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Why a Firefly movie when you can make an entire season for the same dosh?

Supergeek Wil Wheaton ... as opposed to those of us who really are just geeks ... in his WWdN: in Exile blog (though isn't it way past time it's renamed WWdN: I ain't never going home to the domain that bears my name?) poses an interesting question about film/TV creation and distribution:

When you have a passionate, built-in audience for a specialized show, like Firefly, or Babylon 5, (or some non-Sci-Fi show, even,) instead of trying to make a big and expensive theatrical feature that just won't cross over into the mainstream audience, and give the studio an excuse to kill the entire show, why not take the money you'd spend on one big movie, and use it to produce a full season that would be released on first-run DVD, in stores or on the intertubes?

It's a thought that's come up in other fora I've frequented. I suspect (ie speculate, in the absence of hard industry knowledge) that this distribution method hasn't yet happened for the following reasons:

Historically, studios have made their big money from movie box office. If a movie becomes a blockbuster, the profit can be huge: way, way above the cost of making it. Production costs are sunk, marketing dims to a simmer a week or two after the film is released (if a movie has legs it'll be due to word of mouth), so - other than a split with the cinema operator - it's all cream. A (low budget) hit can make 20 times its cost just in box office, and even if the ratio isn't as dramatic as that, the profit could reach eight or nine figures. Titanic after all, sure, cost $200M but took in $600M in the US alone, and close to $2B worldwide.

In contrast, the revenue upside from TV distribution is limited by a cap on the license/distribution fee the studios can get from the networks. If they sell a show at $1M per episode but it rates through the roof and the advertisement revenue goes for $2M per episode, that difference goes to the network, not the studio. The studio only has a chance to make up the gap the next time the license is up for renegotiation. The networks are in a similar situation with advertisers.

So, in contrast to film distribution, the studio (and the network) in TV distribution actually has to deal with a party in whose interest it is to keep the studio's (or the network's) cut low.

Arguably, the same is true for film distribution - it's in the cinema operator's interest to bargain down the share going to the studio, but from what I understand, that's a battle the chains have pretty much lost, which is why popcorn and drinks are priced as outrageously as they are: concessions (or the rare sleeper hit) are where cinemas make their money these days.

Hence, the upside potential for films is much greater than that of TV. If I was a studio executive who could spend $50M making a movie, which could maybe make $200M in box office, or spending the same $50M making a TV series, which could maybe make $100M in license fees, I'm more likely to gamble on the former. Making movies is still sexier than making teevee.

Now the economics of the business are changing. These days, as much - or more - of the money from movies is made not from first run theatrical releases, but DVD sales. There's an argument I've read that the theatrical releases are becoming not much more than big-splash marketing campaigns for the DVD to follow, usually within months or even weeks. (Remember in the old days when it took years for a movie to be released on video? These days you can sometimes pick up a disc while the film is still running!)

So, doesn't this bode well for a direct-to-DVD distribution model for a show like Firefly? Not really. Yes, the DVD sales for the show were so strong that they greenlit Serenity. But, don't forget, the studio already made most (maybe all) of their money back from the license fees from the networks, both in the US and overseas. The DVD revenue would have been cream, not meat.

Just say that the first season of Firefly cost the studio $40M to produce. Then let's assume that licensing revenue made them $30M. (No idea if the numbers are accurate, but it's the principle I'm trying to illustrate.) So DVD sales would only have to bring in $10M to bring the product to break-even. Say, a million Browncoats pick up the DVD box set and $10 of that goes back to the studio as profit (the rest to the retailer, the distributor and cost of production) and: voila. From what I understand, Firefly got about two or three million regular viewers, so if one in three of them buy the DVD, that's a huge achievement; a testament to the devotion the show inspired.

In contrast, say a second, direct-to-DVD season were made tomorrow. It might also cost the studio $40M to produce, but let's say $30M because there might be some sets and props in storage they could reuse and creative development costs have already been sunk. In order for this season to be profitable, at $10 per box set profit to the studio, three million people would have to buy it. Now the question is, if a million Firefly fans bought the first season, after they've seen it already on TV and knowing they'd love it, why would three million people - basically everyone who used to watch the show - pick up the second?

You could argue that it's because they haven't seen it, the episodes would after all be new. But I think that's actually a negative factor rather than an encouraging one. People are still used to seeing small-screen entertainment for free (on free-to-air TV) or for a relatively small per-hour pro-rated fee (DVD rentals or premium pay-television). How many people would pick up a $20 movie sight unseen? Not that many. How many people would pick up a $50 box set sight unseen? Even less. Yes, I'd be one of them, but then I'm one of those people who bought Done the Impossible sight unseen. Yes, Firefly inspires devotion. But not in every single viewer. And - I suspect - that's what's needed to make this economically viable.

This is the fundamental problem with direct-to-DVD distribution: it cuts out the biggest, most lucrative source of revenue - first run TV licensing. Whereas shows which are screened first on television can still sell well on DVD, and in fact arguably sell better because they've had the exposure (ie TV first-runs as part of the marketing strategy to sell the DVD to parallel the concept of theatrical releases to do the same).

I haven't discussed "direct-to-intertube" distribution simply because I think it's still too early for this channel to be viable as a primary means of distribution. As an adjunct? Sure. But ubiquitous as the net has become, I don't think we're at the stage - technologically or culturally - where enough people will choose to download their shows before going to their local video store or switching on the TV. Bandwidth is getting better, but it's still not there. Micropayments are getting better, but - Apple's music store aside - still not commonly accepted by consumers. And the majority of people still have their big screen TV with surround sound system in the living room, and their PC with the 17" screen and stereo speakers in the study.

I also haven't discussed factors like

  • the differences betwen domestic/international first run versus syndication rights
  • the concept of "packaging", where multiple TV shows or movies are sold off together
  • studios and networks belonging to the same corporate parent entity
  • cost of marketing vs cost of production of films vs TV
  • the film "distributor" as the middleman between the studio and the cinema operator
among others because, while relevant, ultimately I don't think they impact the central argument: direct-to-DVD is still a poor cousin compared to wide theatrical releases for movies and first-run TV premieres for shows. There's a reason why direct-to-video releases are so cheap and nasty: they have to be, with their most lucrative revenue sources denied to them.

Now, JMS has announced some direct-to-DVD Babylon 5 movies, and maybe these will prove me wrong. But I suspect not. And if they do work, it might be because, well, in terms of production values, B5 always was pretty cheap and nasty. In contrast, Firefly cost about $2M per ordinary episode, and much more for the pilot. Would the fans tolerate Serenity flying on a shoe-string? More importantly, would Whedon and his cast and crew?

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This page contains a single entry from the blog posted on October 8, 2006 3:21 AM.

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