You will be redirected back to your article in seconds

Can Yahoo Make Big TV Shows Pay?

With an eye toward landing its own “House of Cards”-style tentpole, Yahoo is looking to pour top dollar into original shows with TV-biz pedigrees. It has approached multiple studios and agents to scope out potential hits, and is zeroing in on specific projects.

But as an ad-supported site, Yahoo is making a risky bet with a shift to longer-form, prestige programming. And the company may be hard-pressed to make the economics work.

Yahoo has produced more than 70 original, shortform Web shows, but few outside of reality-dating parody “Burning Love” (pictured above) have gained traction. It’s now focusing on fewer, higher-budget properties, CEO Marissa Mayer said on the company’s earnings call last week. “Smart, more strategic investments in video can really help us grow our user offerings, traffic and, ultimately, revenue,” she said.

Yahoo marketing chief Kathy Savitt is aiming to ink TV show deals to announce at its Digital Content NewFronts presentation for advertisers next week in New York. The company is seeking to acquire four 10-episode, half-hour comedies, with budgets of $700,000 to a few million dollars per episode, according to a Wall Street Journal report.

The strategy is to capture coin from real TV ad budgets rather than simply to tap into smaller digital media budgets, said Pivotal Research Group senior research analyst Brian Wieser. According to his math, Yahoo’s big-content play could pay dividends — if the stars align.

In 2013, HBO’s “Girls” generated 27 million hours of viewing, according to Rentrak data. Using that as a proxy for premium video viewing, a Yahoo series might garner 30 million viewing hours in its second year, Wieser said. That would yield about 360 million ad spots; with a cable-like ad rate of $25 per thousand impressions, that translates to $9 million — enough to recover the cost of two 10-seg series at $450,000 per half-hour installment (without factoring in first-year ad revenue).

However, that assumes Yahoo can produce a bona-fide hit, as well as sell out ad inventory at premium prices. Furthermore, Yahoo would have to drive big numbers without the critical mass of content that Hulu and Netflix use to attract viewers. And it wouldn’t generate subscriber fees like HBO or Netflix. Other digital players are diving into TV-style programming: AOL is producing its first TV-length show, “Connected,” but the handheld-cam reality format will keep production costs relatively low. And Microsoft’s Xbox Entertainment Studios slate of new shows with notable names like Seth Green and Sarah Silverman is aimed at boosting Xbox Live Gold subscriptions.

One show on Yahoo’s shortlist, according to multiple sources, is “34 and Pregnant,” a comedy from Lesley Arfin, who has written for “Girls” and Fox’s “Brooklyn Nine-Nine,” and served as story editor on MTV’s “Awkward.” The mom-com previously was in development as a digital-only comedy series for HBO Go. (Reps for Yahoo and Arfin declined to comment.)

A new crop of buzzworthy laffers could build on Yahoo’s attempts to carve out a spot in comedy. Last fall it launched a block of comedy originals, which included Jack Black’s “Ghost Ghirls” and “Tiny Commando” from Ed Helms and Jacob Fleisher. But those haven’t been raging successes: Premiere eps for those two series have had 262,000 and 180,000 views, respectively, over the last seven months.

One issue for Yahoo is that it’s a destination most people visit for news, info, email and search, not light entertainment. U.S. video viewing on the site averages less than 4 minutes per day per user, according to comScore. “The Yahoo home page, if you look at how it works, there’s no place to showcase a half-hour comedy,” said one top digital studio exec.

Mayer, on the earnings call, said Yahoo will invest more money in fewer original series but that overall spending will be in line with prior years. The company may need to plow more into the initiative for it to kick in.

“It’s necessary for them to commit to many programs,” Wieser said. “It’s like starting a new cable network — you can’t just hope for one hit.”

Popular on Variety

More Digital

  • YouTube - Google UK Offices

    Google Launches Ability to Find Key Moments in YouTube Videos via Search

    Google has introduced a new way to find exact moments in YouTube videos through its search engine, with initial partners including CBS Sports. According to Google, search results now will provide links to key moments within the video — if, that is, YouTube content creators have provided the necessary timestamp information to Google. “You’ll be [...]

  • Spotify logo is presented on a

    Spotify VP Paul Vogel Talks Subscription Prices, Label Licenses, Podcasts

    The annual Goldman Sachs Communacopia Conference gives representatives from major companies the opportunity to present to the investment community, and Paul Vogel, Spotify’s VP and head of financial planning & analysis, treasury and investor relations, spoke on the streaming giant’s behalf on Tuesday morning. While many of his comments were statements frequently heard in the [...]

  • Directv Now

    AT&T Sued for Allegedly Creating Bogus DirecTV Now Accounts

    A group of investors sued AT&T, alleging the telco artificially inflated subscriber counts for its DirecTV Now streaming service — including by creating fake accounts. In the federal class-action lawsuit, the plaintiffs allege that AT&T wanted to make DirecTV Now seem more successful than it actually was as another way to rationalize its $85 billion [...]

  • Streaming Battle: Disney, Apple and More

    The Battle for Eyeballs Makes for an Action-Packed Streaming Arena (Column)

    It came as no surprise last week that Disney CEO Bob Iger had resigned from the Apple board since the two companies are poised to launch competing subscription streaming services in less than two months. But Iger’s departure (announced the same day that Apple revealed its Nov. 1 launch date and $5-a-month price point) underscores [...]

  • AVOD streaming video OTT users -

    Fast-Growing Asia Video Market Awaits Arrival of Disney Plus and Apple

    Asia’s over-the-top video streaming market is growing so strongly that there is currently room for a wide variety of business models. Local companies have many of the most compelling success stories, but the global players have found plenty to chew on too, and competition is expected to increase with Disney and Apple launches starting from [...]

  • Streaming Wars Placeholder TV

    Explosion of Streaming Services Points to Price Wars on the Horizon

    With its $800 iPhones and $1,400 Hermès smart watches, Apple’s not exactly in the business of bargain-bin pricing. But the surprisingly low-priced debut of Apple TV Plus, at $4.99 per month for a family subscription, is a signal that the streaming video market of tomorrow — soon to be awash with services from Disney, WarnerMedia [...]

  • VJ1 RuPaul's Drag Race

    Pluto TV Adds Seven More Free Viacom Channels, Including One for 'RuPaul’s Drag Race'

    Viacom continues stuffing more library content into Pluto TV, its free, ad-supported internet streaming service, adding a range of African American and LGBTQ programming from VH1 and BET. On Tuesday, Pluto TV launched seven new genre channels with content from its parent, including dedicated channels for VH1’s “RuPaul’s Drag Race” — with episodes from the [...]

More From Our Brands

Access exclusive content