With Mad Men and Breaking Bad winding down, I wonder if AMC can maintain it. They seem to have garnered the reputation of being hard on showrunners (Both Matthew Weiner and Vince Gilligan have had issues with the network). Walking Dead is on it's third showrunner.
Another network, FX, seems to be trying the HBO/AMC model in getting quality programming and is going out of their way to appear showrunner friendly. It'll be interesting to see if they can capitalize on some of AMC's missteps in nickel-and-diming their own shows.
AMC hit it's Golden Age of TV programming with that trio, but clearly have shown that they have issues with the handling of heavy creative talent, what with the issues that Weiner and Gilligan have publicly had, and the volatility of the showrunner position on the Walking Dead. (which subsequently also resulted in one of the actors leaving the show). On top of that, they expanded the number of episodes of S4 while reducing the budget per episode. And of course, milked the coverage of these shows with vacuous Talking Bad/Talking Dead.
I wouldn't be surprised if talented writers avoided that network like the plague.
AMC is also in a tough spot. They don't have the revenue to support the creative folks properly. The long lag between great content and an increase in the affiliate fee, makes the financials tricky. The death of DVD sales is not helping much either, as there is less to promise on the backend.
I think AMC gets $.35 per subscriber compared to ~$5 for ESPN. It is going take decades of hit shows before AMC is paid the $1-2 they actually deserve.
Hopefully eventually its a la carte. I'd pay $2/mo for AMC. I dont need the ESPN. The problem though is there sister channels. IFC is good but I could leave the rest.
My bet is that TV-over-IP eats the market before de-bundling occurs. In terms of cost, distribution, quality, and ease-of-use, digital downloads beat cable every time. The only piece of the puzzle networks still own is content production. With House Of Cards and Arrested Development, Netflix made a strong entry into the TV-making club, and struck the first blow against that monopoly.
In my view, we're two innovations away from internet tv for the masses: independent content production that can rival the networks for quality, and an easy-to-use streaming box to supply it. The latter is easily possible with technology on the market right now (Roku, Apple TV, etc.), and the former seems all but inevitable.
The tough part about that for the networks is building out the infrastructure and giving up all the free advertising that the cable companies give them.
By packaging their content as a standalone service, a la HBO Go, they've now given up being bundled in tiers with other networks. And they've got to build out their own delivery networks & apps. Or... they can join up with groups of other networks, create a service that advertises and bundles networks together and takes care of all the infrastructure.
HBO Go is NOT effectively a standalone service. You have to subscribe to HBO before you can get HBO Go. It's just streaming of things you already paid for on cable.
Which sucks. I would pay for HBO Go if I could get it at a decent rate. But like hell I'm going to pay for cable and the crazy upcharge for HBO just to use HBO Go. As a result, Netflix and Amazon Prime get all my money, and HBO gets nothing.
Yeah, sorry, I meant similar to HBO Go in terms of standalone app + network built distribution. And the reason you can't buy HBO Go without cable are exactly what I outlined above.
Or a series of third parties can compete to offer the infrastructure, which is just a CDN tied to a small computer with an HDMI out, and the former networks and new production houses can offer their programming on one, some, or all of them.
BTW this is one reason net neutrality is so important. If we're going to start rebuilding existing services over dumb lines (IP) then it's imperative that we maintain competition. The big problem with cable right now is that it's an oligopoly (monopoly in many places). By separating the infrastructure from the content delivery we can hopefully avoid many of the issues people currently have with cable. If we allow Verizon to charge an extra $50 to carry any non-Verizon-based "TV show bundle" then we really will be right back in the cable boat.
It's pretty amazing though that Moto wants $800 for a cable box and Western Digital can sell the same thing for $150. Shows what competition gets you.
But the problem for the next AMC is whether anyone would have been paying $0.25/month for them before they had "Breaking Bad" and "Mad Men". A la carte where everyone picks the 10-20 channels they currently watch at $1-$20/each instead of 100-200 channels at $0.25-$5/each means there really can't be another fledgling AMC who exploits their existing (cheap) position on the "dial" to build an audience with quality content and then demands more money.
Of course it seems a bit silly to be talking about channels these days. This problem will sort itself out somehow because I can't believe anyone who wants a "channel" to every device with a screen in the country won't be able to acquire one in a few years' time.
AMC makes 30 million a month off subscribers. At $2 a month they'd need 15 million monthly subscribers to equal what they currently earn. Historically speaking Breaking Bad has averaged 2 to 3 million viewers. After five and a half seasons its highly anticipated premiere had almost 6 million viewers.
So yes, go ahead, keep thinking that two dollars a month is a reasonable price.
Initial reviews of one of the shows poised to take over the mantle of Mad Men and Breaking Bad - Low Winter Sun - have been negative all around.
AMC seems to be trying to replicate the formula that made those two shows so successful, but in doing so have somehow created an empty shell that has no resonance with the audience.
