After many Hollywood-backed flops, who's left in Web video?
In the past two years, five separate online video ventures backed by big media money have gone out of business: NBC's DotComedy, HBO and AOL's This Just In, Turner's SuperDeluxe, ABC-Disney Television's Stage 9 Digital, and the UTA-funded 60Frames.
Every flop has its own specific problems, of course. HBO and AOL never figured out how to work together smoothly on This Just In; SuperDeluxe overspent on its content and was competing, in a sense, with its parent company's Adult Swim; Stage 9 never had a natural home for its shows since it didn't work with ABC.com; 60Frames needed more funding at a time when the venture market had completely dried up.
But they all shared one common misstep: A desire to jump on the bandwagon led by YouTube and Saturday Night Live's "digital shorts" and a belief that big advertising dollars were just around the corner. As it turned out, there's still not much money in Web video advertising -- certainly not enough to earn a profit on videos that cost anywhere from $5,000 to $25,000 each to produce. As Mike Salmi, former head of digital media for MTV Networks, put it: “It’s very similar to what happened in ‘99 and 2000, where everyone saw gold in the hills. The reality is that it’s much harder to make money than we thought.”
In today's Los Angeles Times, we have a story surveying these flops, explaining why they went wrong so fast, and what their failures meant not only for the big media companies that backed them, but the creators who made videos for them. Check it out here.
Our article focuses on the remarkable number of quickly abandoned Web video efforts in Hollywood over the past few years. A few remain, however.
They all have slightly different strategies and models, but most of them share one of two defining characteristics that separate them from the space's many failures: Web video serves a larger strategy and thus doesn't need to earn a profit, or it's being produced at virtually no cost.
Companies still in the web video business include:
Sony Pictures Television's Crackle: A much-evolved version of Grouper, the video sharing website Sony bought for $65 million in 2006, Crackle mixes original series with television shows and movies owned by the studio.
If Crackle was a cable network like AMC, its original series would be akin to "Mad Men" and "Breaking Bad": Costly productions that aren't profitable on their own, but draw attention and help shape a public identity. The real profit is in the Sony-owned movies and TV shows that can rerun on the website at virtually no cost.
"We view Crackle like a network that has movies and TV content and then we layer originals on top of that to define the voice of the network," said Sean Carey, executive vice president of digital distribution for Sony Television.
Crackle's series include "The Jace Hall Show," a talk show about video games, "Penn Says," a series of rants by magician/comedian Penn Jilette," and "Angel of Death," a $1 million, 10-episode production from comic book writer Ed Brubaker that has been combined into a movie and will air on Spike and come out on DVD. Here's an episode of "Angel of Death":
MTV Networks' Atom.com: Comedy Central started producing original content on its own website in 2005 under the "Motherlode" brand. By 2007, it shut down the so-called "broadband channel" after finding that visitors to ComedyCentral.com were mostly interested in, believe it or not, Comedy Central stars like Jon Stewart and "South Park's" Cartman.
At the same time, MTV Networks was trying to figure out what to do with AtomFilms, the indie film-focused website it acquired in 2006. The solution: Re-launching Atom.com as a home for Web-only comedy content.
Atom is full of inexpensive videos that come from users or were acquired in licensing deals. The 75 to 100 professionally produced videos it makes for the site each year help it to stand out amid the Web clutter. "It would not be a self-sustaining business if all we were doing is paying $5,000 or $10,000 per video and serving ads around that," observed Scott Roesch, general manager of Atom.
Atom does have one other advantage that helps its economic model: The videos it produces are fodder for a late night series on Comedy Central called "Atom TV."
One of Atom original series is called "Hot Sluts." The title, ummm, speaks for itself:
Warner Bros' Studio 2.0: Essentially a label within Warner Bros. Television, Studio 2.0 doesn't have any dedicated staff, making it much easier to justify the costs of its infrequent Web-only productions (only seven currently on the Web or recently announced). Much of Studio 2.0's content is used to attract audiences to the company's TheWB.com website, which also features Warner television shows.
However, Warner's digital business is first and foremost an effort to attract and maintain talent at its television division, according to Craig Hunegs, who oversees Studio 2.0 but spends most of his time focused on his job as executive VP of Warner Bros. Television. "It provides value to us as a TV development tool," he said.
Hunegs pointed as an example to "Children's Hospital," a Webby award-winning Internet series that was the first project for Rob Corddry at Warner. The former "Daily Show" correspondent is now developing a television project with the studio. Here's an episode of "Children's Hospital":
Funny Or Die: The comedy website run by partners including Will Ferrell, Judd Apatow and writer Chris Henchy has a very simple model to produce videos with well known stars like "Desperate Housewives'" Eva Longoria and "The Hangover's" Zach Galifianakis: Don't pay them.
The site's only real production costs come from a staff of 13 who write, produce, and edit its professional content.
Celebs often show up in Funny or Die videos for fun or to prove a political point (as in the recent pro-gay marriage clip "Prop 8: the Musical"). Producing a Funny or Die video has also become a useful part of the publicity blitz for new projects. Sandra Bullock, Ryan Reynolds and Betty White recently produced this Funny or Die gem to promote their upcoming movie "The Proposal":
Vuguru: Former Walt Disney Co. CEO Michael Eisner started this venture in 2007 to produce short form series for the Web. Its first project, "Prom Queen," got tons of media attention and a highly touted distribution deal with MySpace. It even became a hit in Japan.
But Vuguru has no larger strategy to justify its Web investments, which is why it has been taking things slowly, particularly after two of its series last year, "The All for Nots" and "Foreign Body," failed to draw many viewers.
Right now it has sequels in production for "Prom Queen" and its sports comedy show "Back on Topps," which ties into another company owned by Eisner, Topps trading cards. In both cases, Vuguru is trying to integrate sponsors early in the process.
"We would love to take something to Yahoo or Hulu and say, 'Here, sell my content,'" said Ryan Barlow, director of distribution and marketing for Vuguru. "But they can't provide us with guarantees, so that leaves us to find someone with a sizable check."
Here's the first episode of "Back on Topps":
Photo: "Squeegees," the only Stage 9 Digital series to ever see the light of day.