Internet Distribution: Community on Hulu, How the Web is Changing the Game for Film & TV

In Dec. 2011, the online video service Hulu rode to the rescue of an NBC comedy series - announcing that it was acquiring the internet rights to the NBC sitcom, Community.

Reportedly, the cable channel Comedy Central, owned by Viacom Inc., may also be in talks to license reruns of Community.

But it's Hulu, an internet distribution company co-owned by NBCUniversal, News Corporation, The Walt Disney Company and Providence Equity Partners, that fans of Community (see video below of a Community flash mob from Dec. 22, 2011) can thank for new episodes.

In November 2011, its third network TV season, things were not looking that good for Community... In fact, it was facing cancellation.

Back then, Community was averaging only about 4 million viewers an episode. Not enough to guarantee a primetime slot in the world of network television - where advertisers prefer hit shows, which can average 15 million viewers a week.

Even though Community, starring Joel McHale and Chevy Chase, had a loyal following, NBC execs were uncertain. Could they could make more money with another show? Or should they continue to support Community - so that it could compile enough episodes to reach "syndication."

What is "syndication?"

Syndication is a term that is used in both print and broadcast media. It indicates content that is purchased for use by a local newpaper, TV or radio station. In the broadcast industry, reruns of a network TV show can be syndicated to local stations - with the local stations choosing the time slots for the reruns.

In the past, only hit shows were able to make it to daily syndication. And for years, daily syndication, where episodes of a television series are shown five times a week on local broadcast outlets, represented the financial promised land for sitcoms.

Now, that model may be changing, with internet services like Hulu willing to distribute shows that aren't big hits.

In the old model, access to daily (also known as "strip") syndication was generally reserved for hit half-hour comedy shows with enough episodes (usually a minimum of four full seasons, but preferably 100 episodes) to allow for several months of daily shows without a rerun. The economic bonanza of syndication on local TV was the foundation for the old production system - where the initial runs of most television series were not profitable. In that old model, star salaries and the cost of production would typically leave the studio - in the case of Community, Sony and NBC/Universal - with a big loss. The studios were willing to absorb losses on their initial network runs because daily syndication (where studios are no longer paying production costs) could generate huge profits - more than enough to balance out any losses. But to reach syndication, the local channels wanted big mass market hits (not niche hits like Community) and 100 episodes.

The fact that Hulu and other internet distribution companies can survive by marketing to niche audiences - without the need for 100 episodes - is changing the TV game.

In the New World of television distribution, a rabid audience that helps to market your content via social media, may be more meaningful than a library of one hundred episodes - or even huge ratings for an initial run on a network.

Making a deal with Hulu required a huge culture shift within NBC. According to Meg James writing on Dec. 31st, 2011 in the LA Times: "Television production studio executives long have been wary of Hulu and other forms of Internet distribution, fearing they would lead to increased piracy and destroy lucrative secondary markets, including syndication and DVD sales. But video streaming services offered by Netflix, Hulu and are becoming an unexpected boon to the TV syndication market. By writing checks to license library content from networks, the Internet services are injecting new revenue into the TV business and breathing new life into middling shows."

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Thoughts from a film producer about making and distributing films.