The Economics of Niche Programming

The Economics of Niche Programming

There’s a reason Firefly got canceled.

Netflix must have known it’s my birthday next week, because they made an announcement last week that sounds like it was made just for me:

“House of Cards,” the much-anticipated television series and political thriller from Executive Producer David Fincher and starring two time Academy Award-winning actor Kevin Spacey, will debut exclusively in the United States and Canada from Netflix, the world’s leading Internet subscription service for enjoying movies and TV shows.

A critically acclaimed director and an enjoyable, talented actor adapting one of my favorite BBC series to American television? Why make it a press release? There can’t have been more than nine people in the U.S. who were clamoring for House of Cards to be remade – why not just shoot us all a text?

The obvious first reaction to this announcement is “why Netflix?” What business does a distributor of digital content – either real DVDs or streamed media – have producing obtaining exclusive rights to a TV show? But the more considered follow-up is “why not Netflix?” Where else would such a niche show belong?

Answering that question answers a lot of others – including questions about Arrested Development and Firefly.

Arrested Development has long been considered a show that didn’t get a fair shake by Fox. Critically acclaimed, laugh-out-loud funny and densely plotted, it broke ground for a new generation of sitcoms. It chugged along for three good seasons (though some of the final episodes were phoned in (though who can blame the writers, given the day-by-day uncertainty over the show’s fate?)). But none of that was enough to save it.

What doomed Arrested Development? Mitch Hurwitz had a column in the Guardian last month where he outlined a “Guide to Getting a Sitcom Canelled.”

Have a confusing title
Come up with an unwieldy title that perhaps comes from the realm of psychology, so that the title of your show is almost instantly forgettable. […] If you call a show “Arrested Development” it’s confusing and sufficiently disorientating [sic] to guarantee that a wide audience never discovers the fruits of your labour.

Audiences love fast cars and exciting vehicles
So see if you can put in some heavy machinery like a stair-car, that isn’t easily associated with speed or sex appeal.

Try to do too much for a 20-minute programme
If in your particular medium an audience is used to a simple plotline or maybe one or two stories, see if you can get eight in there, and find a way that they somehow intertwine.

And so on.

It’s an equal blend of self-effacing humor (“try to do too much”) and sour grapes (“audiences love fast cars”). Hurwitz acknowledges his show’s Pynchon-esque ambitions but treats them as equal part blessing and curse. This sort of tone doesn’t draw a lot of sympathy from an impartial audience.

Plus, as it happens, Hurwitz is wrong. There is an audience for this sort of show. They’re all watching FX.

FX, Fox’s cable entertainment network, is the home of shows like It’s Always Sunny in Philadelphia, Archer and Louie. These are edgy comedies, depicting unsympathetic characters doing terrible things to each other. They feature intertwining storylines and dense cultural references. Archer in particular packs in references to obscure cultural figures with a casualness that belies their dark tone. When a strung-out Woodhouse jokes about shooting a pina colada off the head of William S Burroughs’ wife in Mexico (S2E3, “Blood Test”), I nearly choked from shocked laughter.

It’s easy to say that “audiences weren’t ready for a show as smart as Arrested Development.” It’s harder to say that when there’s a cable network that airs shows like that all the time.

(Sunny, Archer and Louie all post-date Arrested Development, of course, so it can be argued that they’re following a trail that Hurwitz blazed. But it can also be argued that they’re avoiding Arrested Development’s mistakes)

Firefly, another show that Fox canceled too soon, was a space western produced by Joss Whedon, who had risen to prominence with shows like, wait, do I even need to gloss Firefly for this audience? You know all the details, right? Okay, I’m just going to skip to the analysis.

Sci-fi is always a tough sell for a conventional audience. Sci-fi that plays with the tropes of sci-fi – western trappings instead of shimmering costumes – is tougher still. And Whedon’s particular brand of melodrama can be a very hard pill to swallow. With all these elements working against it, Firefly seemed doomed to failure. While it’s perhaps surprising that Fox pulled the plug after only 13 episodes, it’s not surprising that Fox cancelled it so young.

