AMC is succeeding by breaking the rules of legacy television
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qz.com
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.
Which actor is this?
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.
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.
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.
Shit.
We just built cable again.
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.
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.
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.
So yes, go ahead, keep thinking that two dollars a month is a reasonable price.
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.
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".
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.
I'm looking at you BBC/PBS-Masterpiece joints.
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.
[1] http://www.nytimes.com/2012/12/09/magazine/the-mad-men-econo...
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.
It's the same how movie companies sell broadcast rights to HBO or other similar channels.
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."
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.
What shows are you referring to? (Downton Abbey is not BBC, its aried on ITV in the UK.)
We used to have that problem with Dr. Who, but I think that's now a day-after thing.
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.
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.
All, full episodes are there.
http://qz.com/114483/amc-is-succeeding-by-breaking-the-rules...
Compared to what they earn from regular viewers - subscription fees and commercials - that pricing is nuts.
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.).
http://www.timewarnercable.com/en/residential-home/support/f...
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.
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.
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.
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.
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.
It's a similar model though. Make lots of cheap movies and make money off of all of them.
You talk as if noone is doing this. But you appear to be ignoring all the Euro cinema produced each year.
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.
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.
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.
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.
This is my friend's website. He takes his craft very seriously and is a workaholic. No day job, this is all he does:
http://www.villainpictures.com/work/index.html
Five finished, full-length projects in the last 12 years, two more in the pipe.
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.
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.
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.
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.
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.
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.
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?
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.
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.
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
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
I'm at the point now where I'll just wait a couple years to catch it on Netflix.
I think HBO definitely had a strong hand in pioneering AMC's current model.
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.