Studios-Backed Web Video Efforts Stalled For Now; Who’s Left?

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Studios-Backed Web Video Efforts Stalled For Now; Who’s Left?

Time was when everyone was starting their own online video studio, inspired from the early successes on YouTube. It wasn’t that long ago when Disney (NYSE: DIS), HBO, NBC and AOL (NYSE: TWX) started funding these projects, with flashy announcements and high-profile backers. Now, as the bubble on original online video has burst, most of these efforts have been stalled, and network-backed options such as Hulu have taken off, LAT surveys the scenario and trends going ahead:

—In Feb last year, Disney launched Stage 9 Digital with an initial roster of about 20 shows. With the exception of its first series, “Squeegees,” a comedy about window washers, none of the others saw the light of the day. Earlier this year, it laid off most of its staff, and in March Stage 9 was shut down.

—Turner’s online comedy venture SuperDeluxe, launched in 2007 as edgy, multiplatform brand aimed at men 18-24, folded last year into its much more recognizable AdultSwim brand.

—HBO and AOL’s comedy venture ThisJustIn folded due to, well, pure and simple mismanagement, besides the macro issues. Then we all know siste company Time Inc’s doomed venture with OfficePirates: that closed down two years ago.
—Besides big media, startups like 60Frames and ManiaTV have also closed down in the last year. Some of these moved away from creating original content but served as distributors, but even then, ad dollars didn’t grow fast enough to cover production costs, let alone overhead, as LAT story explains.
—Just yesterday, CBS-backed EQAL announced that it is moving away from development and funding of its own standalone series, in favor of running the online video properties for existing brands like CBS’ Harpers Island (called Harper’s Globe) or Food Network icon Paula Deen.

The reasons for the above failures came down to hubris, the hope that advertising would help tide the way. With the economy, and general lack of a big enough audience to monetize, most of the optimism has frittered away. Some of the new ideas include integrating sponsors into projects ahead of production, instead of baking them in later. One latest example is the show MSN and Reville are working on with Jack and Suzy Welch: the new show, to debut on MSN, is called “It’s Everybody’s Business With Jack and Suzy Welch”, and is as sort of a business-intervention series, in which the duo doles out advice to companies, reports Variety. Microsoft (NSDQ: MSFT) gets to promote its suite of small business software and technology services as a result. For a deeper dive into the state of brand-funded video content, read this AdWeek story that came out today.

Meanwhile, some of the studio efforts left in the field include Sony’s Crackle which mixes original series with TV shows and movies owned by the studio; MTV Networks’ Atom.com which has morphed into a comedy video site feeding into ComedyCentral; Warner Bros’ Studio 2.0 which i used to attract audiences to the company’s TheWB.com site; and among startups Sequoia-backed FunnyorDie, which features well-known stars and don’t really have to pay them; Michael Eisner-backed Vuguru, which is taking things slowly after two big online productions, and others like Deca, which is now focusing on video-focused vertical community sites like Momversation and others.

As for their distribution strategies going ahead, beyond advertising support, VideoBusiness looks at some alternative strategies: Walt Disney Studios Home Entertainment will launch its first original Web series, Time Jumper, a graphic novel series produced with legend Stan Lee, and will sell it only as a download on iTunes and in 2010 on DVD. Warner Home Video launched a series tied to the Terminator: Salvation theatrical release that re-uses graphics from the videogame spinoff and is being sold as a download through iTunes and Amazon (NSDQ: AMZN) VOD. Also, Starz accidentally found online success with its Starz Bunnies show, an ongoing series of 30-second animated shorts, and while the show is ad-supported and airing Crackle and Netflix (NSDQ: NFLX) and on-demand on Starz, it took to licensing the series international in in France and Germany, which made it “made it a very profitable game,” said Marc DeBevoise, head of Starz Digital Media.

On a related topic, Henry Blodget wrote an impassioned essay over the weekend arguing that the TV industry will look a lot like today’s newspaper industry in the next 5-10 years: not able to support its current cost-structure as audience move online and online-based distribution gathers steam. Agree with him or not, the argument is compelling.