It's looking like it might take a while before AMC finds itself a winner again. The channel that seems to be poised to take up the mantle is FX. John Landgraf, the CEO, is one of the few executives who seems to really care about the quality of the shows he's responsible for. Justified is easily among the top tier of shows airing today. Louie is most likely the first of an entirely new genre of autobiographical shows that blend drama and comedy. The Americans is one of the best shows to premiere in 2013. They might just have a shot at this if they could only pick up some awards attention.
> Another network, FX, seems to be trying the HBO/AMC model in getting quality programming and is going out of their way to appear showrunner friendly. It'll be interesting to see if they can capitalize on some of AMC's missteps in nickel-and-diming their own shows.
Hasn't FX been trying for the quality-original-programming thing for over a decade (at least since "The Shield" in 2002), with limited success?
There's also probably a certain degree of tension between being "showrunner friendly" and being concerned with "quality programming".
"Pressing still further, AMC is giving new Breaking Bad episodes to Netflix viewers in the United Kingdom right after they air in the US, instead of the weeks-to-months delay that is typical for exporting top-flight US shows."
This. It blows my mind that in this era if your content doesn't require localization efforts why it isn't made universally available ASAP. Cult followers run off to news site and message boards and twitter and where ever else to talk about their favorite show and that gets more people interested. Not making it available spoils all of that momentum and waiting months is just shooting yourself in the foot.
Really? AMC makes 33 cents per month per cable subscriber. As of December 2012 AMC was making $30 million dollars a month off of an 80 million subscriber base [1]. They get that money because their product is in such high demand the relatively small number of viewers demands their cable providers include AMC. If they suddenly start giving away their content for next to free those demands go away and so does the revenue stream.
It rarely makes sense to give away new content on Netflix for next to free. You see it happen, but only rarely and in very select circumstances.
You can have different holdback times for different territories. Don't put it on Netflix for a month in the US but put it on right away in the UK where AMC is not available and Breaking Bad does not appear to have a pay network distributor.
The bigger issue is the fact that most shows DO have foreign distribution. At the point it's not AMC that's holding it back from Netflix, it's the company that's paid a bunch of money to air it over there. The rights windows in each country can have huge variations just depending on how the contracts are negotiated. It's never as simple as "the US airing network isn't allowing me to see this in the UK because they hate me."
Interesting, Australia gets breaking bad on cable the same time as US. Although there is always going to be a lot of piracy because you are looking at $100+ a month to get cable and the showtime/movies group of channels which show it.
I'm saying that the number Netflix pays per stream is so small it might as well round down to zero. If just getting users to watch your show on Netflix was a great way to make money then everyone would be putting their new shows on Netflix. Almost no one does that. Instead everyone puts old seasons of their shows on Netflix in hopes that consumers will then watch the new season on subscription cable or buy the show direct off iTunes.
Content holders effectively give away old content so they can sell new content. If they give away new content there is nothing left to sell.
They're not avoiding Netflix only because it doesn't pay enough, they're avoiding it because the medium threatens pretty much everything about their current way of doing business. It's deeper than just money.
Netflix doesn't pay per stream. Netflix pays for content in "windows". e.g. Netflix pays $20M to show Seasons 1-5 of Breaking Bad for 1 year. That's why content appears and disappears all the time.
It's the same how movie companies sell broadcast rights to HBO or other similar channels.
UK viewers would easily pay 50¢ to stream an episode though, that's only ~30p. For a series they'd be paying that once a fortnight it seems (USA sourced shows appear to be doing fortnightly showing now?), so > $1 a month.
How can taking 3 times the monthly subscriber profit for a single show harm them? Are they really making more selling that one show to other networks than they take selling their whole network to customers?
Instead it looks like it's $2 per episode on Amazon Instant, which is USA only or at least not in the UK. Instead UK has LoveFilm which doesn't have individual episodes and apparently requires mailing a DVD for you to watch Breaking Bad.
I've seen adverts for this show in the UK and find it weird that you can't just buy it and watch it.
The reason it's being given to Netflix in the UK is because no networks here have paid for it. It was either that of let people download it illegally (as it's the last 8 episodes I'm sure most people would have done this).
> It blows my mind that in this era if your content doesn't require localization efforts why it isn't made universally available ASAP
Because shows are distributed by different companies in different territories.
In many cases the company that airs the show doesn't produce it. You even have cases where a show airs on one network but another network has digital distribution rights and a third has physical distribution rights, and that's only in the US.
International media rights are an extremely complicated thing and usually each show is negotiated individually.
I work in this space and it's crazy how complicated it can get.
And this is why the Internet is continuing to eat this industries lunch and why people will continue to simply pirate the content. The old distribution mess is a dying model, distribution is too easy with the Internet today, consumers aren't going to wait for content they want and can easily find online. Consumers don't care about media rights, they care about seeing their show as soon as it comes out.
I know the Christmas special was aired quite late, and I remember a few years ago when they made a Vuvuzela joke and instantly made it clear that they were on a 6-12 month delay.
