Michael Eisner's Internet Play: Vuguru

With the premiere of Michael Eisner's second web series The All-For-Nots, here's a quick review of the new media world according to Eisner. 

His company's first series was Prom Queen.  According the Eisner, it cost $3,000 per 90 second episode, was seen by 20 million people and made, "a couple thousand dollars."

Though it had more shots of girls in bikinis than the original, Prom Queen's sequel, PQ: Summer Heat, was seen by fewer people and "lost money."

Despite this (and his view that the writers strike was insane because "it [was] over a business and a marketplace that is not evolved enough to even know if there is a business or a marketplace there"), Eisner is determined to make Vuguru "the leader in high-quality, story driven content produced for new media platforms."

He premiered The All-For-Nots with sponsorships from Chrysler and Expedia, distribution on Bebo and Verizon's V-CAST (not sure who paid who for what) and a simple strategy: produce cheap content that makes people laugh and cry. 

With little deference to Eisner's experience producing content that is professional, tear-jerking, and cheap, TechCrunch's Michael Arrington paid Eisner what must be high praise in Silicon Valley when he wrote that Prom Queen was, "as good as much of the user generated content out there."

And though Arrington predicted the show could be "very profitable", he doubted the need for Eisner's lavish $100k production budget for the 80-episode series: "the audience can easily create their own content and distribute it to millions on YouTube. Some of that content will be better than anything Hollywood produces. And it won’t cost even $100k to create."

No word yet on the budget, revenue, the fees paid to talent or the likely profitability of The All-For-Nots.  But if the Lonely Girl people can make millions off their Bebo show, Kate Modern, one hopes the former King of the Mouse House can figure out how to do the same.

Hulu

With Hulu about to officially launch, here are some quick ways to get smart.

First, check out the site when it debuts, probably some time this week.  (If you can't wait, email me and I'll give you one of my ten "invites" to the beta.) The site has an elegant interface and high quality video.  (I watched it in my office on a 24" Mac from six feet away.  It was great.  There just might be something to this TV on the Internet thing.)  And though the programming selection seems scattershot - just 5 episodes of House, 9 episodes of The Office, the entire 39 episode first season of Alfred Hitchcock Presents but none of the second or third seasons - I can't be too critical of any site that lets me watch all of Arrested Development whenever, wherever and for free.   

Also see Fortune Magazine's fawning piece about the company, a joint venture between Fox and NBC, with a $100 million investment from a possibly crazy venture capital fund.  The article, complete with photos of geeky programmers and laughing execs, reveals Hulu has spent $15 million so far, is run by a former Amazon executive Jason Kilar who brought a start-up culture to the venture (we're told he "abandoned the palatial corner office he'd been assigned in Santa Monica for a near cubicle") and that Google has nicknamed Hulu "Clown Co."  Cocky bastards, those Googlers. 

The famously fallen (and savvy) Internet analyst Henry Blodget explains Hulu's business model here:

• Hulu is the exclusive distributor of ad-supported streaming content from Fox, NBC and any other premium content provider they can sign up.
• The content provider gets 70% of the revenue.
• Syndication partners (e.g., a Hulu channel on YouTube, if that happens) get 10%.
• Hulu keeps 20-30% (depending on if there's a syndication partner).

According to Blodget, the content suppliers have first crack at selling the ads, with unsold inventory bundled into genres and sold by Hulu.  (Ah, bundling - the first of many reasons why the WGA and DGA need to start staffing up on auditors.)

The Fortune article ends with a couple of quotes from CBS' head of digital initiatives, Quincy Smith.  First, Smith says, "The economics have to change."  In other words, Smith doesn't think paying 20-30% of ad revenue for internet distribution makes sense.  Given that Blodget's most recent critique of Hulu's business model ("Hulu: Great Product, Still Screwed") argues Hulu needs to take more than 30%, this could be bad news for the guys who chucked in the $100 mil.

Second, Smith criticizes what we might call Hulu's creative model, it's vision of how the internet and entertainment ultimately converge: "If the web is just another way to watch TV, I think I'm going to slit my wrists." 

This continues a critique Smith began back in September here.  The gist:

• Premium content owners should make sure audiences can find their content "anywhere, anytime on any screen."
• Hulu, therefore, should focus on syndication and waste neither time nor money building a destination
• Audiences (who Smith charmingly calls, "the bulk of God's children") want clever clips and interactivity, not the whole episodes Hulu focuses on delivering.

The bigger question raised by Smith's quote is a creative one: Is the most important thing about the Internet really just that it delivers the same old TV over different pipes?  Or shorter, lower-budgeted versions of traditional TV? 

Or is there something more here, something to invent that uses the unique social and interactive aspects of the Internet to tell stories in new ways?  My view is there is and that, as writers, actors and directors with some claim to authority in the realm of storytelling, it's our job to figure out what it is.  If only to keep Quincy Smith from doing himself in.

Finally, for a short history of the business and a spirited discussion in the comments section, check out the Geek in Chief's take on Hulu in TechCrunch.  Comment #11 is surprisingly vitriolic.

Disney Launches Web Content Studio - Stage 9 Digital Media

With a web site and press release that push hard to position the company as revolutionary, Disney today announced the launch of Stage 9 Digital Media. They claim to have 20 web series in various stages of development, ranging from comedy to science fiction. 

Tech Crunch's Eric Schonfeld wasn't impressed by Stage 9's first series, SQUEEGEES: "Lame doesn’t begin to describe this three-and-half-minute comedy about the hijinks of a window-washing crew ... What ABC fails to understand is that when it comes to Web video, authenticity trumps production values." 

NewTeeVees's Chris Albrecht characterizes SQUEEGEES as another example of big-media creating web shows that are merely "shorter versions of what already exists in old media." He calls the show "sit-comy" but funny, and he faults Disney for a cardinal internet sin: not allowing users to embed the show in their own sites. 

The LA Times article about Stage 9 suggests $200,000 as a budget for some of the series, pretty high for internet original content.  I've heard the science-fiction series they're doing - Trenches - is considerably higher than that.

Shoot First. Get Advertisers Later.

The New York Times reports today that Warner Brothers will start making internet original content the old fashioned way: shoot first, get advertisers later. This is a good thing.  It means talent generate the ideas, not marketers.  Like others, Warner Brothers has found getting advertisers to finance production can be more hassle than it's worth.  Better to shoot the shows fast and cheap, push them out of the nest and see if they fly. 

The Times mentions three other recently launched internet original producers: 60Frames, Generate and Michael Eisner's Vuguru.  More info about these companies and others in the coming weeks.    

Here's a sample from THE JEANNIE TATE SHOW, from Warner Brothers Studio 2.0. 

Samples from 60Frames, Generate and Vuguru are below the break.

The End of Hollywood Accounting?

Will 1+1 someday = 2?

The WGA, the Teamsters and California State Senator Sheila Kuehl have just announced the introduction of the "Fair Market Value Bill." The bill seeks to prevent studios from selling programming to sister companies for below market value. This particular strain of Hollywood accounting is designed to shift profits away from the studios (where they must be shared with talent and producers and serve as a basis for pension and health contributions) to networks, where they may be enjoyed without the pesky need to pay one's "partners."

Press release below the break.  We'll have more soon on the bill in particular and Hollywood skulduggery in general.

And if you're a studio accountant or lawyer looking to go all Michael Clayton on the Big Six, send us a tip or a post.