9 ms·

The Economics of a Hit TV Show

107 points by sebg 13y ago

thenomad 13y ago
Interestingly, this shows that the economics of TV and the economics of YouTube are actually not that far apart. Breaking Bad's $400,000 per ad spot, at 10 million viewers, is noted as being remarkably high. That's $40 CPM. Whilst a lot of people are very cagey about their YouTube earnings, if you do enough asking around the numbers tend toward $2.50 CPM. It's frequently noted that popular shows which are able to sell show-specific advertising make a lot more than that. Even if you assume that a Breaking Bad-level YouTube success would only get a 4x multiplier to its ad value, that's still $10 CPM - only 4 times less than the on-TV Breaking Bad. I would have expected the difference to be considerably greater.
- deleted 13y ago
  [deleted]
- hayksaakian 13y ago
  Maybe the CPMs are so unusually high on TV is because of the fill rates? I don't actually know the answer to this question: Can you get 10 million ad views on a youtube ad in a tv-show-length of time?
- FreeKill 13y ago
  Also, consider the advantage that AMC has in a dedicated sales team going hard after advertisers on the merits of buying a spot during the breaking bad finale. If youtube worked in a similar way, I bet you would get higher CPM by virtue of better sales people...
protomyth 13y ago
I'm a little confused by the ending regarding Netflix. I thought Netflix went pilot-less with House of Cards and just paid for a limited exclusive for the whole season. This is pretty different than the described network system.
- jonnathanson 13y ago
  Hi! Author here. You raise a good point. Indeed, Netflix went pilot-less, but they still paid network-level prices to make the show. Essentially, they skipped the pilot and went straight to the series order (and 2 full seasons at that). In some ways this was a riskier move than the network model. My argument is mainly that Netflix has the tools at its disposal to get smarter about this process. To be fair, I believe a lot of that $100M was a signaling tactic -- both in Hollywood and as consumer-facing PR -- almost as much to do with marketing the fact that Netflix has originals as it had to do with investing in them. But the investments needn't always be that big up front.
  - somberi 13y ago
    Thanks for the article. Regarding "Netflix went pilot-less". BBC had done a "pilot" for them when they produced the Original HoC in 1990 (and they based in on a book by Michael Dobbs). The point I am trying to make is that, they got a sense of what the show was going to look like, who it will appeal etc because they had carried the BBC HoC for a while in their inventory. I am assuming, that they had some viewership data from this.
    - protomyth 13y ago
      The BBC HoC probably provided a nice reassurance, but there is a pretty big chance the US version won't work. I would imagine HoC is even more problematic given the difference in political systems.
twoodfin 13y ago
So as I understand it, the author is suggesting that NetFlix produce a bunch of low-rent pilots (or half seasons or so) throw them against their wall of subscribers with a bit of recommendation-targeted magic, see what sticks, then spend the money to produce the "grown up" versions. At first glance, that isn't a terrible idea, but even if it were their eventual strategy, I still think it makes sense to spend big bucks on top shelf series to start. For one thing, they weren't totally "blind": If you believe their spin, they spent a lot of time analyzing their audience to target exactly the kinds of shows they should make, and they have a lot more data to go on than, say, AMC had seven years ago. For another, if they wanted their subscribers to take them seriously as an HBO-like content producer, it helps to actually produce some HBO-level content right out of the gate. Once subscribers trust that you can make Emmy-worthy shows, they're more likely to tolerate your ultra-targeted but cut-rate test-batch series. Even so, I'm not sure how the suggested strategy is supposed to play out: Say they made 100 cheap shows instead of 5 expensive ones. In order to be more interesting to any particular audience to overcome the fact that they aren't (yet) Hollywood-quality, one would think they'd have to appeal deeply to a narrow audience (I'd give a science fiction show about a generational ship a chance no matter how cheaply it was produced, for example). But now your show is in a trap: It's too focused, and will have a hard time gaining an audience even when the production values go up (and how do you "scale" to more expensive actors?) Time travel geeks loved the movie "Primer", which cost about the same as a small car to produce, but a million-dollar-an-episode show based on the concept has roughly 0 chance of making its money back.
