It appears that Netflix, Hulu, and YouTube are the major players in developing and/or acquiring original content for internet consumption, because they’re all already integrated enough to be able to mass release content to a specific audience at relatively low cost (compared to studios). Netflix is releasing Lillyhammer, House of Cards, Arrested Development, Orange is the New Black, and Hemlock Grove. Hulu intends to spend $500 million on content this year, including narrative series Battleground, documentary series A Day in the Life, and an untitled new doc series from Richard Linklater. Youtube is launching over 100 new channels centered around celebrities. Amazon, AOL and Yahoo are also funding original online content, because, as AOL Video SVP Ran Harnevo puts it, “The economics of original web video are finally starting to make sense, because companies like AOL have finally reached the scale necessary to attract real brand dollars.” Vodo.net, a Bittorrent subsidiary, crowdfunds its own content, including the web series Pioneer One.
Netflix makes its money from subscriptions; the rest make their money from ads. Though Netflix, Hulu, and YouTube acquire indie content, it’s very difficult to find specific percentages of profit splits with filmmakers - I could only find vague references. YouTube’s partner program provides content creators with a very small fraction of ad profit, based on each video’s view count. I also read negative posts about the percentage of revenue Netflix and Hulu share with filmmakers. Considering these companies have massively-reduced marketing (and in our case, production) costs, this is a surprisingly old-school way of dealing with filmmakers financially.
Some smaller players have been emerging as well. SnagFilms is a website which acquires and distributes documentaries online, and earns revenue through ads. Babelgum has been around since 2007, and acquires good indie films for online viewing. Babelgum earns its money through ads, shares profit 50/50 with the filmmaker, and requires exclusive streaming and mobile rights. IndieFlix is a similar company which earns revenue from subscriptions instead.
Interestingly, some “indie” sites like Kickstarter and IndieGoGo are starting to be co-opted by celebrities, drawing money from the crowdfunding culture to fund their own projects. There’s even one weird website which apparently exists partially to crowdfund studio productions.
Laurence Billiet of Babelgum claims that the future of online entertainment will be “curated content,” meaning that in an environment saturated with content, users need trusted sources to sort through the bad stuff to deliver the content they want to see. Ted Sarandos of Netflix echos this belief: “When you have millions of choices, and we live in a world of unlimited choice, you really do need some tools to find things.” I think there’s some truth in this, but it is still a traditional “top-down” view of entertainment. Many online users prefer a more democratic “bottom-up” approach to content: let the masses curate content for each other.
There will always be an audience for the old, centralized way, but I agree that most of these internet players are just trying to recreate a more centralized model (though Netflix’s demolishing of release “windows” is fairly progressive). The content being acquired by the major players is celebrity-driven and operates in economies of scale, not to mention these channels are nearly impossible for smaller content creators to break into - just like the old Hollywood system. To take full advantage of the internet, distributors will have to stop fighting piracy, and instead find a way to monetize a distributed network.
YouTube is probably the most progressive of content acquirers, since on YouTube (as opposed to Hulu, Netflix, and others), content creators really do stand a chance of success based solely on the merit of their work. But obviously YouTube still sees potential for revenue in celebrity-driven content as well.
My film, unfortunately, doesn’t fit in anywhere on the internet, in my opinion. Other than YouTube, the major players are just too focused on traditional non-niche content. I would be interested in working with Babelgum, but films which do well there usually have a festival pedigree. I create a comedy web series on YouTube as a side-project, and through my many failures and rare successes, I’ve gathered a sense of what appeals to the online world. 15 Minutes of Faye would perform better in traditional film festivals, which is fine with me, since my primary goal is to get the film seen by as many people as possible. Monetization would be nice, but after reading Think Outside the Box Office, I have little hope that recouping my production expenses is a realistic expectation (unless I want to spend the next three years getting my film out there - which I don’t).
An interesting footnote: In the interview with Ted Sarandos, he points out that one of the reasons for Netflix’s success was its wide assortment of television shows - long-form serialized storytelling. “In some ways it’s like the new literature … where you have the ability for a story to develop and for characters to develop, and more importantly for the audience to develop relationships with the characters.” As Jon Reiss points out, television’s core business is repeat viewers. These trends are dire news for creators of traditional narrative feature films, but good news for the transmedia creator.
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