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Industry Report: Distribution and exhibition

Scopas Medien: The Business Model of Web Series


- Thomas Schneider-Trumpp is Executive Producer and Head of Animation at Scopas Medien.

When did started working with Internet?
Scopas Medien exists since 15 years; since '99 we are focusing on TV series concept. Since a decade we are presenting nearly every year TV series concepts; at the moment we have 4 series in co-production and one feature film. When you see that TV is working so well it might seem that there is no reason to work on the internet, but we think that this is not the case anymore.

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How did you build your business model?
Our business model works for producers not for distribution companies. It is a small business strongly growing, there are no big numbers. Since 2008 it has been possible to make revenues purely from the web, also with animated content. The web content is very easily transferable in other countries, so we are looking for franchising partners in other countries.

Why did you made series for web?
There are several reasons. It might be typical for Germany, but animation is a very rare content; although we do it since 15 years we still have to struggle and fight with broadcasters to come up with original animation content, and it usually comes from outside Germany, licensed in Germany or co-produced. There are two additional important factors: broadcasters tend to finance pre-school series and the production cost for TV series are getting drastically down.

The consequence is that we can not produce anymore an animated series in our studios, so we have to go outside and this is not very positive. As we are specialised in stop-frame animation, it is very difficult to split the work with other producers. We also want to develop concepts for other target groups, and this is impossible in Germany, where series like the Simpson or South Park are running on private channels.

For all these reasons, we decided to self produce and distribute content for the web.

The web has many positive aspects. We can reach all target groups, which in our case is from 14 to 45 years old who love to watch animation. In the web, as the broadcaster, like we have actually became, we have full control of our brand because we can decide when, where and how often to show the content. We also have full control of the value chain, this was something we always struggled with the broadcasters. We invested quite a lot of money in TV co-productions, with the idea of keeping the rights and search for licensing partners through our own merchandising department. This strategy become useless if the TV broadcaster doesn’t show the content on TV.

The co-production idea in our case does not work, even if we are supposed to be on the same level of the broadcaster. In the web we control the content. There are also new business models rising in the web, making your content available to advertisement.

We have a direct relation with our audience, we know our audience, we can in a way control it, sending out information with newsletters for example, and the are hundreds of channels where you can deliver your content and make revenue with it. And of course there is a huge target group spending about 60-120 minutes a day on the Internet visiting an average of 10 pages each; we have to go where the audience goes and present our content.

What are the elements you should pay attention when you produce for the web?
When you start to develop something for the web, you should know what means web, you can deliver your footage and recycle it again and again. The “web generation” is looking for different kind of content, but always short and fast.

What kind of content do you produce?
Our content is about “sports comedy”, sports news and famous sport characters. We engage an emotional contact with the audience. We picked out 2 projects. The first one is about the German national soccer team. 9-12 million people follows the championship on the web. There is a perfect schedule to produce something for the championships and national games. It’s a permanent topic and it has a target group. We created a content to top this target group, building our own channel. We estimate that we are attracting 10% of the soccer audience, which a successful case.

How many episodes do you produce?
We produce 1 to 2 episodes a week always based on the sports news. We cooperate with several web portals that diffuse the shows on their home page. We have different styles of programmes that we deliver: a backstage article style, a story style and a backstage life style. The shows are made with puppets. We produce around 40 episodes a year and, during the World Cup, we produce content every day.

After the first year, RTL Television came to us asking to have it also on TV. We produced 2 seasons for them.

What are the main differences of a TV and a web producer?
We had to learn a new way of story telling and distribution. We also had to learn to be journalists. To do this kind of content, you must be a sport fan, interested and informed about sports, because you have to talk as a journalist to a target group that might be better informed than you; in the morning before planning to shoot a new episode we read the newspapers; then it is important to know exactly how the website works, becoming in a way a programmer. We created an editorial department with a traditional team of comedy writers, with which we sit and discuss which news to take; when you produce a clip this might be interesting in the web only for 2 weeks, so you have to focus on the right news and produce a script with these characters that everyone knows.

We have a fast way of producing these episodes, it's not like on TV, and we have to deliver an episode in 2 or 3 days. Stop-motion is the perfect way for doing this; we are able to produce 1 to 2 minutes a day, which is actually the length of each episode, so we can shoot in one day, also because our production schedule is between 1 and 6 days for the three different styles.

You have to plan your delivery, you have to upload the clip on an ftp server or even send it by email, and you have to keep in mind all the different formats as Quick Time, Windows, Media file, etc. In 1 or 2 years there will be only two main systems. You have to have new skills and new ways of productions.

