Category Archives: The Business of Production

What if there were no established TV production “industry”

One way or the other I’ve been thinking of what a “new media studio” would be like; how will people be paid; what would drive consumer demand; and all the rest that goes with a theoretical construct of a “replacement” for what we have now. Practically speaking, it’s more likely to evolve with many ideas in parallel, than come in one sudden upheaval that creates a new greenfield.

Although, as an aside from my main theme, I look ahead two years to when the actors’, writers’ and directors’ contracts come up for renewal. My feeling is that they’ll either have negotiated a settlement before the contract runs out, or we’re in for an apocalypse.

Remember that this a purely theoretical construct so I’m forgiving myself for not having every detail covered. What set me thinking, horrible-though-it-is was Demand Media. Wired’s article The Answer Factory: Demand Media and the Fast, Disposable, and Profitable as Hell Media Model is really a nasty kick in the mouth for production skills: essentially “quality” has no place in this (highly profitable) production line, where costs have been driven down by competitive pressure. It is probably the dystopian future we were warned against when the industry became “democratized”.

Fortunately I don’t think it’s feasible for television-like content. (I’ll just call it Television, but I mean the sort of content that people watch on networks, cable channels, or off a satellite or even via Hulu.) For a thousand reasons I’ll bet at a minimum a more complex production process and higher demands for writing skills. Even relatively successful Internet Shows often have underdone production values from lack of quality writing, lighting or sound. (And some are excellent in all three because they have been made by “old school” folk.)

But let’s step back and apply some of the principles and see what might come of it.

Based on audience demand

Instead of basing program ideas on  some ‘gut feeling’ of a producer or executive we can take a lesson from the Demand Media case and design shows tailored to specific audience demands. Demand Media have algorithms that watch search terms and derive future “shows” as answers to questions people are asking ‘now’.

I’m sure there are ways of tackling similar challenges for TV shows. Monitor social media interactions for the types of comments being made about shows; use that data to derive algorithms to direct existing shows and find ideas for shows that will have an audience, and the business model for that audience would also be known. (See below, Funding it All)

Production Line

Everything becomes a production line. It’s going that way now, but the whole process needs to not be recreated anew for each show. In a greenfield model, employment is constant with people moving from show to show as they come and go; moving from one creative grouping to another.

Everything is standardized: production gear, cameras, record formats, etc. Standard workflows, controlled by the studio.

Talent

Talent would be mostly staff – from writers, production crew, actors, editors, audio post – paid decent salaries and with good benefits. Everyone would get a decent salary with a flat salary structure (instead of the enormous salaries for some) but would also share in the studio profits. Everyone is motivated to make it work.

Talent (across the board) is nurtured in their craft advancement based on merit. (Implicit in advancement is the concept that people will leave, unless the studio always grows.)

Production

Put production in inexpensive facilities, either purpose built (long term) in inexpensive locales (low cost counties) or in excess facilities from a declining (declined) old industry.

I see a lot of standing sets and green screen, and frankly a lot of synthetic sets.

Again with standardized production gear, all matching grip and common set modules for set construction. Work on the model of Southwest, JetBlue and Virgin America: one standard service, in standardized aircraft with much simplified maintenance and costs for spares.

Standardizing on common equipment, workflows, formats and outputs would save production and post huge amounts of money. Equipping with modern gear that has great quality at affordable prices taking advantage of all the cost reduction of the last decade.

Production will require talent. We need it to “look and sound like Television” because that’s where a large market is at (if we’re in a greenfield remember). It will still need to be lit well; recorded well and finished to a high standard, but I would argue that the most profitable approach would be to go to the least expensive “good enough” solution. And by “good enough” I do mean that it has to be good, but maybe for this type of content, shooting with a Viper might be “more quality than we need to pay for”. But AVC-I or direct ProRes acquisition with a KiPro makes for high quality and efficient pipelines that maintain “good enough” quality.

Apply that concept across the range of production departments: good enough, but not luxury.

