The other day I was listening to a Marketplace special on Pemberley Digital, a producer mostly famous for The Lizzy Bennet Diaries which is an adaptation of Jane Austen’s Pride and Prejudice. They interviewed the Director, Bernie Su, who said the show “speaks to our modern culture […] the ADD culture. People want to get in and get out, get in and get out.” Their focus is to telling long stories in 4-5-minute increments.
Let’s take a look at their business model. First, they look at each story as franchises, not just an adaptation from a book. They generate revenues from several different sources.
- YouTube ads
- Merchandise sales (t-shirts, pins, mugs, posters, and more)
- Affiliate marketing (off of their website)
- DVD sales (they sold 7000 DVDs of the Lizzy show via Kickstarter campaign, even though it is available for free online)
- Book (based on the web series, which is based on another book)
What I find most interesting about this story is how to develop a show in small increments to captivate a niche audience. Moreover, the show is based on a classic story. One of the challenges posted by the interviewer is how to hook the viewer in the first four to eight minutes. Bernie thought that observation was astute. Compared to a movie, you pay your theater ticket and sit for the whole thing instead of consuming it in small chunks. Pemberley Digital has to be able to modularize sections of each chapter of Pride and Prejudice (they have now produced a number of other shows) in captivating four to five minutes. They use various artifacts such as humor, conflicts, and anecdotes from current events mixed with Shakespeare. Each episode has the main actor wearing different clothes and filming from different places. Sometimes a new character is introduce as the story evolves. Settings include home and office spaces. Their production of Emma Approved, which also won a number of awards extends the model to include advice on fashion, careers, romance, and music. The target audience includes the teenager and 20-year old female group which is a high margin segment. That said, it is also a very competitive space and capturing their share of the attention is difficult.
It’s not news that short videos can be very successful in captivating audiences and launching franchises. Think Justin Bieber and Miley Cyrus around 2008. Shows can be accessed anytime and on any device and, most importantly, they are perfect in our busy days between an email and a meeting. I can watch three episodes in my laptop, stop, work, and then resume after dinner, or I can watch on the train on my way to work on my phone.
They won the 2013 Primetime Emmy Award for the Lizzy Bennet Diaries and several other awards for their other shows. Let’s look at the viewership funnel and ability to captivate their audience over time. I looked at the YouTube viewer count for both Lizzy and Emma shows (see charts below).
Between the first episode and their average viewer count there is a drop of ~75% according to the three funnels above. What’s most impressive is that they managed attrition well from then on and maintained viewership fairly constant for the remaining episodes. I took a brief look at their other shows (e.g. Frankenstein MD) and noticed a much smaller viewership (~60-80k average). That said, the first episode filters 50-60% of the audience which is when people decide whether they like the show or not. The first episode suddenly becomes very important for the rest of the series. While I think shorter vlog-like stories certainly have a market I am afraid that such businesses are too hit-driven. In other words, they produce great shows upfront and then struggle to create subsequent blockbusters. Second, competition and substitution is very fragmented and can come from big producers and distributors such as Netflix to smaller one-off performers, think the next Justin Bieber. A similar competitive environment that comes to my mind is social/mobile gaming platforms such as Zynga and King Digital. In order to create social lock-in these companies need to continuously produce top content, provide social sharing, offer merchandising, and capture their audiences inside and outside of the show (e.g. blog). They can also offer premium content to users who provide their personal information or pay a fee.
What can they do to reduce the 50-60% filter in the first episode? Are these business hit-driven? If yes, how much? Could they license their content to other distributors such as Netflix? Can they produce their content exclusively for Yahoo Screen or Netflix? What are other revenue models in addition to ads and merchandising? I guess we can ask Emma.