The day after thing with Dr. Who is because it's airing at the same local time in the US as it does in the UK I believe, which is perfectly reasonable to me, i'd rather not have to watch it at something like 5am :)
I cut the cable about three years ago and I just subscribe to Amazon Prime, Netflix, and Hulu. I'm also happy to spend $1.87 per episode for Breaking Bad. I don't miss cable one bit.
I'm happy to pay for quality content while filtering out all the jibberish I would otherwise get by watching it on cable TV. And I don't have to pay the $100+ per month that Comcast jacked me up to with fees, equipment, and constantly increasing monthly subscription costs, which would always go up without explanation or warning.
For those of us who are picky about our content choices -- and especially those of us who don't really give a crap about sports -- cutting cable makes a lot of sense. I wish cable providers offered a lower-cost option with no sports package, but sadly, that's the bread and butter of the entire cable TV business model. So I'm stuck paying largely for content I don't consume.
Bundling is a raw deal for those of us who don't care about the bulk of the bundle. (To say nothing of the silly equipment costs, etc.).
It's a raw deal for the cable companies, too. They'd rather do an a la carte format, but the networks bundle themselves. It's like this, ABC, which owns ESPN (one of the most watched TV networks) says that if you want to carry ESPN, you have to carry ABC Family, and ESPN 3, etc.
Cable companies do offer a low cost bare bones option. It is called "basic cable." It's a few bucks a month (around 10-15ish) and when I had it, it was about the first 15-20 or so channels.
Yeah, the problem with basic cable is that you get only the basic cable channels. There is no great way to sever, say, HBO and Showtime from ESPN-XYZ, etc.
No, I am meant that $1.87 is absurdly high compared to how much money AMC makes from cable viewers. See the analysis a little further down, it's less than 40c per episode.
According to the article, they make about 0.35 cents per month from subscribers. Given 13 episodes per year, and a 30% commission that's $4.20 vs $17. I suspect that much less than 25% of AMC subscribers watch Breaking Bad given how bundling works so it can be argued that they're making more money from subscribers than from people buying on iTunes.
13 episodes is 3 months. So that $4.20 is really closer to $1. Bump it to $1.50 as a generous amount for advertising. Apply your 25% modifier and you are still at $5/season or 38c/episode.
They pull 3 million viewers for the first showing in the US. Then there are all the catch-up viewings later in the week plus the showings in foreign markets. I don't know if BB will be syndicated, usually takes around 100 episodes before a series can be syndicated, but it is definitely sold on bluray and DVD.
That's 33 cents for ALL of AMC, not just Breaking Bad. That's mad men, he'll on wheels, walking dead and the old movies. And they sell discs. And the sell in iTunes. And they get paid by Netflix, hulu, and amazon.
I hope it continues to work out, I tend to enjoy just about all of their original content and they seem to be hungry enough to not just do the lowest common denominator thing. Probably not as big as hbo but give them some time.
I watch TV shows by the season, in one sitting often times. So shelling out $70 for the box set of discs is terrible. Netflix is my kind of product, but I'm still waiting for the next season of Walking Dead. Can they just stop delaying it so long?
I will now have to find the time to watch these "quality" shows to see if in fact they are quality programming. It would be great to be able to tell TV networks that they should focus on creating quality programming, instead of just getting the best advertizement deal and that this would boost their ratings/revenue. While I cannot think of any great TV shows, there have definitely been exceptions, like The West Wing, which I didn't watch live, but I'm now watching on NetFlix and can certainly say that the show is of very high quality. The West Wing has set the bar for what I qualify as quality programming, so if AMC's programming is there, no wonder they are doing so well.
If the West Wing is your current high bar for high quality programming you're in for an absolute treat.
The West Wing was the last great show put out by the major broadcast networks before the rise of cable and the it pales in comparison to the output what has been dubbed "The Golden Age of Television". It's actually an embarrassment of riches right now on the television front.
Wow. I am stunned! Never been too much of a tv show watcher, but your comment really makes me think if I have chosen wisely. I don't have much time to waste ("spend").
Wait until after the first or second season is over until you start watching like I do. By then you'll be hearing which shows are good and can easily catch up on Netflix or Amazon/iTunes.
So many really good points made here in the comments. My two cents, I really really hope that GOOD WRITING some how wins the day. AMC shows like Mad Men, Breaking Bad, Hell on Wheels, etc. are really well written in my humble option, compared to the "reality shows" that are staged/sort of written ugh, whatever. I hope that other networks see what HBO and AMC are doing and realize there is a market for good writing. Quality story, quality production, I will watch, otherwise, I can just surf hackernews or do something else on the internet.
I wonder when the movie industry will have a pioneer along these same lines.
It's an idea I've had for a while... produce movies on a moderate budget... with as many talented screenwriters as there are, there have to be good scripts that go unoptioned. Cast talented character and stage actors instead of big name (big $$) star talent, and quitely make a bunch of really good movies for not a ton of money (Think $15-20 million budgets).
The idea is to have a deep catalog that quitely does well, instead of trying for massive blockbusters that can be $200m losses if they bomb.
