CBS Eyes More Summer Programming With SVOD Tie-in31 Jul, 2013 By: Erik Gruenwedel
CEO Les Moonves says success of ‘Under the Dome’ revealed a new business model
Expect to see CBS spearhead a broader push by TV networks and media companies seeking to launch original programming during non-traditional time slots (summer) with an eye toward exploiting foreign and digital distribution, CBS boss Les Moonves told analysts.
Speaking during a July 31 fiscal call, Moonves said the midsummer release of survival fantasy “Under the Dome” was a watershed moment for the network as it realized the summer no longer was exclusively a period for re-runs and syndication. Until "Dome," CBS, per policy, had refused to license primetime content to subscription video-on-demand platforms, believing they compromised traditional ad-supported and syndication revenue models.
Then again, “Dome,” based on a novel by Stephen King, realized 13.7 million viewers for the initial episode — an impressive tally for summer release, and one that mushroomed to more than 20 million viewers when factoring in subscription video-on-demand and the DVR, according to CBS.
Unique to “Dome” was the fact CBS had licensed exclusive pay-TV rights to Amazon Prime Instant Video — a first for the network — and allowed a SVOD service to stream a primetime show just four days after its initial broadcast.
With SVOD services such as Netflix, Amazon, Hulu Plus and Redbox Instant clamoring (and willing to pay) for upscale content, CBS could justify "Dome's" $3 million-per-episode budget, Moonves said. In short, the series, together with Amazon, underscored the growing power of SVOD as buyer, distributor and generator of content.
“Because of the Amazon deal and the international sale, we were able to make this show profitable before it even went on the air,” Moonves said. “It's things like that where you will see us invest more in programming, but also invest with the knowledge that we're going to get it back and then some. That show is going to be very profitable for years to come and it's the greatest way to invest our money.”
Indeed, the network will generate additional incremental revenue from the "Dome" disc release slated for Nov. 5.
Meanwhile, CBS said the entertainment segment’s second-quarter (ended June 30) revenue grew 18% to $2 billion, driven by increases in TV license fees, advertising and affiliate fees. Growth in TV license fees was a result of higher international revenue from both streaming and traditional syndication.
Moonves said the response to “Dome” was tremendous, with Amazon CEO Jeff Bezos personally lauding the e-commerce behemoth’s decision to license the program.
“I think you will see every network develop and try to replicate the model that we did,” Moonves said. “I doubt many of them will have the same ratings as ‘Dome,’ but I think there's a huge appetite with the SVOD players out there to join us, plus the international desire for our content is not slowing down at all.”
With the success of “Dome,” which saw a third of its viewers watch the program on demand, the question for CBS revolved around when to release the second season. The network opted not to release the sequel season in February, but next summer — despite ratings that made the show the second-highest rated drama on TV.
“What it means is we get a program all year long from September to September,” Moonves said, adding that with Nielsen improving its data collection for delayed viewing, the network will soon be able to get paid for viewers opting in more than 72 hours after initial broadcast.
Regardless, the executive reiterated that the strong desire for programming — notably original — from digital distributors, has heralded a new market with incremental revenue opportunities.
“It's something that hasn't existed in many years, but without Amazon's help and without the strong international marketplace, we couldn't have done ‘Dome,’ with normal summer pricing,” Moonves said. “Now, with [SVOD] wanting to get involved and get involved early, the sky is the limit in terms of what great assets they're creating for us. We're happy they're around.”