Is mid-range web TV too risky? The middle ground of web television, somewhere in between homebrew video blogs and high-end celeb-laden studio series, appears to be murky water. The shuttering of digital studios 60Frames and maniaTV stand as somber reminders that web television is still shuffling to find its business model. According to Greg Goodfried, who co-founded web studio EQAL in 2007 with partner Miles Beckett, it’s all boiling down to cost structure.
Miles and Greg made their mark with arguably the most successful dramatic web series to date, lonelygirl15, setting themselves up for a top seat in the serialized drama space. Follow-up series like LG15: The Resistance, Bebo-backed KateModern and Polish lonelygirl-spinoff n1ckola locked up the genre for their venture-backed studio.
So, it’s somewhat surprising to see reports that EQAL is moving away from creating original serialized drama series. Some coverage even went as far as to say that EQAL was getting out of original series altogether. We talked to Goodfried on the phone, and asked about the comments he made on June 9 that kicked off this flurry of speculation. He was adamant that the idea that they are giving up on original content is grossly exaggerated. 
The shift in strategy, Goodfried said, is focused on working with established stories and fanbases rather than building them from the ground up as they did with their lonelygirl15 franchise.
“Instead of creating new IP from scratch, we’re partnering with existing IP,” said Goodfried. But he went on to point on that it doesn’t mean what they create isn’t original. “It’s original because it’s not re-purposed content we’re just putting up online, he added. “We are creating brand new original web content that is shot and formatted for consumption online, and it’s totally original.”
Harper’s Globe, the web community extension built around the CBS drama Harper’s Island, falls into this category. Showrunner Jon Turtletaub and his team of writers created a story and universe for the show’s primetime TV spot, while Goodfried and his team used that basic framework to build a web series narrative and community site around it. The Harper’s Globe narrative follows the exploits of the island newspaper’s young video blogger (played by lonelygirl15 alumn Melanie Merkosky) as she explores the mysteries of a series of grisly murders that take place each week on the primetime show. “We know how to make content and produce experiences on web sites that can engage and build large communities around an entertainment brand, and how to monetize it,” Goodfried said.
But what was wrong with lonelygirl15? After all, the series churned out nearly 600 episodes and racked up over 200 million views and counting on YouTube. The challenge, says Goodfried, is most likely the show’s own success, which started back in 2006 with then unknown star Jessica Rose posting video blogs to fans who for a time believed her fictional character, Bree, was real. A skeleton crew of no more than three people would write, shoot and edit the videos. By the time the secret was out and mainstream media had picked up on the lonelygirl15 sensation, the show had ballooned into a full-on production, complete with numerous characters and storylines and a rapidly inflating production budget.
Keeping Costs Low
This is where the economic realities of the still nascent web television industry came to a head. With costs rising, even sponsor deals like Neutrogena’s well-received integration within the lonelygirl15 storyline still weren’t enough to fully support the show’s costs. Union pay rates for talent and writers, additional crew support and marketing costs all added to the per-episode sticker price.
“What lonelygirl15 evolved into is super expensive, and the internet is still not at a place where you can sustain that kind of production,” said Goodfried bluntly.
The series had reached the apparently treacherous middle ground in terms of cost. The film industry has had its own run-ins with this bi-polar dilemma—grappling with the success of low-end ($10 million) or high-end ($100 million) films and the often perilous fate of middle-range ($40 million) productions. Goodfried sees a similar polarity in the web series world, with low-cost YouTube stars and indie web series creators able to wear many hats — on-screen talent, editor, writer, and director — while keeping costs low.
So we’re left with two strata of production — low-cost indie grown stars and high-cost traditional celebrity. “You’ll have this huge emergence of web celebrities who pop up on their own or you’ll have traditional TV content that gets extended on the internet,” said Goodfried. Successful web series like The Guild, What The Buck and Diggnation, he added, are able to keep their production costs very low.