There are certainly some filmmakers that sort of take this approach (The Coen brothers, for instance), but I don't know of any studio that has taken the approach to heart. I'm not talking indie studios here, but full AAA productions, just not with big VFX budgets or $50 million cast members.
I think the issue here is with the marketing costs necessary to actually get people into theaters. It's so difficult to actually convince folks to get out of their homes for filmed entertainment that it generally takes a $50-$80 MM marketing budget for a film to do _any_ kind of business at the box office.
This ruins the economics of the 'mid-sized' film, since if you have to tack on $60 MM of marketing onto the production budget anyway, even the smaller films generally have a high level of risk. Thus the whole market has bifurcated between enormous $200 MM behemoths and $2 MM indie movies with limited theatrical distribution trying to promote themselves virally.
How important is it to get into theatres? I'd imagine doing a deal with Netflix that says they have exclusivity for x months but it can still be shown in a limited number of theatres. The promotion Netflix would do (top of the page on netflix.com as well as the press it would generate) might offset the limited marketing budget you have available and get people who want the full experience to watch it in the theatre.
Increasingly however it seems that stigma is going away. In fact a number of indie distributors are currently experimenting with simultaneous theatrical + VOD + streaming services releases with a degree of success.
As the average age of people who've come to assume streaming services like Netflix as the norm increases, I think we might a see a greater willingness to forego theatrical releases altogether.
This used to be the Hollywood model. In the 1970s, for example, studios made movies like you describe. Over time, they've found it's more profitable to release fewer movies that are surer bets, which is how you get this endless parade of formula movies with $250m budgets.
It's not just that it was discovered to be more profitable in the abstract. Technology changes are a big factor too. Since TV achieved widespread penetration, movies have had to promise something new: either visual spectacle, something deemed unacceptable for broadcast, or something too serious/subtle/obscure. The combination of cable and HD TV have more or less eliminated the latter two categories. HD TV can adequately deliver pretty much any non-"spectacular" content. So audiences are, in general, not as likely to visit a theater for this, i.e. pay the cash required.
Think of what I'm proposing as the "Shawshank Redemption" model. Don't focus on box office sales, focus on the complete picture, and focus on compelling storytelling.
Shawshank peaked at #9 at the box office, only making back about half it's budget.
In the home video market, it has just exploded, selling over 5 million copies in the UK alone. (http://www.bva.org.uk/news-press-releases/members-press-rele...). That's kind of mindblowing...about the same number of copies as Sgt Peppers has sold in the UK, and way more than any contemporary album - the closest comparison is probably Oasis's What's the Story? (Morning Glory) at 3.3m units sold.
There's no "Shawshank Redemption model". It's an outlier, a one-off, and it would be foolish to base your business model on the idea that you could replicate it.
Don't confuse a local maxima with a global maxima. Or, the dead hand of the free market always wins, err... unless you have no free market. Or confuse narrowcasting with broadcasting.
A good Hacker News car analogy would be 70s/80s Detroit iron vs Japanese imports. When its just onshore, long term trend for the local maxima was to ship junk. Then you get some competition and that doesn't work anymore... In the very long run, like the car analogy, the newcomers have to hurry up and cash in while they can, because the entrenched interests will eventually adapt.
There are multiple problems with that approach though. Serious problems.
with as many talented screenwriters as there are, there have to be good scripts that go unoptioned.
Sure, but can you spot them? Are you capable of spotting a right script which would make a good profitable movie? Or do you know someone who can? Check out http://blcklst.com/
Cast talented character and stage actors instead of big name (big $$) star talent
Stage acting and film acting are two different disciplines. Vastly different in technique and experience needed. Another point here is that 'big star' talent brings marketing power to the table as well, something you haven't touched upon on at all. Marketing is big part of the game. That's why usually in 'smaller' productions you get a lead or co-star 'big name' with rest of the cast relatively unknown. Not everyone unknown. Not to mention casting is a difficult job in itself. You may find an actor that suits role perfectly, but all of the cast has to function together on screen as well.
Think $15-20 million budgets
$20m range falls in small production range, so that checks out. Productions are not spending happy, remember that when you see those vertigo inducing budgets. They have thought through their spending well.
The idea is to have a deep catalog that quitely does well, instead of trying for massive blockbusters that can be $200m losses if they bomb.
Why not both? That's what studios do. http://en.wikipedia.org/wiki/Tent-pole_(entertainment) Otherwise you'd better have deep pockets in order to churn out multiple films and 'hope' some of them will rake in cash. That's because most of the films on smaller budgets aren't profitable at all. It's a numbers game in your proposal then, more risky than tent pole approach. What you propose would be a YC for films, where budgets aren't $10k because they can't be for various reasons and production time isn't two months, but two years.
Producing movies involves a metric shit-ton of work. You need a LOT of really good people to do just one movie well. Doing a whole bunch? Quality will inevitably suffer due to lack of attention. It's not just acting talent. Pre- and post-production is ridiculously hard to do right, and will ruin all your hard work if it isn't.
