positioned as a premium production Varicam.

Robert Harris, VP Marketing and Product development took to the stage to talk about the success of the AVCCAM format – based on the consumer AVCHD format but with higher bitrate options for improved quality. Pitched as “for those who can’t afford P2 independent frame products” like schools, event videographers, churches, etc.

AVCCAM records to ubiquitous SD media at data rates comparable to HDV. Like HDV AVCCAM is long GOP, although AVCCAM is H.264 not MPEG-2. H.264, which is also known as the AVC coded (Advanced Video Codec for MPEG-4). AVCCAM is gaining NLE support and theoretically provides significantly higher quality at any given data rate. H.264 is generally considered to be 2-4 times higher quality than MPEG-2 (HDV and XDCAM HD/EX).

So, while both HDV and AVCCAM produce Long GOP material, all else being equal, the AVCCAM footage will be significantly higher quality than that from HDV. All else being equal!

Panasonic announced a new camera to join the existing two products in the AVCCAM line: the AG-HMC70 and HMC-150. The new camera – AG-HMC-40 is a compact handheld camcorder (prosumer form factor) that weighs in at around 2.2 lbs (1 KG) with three 1/4” 3MOS chips, 12x optical zoom, Dynamic Range Stretch and Cine-like gamma. The HMC-40 records full raster 1080 at 60I, 30P and 24P; 720p60 and SD. Well equipped with outputs the camera features HDMI; USB 2; Composite and Component out. An optional XLR input adapter has manual level control. The HMC-40 will be available in August. The HMC-40 will carry an MRSP of $3195 and records to standard SD cards.

Also in the announcements from Robert:

HMR-10 – a compact, portable, battery powered recorder/player with  3.5” screen, HDMI and HD-SDI output, HD0SDI Input, USB port, audio input, remote start stop. At the highest bitrate it offers 3 hrs full raster recording or 12 hrs at 1440 x 1080 and a lower bitrate. (1440 x 1080 matches HDV and XDCAM HD/EX at below 50 Mbits/sec).

Billed as “HD Quality” the AG-HCK10 is a compact camera head with 3MOS 1/4” images. It teams with the HMR-10 where iris, focus, zoom and remote control come from the deck over HMR cables up to 10 meters each.

Both deck and compact camera head will be available in August with the HMR-10 coming in at $2650 and camera head similarly priced.

That completed the new product announcements but Robert Harris returned to the stage to commit Panasonic to supporting 3D throughout the entire camera-to-home workflow. He noted that the recent Monsters vs Aliens release had 28% of the screens showing a 3D version but those screens took in 56% of the total revenue! No wonder the industry is heading for 3D. The slide showed a single camera that had two lenses on the body – most unusual looking as the appeared to merge into the body.

No timescale was revealed for the Panasonic push to 3D but they are previewing technologies, particularly display technologies, on the NAB 2009 booth in the Central Hall.

NAB has arrived, seemingly suddenly, and it’s only two days before we drive up. This year is a slightly less hectic schedule than previous years, as I’m not presenting at any of the FMC Post|Production conferences this year.

While I’m not sure exactly of the schedule, I’ll be helping Larry Jordan and his crew with their mighty “official podcast of NAB” schedule by filing some reports through the week.

NAB starts very early Sunday morning when I moderate a panel starting at 8:15 am for the Creative Storage Conference on Electronic Content Delivery and Digital Storage where I expect to learn a lot from the panelists. Apart from the early hour – not my golden time – it should be a great session.

Monday night, more so than usual, is incredibly busy. I’ll be starting the evening at the IMUG (International Media Users Group) MediaMotion Cafe (downgraded from the MediaMotion Ball this year – the ball will be back in 2010), which is sold out. I’ll also be attending the official Avid event at pretty much the same time, while trying to catch the unofficial user event in the central bar. That’s sponsored and your business card gets you free drinks.

The big highlight for me is our Finisher Face-off: the Finisher software with novice editor, up against an experienced editor, cutting a package shot at the show by the Digital Cinema Society. Neither contestant will have seen the already-captured footage before the edit. Should be fun to watch at 2pm Tuesday April 21st on the Final Cut Pro User Group Superbooth - SL10129 near the Blackmagic Design booth. We have no idea how this will go down, so if you’re at NAB, come find out when we do.

We’ll be revealing the results at the Final Cut Pro User Supermeet that night at the Rio Amazon Ballroom where we have an Exhibitor Table (shared). The agenda for the Supermeet looks amazing.

Although the ProMax Digital Lounge is on Monday, Tuesday and Wednesday night, I’ll only be able to make it on Wednesday night. At 6:45 I’ll be presenting on  ”Growing Your Production / Post Business During The Recession” based on my new book that will get first showing at NAB but be officially released a week or two later when we get paperback copies back from the printer.

The book is called The New Now: Grow your production or postproduction business in a changed and changing world. It’s packed full of practical advice on how to use networking, social media, company blog and ‘the new PR’ to grow your business whatever the economic circumstances. Like the HD Survival Handbook the new book will be available for PDF download from ProAppsTips.com for $9.95 or from Amazon for $19.95 for those who prefer paperback.