- jonnathanson 13y ago
  Author here. I don't disagree with you, especially in the second paragraph. To some degree I think it was smart for Netflix to make a big splash this early on. But the perception that they're "paying for quality" is a bit suspect, given that Hollywood itself -- ostensibly "paying for quality" in its entire process -- has a 98% failure rate on developing projects. Quality talent doesn't always yield a quality product in the creative business. Even the best writers, directors, producers, and actors have their failures. I have no reason to suspect Netflix was any smarter in its approach to developing House of Cards than networks would have been -- though I could be wrong (and hope I am). At the end of the day, the $100M for HoC was a big bet. It was a signaling tactic, a marketing tactic, and a bet on top-tier talent. But it was a bet, nonetheless, and an expensive one. That it seems to have paid off (to an extent? jury is still out) shouldn't fool us into 20/20 hindsight bias. It could just easily have busted. "So as I understand it, the author is suggesting that NetFlix produce a bunch of low-rent pilots (or half seasons or so) throw them against their wall of subscribers with a bit of recommendation-targeted magic, see what sticks, then spend the money to produce the "grown up" versions." Not necessarily, and I should clarify here. I think pilots can be shot for a lot less than they are, and I think audiences are proving themselves quite receptive to previews and other short-form "pilot" systems as proofs of concept. A lot of movie trailers are increasingly being made before the movies even start shooting ("teaser" trailers). I think there are ways Netflix can take the guesswork out of the development process, even if production is still an expensive endeavor. You have to pay for a quality product, but the system right now also pays heavily for the risk in the pre-production process. That process can probably be de-risked considerably. I would not recommend testing 100 half-baked concepts to see what sticks. But I do think Netflix could test or tease concepts in development to determine which ones to develop, and/or how to present new shows to the right early adopters. Something I probably wasn't as clear about as I could have been: half the battle in finding a hit is developing an audience, not just a show. Netflix has better audience-development capabilities at all stage of the production equation. It doesn't need to guess quite as much as networks do. Maybe -- to your point -- Netflix's audience-segmenting capabilities give it the ability to play the big bets game more than networks can. But historically, people have been shockingly bad at predicting what will actually hit and what will miss. Star Wars was laughed out of every major movie studio in town, for instance, and at the script level, it sure didn't look like "quality" to the eyes of the execs reading it. On the other end of the spectrum, a show like Firefly -- which fans (including myself) consider one of the most brilliant things ever made, has repeatedly failed to gain mass appeal beyond its limited niche, despite many attempts at re-marketing home video, a feature film, etc. The operative lesson here is that "quality," as an objective concept, is hard to parse and hard to pin down. "Quality" is more of a function with a lot of variables, and many of the biggest variables are on the production side and the audience side -- not the development side. Tldr: People are over-investing in development, when they could be investing more heavily in production -- whether at greater scale, or in greater depth per project.
Sukotto 13y ago
I see from the initial image in the post that it contains info about Breaking Bad. So I backed out of reading it until I know if it contains spoilers. Before I go read it would someone please verify that it's spoiler-free? (beyond the initial image which spoils something about Walt/Skylar's relationship) . SPOILERS BELOW . I'm partway through season 4 at the point where Skylar makes Walt return the fancy car he just bought for Walt Jr. saying that "someone has to protect the family from the man protecting the family". Jessie is riding shotgun with Mike and Hank is starting to regain interest in the blue meth case.
- alexmayyasi 13y ago
  you're safe!
  - Sukotto 13y ago
    Great. Thank you.
- johnchristopher 13y ago
  There are no spoiler tags or any mechanism on HN to prevent reading a post or a part of a post. People who don't want to get spoiled can't parse the page without taking a huge risk even when they have been warned because they have to scan for things they don't want to read. I suggest you edit your spoiler out and just state the last episode you watched and ask if the article deals with story segments you haven't watched yet.
