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Shane Smith: TV and Film Production Costs Don’t Make Sense in the Digital Era

This column is part of Variety’s Broken Hollywood feature. For more execs and their opinions on the state of Hollywood, click here.

I think the biggest issue for legacy media — both TV and film — is that it just costs too much money to develop a TV series or movie. And most of them don’t work. Then the one that works has to pay for the rest.

If you look at film, distribution is pre-bought. If you’ve paid for the distribution, you say, “I have to make sure it’s a film that gets enough butts in the seats.” I think that’s the problem: It becomes prohibitively expensive, and you can’t develop films for a smaller amount of money.

If you’re playing roulette and you’re betting on black every time, if red comes up five times — suddenly you’re bankrupt. You’re gambling with all your cash on tentpoles.

It’s the same with television: Look at how expensive it is to produce a series. And there’s an 80% chance that a new show will get canceled in the first year. All of that costs money.

You have a lot of companies developing stuff that’s just derivative. If “The Voice” is the No. 1 show on TV, they say, “Let’s do 100 different versions of ‘The Voice.’ ” The problem is, by the time you get to market, it’s already saturated and everybody hates the format.

Don’t get me wrong: I love film. I love TV. But I watch most of my stuff online and on mobile.

What’s happening online is you can do, effectively, a whole series for the cost of craft services for a show in the old model. You can have the pilot, then change and tweak it. So you have more freedom to develop the show, or star, into something that is more entertaining — and that the audience wants to watch.

We’re platform-agnostic. For us, it’s about how do you get to all screens. It’s not a question of “Can TV migrate to online?” If that’s the question, you’re already dead, because online is mobile, and that’s the future.

If you look at film in particular, the majority of their money is made through theatrical distribution. The problem is similar to what happened in music. You have three companies controlling the majority of the market, and they price out the rest of the market. But all they need is a couple of dogs, and they’re in trouble. And companies like mine come along and eat their lunch.

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