I have a friend who does it. Writes, directs, acts, produces. He works constantly, 12-14 hours a day. I feel bad for his new wife. Trust me, the movie craft cannot be scaled like this by solo players who aren't part of the establishment. Not with the current state of the art.
The thing is, if you're not doing some sort of incredibly bloated production, you don't need 10,000 people to make a movie. Most movies are NOT Lord of the Rings.
For instance, one of the best critically received movies of the last decade was probably No Country For Old Men. Budget? $25 million. Made back well over triple that at the US box office alone.
The King's Speech? $15 million, made over $135 million
Argo? $44 million, and that had lots of expensive location shoots in the middle east
The Hurt Locker? $15 million
Slumdog Millionaire? $15 million
Crash? $6.5 million
Million Dollar Baby? $30 million
All movies that did very well at the box office, and were made for $25 million or less (with one exception). They also all won the Best Picture oscar. So there is PLENTY of evidence that you can make a great movie without getting anywhere near a 9-figure price tag.
Of course, for "indie" films, you can go well under that. "Clerks" cost about as much a new car. The original Texas Chainsaw Massacre was barely over $100k....the first Saw movie was made for just over $1m and grossed 100 times that.
You said your approach was to "make a bunch of movies for not a lot of money." No one's arguing the "not a lot of money" part, what I'm saying is that you can't make a bunch. You can produce one really great movie every two years if you're amazing. That's it. It will take you twenty years to get to "a bunch". That's after ten years of learning how to make movies. It's that hard.
This is my friend's website. He takes his craft very seriously and is a workaholic. No day job, this is all he does:
I never said "make a bunch", other people may have tried to put those words in my mouth, but that was certainly not my intent. I am, in fact, arguing for quality over quantity....just a sort of slightly stodgy quality of actually letting talented people create instead of just writing a ginormous check to whoever is hot at the moment. Think BBC Miniseries sort of approach, but with actual budgets - not extravagant, but not skimping either...the Coen brothers are probably the best example in Hollywood. Woody Allen is sort of on the same wavelength as well, and has turned out a film a year forever, and they pretty much all have made money.
That's the "Moneyball" approach. Hire people who can consistently get to first base. With that steady income, you can afford to try an occasional big budget production.
In a world where network television has moved to unscripted reality shows filled with B actors trying to "make it" a good quality, well produced, well scripted show with talented actors is going to be a gold mine. The real issue is that network TV never really recovered from the writer's strike. AMC just came along and started offering the type of quality shows that were previously available on the network channels.
I think its simpler than that. Network TV can't show a boob on a football halftime show without 0.001% of the population howling like morons and the network and government of course caving into them. Its the culture everyone knows they're supposed to want, but don't actually want. They're pigeonholed into a sorta G-PG ish range no more or less.
HBO shows you can produce regular TV drama (Sopranos, etc) at an R rated level and be incredibly profitable, well, at least as long as there's practically no competition.
Hmmm. Whats between G/PG and R that could be popular... PG-13! So that's how you get gory zombie blood splatter and meth cooking on a TV show, and its a profitable sweet spot.
All this discussion about people really liking AMC because they put episodes on netflix is nonsense. They like AMC because "regular TV" isn't obscene enough and HBO is a bit too obscene. Or risque, or "adult" (I hate that characterization). They simply are better targeted to their audience.
Netflix has no shortage of goofy failed major network sitcoms / cop / lawyer / doctor dramas, and no shortage of gore and sex series/movies, so its not merely being on netflix that makes AMC beat the others.
Breaking Bad is laced with way more profanity and graphic violence than you could swing for a PG-13 rating. It's not True Blood, but then, The Matrix and Blade are two R-rated movies with vastly different severity of content.
The language is still oddly MPAA-centric. The writing is so outstanding it's hardly something to notice, yet the characters never say "fuck" apart from once or twice, where it was probably censored on basic cable (pretty sure the most recent instance I saw was even distorted on Netflix).
Contrast that with a motherfuckin' HBO show where you can't go a fuckin' minute without a few fucks thrown in for good fuckin' measure.
Oh, I'm not arguing that it's anywhere near as gratuitous as the content you'll find on HBO. I'm just saying that it's difficult to play it as "PG-13" material; it's more soft-R than HBO's hard-R.
I would agree with you but the success of Hannibal on NBC suggests otherwise. The problem in network television has been either their complete mismanagement of reasonably successful shows or their unwillingness to let ambitious projects come to air.
When they've let showrunners do their thing - Michelle and Robert King with The Good Wife on CBS and Bryan Fuller with Hannibal on NBC - successful high quality franchises have been created as a result. They just don't do it often enough.
Sidenote: it looks like the people behind qz.com fixed the 'feature' whereby scrolling up past the top of an article would replace it with the previous article. This has made reading articles on that site less aggravating.
Assuming that they have fixed costs, do you honestly think that they would retain half or more of their current subscriber base without being bundled with cable packages?