  - AznHisoka 13y ago
    Seconded. When I saw he posted SPOILERS, I immediately scrolled back up. To the grandfather: Just post what you wanted, and get rid of the spoilers section. Sheesh. You're not amusing anybody, or adding anything substantial to your original point.
kenjackson 13y ago
First, nice story! Question for the author (or anyone else really)... What about what Amazon is doing at studios.amazon.com? That seems like a new way to build programming.
- jonnathanson 13y ago
  Amazon's approach is very interesting, and I'm paying pretty close attention to them. I tend to be somewhat skeptical of open-submission systems, or of voting systems, because they suffer from the same prediction problems that Hollywood's development model does. Plus, they're more prone to GIGO problems (Hollywood actually does a pretty good job filtering crap out before it goes into the system). Amazon might be focusing on the wrong thing (development) rather than the right things (production, support, distribution exclusivity). At least in the short term. If I were them, I'd probably use my significant capital reserves, buyer power, and Hollywood's resentment of Netflix to my advantage. I'd cut exclusive deals on proven or undervalued material that's already been produced (and could be scaled up, or reinstated, or spun off). Personally, I think the smartest thing Amazon is doing is tying Amazon Prime to free VOD streaming. A la carte content purchases are probably going away in the long run, and Prime is a great transition vehicle into more subscription-based services to compete with, say, Netflix.
  - Nimi 13y ago
    Why do you think a la carte content purchases are going away?
    - jonnathanson 13y ago
      For reasons of consumer convenience and marginal purchase costs. Right now, I believe the reason iTunes is so competitive with Netflix has less to do with a la carte's strength as a model, and more to do with Apple's strength as a platform and ecosystem. I would not be shocked to see more subscription-type offerings from Apple, especially with the whole migration toward iCloud. Here is where I'll put on my Purely Speculative Futurist hat, and I'll wade out a little bit into the choppy waters of broad generalizations. But I think that a la carte purchases, especially for entertainment products, are in many ways a relic of physical media. That's the way you had to buy physical media, for the most part. But it's a relic that cloud technologies and streaming services are obviating the need for. From a consumer standpoint, I experience zero marginal cost to watch an episode of Breaking Bad on Netflix (whereas I very much experience the feeling of paying $2.99 for it on iTunes). Netflix is in a tough spot because it has lost a lot of great content, as well as competitive windows against services like iTunes. iTunes is (currently) a much better place to get the new stuff while it's new, and that's a big liability for Netflix or other subscription services. All other things being equal, subscription is a better value proposition than ownership for many categories of goods. It's also more convenient.
vinceguidry 13y ago
I don't think the HoC $100 million bet was as big as it looks. Execution counts for a lot in this business, and it's very tough to get right, but if you throw enough money at it, and give the right guy enough control, you can do it reliably. It's like pop music. You can't guarantee that your next album will be Thriller, but you can guarantee a big splash if you get everything right and have the cash for it. It's a question of management bandwidth. If you're at the kind of scale Hollywood's at, there's just not enough to go around. Not enough cash, not enough rockstar executors. James Cameron can only make so many movies. Netflix simply realized that they can put all their eggs in one basket, then watch it extremely carefully.
- ghaff 13y ago
  You mean like The Lone Ranger starring Johnny Depp and produced by Jerry Bruckheimer which is expected to lose something like $150 million? Big names certainly help. (And IMO Kevin Spacey is what elevates HoC from something fairly pedestrian to something worth going out of one's way to watch.) But this is a biz that's hard to predict winners in and I'm skeptical that viewing data makes a big difference.
bryanh 13y ago
No mention of Hulu here or in the article? Hulu has done several of these cheap shows and none of them seem to have caught on in any meaningful way, whereas Netflix's obvious "swing-for-the-fences" attempts seem to have everyone constantly excited.
logical42 13y ago
