Monday, November 2, 2015

Franchise on the Edge of Forever: Star Trek and the Making or Breaking of Streaming TV

CBS' streaming Star Trek series may be an option in our very own Kobayashi Maru.

There’s a lot to love about CBS’ announcement, today, that it’s creating a new Star Trek TVseries. For fans of the original series and/or the franchise of series that followed, it’s a welcome return, after a decade of drought (J.J. Abrams films notwithstanding). For newcomers, it’s a chance to experience Star Trek in its true home on the small screen, with modern production values and storytelling sensibilities. The famously philosophical franchise can sink its teeth into the dilemmas of the new millennium. (Please, please, let it sink its teeth into some philosophical dilemmas.) In an age where a new reboot, revival, or movie-to-TV adaptation is announced every other day, a new Star Trek series feels like a store that doesn’t start selling Christmas decorations until after Thanksgiving: Restrained. Refreshing. A cause for celebration.

There is one catch. CBS will be releasing the series exclusively on its $6-per-month subscription streaming service, CBS All Access.

You’d be forgiven for not knowing that CBS has a subscription streaming service. According to CBS president and CEO Leslie Moonves, as of last May it had “more than 100,000 subscribers,” which presumably means less than 200,000 subscribers. CBS’ logic in releasing such a high-profile property on such a low-profile service is a little odd, but basically followable: The series exists to advertise the service.

CBS, like everyone else, seems to have read the writing on the wall of broadcast television. This season’s ratings are abysmally, catastrophically, end-of-days low. They’re so low, the networks don’t even know what to cancel; they seem to be afraid that ratings that are in the pit today will be over their heads tomorrow. Yet television is more talked about and respected than ever before; clearly people are watching somehow. So CBS is, quite sensibly, looking for other avenues of consumption, and streaming video is the natural way to go.

The problem is that the most popular streaming TV aggregators—Netflix (43 million U.S. subscribers) and Hulu (9 million subscribers)—are branching aggressively into their own original content, and CBS naturally wants to avoid directing traffic to its competitors. The only option left for CBS, then, is to stream its own shows, and profit either through advertisements or through direct subscriptions. Advertisements are free for the consumer, which makes your service an easier sell, but there’s a major, perhaps insurmountable, drawback: Advertisers are reluctant to spend the kind of money on online TV that’s necessary to turn a profit. (I have never seen a good explanation for why.) Yahoo Screen, which made a high-profile acquisition of Community last year, reportedly lost $42 million in its original programming venture. And in a fascinating interview with Vulture a few months back, USA Network president Chris McCumber admitted that, although its stylish, paranoid hacker thriller Mr. Robot (released online, with advertisements, the day after airing) was the most talked-about show of the summer, the network has no idea how to monetize it.

Which is clearly how CBS came to settle on its current tactic: A standalone, monthly subscription service. The question now, of course, is whether that tactic has any hope of succeeding.

Earlier today, FiveThirtyEightpublished a survey indicating that the demographic with the highest proportion of Star Trek fans is 44 – 60-year-olds. Then over-60-year-olds and 30 – 44-year-olds. Then 18 – 29-year-olds. (It was part of a Star Wars audience poll, which may skew results, but still.) Accordingto AdWeek, 82 percent of Hulu subscribers are in the 18 – 49 demographic. If CBS is hoping that the allure of Star Trek will draw viewers into its service, that disparity is a significant hurdle to overcome.

The larger hurdle, though, will likely be the fact that Star Trek is the sole draw. HBO Now has about a million subscribers. Hulu has 9 million. Netflix has 43 million, in the U.S. All of these services have more content than All Access does—and many current CBS shows are available in their entirety on Hulu or Netflix. (Off the top of my head: Criminal Minds, Hawaii Five-0, The Good Wife, Blue Bloods, Madam Secretary, and Zoo.) It simply stretches feasibility that young, casual Star Trek fans will pay for a separate service on a monthly basis, when it provides only one exclusive show of any interest to them. But even if they do, in order to compete with Netflix and Hulu as a standalone service in the long term, CBS either needs to put a ton of exclusive, desirable, constantly-updated content on All Access concurrently with Star Trek—the kind of content that can rival Netflix for choice and quality—or hope that hardcore Star Trek fans will forget to cancel their subscriptions when the show’s over. There’s a limit to the miracles a single show can work.