Fox took the brunt of audience furor for this call. “The networks aren’t willing to give shows like this a chance,” fans said. Except networks are.

Battlestar Galactica is set in a universe that, confusingly, looks a lot like 21st century Earth, only with starships. But it’s not Earth. In fact, it’s the last survivors of a genocide, who are fleeing across the galaxy to Earth. They’re pursued by robots that either do or don’t look like humans, depending on which ones you encounter. In the close quarters of a huge ship, they deal with intertwining personal relationships, political tension and questions of identity. Oh, and there’s mysticism at play as well.

(And that’s just the first two seasons – when it was still making sense)

That’d be a hard novel to sell to an audience of sci-fi fans, much less a television series. And yet it found a devoted group of followers, critical acclaim and pop culture presence for four seasons on the Sci-Fi Channel.

So why did BSG succeed when Firefly failed? Why is It’s Always Sunny in Philadelphia entering its seventh season when Arrested Development struggled for three? What’s the element that those successful shows had in common?

38 Comments on “The Economics of Niche Programming”

  1. Chris Bowyer #

    Without knowing for sure, I’m guessing the difference is that Arrested Development costs a lot less than a lot of the FX fare. Louie, in particular, is dirt cheap to produce.

    Ditto for Firefly, which was pretty expensive for its time, as well.


    • John Perich OTI Staff #

      I take it you meant “Arrested Development costs a lot more than …”

      Which it almost certainly did, but it didn’t have to. It could have just as easily been set in Miami – a city identified with real estate booms, vapid wealth and wacky characters. The cast was largely unknown until A.D. put them on the map. And there were only a few recurring key sets: the model home, Lucille’s apartment, the Bluth offices. Sometimes the prison.


  2. Tim #

    With Battlestar Galactica, do we not need to ascribe some value to the fact it was a remake? While the original wasn’t a great success it did build up a fair amount of cult appeal and cultural awareness, so it might well have snared extra interest in the early broadcasts boosting ratings.

    Would the recent versions of The Karate Kid and The A-Team have been made/equivalently successful with different titles?


    • John Perich OTI Staff #

      … there’s something to that, but that just leads to the same question back again. Why did the Sci-Fi channel remake of BSG succeed, while the NBC remakes of The Bionic Woman and Knight Rider failed?


      • Bill #

        Well, to be fair, The Bionic Woman and Knight Rider kinda sucked. Though the original Bionic Woman pilot that leaked online with Ann “her?” Veal playing the deaf sister was unintentionally hilarious.

        I often wonder about niche programming if there’s a better way to leverage the passionate fan. There was money to be made off of Firefly… somehow. Lots of those crazy browncoats have an attitude of, in the parlance of Futurama, “shut up and take my money” to anything with Firefly/Serenity on it. And of course every actor in every Sci Fi show ever has a side income for life doing autographs at nerd conventions. So since this money is out there, in some way the passionate fan should be worth far more than a casual viewer to the company making the show in the first place. They do licensed comic books and board games and online content and all that, but that all seems a drop in the bucket compared to the cost of making a TV show. Other than (I assume) being more likely to buy the DVD of a show they’ve already seen, I don’t see that turning into real money that might keep a show alive.

        Things like kickstarter fascinate me in this respect, but we’re so accustomed to getting TV for free or from a subscription model, that the number of people to drop cash to help get a series made in the first place is probably miniscule (and the hippie environmentalist in me knows people don’t change habits like this very easily).

        This obviously occupies far too much of my brainspace for someone who doesn’t work in entertainment, but it seems completely appropriate for a website with this name.


        • An Inside Joke #

          This comment reminds me of something I discovered in a TV analysis class back in college (unfortunately, it was years ago and I can’t remember the source, so you may have to take my word for it.)