does the bar chart (http://s3.amazonaws.com/pix-media/blog/424/ad_cost.png http://s3.amazonaws.com/pix-media/blog/424/ad_cost.png) irritate any one else here? I feel like it's a rather biased data visualization, it seems patently unfair to compare the finale of breaking bad with the average of a network. If anything, it should be contrasted with the finales of each of those network or possibly replaced with a figure representing the average cost of an ad on AMC.
- jonnathanson 13y ago
  Hi there! Great feedback. The bar chart isn't perfect, and certainly less so out of context. But I should clarify my intent behind it. The final episode of Breaking Bad pulled in roughly the same numbers that your average primetime hit (or even indexed basket of hits) pulls in every night. So when we're talking about the primetime averages, we're talking about indices with viewership figures roughly comparable to Breaking Bad's final episode. The point was that Breaking Bad was able to put a significant price premium on its finale relative to the nominal size of the audience it drew. It punched above its weight, so to speak. (Finale or otherwise, we're talking about 10 million Breaking Bad viewers vs. 11 million CBS viewers.) Is the comparison totally fair? In that specific context, in illustration of that specific point, I believe so. Would it be remotely fair if it were used, say, to illustrate a point about Breaking Bad in general vis-a-vis the market? Considerably less so. The point was more about its value to AMC, and less about the show's ostensible superiority to any other network show. To that point, I like your idea about contrasting Breaking Bad (finale, ordinary episode, etc.) with the average cost of an ad on AMC (though we'd have to control for the skew exerted on that index by Breaking Bad itself). That might be more apples-to-apples in certain respects, and it might have driven the point across a little bit better. Duly noted, and in as much as I am considering a followup, I may want to address that specific concern.
  - logical42 13y ago
    I actually feel like it is misleading. I would expect each bar to represent an item of a similar type. But, in this case, it doesn't.
kisstheblade 13y ago
The prices for recording shows seems absurdly high. What costs $2 million for a comedy pilot (i.e. no special effects or pricey explosions etc involved)? Could somebody elaborate. If you think what you can get for $2million it's an absurd amount of money. FTA: "yet a typical half-hour comedy pilot costs $2 million to shoot" I think Louis CK got away with 100k per episode (albeit doing most of the work himself), which also seems kind of high, but anyhow shows what it can cost to shoot.
r0h1n 13y ago
I'm really impressed - and curious - about Priceonomics' ability to come up with such well-researched and well-written (getting both right isn't always easy) posts on such a wide plethora of topics. Especially because the authors don't seem to be their staff (I could be wrong here). What motivates the writers to come up with content that must surely take a lot of time to research & write?
deleted 13y ago
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deleted 13y ago
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r0h1n 13y ago
I'm really impressed - and curious - about Priceonomics' ability to come up with such well-researched and well-written (getting both right isn't always easy) posts on such a wide plethora of topics. Especially because the authors don't seem to be their staff (I could be wrong here). What motivates the writers to come up with content that must surely take a lot of time to research & write?
desouzt 13y ago
As someone who is in the process of trying to get my sitcom to air this was a fascinating read. Thanks for posting.
gillianseed 13y ago
Very interesting article. I've been thinking about the rise of cable channels versus network tv when it comes to the cultural impact of their shows. They certainly seem to get it right in that respect a lot more often than the networks do, based upon my anecdotal evidence (totally lacking any real data), cable shows like Game of Thrones, Walking Dead, Breaking Bad, American Horror Story, Mad Men, etc It seems to me (not that I have any real data to back it up with) that the shows people talk about online (and amongst people I meet) are basically all cable shows, from back with the Sopranos to shows airing today like Game of Thrones, Walking Dead, Breaking Bad, Dexter, American Horror Story, Homeland, Mad Men, Boardwalk Empire etc, have a much greater cultural influence than what the networks are offering apart from a juggernaut like American Idol (which seems to be fading away these days aswell) and perhaps something like Big Bang Theory. I think it's an interesting shift, if there is indeed a shift and not just something I'm making up.

