How Much For That Episode In The Window?

As a startup company trying to find investors, as well as a cast and crew for the series we are currently developing, we have experienced pushback on what dollars should be going out.   We maintain that we can create compelling, high quality content for essentially coffee money.

As new media begins to take hold, we along with other content creation sites hope to help shape the way Internet Television is done.

Note: the following research is based on short-form media.  We at Greenlight360 intend to produce long-form content.

Internet Television as it stands today is not richly funded by advertising like traditional network broadcast television.  The reason is that everyone wants the Internet for free, and until advertisers feel that there’s an audience they won’t want to buy larger shares of ad space.  Next New Networks, Herb Scannell (CEO at the time of this Business Insider article in 2007) stated that “Internet video only works if it’s dirt cheap or less.” There was a thought at the time that web video could be made profitable for 10% of conventional TV programming – he felt that was still too high.  He looks for programming that costs “hundreds of dollars a minute.”

The Writer’s Strike in 2007 seem to help push along the popularity of webisodes.  The cost of webisodes has been a well kept secret.  As noted in an article by NewTeeVee in 2007:

• The low end of the spectrum, Yuri Baranovsky estimated it cost him ~$500 per episode out of pocket to create the web sitcom Break a Leg – the cost is kept low by cashing in favors
• John Norris (not of MTV fame, but White Rock Lake Productions) spent under $500K to produce his horror series Buried Alive, which is equivalent to a 2 ½ hr movie (100, 1 to 5 minute episodes) at $3,333 per minute
• Michael Eisner’s Prom Queen cost him roughly $3,000 for 90 seconds
• The high end Sanctuary, an award winning series picked up by Sci-Fi Channel cost ~$4.3M to produce.  This effects-heavy series cost $32,000 per minute for 135-min.  Compared to the other Web series it’s quite expensive, but compared to traditional network television….

Two years later, producing a Web series at low cost is still the mantra today, as indicated by Web Series Magazine.  The payscale for Web series:

• Actor – generally series producers can’t afford to pay emerging talent
• DP – most producers handle their own photography
• Director – most producers direct their own webisodes
• Editor – most producers cut their own webisodes
• Extras – most producers use friends and family, there’s no pay
• Producer – if you’re lucky to get hired…$200 for 12hrs on the low end

How big a  difference is there really in advertising on broadcast television vs the Web.? HUGE!  The best description I’ve seen is from David H Lawrence XVII of Heroes fame.  His example showed a 1000-fold difference.  Rounding out numbers for easy understanding….a network like NBC makes about $10M from advertising each time an episode of a popular show is aired.

For further details that speak to CPM and CPC, please view the David H Lawrence XVII video (above link).

The math for a popular Network show:

• One 30-second spot costs $300,000
• In a 60-minute episode there are 22-minutes of spots, which is 44 30-second spots.  These spots are split up to national and local…approximately 75% are national and assuming all are sold, 75% of 44 is 33 spots
• 33 spots x $300,000 = $10M  — Income earned by the Network(NBC) per showing of an episode of a popular show

If the Network (NBC) gets 10M viewers this means that the Network gets $1 per viewer per episode.

Using the same number of viewers for webisodes (which by the way is entirely unrealistic) but keeps a common denominator for the example.  The most common form of advertising is Cost per Click (CPC) – this is what an advertiser pays the network every time a viewer clicks an ad.  On average the CPC is 5-cents.  Just from that alone you can see there is an enormous difference between Network Television vs Internet Television.

According to Google if you can get 1% of your viewers to click an ad – that’s awesome!

The math for a Web episode:

• Assuming 10M viewers, and 1% click the ad – that’s 100,000 clicks at 5-cents a click, this totals up to $5,000, this assumes one pre-roll, and even if you add in product placement maybe you’ll up the total to $10,000

This, $10,000 is a far cry from the $10M the Network made per episode on traditional television.

So until advertisers fully support Internet Television, those of us who are in the business of creating content can’t solely rely on advertising money alone, it just isn’t there yet.  We must creatively find a way to do this, and be great at it on coffee money.

Blog post by Juliette Tai, Director of Research & Competitive Intelligence

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