EQAL’s Next Chapter
Does the strategy shift change public perception of EQAL away from a cutting-edge creative house? That’s not yet clear, but it sure isn’t stopping a who’s who of Hollywood from approaching the studio. Alicia Silverstone (The Kind Life), CSI-creator Anthony Zuiker (Level26.com), and even TV celeb chef Paula Deen have all teamed up with the company to develop online extensions of their existing projects.
“The bread and butter for EQAL is building robust online communities around entertainment properties.” Their latest project, Get Cookin’ with Paula Deen seems a little like unfamiliar territory for the conspiracy-loving creators. The match however does play to what they have proven they know how to do well — building a community hub around an entertainment property. Only in this case, it’s a celebrity chef.
“Traditional media talent and brands come to us and say ‘I’m already popular online and I don’t know what to do with it,’” added Goodfried. “Or, ‘I’m doing something, but I need some help doing it right.’” For the Deen series, the community centers around cooking—mostly sharing recipes and photos from kitchens through a ‘Challenge of the Week’ and similar calls for fan action.
What lies ahead for original web series remains to be seen. The next Miles and Greg are out there — dreaming up and crafting a low-cost series that will spark the imagination and interest of the masses. While the web television industry of 2006 was a much less crowded space than it is today, 2009 brings with it a more developed ecosystem for online video and a public increasingly hungry for original online entertainment.
Those next web stars will need to learn to wear many hats — talent, production, marketing — and manage to put to use their biggest advantage over traditional media: inexpensive labor. Goodfried agrees, “They are going to be pretty much homegrown. It’s hard for traditional media to do it because they don’t know how to do it.”
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Great article. I think what makes Miles and Greg special in the space will never change, whether they are building original IP, or expanding worlds already started elsewhere. Their work on Harper’s Globe was amazing, and the ridiculously charismatic Paula Deen seems to be the perfect candidate for exploring new ways of creating interactivity with an actual person. I imagine that they can do for the reality/cooking genre some of the same sort of ground breaking things they did for drama with LG15 and its many offshoots.
These are definitely challenging times for an emerging art form–the boom of the past few years perhaps being too big, and the financial meltdown creating sudden bottom line pressures that did not exist a year or two ago. Both factors distorted the landscape. But I could not agree more when you say the next Miles and Greg are out there. All of the shifting models for revenue, distribution, etc will eventually settle. There is an audience on one end of the pipe, and talented storytellers on the other. How they connect with each other may take longer to work out than anyone might wish, but it will absolutely happen. It always does.
I’m a little concerned about this news.
From the outside it appears that EQAL is becoming a Service Provider. That’s great if you have a monthly contract and multiple clients signed up for your service that you can scale. But if it’s a project by project service it’s a slow death march because the work will dry up, the market will change and you will go out of business.
Studios and TV Networks have been working with two different types of creatives for years. Original Content Creatives and Creative Services people. Hollywood has learned that finding original ideas that emotionally engage viewers and finding people who can create and produce those ideas is hard. Therefore they pay well for those ideas and residuals are paid on the back end as well. As for creating TV promos, trailers, print one sheets and websites… well the studios and networks have learned that these creative services are much easier to come by. This has turned creative services into commodities. Studios and TV networks have set prices on what they will pay outside firms or freelancers and those prices have only gone down over the last ten years. On top of that the studios and networks have their own staffs that know how to handle create services.
That said, I think we are living in a bubble on creating online communities and if traditional media doesn’t know how to create an online community they will soon and when that happens “community building” will become part of the Creative Services department and in turn a commodity.
If you haven’t worked for a studio or a network it’s easy to get drawn into the thought of working for a famous Hollywood name but the reality is that while we are in this bubble you, as an original content creator have the opportunity to create your own audience and leverage. It’s not easy and it’s not a for sure thing but yet there is a real opportunity right now for you to create a brand that will make you money the rest of your life.
I think it’s great that Greg and Miles are doing work for CBS and for Paula Deen but it’s dangerous territory because when you are working hard on doing a great job for someone else you are creatively robbing yourself to where your original ideas are put on the back burner.
Now if you can do someone else’s dirty laundry, get paid for it and own a piece of the back end, GO FOR IT!