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Rafat Ali

@rafatali Jun 15, 2009 11:44 AM ET

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eli

@frank - very limited indeed :)

Frank

@ Eli
Kinda sounds like a glass half-empty perspective coming from a limited POV…

Kieran

The lesson learned by the big media companies is that UGC is worthless and professionally product long or short form content is best monetized via aggregators.

ooo fork

I think there's potential for mashing up tv and film matierial, putting it to music and creatively editing advertising into it. A very strange music video site indeed….

eli

@Frank.

I assume we worked together at TJI and you are posting under an assumed name.

For my part, I think that 3 million number is soft and I think the ad deal talk is misleading.

-First of all, the 3 million uniques doesn't represent baseline traffic. It represents traffic that was driven by links from AOL's homepage which was contractual. Much of which was mined from lame picture galleries that basically jacked page impressions. (this is not to take anything away from the real content which was generally rad).

-Second, the ad deals that were needed to support the kind of overhead that we had were simply not forthcoming. The math wasn't close at all. 50k here and there doesn't support a multi-million dollar budget. And even if those deals had gone through, we didn't have the infrastructure to fulfill them. We didn't have an ad-ops team, and AOL's sucked royally.

Ultimately it doesn't really matter. At a subsequent job I saw how a site like TJI makes all of this stuff work. And my judgment is that we weren't very close. We had such a deficit of internal competence that success was simply not in the cards.

Break.com, a site that was effectively built from scratch has a sales force of 15, a serious technical team of about 40. The "blocking and tackling" as they used to call it was pretty impressive. They would regularly bag 100k deals and even they weren't too enthusiastic about creating original content because the cost was too high.

To be sure, the Albrecht situation directly caused our fall, but we were never going to be successful. And by the way - it's not like we didn't know all of this when we were running the site. We never really had any support from HBO - all they did was saddle us with a load of corporate bureaucracy. And the support we got from AOL was unspeakably inept and counterproductive.

And I deserve a bunch of blame. My design/product work sucked. That job took the life out of me and I just couldn't make anything nice. I guess I mostly feel like we all squandered a chance to work at a cool company, HBO, and we deserved to be killed right about then anyway.

Frank

After reading one too many times about how ThisJustIn was folded because of failure to gain traction, or mismanagement - I thought the record needed to be set straight.

Though it WAS indeed mismanaged at the beginning, that situation was changed and fixed; the site was launched and approaching 3 million uniques per month in only its third month of being live; and a number of strong ad deals were either closed or waiting to be signed.

THE PROBLEM was the very sudden and abrupt departure of HBO's C.E.O. following the unfortunate incident in Las Vegas. Like many other shows, projects, etc., ThisJustIn was a casualty of the chaos / turf wars / land grabs that ensued at HBO. None of the remaining executives there wanted the baggage of a first foray into a business and medium that they did not at all understand.

Meanwhile - once HBO decided to jettison ThisJustIn, AOL was all-too-happy to oblige as part of their beginning efforts to slash and burn and trim AOL so it could be spun off.

Bye bye ThisJustIn. Hello story of "failure" the media seemed to swallow whole.

samG101

Then, there's today's LA times story…

http://www.latimes.com/entertainment/news/business/la-fi-ct-webvideo15-2009jun15,0,942884.story

RIP newteevee, it was fun while it lasted.

What should be noted is that most "web television" has been fairly terrible and therefore no advertisers cared about it. It wasn't that advertisers didn't commit in general, it's that they didn't commit to amateurish and too in-joke (or no-joke) Content.

And, the "good stuff" (original web series) often didn't think multi-platform enough from the outset. If only someone had started a DVD label for original web series and had an output deal with Wal Mart, the "minimums" would have created a sustainable business model…(yes, leveraging old media to succeed with new).

Combined with the general conflict of putting non-interactive Content into an Interactive medium, it's just not a model that could succeed. That said, new technologies and some new business thinking may create a webtv 2.0 (sorry, you know what I mean) platform that will look/feel entirely different, and make money to boot.