107 points by sebg 13y ago

Interestingly, this shows that the economics of TV and the economics of YouTube are actually not that far apart. Breaking Bad's $400,000 per ad spot, at 10 million viewers, is noted as being remarkably high. That's $40 CPM. Whilst a lot of people are very cagey about their YouTube earnings, if you do enough asking around the numbers tend toward $2.50 CPM. It's frequently noted that popular shows which are able to sell show-specific advertising make a lot more than that. Even if you assume that a Breaking Bad-level YouTube success would only get a 4x multiplier to its ad value, that's still $10 CPM - only 4 times less than the on-TV Breaking Bad. I would have expected the difference to be considerably greater.

deleted 13y ago
[deleted]
hayksaakian 13y ago
Maybe the CPMs are so unusually high on TV is because of the fill rates? I don't actually know the answer to this question: Can you get 10 million ad views on a youtube ad in a tv-show-length of time?
FreeKill 13y ago
Also, consider the advantage that AMC has in a dedicated sales team going hard after advertisers on the merits of buying a spot during the breaking bad finale. If youtube worked in a similar way, I bet you would get higher CPM by virtue of better sales people...

protomyth 13y ago

I'm a little confused by the ending regarding Netflix. I thought Netflix went pilot-less with House of Cards and just paid for a limited exclusive for the whole season. This is pretty different than the described network system.

jonnathanson 13y ago
Hi! Author here. You raise a good point. Indeed, Netflix went pilot-less, but they still paid network-level prices to make the show. Essentially, they skipped the pilot and went straight to the series order (and 2 full seasons at that). In some ways this was a riskier move than the network model. My argument is mainly that Netflix has the tools at its disposal to get smarter about this process. To be fair, I believe a lot of that $100M was a signaling tactic -- both in Hollywood and as consumer-facing PR -- almost as much to do with marketing the fact that Netflix has originals as it had to do with investing in them. But the investments needn't always be that big up front.
- somberi 13y ago
  Thanks for the article. Regarding "Netflix went pilot-less". BBC had done a "pilot" for them when they produced the Original HoC in 1990 (and they based in on a book by Michael Dobbs). The point I am trying to make is that, they got a sense of what the show was going to look like, who it will appeal etc because they had carried the BBC HoC for a while in their inventory. I am assuming, that they had some viewership data from this.
  - protomyth 13y ago
    The BBC HoC probably provided a nice reassurance, but there is a pretty big chance the US version won't work. I would imagine HoC is even more problematic given the difference in political systems.

twoodfin 13y ago

So as I understand it, the author is suggesting that NetFlix produce a bunch of low-rent pilots (or half seasons or so) throw them against their wall of subscribers with a bit of recommendation-targeted magic, see what sticks, then spend the money to produce the "grown up" versions. At first glance, that isn't a terrible idea, but even if it were their eventual strategy, I still think it makes sense to spend big bucks on top shelf series to start. For one thing, they weren't totally "blind": If you believe their spin, they spent a lot of time analyzing their audience to target exactly the kinds of shows they should make, and they have a lot more data to go on than, say, AMC had seven years ago. For another, if they wanted their subscribers to take them seriously as an HBO-like content producer, it helps to actually produce some HBO-level content right out of the gate. Once subscribers trust that you can make Emmy-worthy shows, they're more likely to tolerate your ultra-targeted but cut-rate test-batch series. Even so, I'm not sure how the suggested strategy is supposed to play out: Say they made 100 cheap shows instead of 5 expensive ones. In order to be more interesting to any particular audience to overcome the fact that they aren't (yet) Hollywood-quality, one would think they'd have to appeal deeply to a narrow audience (I'd give a science fiction show about a generational ship a chance no matter how cheaply it was produced, for example). But now your show is in a trap: It's too focused, and will have a hard time gaining an audience even when the production values go up (and how do you "scale" to more expensive actors?) Time travel geeks loved the movie "Primer", which cost about the same as a small car to produce, but a million-dollar-an-episode show based on the concept has roughly 0 chance of making its money back.

