The Quest to Be the Next New Network
Amongst the key events in the history of television was the advent of cable as the dominant source of distribution for both the networks and smaller channels. During the early days of the industry, the US government granted a limited handful of companies a license to broadcast programming directly through the airwaves. Known as networks, they dominated the landscape as the only sources of television entertainment. Cable offered a direct link to their content but was initially only used in remote areas of the country where reception was poor and signals were difficult to pick up. The distribution medium saw an upswing during the 1960s, and deregulation of the industry in 1972 paved the way for individual start-up channels to challenge ABC, CBS and NBC directly over cable and without the need for a government license to broadcast over the airwaves.
Just as the television industry witnessed a dramatic change in the delivery of its programming during the 1970s as more and more people began using cable to access the medium, the same winds of change are blowing in the Twenty First Century as more and more people are relying on the Internet to watch their favorite shows. And just as cable offered the opportunity for new channels exclusive to the rising mode of distribution to appear decades earlier, the Internet provides the same opportunity for a new generation of channels that are exclusive to the World Wide Web to likewise offer their own original programming.
A few visionary entrepreneurs have already taken the leap of forging online networks with the expectation that television will become more Internet-based in the future while the Internet itself takes over the television set in the same way that cable did in the 1970s. Although larger media ventures like Hulu and Netflix are relying on established television shows for content, these smaller undertakings are utilizing independently produced video to fill their programming needs. In 2008, for instance, KoldCast TV launched as an online network featuring a collection of webseries available in one centralized location. What started out as a showcase for a handful of programs centered on off-road racing and teen sexuality soon evolved into a genuine hub of original webseries that is now accessible in approximately 138 countries.
Next New Networks, meanwhile, was initially a joint venture between former Nickelodeon president Herb Scannell and MTV creative director Fred Seibert when it launched in March 2007. The concept was to build a series of “micro-networks” centered on specific topics like fashion, food and car racing. A vast majority of the video content on Next New Networks was produced in-house but that philosophy changed in 2008 when Scannell stepped aside as CEO to allow Lance Podell to take the reigns of the company. While the original founders of Next New Networks had a wealth of experience in content creation, Podell was more business oriented and Internet savvy in regards to his background.
Under Podell’s guidance, the company introduced its Next New Creators program in order to work with established independent content producers whose projects fit the micro-network infrastructure of Next New Networks. “Figuring out how the Web works, how to build an audience, how to work with brands, these are things that producers really need help with,” vice president of marketing Kathleen Grace told ClickZ in March 2010. “There are tons of people on Vimeo and Blip.tv and YouTube creating good series that need help finding an audience and finding sponsors.” Next New Networks thus positioned itself as a nurturing environment for creators and mode of distribution for their creations.
While Next New Creators initially complimented the in-house productions of Next New Networks, the effort eventually led to the company outsourcing all of its content through the program. The strategy worked as Next New Networks not only passed the one billion mark in video views in September 2010 but started to show a profit as well. That success quickly caught the eye of Google with rumors soon running rampant that the search-engine giant was interested in purchasing the company. The rumor became reality in March 2011 when Google-owned YouTube officially acquired Next New Networks.
Original video on the Internet would obviously be very small and very niche if it wasn’t for YouTube. The company was founded in 2005 by PayPal employees Steve Chen, Chad Hurley and Jawed Karim as a means to share videos and was quickly overwhelmed with million of users and an equal number of wannabe filmmakers sharing their creations with the world. Google purchased YouTube in 2006 and was able to monetize its acquisition through advertising. YouTube also developed its own partnership agreements with quality content providers by showcasing their works in an effort to increase views while offering a revenue sharing program with the creators. The purchase of Next New Networks thus not only aligns with the business philosophy of YouTube but enhances it as well.
While YouTube relies on user generated videos for its content and Next New Networks developed a revenue sharing/nurturing plan to assist independent producers, Deluxis Entertainment is looking to both produce television-style shows and make them available via their own online network for a monthly subscription fee. Although the vast majority of webseries currently available on the World Wide Web have episodes that range from three to ten minutes in length on average, the shows that Deluxis intends on producing will be of the more traditional television running time of thirty minutes to an hour long.
“Our belief is that television will not truly flourish on the Internet until we provide programs that are in the same league as the very best shows that currently appear on premium cable channels and pay television networks,” chief executive officer Christopher Kaminski said in the February 2011 press release announcing the venture.
The differing business models of YouTube and Deluxis parallels yet another chapter in the history of television. In addition to the rise of cable during the 1970s, the Federal Communications Commission also instituted the Fiscal Interest and Syndication Rule—Fin-Syn for short—at the start of the decade. The intent was to prevent the three networks from monopolizing the television industry by not only broadcasting shows but producing them as well. This led to a rise in independent production companies that licensed the original run of a series to the networks and then sold the syndication rights for later broadcast on smaller channels. For over two decades, ABC, CBS and NBC thus operated in the same fashion as Next New Networks in that their content did not originate from within but from outside sources instead.
When Fin-Syn was repealed in 1993, the shift away from independent production companies to those controlled by the megamedia giants of the times led to yet another shakeup within the industry. Syndication rights were too great of a commodity—TV by the Numbers, for instance, reported in June 2010 that the sitcom Seinfeld had earned $2.7 billion in syndication—and ownership of a television series was a potential investment that could reap profits for years into the future.
Such a scenario obviously does not exist in terms of online video. Although the webseries Sanctuary later become a television series on the SyFy channel and Secret Girlfriend landed on Comedy Central, most entries into the medium do not have an afterlife and struggle monetarily during their initial release. With revenue sharing and partnership agreements, Next New Networks and its post-YouTube incarnation thus not only financially benefits all involved but keeps the independent spirit of the webseries in tact as well. It should be of no great surprise that the 1970s is known as the “Golden Era of Television Sitcoms” while the 1980s saw the launch of “Quality Television” due to the creative freedom that independent production companies offered their writers and producers.
That is not to suggest that Deluxis Entertainment will not offer the same freedom in their creations. By paying the cost of producing television-length episodes, however, the risks are obviously higher and the demand for success greater. CEO Christopher Kaminski told GigaOM that the company believes it needs just one hit show to entice subscribers, which is a massive undertaking for any start-up network or channel regardless of the distribution mode. The annals of television history, meanwhile, demonstrate that it can be done nonetheless. When FOX launched as the “fourth network” in 1987, for instance, very few people expected it to succeed but initial content like Married… with Children and The Tracey Ullman Show helped it to ride out the storm until The Simpsons and The X-Files came along and elevated the new network’s stature.
The same could ultimately hold true for Deluxis Entertainment—like everything else with the Internet, only time will tell.
Anthony Letizia (April 25, 2011)
Discuss on the alterna-tv.com Forum
