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March 05, 2005
Shows Facing Cancellation Can Overcome Wobbly Ratings With the Lure of DVD Sales
I was reading an article in the Wall Street Journal about TV shows "on the bubble" -- industry parlance for a series facing cancellation because of wobbly ratings. The article told of a story about how fans of the show Arrested Development have done what loyal fans typically do when their show might be canceled. But then it got interesting:
"In the past, such efforts typically failed if the show's ratings didn't generate enough ad revenue to cover costs. But the cancellation calculus is starting to change. Fox's 'Family Guy,' axed in 2002, is getting another chance on the air because sales of DVD collections of the show have been so hot. Indeed, fundamental shifts in how TV companies make money are starting to complicate cancellation decisions -- and small but dedicated groups of viewers are gaining newfound clout."
"Of course, audience size still matters a lot in prime-time network television. But now other factors are influencing the cancellation decision. DVDs have become such a gold mine -- profit margins reach 50% -- that broadcasters are increasingly open to the idea of keeping a ratings-challenged show on the air, especially one with a fanatical core of fans, in order to generate more episodes to sell later on DVD. Other nascent income streams -- on-demand services, and downloadable episodes sold on the Internet like songs -- also are giving consumers more direct power in programming decisions."
This story reminds us of what many people forget: that owners want ways of monetizing their content. In the WSJ story, monetization meant DVD sales later on. This is a key point that some VOD business models must heed -- the content owners must be rewarded somehow.
There is also a note of caution for content owners: be pro-active in seeking out ways of getting value. There is already a huge amount of swapping television shows already occuring online in P2P networks. I guess video just wants to be free (as in accessible).
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