Promotion and Audience Building

I think there are a lot of lessons from the independent film producers who have learned how to build audiences, and it’s something I’ve presented on before. It will be more building and nurturing fan bases and involving them in the process as much as possible.

Funding it all

Ah yes, the million dollar question. Or multi-billion dollar question if we’re talking an alternative to the current Television industry. Of course, I don’t have any definitive answer because, well frankly, there won’t be one. As was obvious at Distribution U, there are many avenues to funding a program:

  • some audiences will want to pay directly, and that’s a viable business model as I’ve demonstrated before, for even quite small audience sizes;
  • less expensive productions make it easier for one advertiser (a.k.a. brand in recent discussion here) to sponsor the whole show (Mark Pesce’s Hyperdistribution model)
  • use the show to promote merchandise, live performances, or other scarce good.

In one part of my mind I think a model like this could actually work. In fact I’m sure some variation on this is part of Jim Louderback is attempting with Revision3 and Kip McClanahan is attempting with On Networks. I suspect that no-one is going as radical as Demand Media, and I hope no-one ever does.

Kip McClanahan
CEO, On Networks

Why might large post houses be heading for the elephant graveyard?

My friend James Gardiner wrote an interesting post “Are large Post Houses a sunset industry?” and it set me thinking. Now James is writing from an Australian perspective and “large post house” and “boutique” post house have quite different expectations of size than the Australian context. (For example, Alpha Dogs in Burbank bill themselves as a “boutique” post house but in Sydney or Melbourne they’d be one of the larger post houses.)

In general principle he’s right. The economics of the large post facilities (really factories) of the size of IVC, FotoKem, Ascent Media’s various facilities are changing. They probably always have been. And certainly there are signs that the very large post-focused facility in New York and Los Angeles are threatened. Long-term post Burbank post factory Matchframe sold a majority stake for just $300,000 (mostly because of long term debt it is presumed). The costs of maintaining the “heavy iron” of a big post facility can be millions a year.

In general principle I agree with James: these large facilities are probably a sunset industry. But he identified one point that I wanted to expand on.

What a big post house bring to the table is more then just services, they bring know how and knowledge.  You KNOW it is going to work.

That alone is the reason that there will (almost certainly) be facilities like these big post factories: at least in LA and NY. These facilities are large enough to be able to experiment and invest in discovering the best workflows (as, indeed, do the people at Alpha Dogs et. al.) and technologies.

But knowledge gets shared. This is one of the absolutely best things about the current Internet Era: knowledge is freely shared in ways it never could be before.

Look at RED workflows. The RED Digital Cinema camera is a big step forward in performance-for-price and a new class of digital cinema camera. When it was first released the tools and workflow where completely unexplored. None of the major NLE companies had native support for the new wavelet codec and working between NLE and color correction caused nightmares.

Two years on and there are established “best practice” workflows across Final Cut Pro, Media Composer and Premiere Pro. Pretty much anyone who does a little research can find a workflow that’s tested. Where did the posts you find when you do that Internet search come from? People who have solved a problem, sharing the solution with other who have the same problem.

Frankly, this information sharing is what made my reputation. As a very early adopter of NLE (specifically a very early adopter of Media 100) I ran into problems earlier than those who purchased later. I also discovered email groups in early 1997 and benefited from the shared experience of the Media 100 Email List of fellow travelers dealing with NLE in the mid 1990’s. (All digital for more than a decade now.)

I don’t know what form the future post-house/factory will be, but what will survive are the “centers of knowledge” because ultimately that’s more important than expensive, but infrequent access to high-priced technology.  The latter will continually get cheaper and people will find smarter, faster ways to do things, that ultimately become best practice and the “norm” again.

I’d be remiss if I didn’t point out two of our own tools that can give a FCP facility and edge: Sync-N-Link synchronizes dual system video and audio in minutes rather than hours, or if you’re working with an edited Sequence replacing camera audio with multi-track in hours instead of weeks. Sync-N-Link is already being used across a lot of Network and Cable series.

Producers have been printing out EDLs and trying to match them to a spreadsheet to report clip usage or music usage: a tedious task for sure, but one that can be automated with Sequence Clip Reporter, which just takes the pain out of creating a video, audio or combined report, including a reel-by-reel report if that’s what you need.

