Friday, September 11, 2009

Monetizing online media

There's a good read over on the CinemaTech blog if you're geeky about how the business will remain viable in 20 years. A snippet observation....

Picking up the theme of targeting, Miller suggested that advertisers will pay more for online ads as behavioral targeting increases (targeting ads based on what you do online and interests you express), though he admitted that online ads may never achieve the same prices that network television commands.

Miller touched on the idea that the costs of content creation may need to go down in this new world, if advertisers aren't paying the prices they once did. (That's a point we discuss pretty frequently here at CinemaTech.)

Mind you TV ad revenues have been dropping steadily in recent years. This budget squeeze on content creation has been one of the big driving factors behind the rise of the reality show. They're cheap to make. Aside from privacy concerns, the notion that even targeted ad revenues online won't fetch the same bid that TV spots go for should be troubling for mid-sized (or smaller) content creators. TV animation has seen production budgets for 22 minute shows drop to less than half what they were 10 years ago. If the online world won't even pay that much for ad space, then the reality is that as a whole (with some notable giant exceptions) this industry is going to have to learn how to make stuff for a lot less money than they currently spend. I'll let the intellectually intrepid among you deduce what that means for the hoi polloi in the trenches/cubicles.


Mark Mayerson said...

I got a look at a budget of a show I once worked on and was surprised to see that labor only accounted for a third of the budget. The rest was pre- and post-production and various kinds of overhead, such as insurance, etc.

Of course, it's the labor part of the budget that producers have been so aggressive about reducing, but there's a lot of money to be saved in the rest of the budget.

It may be that the revenue from online will be so low that large corporations and studios won't bother with it at all. Their overhead costs are just too high to justify participating. Rather than think of how artists are going to continue to be squeezed, maybe it's better to look at this as an opportunity.

A small, versatile group of artists can function without most corporate overhead. Maybe the future of online animation belongs to them. Maybe.

In any case, of the troika of features, TV and games, I don't think that there's any question that the business model for TV is the one on shakiest ground.

sunny kharbanda said...

Good point, Mark.
When was the last time a big corporation squeezed their overheads instead of their employees?

Maybe you're bang-on about the future belonging to independent artists. It's already happening in games. Some of the most innovative games are low-priced, unique, and short. And they come from independent developers.

Monetizing an animated short (or series of shorts) is different from monetizing a game, though. People seem more willing to pay for games because it's an active experience; they've got control. With cartoons, on the other hand, it seems like a harder sell.

Please correct me if I'm wrong (I hope I am!)