jonnathanson 13y ago
Author here. I don't disagree with you, especially in the second paragraph. To some degree I think it was smart for Netflix to make a big splash this early on. But the perception that they're "paying for quality" is a bit suspect, given that Hollywood itself -- ostensibly "paying for quality" in its entire process -- has a 98% failure rate on developing projects. Quality talent doesn't always yield a quality product in the creative business. Even the best writers, directors, producers, and actors have their failures. I have no reason to suspect Netflix was any smarter in its approach to developing House of Cards than networks would have been -- though I could be wrong (and hope I am). At the end of the day, the $100M for HoC was a big bet. It was a signaling tactic, a marketing tactic, and a bet on top-tier talent. But it was a bet, nonetheless, and an expensive one. That it seems to have paid off (to an extent? jury is still out) shouldn't fool us into 20/20 hindsight bias. It could just easily have busted. "So as I understand it, the author is suggesting that NetFlix produce a bunch of low-rent pilots (or half seasons or so) throw them against their wall of subscribers with a bit of recommendation-targeted magic, see what sticks, then spend the money to produce the "grown up" versions." Not necessarily, and I should clarify here. I think pilots can be shot for a lot less than they are, and I think audiences are proving themselves quite receptive to previews and other short-form "pilot" systems as proofs of concept. A lot of movie trailers are increasingly being made before the movies even start shooting ("teaser" trailers). I think there are ways Netflix can take the guesswork out of the development process, even if production is still an expensive endeavor. You have to pay for a quality product, but the system right now also pays heavily for the risk in the pre-production process. That process can probably be de-risked considerably. I would not recommend testing 100 half-baked concepts to see what sticks. But I do think Netflix could test or tease concepts in development to determine which ones to develop, and/or how to present new shows to the right early adopters. Something I probably wasn't as clear about as I could have been: half the battle in finding a hit is developing an audience, not just a show. Netflix has better audience-development capabilities at all stage of the production equation. It doesn't need to guess quite as much as networks do. Maybe -- to your point -- Netflix's audience-segmenting capabilities give it the ability to play the big bets game more than networks can. But historically, people have been shockingly bad at predicting what will actually hit and what will miss. Star Wars was laughed out of every major movie studio in town, for instance, and at the script level, it sure didn't look like "quality" to the eyes of the execs reading it. On the other end of the spectrum, a show like Firefly -- which fans (including myself) consider one of the most brilliant things ever made, has repeatedly failed to gain mass appeal beyond its limited niche, despite many attempts at re-marketing home video, a feature film, etc. The operative lesson here is that "quality," as an objective concept, is hard to parse and hard to pin down. "Quality" is more of a function with a lot of variables, and many of the biggest variables are on the production side and the audience side -- not the development side. Tldr: People are over-investing in development, when they could be investing more heavily in production -- whether at greater scale, or in greater depth per project.

Sukotto 13y ago

I see from the initial image in the post that it contains info about Breaking Bad. So I backed out of reading it until I know if it contains spoilers. Before I go read it would someone please verify that it's spoiler-free? (beyond the initial image which spoils something about Walt/Skylar's relationship) . SPOILERS BELOW . I'm partway through season 4 at the point where Skylar makes Walt return the fancy car he just bought for Walt Jr. saying that "someone has to protect the family from the man protecting the family". Jessie is riding shotgun with Mike and Hank is starting to regain interest in the blue meth case.

