Will MySpace’s (NWS) foray into TV-like video programming make money–or is it just an ill-fated attempt to recapture some world-domination buzz? After running the numbers, we believe it’s possible that “Quarterlife” will turn a profit, but unlikely.
BusinessWeek.com reports that each 48 minute “Quarterlife” episode will cost more than $500,000. This is cheap by TV standards but astronomical compared to most web video. Each episode will be chopped down into six 8-minute segments that will cost more than $83,333 apiece. Assuming a CPM of $15-$25, 2 ads per instalment , and no ancillary revenue or costs, each segment would need to be viewed between 1.7 million and 2.8 million times to break even. In total, the installments would have to be viewed between 10 million and 16.7 million for each 48-minute episode to break even. (See this spreadsheet for details). How achievable is this?…
First, for perspective, according to Vidmeter, the most popular video of all time is the “Evolution of Dance,” which has been viewed 72 million times. The 200th most popular video, “Football Skills,” has been viewed 4.8 million times. Using a $20 CPM (x2), each 6-instalment episode of Quarterlife would break even with 12.5 million instalment views–which would equal the all-time views of “How to Shower: Men vs. Women,” Vidmeter’s 55th most popular video.
The second question is whether a TV show like Quarterlife will appeal to MySpace users at all. Yesterday, we argued that the show “had a chance” because its producers were smart enough to break it down into 8-minute chunks instead of forcing users to sit for a whole hour. We would be more optimistic if the producers were actually producing 8-minute episodes (like the condensed 7-minute Sopranos recap) instead of just cutting a 48-minute TV-length show into 8-minute bites. But the 8-minute length should gives the show a chance.
The third consideration is sustained interest. Millions of MySpace users will no doubt view the first instalment of the first Quarterlife episode merely out of curiosity. The number that view another instalment , however–let alone another episode–will depend entirely on how compelling the first instalment is. Quarterlife will mostly be competing with TV shows, not web videos, and could therefore bomb as quickly as any TV show bombs (and lots of them bomb). Because most web video is one-off in nature, moreover, users may get bored after a few installments, no matter how good the broader episode is. The first instalment could get millions of views, but be followed by declining interest for all the others.
MySpace will no doubt get much ancillary benefit from Quarterlife (namely, press coverage, text-based advertising, etc.), and curiosity may draw new users to the site. There will also likely be other ancillary costs, however (promotion), so these other benefits may not carry the day. All in, we think Quarterlife is a significant financial gamble but one that is certainly worth trying.