Until Breaking Bad and Mad Men, nobody - nobody - cared about AMC. They were that crappy high-40s channel that you flipped through on your way to interesting stuff. Take into consideration the fact that Mad Men and Breaking Bad - AMCs two crown jewels - are about to wrap up. Also consider that they're subsidized by the tens of millions of people who subscribe to basic cable but don't care about their content.
this strategy is starting to smell like double-dipping. the networks charge the cable company an increasing cost per subscriber that subscriber's can't opt out of. (cable bill just goes up), and on top of that, run ads.
either be like HBO and be an optional premium channel with no ads, or stop making my cable bill go up to subsidize crap i don't watch.
> either be like HBO and be an optional premium channel with no ads, or stop making my cable bill go up to subsidize crap i don't watch
Here's the thing. Your idea of "what I don't watch" and someone else's idea of "what I don't watch" are going to be vastly different. By eliminating bundling (the practice of forcing cable companies to carry secondary channels to get access to the primary ones) you'll force a race back to the bottom in terms of content. It will be like the old days of the OTA networks where you have to appeal to the most people to survive.
Things like Science and the Military channel almost certainly would not survive in an a la carte world. Without a subsidy the cost of programming will be too high and ratings too low to be fully supported by advertising.
>Things like Science and the Military channel almost certainly would not survive in an a la carte world. //
This is kinda crazy; but I'm willing to suspend disbelief.
People who want to watch the station won't pay as much as the company can make from advertising to people (on that station) who primarily don't want to watch the station?
If I make shows on two channels, A and B. Then sell access to those channels forcing the carrier to take A+B when they only want A. Aren't I just charging more for A - which gets paid - but needlessly filling B with programming?
Is this just so cable companies can offer "100 stations" as a headline in their advertising?
> Aren't I just charging more for A - which gets paid - but needlessly filling B with programming?
The idea is that the subsidy takes B from losing money being profitable.
Truthfully, only the individual networks know whether the subsidy makes them additional profit or allows them to profitably air networks that they wouldn't otherwise be able to.
There's something fundamental that's changing in business.
Profit = Revenue - Cost
(That's not what's changing, of course.) This admits two strategies: increase revenue, or cut cost.
What's changing? Traditional MBA-style business is about cost reduction. Provide some static service, drive costs to zero or as close as you can get it, and hope like hell you're better at this than any of the other players. That's rapidly becoming obsolete.
Everything becomes a commodity, under this view. "We need 24 hours of programming. Get it together." Excellence (which might increase revenue faster than cost, but goes against every principle of cost-cutting) gets killed off. It's not important. Also, excellence is a bitchy problem from an MBA (polymorphic management) viewpoint because you actually need to know something fairly deep about the work and the problem domain to achieve it; whereas executive-level cost-cutting is a skill that can be applied (if to mediocre results) anywhere.
AMC has been taking the other tack: a long-term revenue-oriented approach that seems to be working quite well. Why? If you're in an oligopoly providing a commodity product or service, cost reduction often spells the difference between survival and failure. However, in this "long tail" world where there are hundreds of players competing for visibility, what you have instead is a world where almost no one gets a large proportional "slice of the pie", but the pie's much bigger. The payoff curve (between investment/quality and results) becomes convex and that favors risk, but it also favors let's-do-this excellence instead of traditional MBA-style cost-cutting.
The problem with the excellence strategy is that cost is predictable but excellence is not.
AMC didn't invent the strategy of going for the high end, HBO did, and lots of networks have tried the same strategy since. AMC has done well by it, but others have not -- see Showtime and Starz for examples. This despite the quality of their programming; Showtime's Dexter is well-regarded, for instance, but has failed to give a "halo" to the rest of the network. Starz has been trying to move up-market with shows like Boss and Magic City, but for whatever reason none of those shows ever really found an audience. (Even AMC's efforts have been fitful -- for every Mad Men or Breaking Bad there's a Rubicon and Hell on Wheels.)
So betting on "excellence" is a tough thing to do, because you have to spend a ton of money without any guarantees that the public will like the results. But the results of cost-cutting are very predictable, in the near term at least; it takes a long time for a run of really bad programming to tarnish a network so much that people stop tuning in. So for the bean-counters the "logical" choice is obvious.
When people tell the story of great content they tend to focus on the very high points. "Breaking Bad" is much better than "Dexter". Even "Mad Men" which isn't as good as "Breaking Bad" is much better than "Dexter", which is arguable the best show on Showtime. Aiming for decent content isn't as meaningful as actually getting that content. Starz and Showtime have failed to get anything approaching HBO or AMC.
You can change your approach but you can't change your taste and if whoever is making content decisions at Starz or Showtime continues to have their jobs then it will not get them very far.
You see it now with the results of Microsoft copying Apple's strategy. Microsoft is doing the same thing that Apple did but since they're out of their element it's not going well. They would have been better off just being a boring company that made a great Office product and an increasingly 3rd party hardware partner friendly operating system. In the same way it would have been better for Showtime to just show movies that no one wants to see but pay for the opportunity to not watch.