Who else is cutting budgets?

In the previous post I talked about cutting production costs, but nowhere did I advocate just paying people less, mostly because I believe that good talent is worth paying well. I do not, however think there’s fairness in an industry where a few make millions while many can’t get their projects off the ground.

So, imagine my surprise when  Fewer Stars, Fewer Risks As Networks Tighten Belts comes up in my news feeds – courtesy of myNAB365 – detailing how the networks are either dropping the pay to well-known talent (10-50% lower than current pay checks) or opting for less-well-known (but good) talent instead. (I will note that my sixth point – of the ten in the book on cutting costs – advised people to “Go for the B-talent” in name, but not quality.)

All is not woe for the talent though, as the article notes:

Big stars such as Kelsey Grammer have taken pay cuts to keep working. And although Charlie Sheen (Two and a Half Men) and Laurence Fishburne (CSI) pull more than $350,000 an episode, second-tier players who routinely got $125,000 an episode not that long ago now are settling for about $80,000.

I know that actors have limited opportunity for exposure, so a hit series can make it harder to get work afterwards, but two seasons at $80,000 a show should set most people up with a very sound financial footing for life!  Maybe the industry is just getting some sense.

The article also talks about filming where there are incentives and tax advantages that make those locations cheaper; shooting digitally instead of on 35mm film*; running shows with fewer producers involved;  and replacing comedy and drama with reality and shooting multi-camera style instead of single camera style, claiming that multi-camera single take is half the price of single camera multi-take production.

* The choice of shooting digital instead of film could also be influenced by the ongoing lack of a contract between the producers and Screen Actor’s Guild. SAG covers TV projects shot on film, while AFTRA, who covers project shot on video or digital, have a contract in place.

The current economic conditions and sudden downturn in advertising expenditure has stressed an industry already undergoing structural change, and accelerated that change, possible taking it further.

I have a lot more to say in a book I’m writing for smaller production and postproduction owners on how to deal with the changing (and changed) conditions and how to continue to grow their businesses, even in these changed economic circumstances, using the tools that have been created by the very changes that are shaking the industry.  Look for it around NAB 09 time.

When is a market saturated?

A post this week by Justin Evans titled RED One Rentals Impending Crash hit my reading at just the right time. Over the weekend I recorded some interviews with Rick Young of MacVideo – a fellow Aussie now living and working in the UK – and a whole bunch of people who were around the foundation of the LA Final Cut Pro User Group. I started to form some parallels in my mind. As have many others to be sure.

Justin has one very, very good point: a RED One is not a good investment for a rental company. Sadly neither was setting up for Final Cut Pro rentals. In both cases a solution you rented as needed (because it was so expensive you couldn’t afford to own it) has been supplanted by “buy it and you’ll always have it to use.” That pattern also applies to HD video camcorders.

The DV Rebel’s Guide author Stu Maschwitze advises readers to own their own camera above owning an edit system. He proceeds to give several examples of where he’s been able to get dramatic shots that add high production value to his shows, just because he had the camera with him.

Projects that wouldn’t have been made are now being made. There are more opportunities to make money in video production than ever before. There are probably few opportunities to make enormous – dare I say “excessive” – profits.

Right now budget projects tend toward formats like HDV or AVCHD/AVCCAM because the cameras are very affordable and the quality “isn’t too bad.” Heck, it’s high definition with quality at least 10x that of my first pro video cameras, and in inflation-adjusted terms about 1/10th the cost. (Not to mention 1/10th the weight.)

But it does limit production in two ways: it limits where the product can go given the quality requirements of some outlets, and it limits what you can do with the image. Particularly with RAW footage – what the sensor saw is what’s in the image – you can push the image in Color Timing a lot, lot further than those formats that limit color information.

Quality has always cost. No-one’s ever been unhappy about that other than the cost-requirement limited what got made and distributed. So industries evolve high cost structures. Budgets get bigger because there’s more at stake and when successes happen, everyone who contributed to their success wanted their share of the (quite often extreme) profits.