Marc, nice article. Tim hit it on the head, regarding the move as switching from “financing” to “production services.” But I look at this as a positive development. For a nascent medium (as what works on the web is truly different from television and film) with a small marketplace (for profitably creating and distributing original content), the ability for future creative stars to practice and refine their craft while earning money from the people willing to finance content is a good thing.
As Marc mentioned, within an appropriate cost framework (read: cheap with free labor), these creatives can make things on the side while the industry/marketplace/distribution outlets figure out how to create a profitable value chain for all participants in this type of content. And Tim, there’s no shortage of creatives in more traditional media working on their passion projects while earning from big media.
how many features about Fred has tubefilter done? because that’s the kind of oddball thing that appears to be making money, and it has an audience that’s truly over 1 million.
how many webseries have really made a profit? not many – it is even 5? prom queen season 1 arguably did because big fantastic worked super cheap – that’s not sustainable in the long term. and big celebrity web shows don’t draw big numbers either.
ever since lg15 broke in 2006 we’ve been struggling with how to make the numbers work.
eqal’s strategy change isn’t about something called “mid range web tv” that marc just made up :-)
its about the whole game.
I just want to know why Bree had a scar on her back. Is that too much to ask for? Any ideas on that one Tim?
Did you guys like the Paula/Miley video?
Just keep Miley away from the Order…… just saying.
lol @ greg.
Tim – excellent points. The services track is a dangerous one especially if there’s no proprietary tech involved. Copying community based sites and basic social media outreach tactics is happening like crazy now.
@milowent – What the Buck, Fred, etc. all fall under that super low-cost side. What I mean by the mid-range is what happens when the cast grows to over over a dozen people, and you cast professional union actors. Imagine if Fred added a whole cast of actor sidekicks – the production budget per episode would leap up and the profit margins on those videos would evaporate. It would hit that mid-range budget – maybe $20-40k per episode that just isn’t being recouped the way it’s set up right now.
Studios like Sony/Crackle are moving to big-budget (~$1M) properties like Angel of Death and The Bannen Way which can then exploit their existing distribution networks – web, DVD, TV, mobile to recoup that investment.
The takeaway I got from all this is that speculative dollars invested right now in unknown, non-celebrity original series are risky, particularly when the budgets creep up into the $100-150k range for a season.
There’s a real opportunity for talented creators here. Popular web series are going to pop out of nowhere that are shot for next to nothing. The ones that do break out will be in a position to make decent returns on their sweat equity.
The original lonelygirl15 was a hit because it was creative, not because it had a large budget, sophisticated equipment or even a celeb star. Somewhere along the line Eqal just took their eye off the ball and here we are. No funding, no show.
If Eqal now builds and manages web sites I doubt very much that is what their venture capital backers had in mind when they invested 5 million. As one user said on harpersglobe.com recently, with 10200 members there are now so many complaints that they need to move them off the home page because all the negativity is spoiling the fun. That does not speak well for their ability to market their services on a larger scale in the future.
I did think of something on the flip side of this and maybe we should investigate the history of animation and it’s humble beginnings because I would bet that there are a lot of similarities to online video and the early days of cartoons. Animator Chuck Jones once told me that when he started in the toon business Walt Disney was the old man of the industry at age 29 and Chuck was just starting out at 19. Chuck said that Walt’s little studio picked up money drawing characters for Newspaper ads to keep things going. I don’t think Mr. Disney stayed in that creative services business for too long.
The problem is Mr Disney was probably not funded by a VC firm. Eqal was supposed to be a growth company. You do not become a growth company by picking up scraps. You become one by innovating.
Has anyone actually used Eqal’s software? Version 1 was so bad that the fans currently use a grease monkey java script to fix all the problems on LG15.com. Miles Beckett personally assured us months ago that he would take charge of fixing the problem an it was not that easy. However it was not hard for the fans to create a java script to fix it so why is it so hard for a technology company like Eqal. Why do they choose to alienate their fan base rather than listening to them. Is this how you grow a company?
