– Thoughts on Strategy and Management

Strategic web marketing 2.0 by MGM?

I would like to discuss an issue for which I posted my first opinions a couple of days ago. These days we can read a lot about web 2.0. It is said that users are not only consumers of web contents; instead of that they generate the content themselves. Videoportals (e.g. YouTube, Clipfish) and blogs are examples for this development. But it might be that “web 2.0” might change marketing techniques more that we would ever have expected.

In August 2006 it was announced that a very famous TV show (Stargate SG 1) will find its end after season 10. (I know that is a very crude description, but there are a lot of explanations and theories concerning this issue. NBC / SciFi-channel (the TV station that broadcasts SG1) cancelled the show within its broadcast program; possible reasons – but every item has got its question mark – : low ratings, decline of visitors, to give way to a new show, cost of production (approximately 2 Mio. US $ per show). Hence MGM decided to stop the production. According to some web based information NBC is the bailee of the show, which causes some difficulties for MGM now.)

If you check the Web you can find a huge number of discussions and chats concerning this issue as well as presumptions about rationales (you can also check the comment to my post by “Guest”, who shared his view of the reasonse with us.)

So let us take a more theoretical point of view to this issue. What could be the reasons to end such a famous show, which obviously has so many fans (including me)? In general there could be three reasons:

a) Irrational reasons. The managers, who were responsible for this decision (to cancel the show) might not deal in a rational manner. In general we expect that managers are always rational. But in practice we have to accept (and this is confirmed by various studies) that managers are “just” human beings and therefore a lot of other factors than economical logic (e.g. personal values, beliefs, personal interests) might influence their decisions. It may be that the managers’ girl Friday did not like the show and hence they preferred a new show on air.

b) Rational reasons. There are economic reasons that support this decision, but the facts are not known (or not announced) to the public. To analyse this issue I would like to check all their (MGM, NBC, SciFi Channel) P&L accounts. If you check the Internet you can find a set of numbers (visitors, costs of production) relating to this show. But at the end of the day you will be not able to answer the question whether the show is successful in financial terms, whether it is able to meet certain hurdle rates (e.g. ROE) or whether another show is likely to perform better (in financial terms!). According to the high profile of the show option B is not so likely.

c) Strategic web 2.0 guerrilla marketing. You never heard about this? Me too! This is just my personal theory about what’s going on here: We experience web 2.0 marketing + guerrilla marketing + strategic marketing. I know that might sounds crazy, but I would like to present three arguments:

c1) In order to increase the demand for a certain product, companies started to create a “run short” situation for their products and announced this to the public. Sony did this when they introduced the PSP in Germany. Microsoft announced delivery problems before the launch of the X-Box 360 in Germany. Both companies as well as the retail shops recommended their potential customers to pre-order devices in order “to make sure to get one”. Sony and Microsoft got a huge media presence. At the end of the day all customers in Germany were served. How can you create such a situation for a TV show? There is just one option: Announce the end of the show.

c2) We know that we are in a Web 2.0 world now. Marketing departments know this as well: BMW Corporation employs Web 2.0. It created 37 short movies with information about the new 6 cylinder engine. Downloads? 2,5 million times (this is no typing error, 2.5 million times!). Cost of production: In total 40.000,00 EUR. That is quite efficient. Another example: During the soccer world championship Coca Cola rented a luxury apartment in Berlin and invited famous blog writers to watch the championship and to write about it. There were no regulations for content and size of reporting. Coca Cola achieved an online coverage of approximately 2,0 million users. Cost of production: In total 100.000 EUR. That is quite efficient, too.

In general Web 2.0 marketing gives these benefits
– You can hit your target group very exactly.
– Costs of production are relatively low (at the moment).
– Users decide about the content, hence the appropriate content is created and delivered by the target group itself. You just need to start with an outstanding idea…

Can you employ this situation for a TV show? The only thing you have to do is to set the ball rolling. Announce the cancelation of a high profile show and you will receive:
– “Fans strike back”-activities
– Huge media presence
– Fans start to create their contents (websites, videos, blogs etc.) and to share the contents with the community (that is a typical web 2.0 feature)
– Users / fans start to recommend websites that discuss this topic and their desire for another season.

To boost this development MGM announced “News from the frontlines. The studios are watching the ratings of Season 9 (now in syndication) very closely to see just how bad the fans want the show to continue. Are you watching? The future is depending on it.”
I have a simple question: What exactly is the hurdle rate in terms of ratings?

I would also like to recommend checking the blog by David Hewlett.

c3) From a strategic point of view the recommendation issue is very important, too. Based on research, we know that recommendations can play a major role in order to “advertise” something to potential customers (and to influence them), since recommendations by existing customers are evaluated as “real” and “true”.

You could raise the question for what reason MGM  might use this marketing technique? Plainly speaking I can just make assumptions which are based on my theories. In general MGM receives a huge positive media presence for its show and that enables it to charge a high fee for another TV station. It might be that we see a game like “good guy, bad guy; where MGM is the good guy and NBC the bad one.
But this is actually not my favourite assumption.

My favourites are:
It might be that there are really some minor economical issues that we can not see from outside. This technique would give them an indication how “hot” the interest or demand of the fans for another season is. In summary this measure can be described as “web 2.0 market research”.

I would also assume that we will face a format change within the series. Since season 8 there are new characters and a new enemy. Why not another format…and I do no think in terms of iTunes. May be a theatre movie and after this movie we will see seasons 11 and 12. For this I would like to quote Amanda Tapping: “I do not believe this is the end of SG-1. It may be the end of the show as we know it, but I am sure you will see us all again.”
That sounds really like a new format. Taking this into consideration this measure could also be described as “web 2.0 pre-product launch”.

As said within my introduction I am a fan of this show. These theories have the objective to present potential options about what is happening with the show and to understand MGM’s and NBC activities.
Taking into account modern marketing techniques, marketing ideas that have been used by other companies in the last couple of years as well as the possibilities and trends by “Web 2.0” it is possible, that we are part of very sophisticated marketing campaign by MGM and / or NBC.

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One Comment

  1. I think this is an interesting theory – but I’m not convinced that MGM or NBC (or the producers of the show) decided to stop regular production just to drum up interest in the show. TV and film financing is a fickle and scary affair – and sci-fi shows are often perceived as less than choice fare by people with purse strings, even though sci-fi does well at the box office and TV shows almost always become franchises within multiple media outlets. Rent the Red Dwarf DVDs and watch the extras to find out just how hard it can be to find adequate financing for a globally successful hit show.

    I do think that they are learning what the potential of web 2.0 is for their content, just like everybody else in the industry right now (though SG-1 and Battlestar Galactica are ahead of the curve). I’d be a little shocked if they didn’t try out a few different internet related formats. I think SG-1 will survive, and it could even be a bellwether for the transition of traditional content to web 2.0. Afterall, what doesn’t kill you makes you stronger 🙂