When did you start the production?
Our first concept was based on 22 minutes episodes during the world cup 2006. We produced a 2 min pilot and a bible, with a different title based on a RTL TV series. We invested our own resources, around €25,000, to create the puppets and to shoot 2 minute pilot. We pitched the concept to TV and web portals. There was a lot of interest but we didn’t make any revenue out of this until 2008, when portals started giving us money. We did a pilot to explain the story and show how fast you could deliver it.

Now you are distributing your own content. How did you learn this new job?
Distribution was absolutely new for us. In the web you can give your content and web portals will deliver it. It's quite easy because in Germany you can sell licenses to any portal with no restriction for exclusive rights.

The web portals can either give you a minimum guarantee (which became the more and more difficult), or you get paid on a revenue share model. In this case you need people watching your content. Our content talks about news, so it's on the front page of the web pages; over the last 10 months we generated 16 million users in Germany, with an average of around 1.6 million a month because it is a news based entertainment format. The portals also have to place the content before an event. At the moment we are producing for the German national soccer league, we deliver on a Friday and they place it during the weekend.

We generated about 30 – 50.000 users with one clip during the first week. There is also a long term viewing process during the six following months.

We will soon start cooperating with a distribution partner who delivers news to more than 300 portals. Since we are dealing with news, these portals will also use our content. We expect to generate over 130.000 users per clip. In Germany the cpm is between €20 and €40 to split with the distribution company or the portal. Between 30% and 50% of the revenue comes back to the producer.

Do you work with YouTube?
Yes, we are generating 85% of our users on YouTube. The revenues are quite modest: around €1,000 to €3,000 Euros a month. YouTube pays pay per click (cpc) model, and you have to become a partner of YouTube. This is possible when you have all the rights of the show. Being a professional company it is possible do become partners just with a contract. You get paid when people are watching your film (from the beginning to the end) and when they click on the advertisement; we get 50% of the revenues, the money comes from a click. If this was translated in a pre-roll model (pay per impression model) it would correspond to about €13,000 – €20,000.

This model will change. YouTube started testing in the US how to put pre-rolls ads in front of the videos, and we must see if it possible in Europe. The problem is that having a pre-roll before the video means also having a 50% drop down of people watching your content…

The strategy is then to have the content on as many portals as possible?
Yes, your clip must be seen everywhere. Of course we have our own home page, so we can deliver our content anywhere.

How can a producer build a brand on the Internet?
In the web you must have a lot of traffic. The brand is not defined as an artistic idea, but it's about reaching viewers. 60% of the our traffic is coming from the embedded code outside YouTube. The advertisement goes on all these other pages, making money also on these private destinations. We also get revenues from a licence for content on TV, where the televisions pay us for watching a film.

You can have a media plan based on the events: in 2008 we sold mobile licences for €40,000 for 15 clips. But today in Germany you can not make any more money on mobile. There was a boom in 2007-2008, is not the same today; we do not focus on it anymore.

It is important to focus on blogging. We write every day and talk to the community; people feel that your site is alive, but keeping it simple.

How did you structured your site?
We have an IT programmer responsible for the details of the site. For the structure we follow those of the many video sites with a main clip and a media centre. There is space for users' generated content. For this content we have all sorts of voting, ranking and bookmark tools, so they can easily link the site to other sites or friends.

When we develop the title and text for the clip, we have to keep in mind to use the right search words; since we have been working for the World Champion Cup 2010, it appears on the top 10 voices of Google.

Do you have other revenues beside ads from Internet?
Regarding the licensing model, we produced DVDs and we have content on the iTunes store. We sold in Germany 30,000 DVDs, getting a minimum guarantee from the distributor of about €20,000, while from iTunes we made €2,000 in 8 weeks.

To conclude, it is important that people watch you content; you must get as many viewers as possible to monetise your clips, investing a lot in distribution; it is good to have your own website but you must also deliver it also to other websites.

How much are the cost to produce a clip?
The costs to produce an easy made clips will be around €7,000 euro. A start investment of €10,000 must be made for the live shots of the players that will be used various times in the story.

How much did you pay for the blog?
The cost for the blog is around €100 a month, not including the people writing on it. There is in fact one person working on it half a day. For the hosting we cooperate with a video platform supporting the streaming costs, that could reach around €3,000 a month, and with whom we share the revenues. The return on investment is hard; at the moment we are close to the break even and we earn around €10,000 a month.


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