You don't have to spend a ton of money. Many of the top shows such as Breaking Bad are not that expensive, and after the pilot you can always walk away and cut your losses if it's an obvious failure. There are many stakeholders in the show to share your risk too. Every show is basically a little startup. People check out the script, say fine, and then do whatever is needed. They can own shares, they can get external funding, they can even finance it themselves (it's always sunny in philadelphia).
Dexter's inability to provide a halo to the Showtime network is mostly due to the sharp drop off in quality in the middle of its run and Showtime's unwillingness to kill it there after.
Homeland might be able to achieve what Dexter failed to, but that'll be contingent on how the fix the serious missteps they made last season.
You have a very strong point. Also, excellence can't be conjured into being just by throwing money at people and hoping they have the talent to do something useful for it. (Look at the VC-funded world; if the VCs could find a thousand people like me instead of the hucksters who currently run the show, they would. But it's just fundamentally hard to find great people.) The risks and especially the search costs involved in an excellence-based strategy are high and might be intolerable from an executive standpoint.
The good news is that what I said above is almost certainly right for a single actor. When you have this legacy oligopoly that has been treating some X as a commodity-- cutting costs, letting quality fall to the most manageable level (usually mediocrity)-- then, as that oligopoly loses hold due to technological change, a single player that takes an excellence strategy will have a good chance of making a big win, because the costs of excellence are not that much higher (a lot of the best shows, e.g. The Wire, started with no-name but talented actors) and the revenue potential is 10-100x (as with programming).
The bad news is that there may be a game-theoretic limit on the rewards of excellence. The fact that it works for one or a few players (e.g. AMC, HBO) might not mean that it scales. It might be that 5 players on an excellence-strategy dilute the benefits but pay the same costs. If that's the case, then this phenomenon is no better or worse than the 20th-century market's reward for branding. (While we associate the corporate-- McDonalds hamburgers, Hershey chocolate, Starbucks coffee-- withe mediocrity the truth is that most of these products were in the upper-middle tier of quality when introduced. They decline in relative terms because cheap, available, upper-middle-tier products kill everything below them and leave themselves at the bottom.) It may not be, at least specifically to TV, that an excellence strategy works for more than a small number of players (who'd become a new oligopoly).
However, I'm optimistic because the trend for software and technology is that the rewards for excellence strategies are nearly limitless (the scarcity of excellent people and ideas, not the "room" for them, is the limiting factor) and everything, including TV, is becoming a lot more technological over time.
I am pretty sure a MBA told them they were doomed if they stayed the way they were. What happened next is very much typical business. They got lucky. One good hit and they were off and running. Now what they have to avoid is the SyFy debacle of turning into cheese. Sadly they have started reality TV shows and that seems to be a staple of far too many channels.
They could have equally floundered in their choice of scripted shows. The difference is that compared to network TV they don't have a dearth of "original" programming to fall back on and hide the fails
Syfy determined that the same number of people would watch a movie no matter how much money they spent on it. Now all of their movies have a budget of only $1 million each, and they're still pretty popular. https://en.wikipedia.org/wiki/Sharknado#Production
Sharknado is also ridiculous enough to get free advertising on Reddit, so they have that as well. I'd be interested if the "Snakes on a Plane" effect makes an appreciable difference in revenue.
Notably AMC makes a lot of money by bundling 48 hours of unwanted programming alongside its flagship station.
to get AMC on your network, you also have to accept some of AMC Networks other products, such as WeTV and IFC. They can lose a little money on AMC itself as long as advertising on their other channels makes it.
> Notably AMC makes a lot of money by bundling 48 hours of unwanted programming alongside its flagship station.
How does "unwanted programming" make money?
> to get AMC on your network, you also have to accept some of AMC Networks other products, such as WeTV and IFC. They can lose a little money on AMC itself as long as advertising on their other channels makes it.
If WeTV and IFC are "unwanted channels" by viewers, how would they make money on advertising?
In the 80s/90s before Steam there was an arms race to ship smaller and smaller floppy disks/cdroms/manuals into ever larger cardboard boxes to "software stores" (The original "app store" I guess). In the old days you'd get something like Turbo Pascal or whatever in a fancy box with binders and manuals and stacks of floppy disks in cases shoehorned in like sardines, and by the end of the battle before retail software died, you'd have a giant empty box four times as big with a CD in a paper slipcover and a single sheet of paper. The idea was your competitor can't sell if there's no space for your competitor...
Because of drunks, sleeping people, crazy people, senile people, high people, you make a certain small fixed amount off every channel. You could broadcast a blank black screen or an infomercial and about 1% of the population would "watch", or at least you can bill the advertiser for that.
Old story in retail. Food stores are the worst. Quarter century or so ago I just about saw reps in near fist fights at shelf resets because another rep was encroaching on "their" space.
