Ken Hayes

That title is definitely presumptuous, but the panel presentation I participated in today was meant to help inform members of the WGA about the Internet advertising industry and to discuss how writers might be able to exploit their creative skills without being dependent on the traditional studio structure.

I was the token non-WGA member. In fact, I have no agenda and frankly don’t understand the issues well enough to take sides in the strike. To me, it’s like Denmark declaring war against Sweden – made sense in the old days, but not in today’s environment. But I do have some good friends who are writers and were open-minded enough to want to understand what makes “new media” tick (thanks to Ken LaZebnik for organizing!)

I was told to expect 50 people in the audience, but there was more like 300. The other panelists were really good, but my favorite was Kent Nichols, who with a partner launched “Ask a Ninja” a couple years ago and now has a thriving Internet video business.  It was a lot of fun, and the audience members were kind and curious and energized.
My presentation is here: InternetAdvertising2008WGA.ppt

The WGA is putting together its own web video site, called StrikeTV, to showcase how writers can be successful without a studio. I wish them good luck. They will need a good viral marketing team to get enough traffic to this site to really make a significant impact (either political or monetary). Anyone want to step up?

As to solving the strike? My own idea is probably too radical. I’d take a cue from the Silicon Valley / Tech / Internet industry and form any new creative project (e.g. a complete television show) as a corporation, just like a tech startup. Every participant (e.g. employee), from the actors, to the writers, to the cameramen to the makeup artists would receive stock options, rather than royalties. The financiers would get their stock too, but spreading the potential wealth around just makes modern sense — that opportunity to hit it big really drives the industry forward and creates super motivation.

Thus the complete “brand” of a show becomes the value, rather than an individual episode. Whether it is ever re-broadcast, syndicated overseas, streamed over the Internet or makes money in t-shirts and mugs – if money is coming into the corporation, the shareholders would get dividends rather than royalties. This puts the creative and production people on the same level as the financiers and reduces the risk of hiding profits.

In my industry, this is equivalent to granting stock options to the Google masseuse.

Go ahead, call me crazy.

While writing an article about how Club Penguin is now passé, I didn’t even get a chance to post it before Disney announced that it had bought the super-cute kids’ casual gaming world for $350 million (up to $700 million if certain targets are met). So, who’ll get the last laugh?

First of all, why is Club Penguin passé? That’s on the evidence of my 8-year-old daughter and a group of her friends, who happily let their paid subscriptions lapse and are now addicted to another kids site. For about six months (and $36 of my paid dues), my daughter could not get enough of CP. See my post from November 2006. But even with the new features and content, eventually, the site lost its appeal. Oh, the fickleness of youth…  Moving on to the next great thing…

Which happened to be Webkinz, also a super-cute “world” focused around virtual pets, for which access can only be gained by buying a $12.99+ plush stuffed toy in select retailers.  Every store near our house was sold out, so we had to buy one on eBay.  Webkinz is hot enough that eBay now highlights those products on their homepage.  Anyway, the only thing better than a virtual pet is one you can cuddle up and sleep with (apparently).  Ganz has bridged the virtual-real world.  Amazingly, there are no subscription fees nor advertising on the Webkinz site.  But to keep your access active, you have to keep buying more stuffed animals.

Now, did Disney buy the cat in the bag with Club Penguin? $350 million CASH for 700,000 paid subscribers is a rich $500 per subscriber.  If a typical subscriber lasts six months, generating $6/month in revenue, it looks like a losing proposition. Note there is NO advertising on Club Penguin, making their current 12 million total registered users a “meaningless” number, in terms of online advertising value.

Unless you’re Disney, who figure that they not only can multiply paid subscriptions by many times, but can also develop Club Penguin movies, plush toys, board games, pajamas, thrill rides and everything else that comes out of the Disney merchandising machine.  Disney’s forte is in extracting maximum concrete value out of a given virtual brand – witness Toy Story, Finding Nemo, etc. etc.  They calculated that Penguin had enough traction and momentum that it would be “easy” to leverage it much larger.

But will Club Penguin have the staying power of a Toy Story or Monsters Inc.? Not according to my 8-year-old. Is it truly more cost effective for Disney to pay $350-$700m for a new character idea than develop it in-house? Perhaps they don’t have a choice or the skill (see the Pixar acquisition). All I know is, I should be buying stock in Webkinz…. And prepare to be bombarded with Club Penguin merchandise this holiday season.

L.A. Times, August 2, 2007 “Disney Buying Club Penguin Website”