Television is the child of film and radio and inherited many of the same cost structures for program production. Given the limited outlets of the day that was entirely appropriate. In the last decade there’s been an explosion of outlets. The number of cable channels have dramatically increased thanks to the Clinton-era Telecommunications Act of 1996. And there’s this thing called ‘The Internet’ that seems to be opening up increasing number of distribution opportunities.

Back in 1999, if you told me there’d be more than 1.25 million registered Final Cut Pro users within 10 years, I’d have been credulous. Although there were about 300,000 Premiere 5/6 users at that time, it was the dominant NLE – Avid having fewer than 1/3 that number of customers at the time. People seem to find a reason to pay for professional editing software beyond what ships free on every Mac.

Apple announced their customer number at the MacWorld ’09 Final Cut Pro User Group Supermeet, but these following are likely to be reasonably close. Avid’s user base has continued to grow and I’ll say a generous 200,000. Premiere Pro has to have well over half a million legitimate customers. Sony Vegas is up over 300,000 customers. Avid Liquid has about 400,000 customers iirc. Other NLEs, like Edius I don’t have a feel for. (Please feel free to correct any numbers in the comments or private email.) Add them together and there about 2 million people in the world who have paid for professional editing software.

You’ll note how I’m carefully avoiding calling them all “editors”. People are obviously using Final Cut Pro in ways that would be quite foreign to an experienced entertainment industry or documentary editor. But if they’re editing, satisfying a need and making a living from it, that’s a good thing. That’s a heck of a lot more people employed (or working for themselves in some way) – making a living doing what they like doing – than ever there was before.

It’s the same in the music and print design businesses. The transition to digital technologies demolished existing cost structures and opened up thousands of new employment opportunities.

Red Digital Cinema, with the RED One now and Scarlet and Epic coming up, will probably sell in numbers that “make no sense” if you expect the industry (film, television, entertainment, education and all other types of production) to not change.

The concept of an “Independent model of Television production” came from Mathew Winer, write/producer of Mad Men: Television production more modeled on Independent Movie production approaches. People like Television, and YouTube-like content supplements but does not replace Television programming.

What we’re currently seeing is a trend for “quality production” away from the big four Networks to smaller players simply because the market (viewers and therefore advertisers) for drama or comedy production on the networks is not big enough. Even ratings winners like American Idol attract audiences that would have seen the show cancelled even 10 years ago.

The cable industry doesn’t have the same cost structures as network, and the Internet has even fewer constraints. Josh Whedon’s Dr Horrible’s Sing-along Blog was purportedly produced for around US$100,000 on the SAG “low budget production” contract. His cast probably didn’t get paid as much as their Network Shows did, but at a time when nothing was shooting because of the writer’s strike, any work is good work. Particularly if that work is in a Guild that has a greater than 95% unemployment rate!

Shows like Mad Men and Friday Night Lights are doing high quality work with “very constrained” budgets. (Anyone know what the per-episode budgets are, let me know in the comments or private email.) What’s to say that under-employed actors and under-employed writers and under-employed-everything-else in LA (Toronto, New York, Vancouver, Denver, wherever) couldn’t produce their own shows for Internet distribution?

There are budget ways to do effects and better green/blue screen tools than ever before. Apple has put advanced color timing in the hands of anyone who wants to try and give their project the “big production” look.

The availability of “quality that no-one can complain about, ever” tools like those coming from Red Digital Cinema completes the production side. The tools of quality production are democratized. A new, new industry arises that aspires to decent middle class incomes with employment opportunities for anyone with the desire, drive and talent to create television, film, conference video, or event videography…

May a million United Artists bloom. If only we could get the distribution side solved.

Why I fear for the future of quality production

NBC’s recent announcement that they were dropping five hours of prime time television to strip program a new Jay Leno show at 10pm weeknights made me think about the problem with high quality (i.e. expensive) “television” programming. (I define “television” as a style of production created by professionals, with professional standards with the intent of making money, regardless of what outlet it goes through.)