Now the harpersglobe site is slightly better but by today standards it is hardly innovative. The production value of the show itself is good but Eqal has still not found a way to make the interactive experience scalable which I guess is not really a major problem because they have not figured out how to market it either.
When a web series is in a position to run TV commercials and it fails to gain substantial traction there is a major problem with the business model. What is surprising is that Eqal appears to have no concept of what they are actually doing wrong. Those who participate in Harpers Globe actually enjoy it but unless Eqal can learn how to market effectively the experience will be restricted to a very limited number of participants as it is today.
I do not think that hype articles such as this one do the industry a lot of good. If you all just run around patting each other on the back and feeding each others egos you are not going to ask the hard questions. When we read journalism we expect critical objectivity… not a corporate press release or hype piece…..so perhaps it is time to burst the Hollywood bubble and take a good hard look at the industry from a user perspective. The first thing I would suggest is that Marc sign up (if he has not already done so) and actually participate in the Harper’s Globe experience as it stands today. See you there:):):)
One by one…..
Nice little editorial and great comments. I believe people are still looking for good stories and good characters and they will go to wherever they can to find it. I’m not into EQAL content or their communities, so I’m not affected whether they create or recreate. The boys have to make a livin’. But I do agree with some that longevity and success will solely rely on the talent and not the studios or celebrity fare attached to the corporate coffers. I love ya Illeana, but the best thing to come out of your Ikea show is The Justine Bateman Show- a fictional show inside the fictional show…”I’m forty and I’m pissed.”
Creating new content around products or celebrities with the same old Hollywood game-playing doesn’t look to be the path of righteousness for web entertainers.
@marc: hmmm. I would be interested to know if any “big budget” webseries actually get a return on their investment. bannen’s way and angel of death are professional looking, but did/will they actually draw an audience of any size? i don’t see any reason that they will. so that seems to be another experiment to see what works.
3 years since lonelygirl debuted, the profitability problem is still a huge one.
@milowent – Too early to tell on Angel of Death and Bannen Way, but I’m guessing Spike TV deal and subsequent DVD sales of AOD will push it into the black.
Two series that are making money, and loads of it, are Prom Queen and Sofia’s Diary. Why, because of format rights. They both have had very successful international sales – Prom Queen Japan made several million $ in a country that doesn’t even have a prom as we know it. Sofia’s Diary has sold to several countries including China (as Sufei’s Diary) where it paired up with Estée Lauder Clinique.
And you can also argue that lonelygirl15 was a format sold internationally as well as n1ckola.pl
and look at that, PQ looks like it was dubbed in german too!
http://www.dailynet.de/InternetWeb/44399.php
the international factor is a curious one. while the internet makes the world smaller, eisner has championed the idea of repurposing his shows for other countries. do these international versions independently generate enough revenue for these deals to continue? i don’t know. or are foreign companies 18 – 24 mos. behind the US in their web series experimentation phase? if the foreign productions are doing well on their own, it begs the question – why?
“And you can also argue that lonelygirl15 was a format sold internationally as well as n1ckola.pl”
Now KateModern probably made money because it had the backing of Bebo, but is Eqal actually making money out of lonelygirl15? They cancelled the USA series for lack of funding.
And big budgets? Eqal gave LG15: The Last $2500 to produce an 8 week series for LG15.com. They actually declined to fund an alternative series that had more star power from the original series.
What is interestingly is that many of the fans seem to think that the fan runs show is better than LG15: The Resistance.
LG15 The Last might even have been a bigger hit with the community if Eqal had not failed to show the least interest in the web site they created for it. In fact they did everything they could to suck the fan base over to HarpersGlobe.com on the SAME day that the fan created show launched. Now talk about cold. I guess one has to admire Miles Beckett for being ruthless.
Just look at the latest fix, WHICH HAD TO BE CREATED BY THE FANS THEMSELF.
http://lg15today.blogspot.com/.....x-v15.html
It is no surprise that Eqal has problems. They just never listen. Just as well they have been lucky. One of these days they are going to run out of lives if they do not come to terms with their central problem.
Does anyone have any solid numbers as to how much these shows are making?
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