What’s the Next Act for Webisodes?

PoltergeistAs the online video market has evolved so has the content being made available on the web. Faster internet connection speeds and increased broadband penetration has opened up the ability for us to watch high-quality, full length movies over the internet. Combined with better, cheaper video recording and editing equipment, the type of content being created has also evolved from repurposing of Funniest Home Videos to the creation of original scripted video programming online- more popularly known as webisodes.

In 2007 there were three catalysts that brought attention to web series as a viable business opportunity (1) the popularity of Lonelygirl15 on YouTube (2) the launch of Vuguru by former Disney CEO Michael Eisner and (3) the airing of Quarterlife by NBC on network television. These events showed that industry newbies could gain notoriety and success from creating original video programming online (Lonelygirl15), Hollywood believed in the potential of the medium (Vuguru) and web series could make the lucrative transition to television (Quarterlife).

The result was a number of high-profile production companies receiving funding in 2007/08 to capitalize on the opportunity. The likes of Funny or Die, Katalyst Media and 60Frames were launched in conjunction with Hollywood elites Will Ferrell, Ashton Kutcher and United Talent Agency (respectively) while others such as Agility Studios, DECA and EQAL (creators of Lonelygirl15) were founded by Hollywood outsiders.

Fast forward to the present where some have already started questioning the long-term viability of webisodes, as the likes of ManiaTV (an early entrant in the space) and the aforementioned 60Frames have already shut down this year while other production companies have been sold or changed focus. While the economy is the easy excuse for what is troubling the webisode market, it has only served to expose the deficiencies in the business model faster.

The basic problem has been one of customer acquisition and retention. Actual show content and quality aside, without a sizeable enough audience to target, advertisers won’t spend the time or money sponsoring a web series. Thus, online video producers have two options for acquiring the necessary reach for advertisers:

Direct– spend money to promote a web series’ website to a potential audience. This can quickly get expensive, especially when you factor in that almost 2/3rds of a show’s audience does not return for subsequent episodes. That means additional dollars need to be spent on marketing to acquire a new audience and/or remind current viewers to return for future episodes. Without advertiser dollars to fund this acquisition or a portfolio of shows through which to cross-promote a new web series, additional funding is needed to build a sustainable audience.

Indirect- rely on YouTube and other video aggregators to drive their audiences to the web series content being uploaded onto their websites as well as provide the associated monetization. While this instantly provides a solution for both needs, audience traffic is greatly affected by site design changes and content owners only receive a portion (YouTube’s standard payout is 55%) of the associated ad revenues. Looking at data from the top 100 mid-tail video publishers on YouTube (many of which produce webisodes), on average they earn less than $50,000 per month from the site (assuming YouTube’s standard 55% revenue share and daily video views of 140,000, plus a generous 100% sell-through and $20 CPM on the ad inventory)- not a big enough business for most investors.

While there are plenty of webisodes that use a hybrid approach in combining these options, longer term this approach is inefficient. This is because the indirect channel undermines the goal, and dollars spent marketing, of the direct channel by turning a scarcely available product (with theoretically high economic value) into one that is widely available, thus reducing the economic value of each distribution point where the content is being consumed. Simple supply and demand is why ABC, Fox and NBC only make their videos available on their respective websites and Hulu.

So where does the webisode market go from here? The good news is that the opportunity will only continue to grow as video consumption habits evolve. The potential bad news is that traditional television studios might soak up most of this opportunity as the likes of CBS and NBC have started building out their own original online video presences.

For original web series producers that means they have two options: beat ‘em or join ‘em.

How to beat ‘em. Create a television network- for the online world. One of the main advantages that television studios have over a producer of a single show is the ability to aggregate TV show audiences on their network and spread the cost of customer acquisition and episode marketing Break_Originalsacross the entire content portfolio. Break Media is an example of an online property that has been able to successfully build such a network online. The company produces over a half-dozen webisodes that leverage Break Media’s network of male-focused web properties to deliver an audience to their original online video content. Because the company has built its network around a very targeted audience it has been able to differentiate itself, and thus thrive, in a YouTube-dominated market while providing some of the same video content (user-generated, 3rd-party webisodes and movies) experiences.

Another option is to compete on the networks’ terms by delivering webisodes to TV. Services like Boxee and even Hulu are providing web-based interfaces that are meant to be experienced through traditional television sets.  Blip.tv (the preferred video platform for web series producers, providing hosting, advertising, and distribution solutions) is taking this one step further by actually integrating its video platform into set-top boxes to allow Verizon FiOS users to view web video content through their television sets.

Blip.tvA truly audacious opportunity for Blip.tv, with its producer relationships, is to take the television delivery concept one step further and actually become a traditional cable television network. This would provide Blip.tv’s customers with direct access to the largest potential video audience out there and open up a new revenue stream in the process. This could be a lucrative opportunity while we wait for broader video consumption habits to evolve from today’s television network-centric experience to that of video on-demand over cable and internet.

How to join ‘em. EQAL has taken this approach by leveraging their online experience and success in developing original web series to help traditional television programs extend their TV show presences online. This makes sense, especially as it relates to primetime shows that do not produce year-round programming. Keeping fans engaged during the offseason, like NBC is doing with The Office, is more easily, and less expensively, done via webisodes. In the process of refocusing its business in this manner, EQAL retains its ability to work with multiple television networks while still retaining its ability to create its own webisodes.