          An advertising firm did a study in which they showed television episodes to two groups: one group of fans of the show who never miss an episode, and one group of casual viewers. Afterward, they asked each group to identify what bands they’d seen advertised during the commercial break – and the fans were able to name far more brands with far more accuracy. So, it’s actually more profitable (in terms of raising brand awareness) for advertisers if they advertise for a show with a few devoted fans, than for a show with many casual viewers.

          I keep hoping that somehow, the industry will do away with their whole system of Nielson ratings and sweeps weeks – but for the time being, I guess we’re stuck with a broken system.


          • John Perich OTI Staff #

            Inside: the industry will have to. There’s so much rapid growth on demand-side advertising that the money is naturally shifting there. TV will discover a better model to price advertisements than “sweeps week!” within 3 years or will die on the vine.

        • Gab #

          How much of that passion and willingness to buy anything comes from the fact that the show they love so much has been cancelled, though, and thus they have a “take what I can get” mentality? I feel like at least a little of it comes from the fact that the show is over.


  3. Lee OTI Staff #

    John, great article, but you missed a golden picture caption joke opportunity:

    “Proctor and Gamble makes it rain. They make it rain they make it rain they make it rain.”


  4. spavis #

    Firstly, your link to the netflix announcement is borked.

    More importantly, in Netflix’s announcement they explicitly say they’re not producing it. They’re just licensing the streaming rights before it’s even produced. Normally they license their streaming deals from the networks but in this case Netflix made an end run around HBO to get the streaming rights because the show is still unproduced.

    So while I’d like to see Netflix produce shows it’s still not on their public roadmap.


  5. Tim #

    I realize this is a bit off-topic, but I have heard a lot of calls for Netflix to start re-producing cult hits, like Firefly and Arrested Development.

    While I would love having new episodes in theory, I wonder how these shows would change without the constraints of a network – no Standards & Practices means more cursing, sex, and violence. The idea that keeps sticking with me on that thread is the Chinese curses of Firefly; granted, I’m sure Joss Whedon and co. intended it at least partly as a preview of the future of globalization, but they could just as easily (in new episodes) have Mal calling out “F*** you!”.

    There’s also essentially no time limit, which may drastically change the story structure since you don’t have to create act breaks around commercials. Are new episodes still going to be 22 or 44 minutes long?

    Without the limitations of a network, the content producers might not be pushed to the same level of creativity.


    • John Perich OTI Staff #

      While producing in a non-network format might free directors from the 22 or 44-minute constraint, I think that’s still something audiences will look for. Even “sitcoms” on premium networks (like Californication or Curb your Enthusiasm) are nearer to 30 minutes than, say, 38 or 52.


      • Kelley #

        Not to mention that Whedon’s own online Dr. Horrible’s Sing-A-Long Blog was produced in three 15-minute segments, mimicking the 44-minute constraint even though it didn’t have any commercials.


  6. Lynn #

    I would say that the 80’s Tom Hanks films and stand up comic specials on Comedy Central are pretty “cheap” shows to broadcast; whereas the Daily Show and the Colbert Report are the budget hogs – mostly for the salaries of the hosts.

    Comedy Central used to have much more original programming (reno 911, strangers with candy, etc) that they no longer invest their time or money into. Roasts of Donald Trump are cheaper.


  7. Tulse #

    Before we anticipate the return of beloved cult shows (you can’t take the sky from me!), I think the economic implications of approaches like this need to be thought through more clearly. The main issue that I see is that Netflix is a pure subscription model — it doesn’t matter to them if you subscribe to watch one show or their entire library (indeed, that’s not completely accurate, as bandwidth costs mean they would greatly prefer you to subscribe and not actually use their service at all). Contrast this with a traditional TV model, where what the broadcaster gets paid (in ad revenue) depends greatly on how much of their offerings are actually watched. Perich of course makes this clear in the article, but I think what is not clear is the impact this will actually have.