It’s unclear what CBS would consider a victory in this situation; I doubt that breaking even, or even turning a small profit, would suffice. Probably, a victory would consist of building a stable, growing subscriber base. But let’s examine the monetary aspect of it.

A reasonable estimate of the cost-per-episode of an hour-long sci-fi show on a major network is $3 million; I believe that Stargate: SG-1 and Stargate: Atlantis both averaged around $2 million per episode, and Doctor Who currently averages about that much, when the conversion rate is taken into account. Fox’s Terra Nova, considered a relatively expensive and effects-heavy show, cost $4 million per episode. (I’ve seen reports that Star Trek: Enterprise cost as much as $5 million per episode, but that’s a fairly astronomical number, and I can’t find a reliable source; if you have one, it would be much appreciated.)

So if CBS produces a 13-episode first season—more or less the norm, now—that’s $39 million in production costs it needs to make up. If every single person who signed up for the $6-per-month service in order to watch Star Trek kept it for a full year, Star Trek would have to bring in almost 550,000 new subscribers. Which doesn’t seem like that much, except that it would mean sextupling the current subscriptions.

This of course, doesn’t take into account potential international sales, or any of the other secondary avenues CBS could take to make money from Star Trek. But it at least gives an idea of the kind of task CBS has set for itself. And remember—profit isn’t even point. It’s the long-term viability of the platform that CBS cares about.

But there’s more at stake here than the survival of a single series, or even a single network. Star Trek is a case study in the future of television distribution.

TV fans begged for years for an a-la-carte cable subscription system: Pay only for the channels you want, and forget the 15 versions of ESPN you don’t care about. Certainly, if the alternatives are $100 a month for 10 channels you want and 500 you don’t, or $50 a month for just the 10 you want, the latter is the clear winner. But that’s not really the dilemma when it comes to streaming services. Part of what we pay for, with Netflix and Hulu, is scrollability. We want access to shows from many different channels, including ones we’ve never heard of before. We want one-stop shopping. Because now, it costs $8 a month—$20, if you spring for both Netflix and ad-free Hulu.

If—big, huge, honking if—CBS builds up the kind of subscriber base it clearly wants, it’s not going to have any reason to sell its shows to Netflix. Remember, Netflix is the competition. If CBS succeeds, and ABC succeeds, and Fox succeeds, and NBC succeeds, and HBO and Showtime and AMC and FX succeed, well, suddenly streaming subscription services aren’t such a good deal, anymore. Viewers will go from paying $20 a month for Netflix and Hulu, right back to $50 a month, or more, for every individual service they want.

The big question underlying all of this hubbub is: What does television distribution look like, ten years down the line? Is it aggregated under a few large sites like Netflix and Hulu? Or is it served out, channel by channel and service by service, in $5 monthly bites? Is there some equilibrium? And what, ultimately, should we be hoping for?

I doubt CBS will achieve its Star Trek dreams. But whether it does or not, there are conceivable problems down the road. If most channels can sustain their own subscription services, Netflix and Hulu will lose much of their content, and we’ll all be paying a lot more for television—or pirating it, and slowly draining the industry dry. If channels can’t sustain their own services, and can’t find another way to profit off television, they’ll fold, and Netflix and Hulu will still lose much of their content. Captain Kirk would find a third option. Can we?

I’m not an economist. I don’t know what needs to happen, for good television to survive. But I know I can see the life and death of the Age of Too Much Television in the life and death of a little show called Star Trek.


NB: All credit for “Franchise on the Edge of Forever” goes to writer and Twitter-er extraordinaire Tom Pike, whose Twitter joke sums up in fewer than 140 characters (and without even trying) what I took over a thousand words to work through.

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