Alternately, some networks like SpikeTV have decided to acquire webisodic content instead of creating it themselves and redistributing the videos on their cable channel. Having a show acquired is an all or nothing proposition for webisode producers, as the content needs to match with a network’s programming requirements. With only so many slots to fill in a daily TV schedule there will be many more losers than winners here.

Webisode producers- time to choose your story.

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7 thoughts on “What’s the Next Act for Webisodes?

  1. Alex,

    Great exploration on Web TV, and one that I’ve been pondering myself for a while now. I think you can drill it down to two main issues that need to be addressed to bring online programming into the mainstream:

    1) Discovery – Unless you’re immersed in web video and digital entertainment, the average user is unaware of the wealth of online programming that is available. So, vehicles that allow users to connect with web shows is critical. And not just a directory or static listing, but a comprehensive recommendation engine that filters by genre and interests to help users discover relevant shows. Eguiders (www.eguiders.com) has an interesting approach where they hand select ‘guiders’ from the entertainment space (screenwriters, producers etc.) to make recommendations, and viewers can actually watch the video directly on their site, which they aggregate from sources like Hulu, Vimeo and YouTube. So, it’s a hybrid discovery/delivery model that is definitely a step in the right direction, but is obviously limited in scope as it is more of an ad hoc viewing engagement than an all-encompassing channel where users can ‘tune in’ as they would their traditional TV. Tubefilter (www.tubefilter.tv) also does a phenomenal job of scouring the net for the best in web TV, and helps users sift through an oversaturated space to find programs they might like, but again, it needs to be more interactive to blanket the entire online video market, which currently exists in fragments across multiple, disconnected locations.

    2) Delivery – Obviously, there are many players already vying for leadership in the VOD space, and each of them are doing a piece of it well, but again, there is no overarching destination or hub where all online programming is accessible. I agree that there needs to be the equivalent of a ‘network’ channel (sans the politics and bureaucracy, of course) with scheduled, as well as on demand, programming across genres. In that manner, it would mimic a cable viewing experience with scheduled shows every day of the week, but also like cable, those programs could also be accessed on demand. And with the interactive nature of the web, a destination like that would also allow for immersive, cooperative engagements that more substantively connect users to shows and extend the viewing experience in compelling and memorable ways (that cable networks like Showtime and HBO are trying to do with online extensions such as ‘University of Andy’ for Weeds and HappinessConsultant.com for ‘Hung.’). The possibilities of those branded entertainment experiences also lends itself well to monetization opportunities and ongoing revenue streams, where brands can forge meaningful relationships with consumers by delivering lifestyle-centric experiences.

    But while those are what I see to be the two important factors to address as video consumption continues to increase, each require partnerships between content creators, publishers/distributors, studios and brands, which is a tall order. But the market is primed, and users are seeking alternatives to traditional cable and network programming. The key is to connect them with those alternatives, deliver the content seamlessly and consistently [on THEIR terms], and offer added value engagements that bring them into a storyworld that they help define vs studio execs pushing static programs that are tailored to suit advertising dollars instead of viewer participation.

    Look forward to keeping the discussion going, and watch this explosive market unfold.



    Principal and Branded Entertainment Specialist
    Space Truffles Entertainment
    Twitter: @Gennefer

  2. Great info from everyone. My webisode is finally starting to look and feel professional (24 episodes in – took us long enough!) and I’m just now trying to learn how to market it. Check it out if you got the time, I’ll be sure to check out “Space truffles” and “the finest hour”. Hey who wants to start a directory of great webisodes and combine it with a blog similar to this one where everyone, creators and viewers can debate/offer suggestions on how to make webisodes successful? Then we can all learn and share contest together.

  3. Jon —

    Congrats on wrapping production of your web series. I’ll be sure to check it out.

    With regard to a web series directory, there are already a few in existence ranging from simple listings to full reviews.

    + http://www.Clicker.com :: The online equivalent of TV Guide with listings of TV and original web programming.

    + http://www.slebisodes.com :: Comprehensive listing of web series across genres.

    + http://www.epiguide.com :: Forum-based listing of online entertainment.

    + http://www.visioweb.tv :: Curates and reviews the top web series.

    + http://www.93Studios.com :: Their ‘Screening Room’ offers complete reviews of the most popular web series, as well as uncovers some gems you might not have heard of.

    + http://www.scifinal.com :: User-submitted listing of sci-fi web series.

    Additionally, http://www.Tubefilter.tv is the premiere resource for web television to keep you current on web series deals and emerging trends in digital entertainment, where I am also a contributing writer: http://news.tubefilter.tv/author/gennefers/ And, http://www.eguiders.com is comprised of folks like myself who are immersed in the web TV space and hand-select the best video content across the Internet. You should also join the Web Series Network to interact with fellow content creators and help drive exposure for your show: http://www.webseriesnetwork.com.

    There are a few others out there, too, but these are the best destinations to get you acclimated to the world of web TV.

    Good luck!


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