    I’d argue that the most obvious result will be to push Netflix (or similar endeavours) to have a very broad but shallow pool of original programming cutting across a wide variety of genres, rather than having multiple shows that would capture similar audiences. The goal of Netflix is to broaden its subscriber base, not actual viewership, and so there is no reason for it to have both, say, Battlestar Galactic: The Return and Firefly: The New Adventures, since both shows cover similar audiences. The marginal increase in the number of subscribers one might see for producing both shows would be less than producing only one of them and another in an entirely different genre (say, Party Down Again, or even, god forbid, Eight is Still Enough).

    Contrast this with the networks and other broadcasters, who make money primarily through eyeballs watching ads. Sure, this model drives a certain kind of programming, but it also means that, at every half-hour, the broadcaster needs to produce shows that will capture the most eyeballs, and if programming a solid evening of sitcoms, or sci-fi, or dramas will do that, then so be it. There will always be a direct financial benefit to producing a well-watched show, even if its audience overlaps with other shows on the network. The networks want to maximize viewing time. It doesn’t matter if same folks who watch House also watch Lie to Me. But for Netflix, having shows with that kind of audience overlap would be a waste, as it wouldn’t actually increase their subscriber base.

    The best analogy I can think of for this is comparing a traditional restaurant to a single-price all-you-can-eat buffet. As far as the buffet owners care, once you’ve paid your entry fee, they’ve “monitized” you as much as they are going to, and so their incentive is to get as many people through the doors as possible. They do this by offering a wide range of cheap-to-produce food — none of it is of particularly high quality, and no single menu item is really a draw, but that doesn’t matter, as they don’t really care what you eat (or even if you eat), and they get folks in by the variety, not quality. By contrast, a traditional restaurant is more like a traditional broadcaster — they make more money the more you consume, and the goal is to get you to eat as much as possible. On this model, you can specialize, since you can differentially price your items (i.e., ad rates) to recoup higher production costs, and variations on a single cuisine are rewarded by return business.

    I don’t know about you, but I generally much prefer the food at traditional restaurants over most buffet joints, and I think that ultimately boils down to the different economic models. As I see it, while the announced project is fascinating, the economics of the Netflix subscription model is going to mitigate against this kind of expensive quality programming, or at least multiple shows that appeal to the same audience (that would be like an all-you-can-eat buffet that has a section for various lobster dishes).


  8. Brian #

    I only checked out House of Cards because Fincher was remaking it, but I literally checked it out from my local library so nobody made a dime.


    • John Perich OTI Staff #

      Short answer: the prices would be different if there weren’t a resale / used / rental market at the tail-end of the retail pipe; also, enjoy, it’s a lot of fun!

      Long answer: [over 100 years of price theory]


  9. Pj #

    Great article! I have one small gripe, though… I don’t think a single episode of Arrested Development, even in the slightly off-pace-at-times season 3, was ever “phoned-in”. Despite the weirdness of season 3 in places, the humor and writing is still as strong as ever.

    That’s it!


  10. yellojkt #

    I’m convinced that Freaks and Geeks was canceled because its niche market – former D&D geek mathletes who became stoners in the early 80s – was just too narrow. Basically just me.


  11. Gab #

    Firefly, another show that Fox canceled too soon, was a space western produced by Joss Whedon, who had risen to prominence with shows like, wait, do I even need to gloss Firefly for this audience? You know all the details, right? Okay, I’m just going to skip to the analysis.”

    That made me very, very happy.

    More on point, though. What about YouTube? The first full-length, produced-exclusively-on-YouTube feature premiered last weekend, “Girl Walks Into a Bar.” Free subscriptions to that one, although more advertisements than Netflix.