I first started worrying about this a couple of years back during the run of “Studio 60 on the Sunset Strip” – reportedly a $2 million an episode show. The problem is that these shows require large audiences to recoup the production costs, and the network operating costs and profit, from advertisers. A 6 million person audience of high-net-worth individuals was not enough to justify continued production.

It’s not surprising really, when you consider that a hit network show today, would have been dropped 20 years ago because of its small audiences. Quality drama and comedy production – shows like Studio 60, Friday Night Lights, Mad Men, CSI, Lost, Heroes, et al. – is expensive and does not get the huge ratings that are required. The hit ratings are reserved for American Idol and reality TV.

So, how do we produce that high quality if the audiences aren’t there?

One obvious answer is to cut production costs. As Matthew Winer, writer/producer of Mad Men, said at a TV Academy function last year, we’re going to have to get used to a “independent film production” mindset for TV production. While I’m not entire sure what he meant by that, it is clear that Mad Men is a quality product – Emmy Award winning quality – but is clearly being produced on a cable budget. (It’s also likely that AMC are subsidizing Mad Men as a flagship for the channel.)

Is this the future for production? Tighter budgets, fewer big name stars (but overall higher quality acting) and a more guerilla approach. Certainly that’s been happening with Friday Night Lights where they shoot in locations rather than sets; shoot multi-camera and avoid over-rehearsing to keep spontaneity. As a consequence, they’re often finished the day’s production by mid-afternoon.

Maybe that’s the future of production? For some other thoughts on the implications of the NBC decision, Kent Nichols blogged about it, and why it was good for new media.

Is a return to the “Studio System” on the horizon?

If there’s one thing that’s very clear over the last decade, is that the tools of production have become cheaper. But so far only the tools of production – cameras, edit gear, accessories, color timing suites, et al – but for craft skills there seems to be the same dichotomy of old: work for next to nothing in “Indie” production, or hang out for one of the few really well paying (Guild) jobs in the traditional production system.

Neither option is particularly suited to emerging “new TV” or “new media” production.

There is justification for extremely high salaries in broadcast: a popular show makes good money for a network and if paying the stars of, say friends $1 million an episode (as they did in the final year) means they get another year of high-value advertising slots to sell, makes sense. But $6 million an episode (plus the actual production cost for equipment, sets, studio and crew) is not going to fly for “niche” programming, in a 10,000 channel world. Frankly, as actors they were competent enough, but it wasn’t the talent that made the show in the first place. Writing, talent, the way the ensemble works, direction et al all had a lot to do with the success of that show.

At the other end of the equation you have shows like Goodnight Burbank where some of the people make some money off the advertising revenue blip.tv secures for the show. There has got to be a middle ground, where profits can be made by the producer and everyone involved gets a decent living. I’m wondering if a return to the studio system of early Hollywood isn’t on the cards?

In that system, actors, directors, cameramen et al were employees of the studio on fixed salaries. Generous salaries for the day, for sure, particularly for the most bankable, but salaries none-the-less. No $20m payments for “stars” that don’t actually contribute to the profitability of the movie. They may make it easier to market, but the studios today do not get payback or value from the huge sums paid to “stars”. The downside of that system is that the studios (vertically integrated businesses including the cinemas in those days) made outrageous profits off the backs of their employees, leading to United Artists and talent as independent contractor.

It seems to me that there is going to be some sort of structure – cooperative, studio, whatever – that allows a minimum of a decent middle class income for everyone involved, but retains control of the show through the newly democratized distribution system. It would have to have far more transparency in accounting than is common in the current system, so that profits are shared *fairly* with those who are responsible for creating the value.

Yeh, utopian, and probably unrealistic, but I can visualize a system where creative talent gets to do what they love (perform, edit, direct, shoot etc) and get a decent income, in the face of ever more fragmented viewing habits. A hit show today wouldn’t have even been in the top ten 20 years ago and yet, shows are still made and people in the industry still seem to live from their work – those who get to work that is. The systems and methods that worked for 3 channels may not be as suitable for a 500 channel or 10,000 channel world.

What do you think?