Breaking Bad and the $75 Million Crazy Plan to Shake Up Television

$75 million for three episodes of television. 

That was DreamWorks Animation  (NASDAQ: DWA  ) CEO Jeffery Katzenberg's offer for Breaking Bad to produce three additional episodes beyond the finale. 

With even the series finale -- which was watched by more than 10 million viewers -- bringing in less than $10 million in advertising revenue, the economics of Katzenberg's offer make little sense on the surface. 

However, as relayed by VarietyKatzenberg's plans for Breaking Bad were anything but conventional. He didn't want advertising money, he wanted nothing short of a whole new model for television. 

Katzenberg's vision instead was to cut 180 minutes of Breaking Bad programming into 30 six-minute episodes over a month. Each episode would cost $0.50 to $0.99 (it's unclear whether that's the cost of each full episode or mini-episode, but at the cost Katzenberg was willing to pay, you'd have to assume it was per six-minute episode). 

The plan never came to fruition, as Katzenberg devised it without knowledge of Breaking Bad's creative plans. After the series finale, there is little need for the tale of Breaking Bad to continue, even if Katzenberg were willing to throw piles of money at series creator Vince Gilligan. 

Doesn't Katzenberg know Walt doesn't need any more money? 

Yet, Katzenberg's conviction in going to an alternate route of distribution for a hit television show is intriguing in its unconventionality alone. With Netflix  (NASDAQ: NFLX  ) already pulling some of this year's best TV shows off cable, could the next shift away from conventional cable TV be high-quality short-form TV shows that cost small sums?

A unique property

The idea of widespread digital buying of television shows isn't new, nor does it lack a platform. Apple's (NASDAQ: AAPL  ) iTunes has a dominant share of digital entertainment spending. 

What's different about Katzenberg's plan is to bring back the length. Movies might cost $15 for 90 minutes of entertainment. A television show costs $3 for 20 minutes. So, could a shorter form of entertainment fill the low-end gap and sell for a dollar for 6 or 7 minutes?

The problem is that cutting up Breaking Bad would be more of a gimmick. Plot lines wouldn't be resolved over 6 or 7 minutes per segment. The series has built a die-hard group of followers who would buy the show in segments, but they would also likely buy a pack of three full-length episodes for the same price (if not more) than they paid for all the segments. 

The only added feature would be the inconvenience that Katzenberg said he planned on releasing the 6-minute segments over a month, with each break doing a disservice to the tension the show is so good at creating. Likewise, no viewers would buy just a few random segments -- it would be an all-or-nothing proposition. 

In short, the idea might work because Breaking Bad has built up such a tremendous following, but it wouldn't necessarily prove a market for paid short-term entertainment. 

DreamWorks moving from cable TV

It's important to remember that Katzenberg's remarks came at a meeting of television executives. With his $75 million offer never seriously considered, this could be more a "good story" to get attention for digital media in general, of which Katzenberg has a strong rooting interest. 

For years, it was widely speculated that DreamWorks would launch its own cable television channel. With DreamWorks' collection of 27 films averaging a global box office of $415 million and a history with television, it'd be easy for DreamWorks to buy a back catalog of older cartoons and anchor it with series based on the studio's hit films. 

Yet, earlier this year DreamWorks instead put its focus behind a YouTube channel. The company bought a YouTube channel named AwesomenessTV. The purchase price of $33 million might not look like much, but that price could rise to $117 million if AwesomenessTV hits certain performance targets. More importantly, it shifts DreamWorks' focus from conventional cable TV and toward digital media. 

From this perspective, Katzenberg already has a "horse in the race" when it comes to new ways of monetizing digital media. If consumers actually started shelling out money for 6 or 7 minute videos, it'd provide another revenue steam for his company's recently purchased YouTube company. 

Not only that, but DreamWorks' new show with Netflix, based on its recent movie Turbo, is being released in 11-minute shows. While that show will be exclusive to Netflix, DreamWorks will build up its expertise at creating shorter length programming. 

A long putt

With so much free programming on YouTube, getting consumers to pay for short-form entertainment will be a tough challenge. Whether or not that programming is high quality, we've long been conditioned to expect programming of that length to be free. 

Not only that, but even on the platform where consumers show the most willingness to pay for media -- iTunes -- video makes up just a sliver of sales. Asymco's Horace Dediu, who meticulously studied the iTunes store, estimated that iTunes spending on videos is less than a quarter billion dollars per quarter. That's not insignificant, but it shows the difficulty in getting consumers to pay for digital media. 

In the end, any form of la carte purchases of media remain a sideshow. The real shift in moving digital's influence will need to come from shifting the massive advertising spending advantage television has over digital media. 

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