    Also, if niche audiences aren’t money-makers, why does Castle have some sort of blatant fanservice Firefly reference every so often? The thing with Castle is it’s highly obvious that the writers are writing for Firefly fans, not only simply because Nathan Fillion is the star. It becomes apparent with the themes of the episodes, even without the “space cowboy” costumes and spas named “Serenity.” Steampunk, aliens, vampires, comic books… They’re writing for a niche, but it’s doing swimmingly- or at least well enough to have a fourth season in the works. Is this because they knew they’d get the Firefly geeks (like me) from the beginning and (literally) banked on them sticking around? But then there are all those other viewers that make it financially worth it- where are they coming from? Its ratings have gone down a bit (until this past week- the premiere of Dancing With the Stars gave it a huuuuge boost), but they’re still, on average, fairly high (right?).


    • Tulse #

      I think those Firefly references appear in Castle because Nathan is a huge promoter, and not because the producers want to bring in the horde of fans, since there isn’t a horde of fans (just a loyal but small cadre of Browncoats). Castle is precisely the kind of bland, comforting, plot-by-numbers TV fare that would do quite fine without the geek references (and if you want references to geek culture on mainstream shows, CSI was way ahead of Castle</i).

      And the mention of Castle prompts me to offer a counter-argument to the oft-repeated OTI mantra that the gang likes “actors who work”, and not those prissy folks who only do “meaningful” projects and refuse to participate in pop culture schlock. That stance fails to take into account the deadening effect of working with lousy material on an actor’s craft. Watching Nathan Fillion mug his way through episode after episode of the lazily-plotted, ham-fistedly-written Castle is outright painful, and I cannot help but think that such terrible day-in, day-out work dulls an actor’s chops. Fillion will be a worse actor when he comes out of Castle (in addition to whatever effect the show has on his more serious opportunities). Doing crappy work of any kind numbs the soul, and not every sort of experience hones one’s skills — sometimes it just makes you lazy.

      (And yes, I am a Browncoat who watches Castle, and after each mediocre-to-terrible episode I tell myself that I value my self-respect too much to watch another. Seriously, I don’t care how much I adore Nathan, this is the last damned one…)


      • Gab #

        That does make a lot of sense. So why do you think the producers give into his demands?


        • Tulse #

          My guess is the producers do it because Nathan is a nice guy and the co-star, and the occurrences are very minor and subtle references that aren’t at all noticeable by a non-Firefly fan — they don’t materially interfere with the main audience’s understanding of the scripts, but are just tiny Easter eggs.


        • Bill #

          I suspect they hired him in the first place because they liked his previous work. So I wouldn’t be surprised if they threw those things in because they liked Firefly too.

          And, while the Firefly audience is apparently not enough to carry a show, adding a chunk of the Firefly audience to the existing audience of a mildly amusing crime procedural can make the difference between cancellation and the successful-but-not-quite-a-hit status that Castle enjoys.


  12. pwl #

    “Advertising is the reason television exists”

    …ironic that you assert this whilst starting the article referring to a BBC-produced program.

    advertising may be what sponsors US-based TV, but the bbc manages to produce a ton of (often reasonable-quality) content. thanks be to UK tv license payers… (from original audiences as well as from US “re-makers” :P )


    • Timothy J Swann #

      This is a good point, but the very way it does television is not particularly easy to disentangle from the influence of commercial television.


  13. Sananana #

    There’s been a lot of talk about the economics of shows getting cancelled in one of the communities I frequent. Genndy Tartakovsky’s latest animated show, Sym-Bionic Titan, over the course of 20 episodes, got the unannounced timeslot shuffle and executives claiming that it failed to sell enough merchandise (because none was available for sale). Of course, among the fans there’s a lot of grumbling like, “Well, I watched it every week” or “I would have bought toys if they were available.” However, there’s also the issue that the majority of us were much older than the target audience. Sure, you have some teens and college kids watching it, praising the ‘mature’ (relatively speaking) storyline and the quality of the animation, but no amount of letters or calls from a bunch of us really matters, because the executives want kids to be watching it.
    So Cartoon network, without a hint of irony, continues to renews its dirt-cheap live-action shows and import cheap Canadian shows, and the cycle goes one.


    • Gab #

      I still say they jumped the shark when they started airing live programming. WTF, Cartoon Network?


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