The way the book industry is changing is probably the subject for another post.

Wednesday night is also the RED user event where I’ll before heading off to  the ProMax Digital Lounge.

Hopefully I’ll see you at NAB.

For the last year or two I have been trying to get solid numbers for the budgets for two of my favorite programs: Friday Night Lights, and Mad Men. These two shows are produced less expensively than traditional budgets – that much I knew – but what the budgets actually are seems to have been a State Secret. Until Friday that is, when Variety provided the information I was after in Networks look for low budgets by Cynthia Littleton.

Friday Night Lights‘ budget is:

“about $2 million and change per episode, compared to $3 million-plus for many network skeins (or just under $3 million on the low end)”

For Mad Men:

“Given the scope of the period drama, production execs say they’re amazed “Mad Men’s” second season came in at about $2.5 million an episode. That was up by a few hundred grand from the first, and a princely sum by the standards of AMC and “Mad Men” producer Lionsgate TV.”

FNL has around 4 million viewers on NBC in Season 3, (down from nearly 6 million for Season 1 and 2)  plus the 4-500,000 viewers who saw the show on DirecTV. The drop off NBC was nearly 2 million – 500,000 of whom may have seen it on DirecTV. I suspect the other 1.5 million viewers saw the show via Bittorrent soon after it aired on DirecTV.

Mad Men’s second season rated about 1.5 million per episode.

So, how do the numbers stack up if we were to forget network and satellite delivery and simply sell the show directly to viewers? Let’s start with Mad Men because it lacks the DirectTV complication.

Mad Men

AMC is an advertiser supported network, although it would seem that Mad Men is a loss leader for the network. With costs around $2.5 million a show and an audience of only 1.5 million, the average cost per viewer is $1.67. To deliver that is about 350 MB for an SD version and 1 GB for a good quality HD version. Bandwidth cost per viewer (for Internet delivery) would be about 4 cents for SD and 12 cents for the HD version. The producers would have to net at least $1.71 for SD and $1.79 for the HD version beyond any partner commissions paid (like Apple’s 35% or Open TV Networks’ 15% – although Apple include the bandwidth for delivery).

So, Mad Men would be viable at $1.70 (SD) and $1.80 (HD) if sold direct by the producer. Through iTunes AMC would need to sell for $2.57 per purchaser to cover the production cost if the audience stayed static.

The numbers for Mad Men are so dramatically different from other shows (as we’ll see in a minute) that the hypothesis that it’s primarily viewed as a way to raise AMC’s profile, rather than be profitable in itself. I doubt AMC cover the cost of production from advertising, instead seeing the show as profile building and reputation building, which it certainly has been.

Friday Night Lights

The numbers work out much nicer for FNL. FNL has production costs of $2.1 million (“$2 million and change”) with an audience of approximately 4 million on NBC. Remember, NBC considers this audience to be insufficient to cover the cost of FNL alone, so it did the deal with DirecTV.

According to the Variety article:

For “FNL,” the license fee that DirecTV pays to producer Universal Media Studios for the first window on episodes before they air on NBC covers about half of the show’s production budget, which makes “FNL” financially feasible for the Peacock even as it generates cable-level ratings.

Decoding that we get DirecTV paying around $1 million for 500,000 viewers (net cost per viewer to DirecTV, $2.00). On DirecTV the show aired without commercials, so again this is a loss leader for DirecTV being made up by higher subscriber numbers to the satellite service overall.

What is interesting is that NBC cannot fund the show’s $2.1 million budget from an audience of 4 million. NBC’s net return per viewer has to be well below 52c per viewer per show. (And yet, a net of $1.29 a viewer wasn’t apparently enough when NBC were arguing with Apple over iTunes selling price, despite it being many times higher than their advertising revenue per viewer!)

If DirecTV are paying $1 million, that means the show is viable on NBC at $1.1 million production cost per episode or at 27.5 cents per viewer. That makes the selling price through iTunes look truly usurious at nearly 5x the net revenue per viewer than the revenue from network broadcast. Is it any wonder they lost 1.5 million viewers for FNL to bittorrent?

At 27.5c per viewer the show is viable. Let’s allow some profit and say the network considers the show profitable enough to continue for two more seasons at 30c per viewer per episode. Add the same 4c and 12c per episode delivery cost and the Network should be selling the show, with iTunes margin added in SD for 52c and in HD for 65c. That would be fair pricing in this deal.

Assuming, as we do for new media that new media requires a direct connection between the producers and the viewers, then viewers would need to pay producers for the whole budget of $2.1 million. Working on the total audience of 4.5 million that equates to 47c per viewer per show. Add in bandwidth and that becomes 51c in SD and 59c in HD for direct sales by the producer, or through Open TV Network, 60c for SD and  70c for HD. With iTunes margins (but including bandwidth) the SD version should sell for 72c and the HD version for about 8c higher for the larger file, or 80c.

I would pay 60-70c for FNL in SD and I’m sure HD enthusiasts would happily pay 70 – 80c for the HD version.

Note: These are download-to-own pricing, not rentals!

We can fund high quality production using a new media model of direct connection between producer and viewer, and we can do it without resorting to the outrageous amounts currently being charged for download versions.