Comcast's decision to close NBC Universal's Digital Studio was only the latest attempt to answer questions about making, marketing and monetizing original series for the web.
They're questions all four of the top broadcast networks and some of the web's biggest video portals have wrestled with for the past several years, even as online video has become increasingly popular. ABC was the first to enter the web-originals business in 2007 with Stage 9, a studio that was ultimately shuttered in 2009 after a series of pilots failed to attract major sponsors. CBS introduced a series of web originals such as "Clark & Michael" and "Wallstrip" in 2007, only to focus more on web-based spinoffs of its prime-time shows. Fox was the last to enter the arena in late 2009 with the launch of Fox Digital Studio, a division that has only formally announced plans for one major project, "The Ropes," an original drama about bouncers from Vin Diesel's production company One Race Films.
But NBC Universal had seemed to be on its way to cracking the code for online branded entertainment, which it backed with promotional time on broadcast and cable as well as distribution on digital properties like Hulu. Its slate of scripted and reality shows was backed by marketers including Hidden Valley Ranch ("Garden Party"), Samsung ("Fact Checkers Unit") and AT&T ("Dial Star"), with at least one series, American Family Insurance's "In Gayle We Trust," committed to another season at the time of the studio's closing.
So what went wrong? According to executives familiar with the NBCU Digital Studio's business model, it wasn't the financing. Each of NBC Universal's web series' multimillion-dollar budgets was funded almost entirely by the corresponding sponsor -- enough to make the studio profitable in 2010.
But NBC Universal CEO Stephen Burke and NBC Entertainment chairman Bob Greenblatt, both of whom took their positions in January, have reoriented the company's digital strategy away from web originals and toward properties derived from TV shows. For a broadcast network that 's still No. 4 in prime time, developing original shows for the web seemed like taking the eye off the core business.
"Steve Burke and Bob Greenblatt talked extensively about how we need to better our position," said Vivi Zigler, president-NBCU Digital Entertainment. "Therefore, let's focus entirely on the shows on the air."
CBS, on the other hand, is often first in prime time for total viewers and key demos, giving it a bit more leeway to experiment with original programming online. The online original series "Around the World for Free" began its third season last week on CBS.com with the help of promotion on TV shows like "The Talk" and backing from AT&T, which re-upped its sponsorship as the show's integrated smartphone and tablet partner. "Around the World" shows former CBS reality contestants -- Jeff Schroeder from the first two seasons of "Amazing Race" and Parvati Shallow from the third season of "Survivor" -- traveling the world entirely at the expense of online viewers and sponsors.
That means the series straddles all three components of CBS' digital content strategy -- TV-derivative, talent-driven and "green field," meaning wholly original, series, said Joe Ferreira, CBS Interactive's senior VP-network liaison and original content. "Are we concentrating mostly on derivative and companion programming? Yes we are," Mr. Ferreira told Ad Age . "But we're still keeping our toe in the original web water. We don't deficit finance everything, but you have to experiment. You let the creative community know you're a go-to place for these kinds of ideas."
Some in the creative community had decided that NBC Universal's Digital Studio relied too much on getting marketers to fund series ahead of time. "It really shows how the advertiser is in control of these enhanced digital content experiences," said one executive who worked with NBC Universal Digital Studio. "To come out with a slate all advertiser-contingent, that 's very tough for any kind of content maker. The networks don't work that way on their TV business. It just shows how difficult it is to actually get projects in there and make it through the times. The networks doing this have to get really good at making this content with advertisers."
Brands and agencies want networks' attempts to succeed, partly because their on-air assets and various websites offer powerful promotional platforms. But networks also may face increasing competition for shows and marketers from the likes of YouTube, which is planning to put millions of dollars behind new original content channels on the site.
Producers' model is now "fish where the fish are," said one veteran web series producer.