TV as we know it has been under assault. Commercials are skipped via DVR or ignored by looking down to check Facebook on your smart phone or pad. Cable revenue is under pressure as consumers shun that dreaded $100 a month bill for streaming alternatives such as Netflix and Hulu Plus.
A lowlight of this struggle includes AMC going to war with "Mad Men" creator Matt Weiner over subtracting two minutes per episode of content in order to jam in more commercials. Eventually they agreed to keep the same amount of scripted content and increase the length of the episodes by two minutes. Also, CBS recently blocked its subsidiary CNET's attempt to include Dish Network's Hopper from consideration as one of CNET's "Best of CES" because of its ongoing litigation to attempt to stop the commercial hopping device.
Can big budget television production still be profitable in an environment where consumers are increasingly able to avoid commercials and cable bills?
"Anarchy" to the Rescue
At Variety's CES Panel discussing the future of television distribution, the CEO of Magic Ruby, Tom Engdahl, discussed his company's experience providing content for FX's series "Sons of Anarchy." Magic Ruby creates applications for "Second Screen" viewing on smart phones and pads for various television shows. The second screen app for "Sons of Anarchy" synchs with the broadcast of the show and allows viewers to interact with other fans via social media, explore locations, discover additional content and effectively facilitates the purchase of show related merchandise. The most popular item? A $50 hoodie. The second most popular item? A copy of a ring worn by Katy Segal's character which sells for $188. Wow! When is the last time a viewer spent $188 on "The Brady Bunch?"
"Anarchy" provides a great example of the second screen, not as a distraction, but as an effective tool to enhance the viewer's experience and enable new ways to monetize content.
(Read More: Akamai Eyes New Second-Screen Technology: Report )
Zombies Streaming in to my House!
Syndication has long been considered the Holy Grail of TV. 100 episodes produced was the magic number. That's enough episodes to run 5 times a week for 20 weeks without repeating an episode. If your show could survive the gauntlet of fierce competition, fickle viewers and writer burn out, you could sell the library of existing episodes to rerun for decades and make that "Seinfeld" money. Then, you too could be as rich and miserable as Larry David!
The problem is very few shows could make it to 100 episodes. Some shows that ran out of creative steam at episode 70 were pushed for another 30 eps just to hit that magic number. And just because a show hits 100 episodes doesn't guarantee a financial success in syndication (i.e. "News Radio," "Mad About You").
With services such as Netflix and Hulu Plus, one season of a show is sufficient to begin what I call "mini-syndication." AMC licensed Netflix the right to stream "The Walking Dead," after one season. Did these Netflix zombies cannibalize the ratings of the show on AMC? Nope, according to the Network, distributing the episodes on Netflix significantly increased the ratings for new episodes when they were broadcast on AMC. The finale for the second season had a 50% increase in viewership from the finale of Season 1. With some help from this early streaming mini-syndication window, "The Walking Dead" has been extremely adept at building on its success. The show utilizes social media forums, original webisodes and a "Talking Dead" behind the scenes program. Additionally, the video game based on the show was recently chosen as the video game of the year at Spike's Video Game Awards and the 100th Issue of the "Walking Dead" comic that inspired the television show was the top selling comic of 2012.
(Read More: Netflix Delivers Surprise Profit, Outlook; Shares Jump)
"The Walking Dead" is a unique property. But, those zombies do show us how an early streaming window can be used to build awareness and monetize the content in mini-syndication at episode 13 instead of episode 100. IFC's quirky low budget comedy "Portlandia" is a great example of a very different show having great success by streaming its first season on Netflix.
Can Amazon's Metrics Pilot the Pilots?
Historically, the system used by networks to create pilots and pick up those pilots to series has been extremely expensive, inefficient and hit or miss. It is estimated that each network hears about 500 pitches per pilot season, engages various writers to draft about 70 scripts, orders around 20 pilots to production and then chooses 4 to 8 of those pilots to move forward to series production. Once in production, the network spends and spends to promote the new shows hoping that they will catch on with audiences, survive and thrive.
Enter Amazon Prime to shake things up. For the uninitiated, Amazon Prime is a unique service that, for a yearly fee of $79, offers consumers unlimited free 2 day shipping on Amazon orders, the ability to borrow books from its Kindle library and the ability to stream movies and television shows via PC, Kindle Fire, XBOX, PS3 and other devices.
(Read More: What Do 'CableNevers' Mean for TV's Future?)
Like Netflix, Amazon is producing original content for its subscribers. What's unique is that Amazon is producing 6 pilots and letting Amazon Prime users determine which pilots will move forward to series. Amazon believes that their viewer metrics are a superior mechanism to determine which pilots to pick up. With a diverse mix of content creators ranging from The Onion, Gary Trudeau ("Doonesbury") and Kevin Sussman ("The Big Bang Theory"), it will be very interesting to see if this experiment is a success.
Winners and Losers
Show Biz has always been about winners and losers. In our brave new digital, multi- screen, streaming world, it appears that traditional commercials and cable providers may be the losers. Destabilizing technology has created an opportunity for a number of non-traditional players to enter the space, including Redbox-Verizon, M-Go, Xbox , Netflix, Hulu Plus, Apple TV and Vudu. The good news is that people have more ways to view content. Additionally, artists have more tools to create an immersive experience. It's exciting to think what the future of "television" (if it can continue to be called that) holds. Perhaps Zombie Bikers who run an internet book store? Like "Friends" with an edge…
(Read More: The Future of TV? Netflix Scores Massive Disney Deal.)
Jeff B. Cohen, Esq. is a partner at the Beverly Hills based law firm of Cohen Gardner LLP which he co-founded in 2002. Cohen Gardner LLP focuses on corporate, technology, media and entertainment transactions.
In 2008, Jeff was named one of the top 35 executives under 35 years of age by "The Hollywood Reporter." Additionally that year, Jeff was profiled by "Variety" in its Dealmakers Impact Issue.
Jeff also has the dubious distinction of being a former child actor, appearing most notably in the Richard Donner/Steven Spielberg film "The Goonies," but please don't hold that against him. He's also on Facebook and Twitter.
