Do We Laugh at this? FunnyorDie Deals with HBO
June 11th, 2008
My doctor says laughter is the best medicine.
He also gave me six months to live. When I told him I couldn’t pay his bill, he gave me another six months.
But seriously folks, is today’s announcement of FunnyorDie’s partnership with HBO a step towards treatment for the ailing web video economy or is it just another symptom of a distressed digital development system grasping for a cure from a declining distribution channel?
Say what you will about FOD’s, traffic, strategy or content, but all the noise about whether or not FunnyorDie has a real digital business, or as I argued, is irrelevant as a web property, is made moot by today’s announcement.
And that’s a good thing. Which we can all laugh about.
It’s a good deal for both parties despite the economics.
From a publicity perspective, HBO’s struggles to rediscover their voice post-Sopranos gets a shot in the arm with access to the FOD library and talent list. What’s the over / under on the usage of the word “edgy” over at HBO today? A million, and I’ll take the over.
HBO gets an equity position in FOD, which will end up being more of a burden then if they were to license content on a first-look basis. You own it… you’re married to it and better make it work.
The big win for HBO is that they get what amounts to a digital studio. A team of creators, marketers and web developers who have been working from lean web budgets, building interactive platforms and managing fickle talent relationships since April 2007. That’s a lifetime for online and is a lot harder than most people think. Just ask HBO, who launched and subsequently killed their own comedy site initiative, ThisJustIn.com, after a matter of a few dreadful months.
On the flip side, FOD gets a much needed, yet somewhat symbolic (less than $10M), revenue infusion and a financing deal to produce 10 hours of content, original or otherwise.
More importantly, they get in HBO, a marketing and distribution machine that can drive traffic, push content and offer real upstreaming opportunities.
Yes, Will Ferrell and HBO were already in bed together on a handful of projects and no, neither he not Judd Apatow nor any of the other A-listers behind FOD needed this deal to get their calls returned by HBO’s development execs. But FOD gets a big increase in brand goodwill by tying their boat to HBO, still considered the gold standard of premium niche content on the reigning king of platforms, TV.
Looking beyond the wins for the two parties, this is an important announcement for web video economics at large and there’s reason we should all be laughing along with, not at, this deal.
Studios and networks are finally coming to terms with the reality that producing compelling content for digital platforms isn’t in their DNA.
There are too many infrastructure issues, guild concerns, budget bloat, kill-your-colleague politics, bureaucratic gerrymandering, creative constipation and corporate development spam that leads to poorly produced, overpriced, irrelevant content that dies on the vine before anyone even had a chance to care.
By the way, you don’t need to be a major studio or network to produce a bad show, just ask the critics who slammed Michael Eisner’s new piece, Foreign Body. Ouch.
Today’s FOD / HBO deal is a great example of the trend towards big studios and networks striking independent production deals for web video. It’s the rough equivalent of the way of the early days of independent film an TV producers getting studio deals. Spelling Entertainment, Carsey-Werner, Miramax and many others all had independent runs producing for distributors. In some cases these collaborations led to acquisitions and in some cases it didn’t. As the market developed, studios built out their own specialty divisions. In some cases they sustain (Fox Searchlight), in some cases they succumb to the death knell, (Paramount Vantage).
Studio have always gone to third-parties to produce their content. For the most part, today’s major studios are essentially banks that finance projects and teams of marketers whose jobs are to ensure that the studio investment sees a return. This, coupled with access to distribution through exhibitor relations makes up the skeleton of the studio system. But the content comes from good partnerships.
Studios and network need production houses that can not only deliver compelling content on a budget, but have the resources to cover legal, equipment and personnel support. Liability and E&O insurance isn’t cheap and if you want to do a deal with a major distributor, you need to have those areas covered. This is a barrier to entry to many of the smaller, independent producers looking for financing and distribution partnerships.
Here’s the corollary to today’s web video deals. FOD gets their HBO deal. EQAL, the new company from LonelyGirl15 creators Miles Beckett and Greg Goodfried, has a first look deal with CBS. Here at SDG we have an Xbox deal.
I’m a big believer that the independent digital studios aligned with major distributors is the immediate future of premium, original production arrangements. But not everyone agrees. Yet.
Some studios and networks have opted for on-the-lot type deals. ABC and Disney have Stage 9, Warners has Studio 2.0, Sony has its various digital production teams working on Playstation 3 content and beyond. Thomas Lesinski at Paramount has what I would consider to be the purest example of an in-house digital team.
The macro is that we’re getting closer to a real market for premium digital content production and distribution. For that market to exist, we need scarcity in both the resource that is the content producer and the real estate that is the distribution pipeline. That means a shakeout on both ends, which we’re seeing now.
Consolidation will move the needle in helping to set the value of content, one of the major roadblocks in the development of sustainable web video economics. The good news is that there’s plenty of room in the digital market and viewership fragmentation means more demand for long-tail content. Let’s all hope this FOD / HBO deal works out and opens the door for additional layers of content and broader paths for producers to tell great stories and laugh all the way to the bank.
Tags: eqal, fox searchlight, funnyordie, greg goodfried, hbo, lonelygirl15, miles beckett, paramount, paramount vantage, SDG, sony, spelling entertainment, stage 9, studio 2.0, thomas lesinski, xbox
Posted by: jake Posted in BusinessYou can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
June 11th, 2008 at 8:03 pm
I once advised viral-video site Metacafe to develop a distinctive identity, or Hollywood would eventually leave ‘em in the dust. In Silicon Valley fashion, they responded “technology and user experience are all that matter.” And, lo, FunnyorDie, a new and relatively small UGC site, gets an HBO deal, while the established giant that is Metacafe is still seeking name recognition. I totally agree with you that Hollywood is full of “infrastructure issues, guild concerns, budget bloat, kill-your-colleague politics, bureaucratic gerrymandering, creative constipation and corporate development spam” (awesome list, Jake), but at least there’s recognition in Hollywood that creativity is important. I applaud HBO for investing in creativity, and I applaud FunnyorDie for making creative expression (and not technology) its focal point. As a marketer, I’m all too happy to see the old rule hold true: differentiate or die.
June 11th, 2008 at 8:36 pm
Freddy, thanks for the comment. Just to clarify, the referenced list of woes applies to corporate studio structure, not the Hollywood creative community at large and speaks to the difficulties in developing original content for digital distribution within the fortress of the studios themselves.
As for your Metacafe adventure there’s a lot packed in there about the interesting “frenemy” relationship between Silicon Valley and Hollywood.
FOD is Silicon Valley venture backed, but distinctly Hollywood. Their web development team is located not in LA, but in the Bay.
If nothing else, FunnyorDie has done a better job than most of bridging the chasm between Northern California’s technology / venture communities and Southern California’s entertainment world.
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May 13th, 2011 at 4:46 pm
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