alexmayyasi 13y ago
you're safe!
- Sukotto 13y ago
  Great. Thank you.
johnchristopher 13y ago
There are no spoiler tags or any mechanism on HN to prevent reading a post or a part of a post. People who don't want to get spoiled can't parse the page without taking a huge risk even when they have been warned because they have to scan for things they don't want to read. I suggest you edit your spoiler out and just state the last episode you watched and ask if the article deals with story segments you haven't watched yet.
- AznHisoka 13y ago
  Seconded. When I saw he posted SPOILERS, I immediately scrolled back up. To the grandfather: Just post what you wanted, and get rid of the spoilers section. Sheesh. You're not amusing anybody, or adding anything substantial to your original point.

kenjackson 13y ago

First, nice story! Question for the author (or anyone else really)... What about what Amazon is doing at studios.amazon.com? That seems like a new way to build programming.

jonnathanson 13y ago
Amazon's approach is very interesting, and I'm paying pretty close attention to them. I tend to be somewhat skeptical of open-submission systems, or of voting systems, because they suffer from the same prediction problems that Hollywood's development model does. Plus, they're more prone to GIGO problems (Hollywood actually does a pretty good job filtering crap out before it goes into the system). Amazon might be focusing on the wrong thing (development) rather than the right things (production, support, distribution exclusivity). At least in the short term. If I were them, I'd probably use my significant capital reserves, buyer power, and Hollywood's resentment of Netflix to my advantage. I'd cut exclusive deals on proven or undervalued material that's already been produced (and could be scaled up, or reinstated, or spun off). Personally, I think the smartest thing Amazon is doing is tying Amazon Prime to free VOD streaming. A la carte content purchases are probably going away in the long run, and Prime is a great transition vehicle into more subscription-based services to compete with, say, Netflix.
- Nimi 13y ago
  Why do you think a la carte content purchases are going away?
  - jonnathanson 13y ago
    For reasons of consumer convenience and marginal purchase costs. Right now, I believe the reason iTunes is so competitive with Netflix has less to do with a la carte's strength as a model, and more to do with Apple's strength as a platform and ecosystem. I would not be shocked to see more subscription-type offerings from Apple, especially with the whole migration toward iCloud. Here is where I'll put on my Purely Speculative Futurist hat, and I'll wade out a little bit into the choppy waters of broad generalizations. But I think that a la carte purchases, especially for entertainment products, are in many ways a relic of physical media. That's the way you had to buy physical media, for the most part. But it's a relic that cloud technologies and streaming services are obviating the need for. From a consumer standpoint, I experience zero marginal cost to watch an episode of Breaking Bad on Netflix (whereas I very much experience the feeling of paying $2.99 for it on iTunes). Netflix is in a tough spot because it has lost a lot of great content, as well as competitive windows against services like iTunes. iTunes is (currently) a much better place to get the new stuff while it's new, and that's a big liability for Netflix or other subscription services. All other things being equal, subscription is a better value proposition than ownership for many categories of goods. It's also more convenient.

vinceguidry 13y ago

I don't think the HoC $100 million bet was as big as it looks. Execution counts for a lot in this business, and it's very tough to get right, but if you throw enough money at it, and give the right guy enough control, you can do it reliably. It's like pop music. You can't guarantee that your next album will be Thriller, but you can guarantee a big splash if you get everything right and have the cash for it. It's a question of management bandwidth. If you're at the kind of scale Hollywood's at, there's just not enough to go around. Not enough cash, not enough rockstar executors. James Cameron can only make so many movies. Netflix simply realized that they can put all their eggs in one basket, then watch it extremely carefully.

ghaff 13y ago
You mean like The Lone Ranger starring Johnny Depp and produced by Jerry Bruckheimer which is expected to lose something like $150 million? Big names certainly help. (And IMO Kevin Spacey is what elevates HoC from something fairly pedestrian to something worth going out of one's way to watch.) But this is a biz that's hard to predict winners in and I'm skeptical that viewing data makes a big difference.