It's called bundling. AMC knows that their AMC network is very popular. People love Breaking Bad & Mad Men & The Walking Dead. So AMC says to DirecTV: We will give you AMC and charge you $0.75 per subscriber. But wait there's more! If you want AMC (and you do because your customers demand it) then you also are required to carry WeTV and Sundance and IFC and pay us $0.25 per subscriber for each of those networks!
So now, with the $0.25 per subscriber subsidy, those networks have lower viewership numbers they need to hit to be profitable.
I chose DirecTV for my example because they got into a very public fight with AMC last summer and AMC was pulled from DirecTV. Basically DirecTV didn't want to pay as much as AMC was asking. In the end AMC won a pretty decisive victory and got almost everything they were asking for.
Okay, now you've got a circular reference of subsidy: you can't argue that WeTV and IFC are both subsidized by AMC proper, and allow AMC to lose money on AMC proper and make it up on WeTV and IFC advertising.
Either, (1) WeTV and IFC have sufficient viewership-to-cost to be profitable advertising venues and can help offset losses from AMC proper (in which case, they aren't "unwanted channels" by any meaningful definition), or (2) WeTV and IFC are net money-losing channels without sufficient interested viewership for advertising to pay the bills that are subsidized by AMC, in which case they can't possibly offset losses from AMC proper.
Either of these can be true, or neither of them, but not both.
You're thinking that the money to be made in cable is in advertising, which couldn't be further from the truth. Advertising dollars are a supplement to subscription dollars. AMC Networks requires that cable providers (Comcast, RCN, Time Warner, DirecTV etc) carry WeTV and IFC at $0.25/subscriber, even though they are unpopular, and carry AMC at $0.75/subscriber.
Cable providers pretty much have to comply, so they can get AMC. As a result, AMC Networks makes up losses on AMC proper with subscription revenues from the unwanted channels.
> You're thinking that the money to be made in cable is in advertising
No, I'm thinking that the specific claim I was responding to upthread was that AMC lost money on AMC proper, but could afford to make it up because it required cable carriers to carry WeTV and IFC, which were "unwanted programming", but nevertheless made up for AMC proper's losses by advertising sales.
I am arguing that that claim is not sound. I am not arguing one way or the other on where the money comes from.
> AMC Networks requires that cable providers (Comcast, RCN, Time Warner, DirecTV etc) carry WeTV and IFC at $0.25/subscriber, even though they are unpopular, and carry AMC at $0.75/subscriber.
> Cable providers pretty much have to comply, so they can get AMC. As a result, AMC Networks makes up losses on AMC proper with subscription revenues from the unwanted channels.
Assuming that that is basically true, then if WeTV and IFC are losing money (before considering subscription fees), then AMC is really just charging $1.25/subscriber for AMC proper (the thing cable cos want) making a profit, and subsidizing WeTV and IFC with it.
If the subsidy works the other way, then the bundling works around the fact that what to consumers is actually desirable enough to be profitable isn't what cable cos want for some reason, which is possible if what viewers actually watch and what viewers look for in selecting cable providers are not aligned, but a counterintuitive enough claim that some evidence should be provided for it.
I think the change in this business is distribution, not necessarily cost vs revenue. Surely MBAs are running AMC as well. Revenue/Cost ratio is perhaps is more important - wider digital distribution leads to increased revenue over a fixed cost
Did you read the article? They're talking about how AMC releases their content on iTunes, Amazon, and Netflix sooner than other networks. It's hardly exactly what HBO does.
While we're doling out "Did you read the article" comments, the article also mentions that HBO is in a league of their own when it comes to distribution. They have their own streaming network (HBO GO) and new espidoes are released immediately.
I think HBO definitely had a strong hand in pioneering AMC's current model.
HBO seems to have a very different approach to online distribution though - HBO GO only works if you already have an HBO subscription through a traditional television provider, and if the last season of Game of Thrones is any indication they don't put their shows on iTunes and Amazon until long after they air.
It's a riskier approach, because in order for it to work they have to get their app in all the same channels and devices that Netflix, Hulu, et al have already gotten into. And they have to train viewers to look there for HBO content instead of in their usual outlets. All of which is challenging.
But it's also potentially more lucrative as well, since if it works HBO won't have a middleman sitting between themselves and their viewers the way they currently do with cable companies and streaming services. And if HBO GO has enough compelling original content to get people to use it, they can then use that as leverage with movie studios for better deals on movies to distribute that way as well.
They also seem to keep the new seasons a secret. I missed the new Breaking Bad and missed most of The Killing this season (too late to even catch up online).
I'm at the point now where I'll just wait a couple years to catch it on Netflix.
AMC makes their shows available for streaming on Netflix faster than any other network that I'm aware of. All past seasons of Breaking Bad are available already. They usually make each season available for streaming soon after the DVD release, and before the next season airs on TV.
Another network, FX, seems to be trying the HBO/AMC model in getting quality programming and is going out of their way to appear showrunner friendly. It'll be interesting to see if they can capitalize on some of AMC's missteps in nickel-and-diming their own shows.