When Dan Goodman and Bill Masterson got the “Bright Idea” to open their own production studio in 2010, “Believe Entertainment Group,” they already knew people were watching video online and advertising dollars could be had.
“We actually named the company Believe Entertainment Group because we believed in where things were – and are – going,” says Masterson, “people aren’t watching TV like we did. They’re never gonna watch TV like it has been in the past.”
Instead, they hoped to bring a business, their own business, in to a new model, much the way television networks did 50, even 60 years before.
“There was a leapfrog moment where at some point the networks started taking more ownership of the content,” says Goodman, “bringing in multiple brands versus a single brand and I think we’re trying to push that moment in time in digital through our business in a similar way.”
In 2011, Believe Entertainment Group partnered on its first big program with basketball star LeBron James and his company Spring Hill Productions on “The LeBrons,” a web series consisting of ten episodes, each five-to-seven minutes long, often called a modern day, “Fat Albert.”
“Nothing like starting with no pressure,” says Goodman.
It worked out well though drawing more than 50 million views on YouTube in season one.
The characters came from a series of Nike commercials beginning in 2006, “to LeBron’s credit,” says Goodman, “he saw the opportunity in that property to be bigger than what he was doing with it. It’s capitalizing on LeBron’s social media network which is in the tens of millions of people online and LeBron is his own media network. He’s a tremendously creative guy.”
When Goodman and Masterson helped get the series out on YouTube, they already knew LeBron had a huge following online. In that sense, they found his audience and gave them something new. It’s just what advertisers try to do on any platform, be it television, print or any of the “new” media.
Goodman and Masterson both have backgrounds in advertising, Goodman on the creative side and Masterson in marketing and sales. They complement but also help each other as they work on each project. They had a working relationship with Nike prior to “The LeBrons” and Nike was looking for ways to grow its brand online. It was a win-win-win for Nike, Spring Hill and Believe Entertainment Group.
Big stars, with huge social media followings, are what “Believe,” believes in. That’s why Goodman and Masterson produced a youth entertainment news and lifestyle series called, “Tiger Beat Entertainment,” with Jennifer Lopez’ production company. It’s why they produce “EpicEDM,” as in electronic dance music, on Twitter, which brings the hottest DJ’s and clubs to online audiences. It’s why they produce, “In The Booth,” following Dutch musician, dj and record producer, Tiesto on YouTube.
“Tiesto already has million-plus subscribers on YouTube to his channel. Why are we gonna try to build it anywhere else?”
Goodman likens the state of digital video to that of broadcast television in the late 1940’s and 1950’s, when programming was often paid for by a single sponsor. Think “Texaco Star Theater,” or, “Philco Television Playhouse.” Ford, Goodyear, Mobil, Procter & Gamble and Alcoa were also among the big-name sponsors, but several factors conspired to force change. As rising production costs limited the pool of potential sponsors, networks began to dole out shorter blocks of time to multiple sponsors within a show. The networks also realized owning their programming could result in larger margins when they sold time to multiple sponsors.
Content, eventually, became king and Goodman and Masterson believe the leverage they gain from taking an ownership stake in their content will lead to more creative opportunities and more profits.
The numbers seem to back them up. By last December, according to comScore, which measures digital audiences, almost 87 percent of all Americans online watched video content. More than 52 billion online videos were seen, the first time the monthly figure topped 50 billion. For 2013, full-year online video advertising revenue was about $2.5 billion a number that could grow, by 2017, above $9 billion, according to eMarketer.
What’s astonishing is how quickly this has happened. “If you would have told a lot of folks seven years ago when we started this ride that you’d actually be able to talk about programming digital slates, TV execs would have said you’re crazy. General advertising markets would have said I don’t know what you’re talking about.”
They know now, but even with the numbers on their side, starting your own company is never for the faint of heart. “It was absolutely a risk,” according to Goodman, “are you ready to go put down hundreds of thousands of dollars of your own money and go raise millions of dollars of someone else’s money and place a bet on it, right now, today? Making it your career, betting your, literally your future on it is a whole different thing. It’s tough and that’s what you know building a business and start-up mentality is all about.”
Masterson has another way of looking at it, “sometimes you go to the best party and the first guy there doesn’t have the best time.”
Goodman and Masterson learned it could work when they met in 2007 at Media Rights Capital, the independent Hollywood studio that produces “House of Cards” for Netflix. Their assignment: develop a digitally focused production arm.
They found success with “Seth MacFarlane’s Cavalcade of Cartoon Comedy,” in 2008 and 2009 drawing sponsorship revenue first from Burger King, and then Priceline.com and Nike. At one point MacFarlane’s YouTube channel, SethComedy, was the most watched YouTube channel of the week.
Other projects included work with Sacha Baron Cohen and The Second City comedy troupe.
The duo was long gone by the time MRC broke new ground in 2011, bypassing bids from HBO, Showtime and American Movie Channel, to make a deal with a web streaming service, Netflix, for “House of Cards.” Viewing habits were clearly changing, something Goodman and Masterson already knew.
“It really became more about the shows and people’s access to the shows and when they wanted to watch it and how they wanted to watch it than anything else. So we just sort of started to follow that trend.”
It’s become far more than a trend.
“It’s a sea change. It’s a race. It’s an enormous evolution,” says Randall Rothenberg, who’s written about and reported on the advertising business for more than 20 years and is now the president and CEO of the Interactive Advertising Bureau, the trade association for online advertisers.
“Are you really paying attention to whether you’re watching a broadcast network, like NBC, or a cable network, TBS or an IP delivered piece of content like House of Cards on Netflix? Not really. Ultimately for the advertisers, for the marketers and their agencies, those differences are going to fade.”
Rothenberg acknowledges that measuring digital audiences is still a tricky game for advertisers and one of the biggest differences between the broadcast and cable television ad market, some $60 billion-plus dollars and the two-and-a-half billion dollar online video ad market. Still, in 2012, all U.S. online advertising, including video, totaled more than $36.5 billion surpassing all other types of advertising, other than television.
Rothenberg understands why online video is so tempting for producers, “I actually know hundreds of 14 year olds who are doing that and making good money at hit. So it really is, not the next wave, but a new and soon to crest wave in the entertainment industry. The medium is global from the get-go. So if you’re a professional creator of content, that’s very tantalizing.”
Believe Entertainment isn’t doing productions on the scale of a major Hollywood studio, which can run in the tens and hundreds of millions of dollars, but there’s plenty of money on the table, “there’s millions of dollars being invested in original content in our shows and there’s millions of dollars coming out of those shows.”