bryanh 13y ago

No mention of Hulu here or in the article? Hulu has done several of these cheap shows and none of them seem to have caught on in any meaningful way, whereas Netflix's obvious "swing-for-the-fences" attempts seem to have everyone constantly excited.

logical42 13y ago

does the bar chart (http://s3.amazonaws.com/pix-media/blog/424/ad_cost.png http://s3.amazonaws.com/pix-media/blog/424/ad_cost.png) irritate any one else here? I feel like it's a rather biased data visualization, it seems patently unfair to compare the finale of breaking bad with the average of a network. If anything, it should be contrasted with the finales of each of those network or possibly replaced with a figure representing the average cost of an ad on AMC.

jonnathanson 13y ago
Hi there! Great feedback. The bar chart isn't perfect, and certainly less so out of context. But I should clarify my intent behind it. The final episode of Breaking Bad pulled in roughly the same numbers that your average primetime hit (or even indexed basket of hits) pulls in every night. So when we're talking about the primetime averages, we're talking about indices with viewership figures roughly comparable to Breaking Bad's final episode. The point was that Breaking Bad was able to put a significant price premium on its finale relative to the nominal size of the audience it drew. It punched above its weight, so to speak. (Finale or otherwise, we're talking about 10 million Breaking Bad viewers vs. 11 million CBS viewers.) Is the comparison totally fair? In that specific context, in illustration of that specific point, I believe so. Would it be remotely fair if it were used, say, to illustrate a point about Breaking Bad in general vis-a-vis the market? Considerably less so. The point was more about its value to AMC, and less about the show's ostensible superiority to any other network show. To that point, I like your idea about contrasting Breaking Bad (finale, ordinary episode, etc.) with the average cost of an ad on AMC (though we'd have to control for the skew exerted on that index by Breaking Bad itself). That might be more apples-to-apples in certain respects, and it might have driven the point across a little bit better. Duly noted, and in as much as I am considering a followup, I may want to address that specific concern.
- logical42 13y ago
  I actually feel like it is misleading. I would expect each bar to represent an item of a similar type. But, in this case, it doesn't.

kisstheblade 13y ago

The prices for recording shows seems absurdly high. What costs $2 million for a comedy pilot (i.e. no special effects or pricey explosions etc involved)? Could somebody elaborate. If you think what you can get for $2million it's an absurd amount of money. FTA: "yet a typical half-hour comedy pilot costs $2 million to shoot" I think Louis CK got away with 100k per episode (albeit doing most of the work himself), which also seems kind of high, but anyhow shows what it can cost to shoot.

r0h1n 13y ago

I'm really impressed - and curious - about Priceonomics' ability to come up with such well-researched and well-written (getting both right isn't always easy) posts on such a wide plethora of topics. Especially because the authors don't seem to be their staff (I could be wrong here). What motivates the writers to come up with content that must surely take a lot of time to research & write?

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r0h1n 13y ago

desouzt 13y ago

As someone who is in the process of trying to get my sitcom to air this was a fascinating read. Thanks for posting.

gillianseed 13y ago

Very interesting article. I've been thinking about the rise of cable channels versus network tv when it comes to the cultural impact of their shows. They certainly seem to get it right in that respect a lot more often than the networks do, based upon my anecdotal evidence (totally lacking any real data), cable shows like Game of Thrones, Walking Dead, Breaking Bad, American Horror Story, Mad Men, etc It seems to me (not that I have any real data to back it up with) that the shows people talk about online (and amongst people I meet) are basically all cable shows, from back with the Sopranos to shows airing today like Game of Thrones, Walking Dead, Breaking Bad, Dexter, American Horror Story, Homeland, Mad Men, Boardwalk Empire etc, have a much greater cultural influence than what the networks are offering apart from a juggernaut like American Idol (which seems to be fading away these days aswell) and perhaps something like Big Bang Theory. I think it's an interesting shift, if there is indeed a shift and not just something I'm making up.