I think this real life situation would make a dandy case study. (And there is, to my knowledge, nothing in the Harvard Business School case study archive on long tail markets.)
If this were a case study, the first paragraph would read something like this:
Series creator Mitch Hurwitz was sitting at his desk at The Hurwitz Company. The office was quiet, even a little mournful. Mitch’s baby, Arrested Development, had just been cancelled.
Five Emmys and the 2004 award for "best comedy series" had not been enough to protect it. As Fox executive Peter Liguori put it, ”The fan base is unquestionably one of the most loyal in TV – it’s just too small." The numbers this season had been disappointing, around 4.3 million viewers a week.
(if this were a real case study, we would do a quick review of economics of TV: how many viewers are required to sustain a series, what it costs to mount one, what the break even point is, how decisions are made, famous exceptions, etc.We would also note how the audience for AD took shape. Did the numbers build slowly? Did early adopters convert to loyalists? Was there a good deal of "churn" is fans came and went?)
In the old days, Mitch knew, cancellation was cancellation. The networks were god. There were no stays of executive. When the network cancelled a show, it stayed cancelled. But because Mitch was familiar with the writings of Chris Anderson at Wired Magazine and because he was a man deeply acquainted with the trends of his industry, he knew there was still hope.
(if this were a case study, we would talk about Mitch’s career in television, what he had come to know about the industry, how things had changed as he came up, etc. There is a good interview at the AV Club (link below) from which we could steal shamelessly. We would also talk about how network TV had changed, how cable plays had emerged, the role of HBO in the reinvention of cable, how even small cable outlets were now producing, and how the economics of the industry had changed as a result. This would also be a place to talk about Anderson’s small tail theory. We would also talk about new distribution options opened up by DVD sales, video iPod, Internet access, and consumers who "prepay" for access to TV shows as they do in the world of the arts [the opera subscription] and in the world of marketing research.] )
(Here are the four scenarios which smart students would extract from the welter of details with which we have filled the case.)
Scenario 1: "revenge of the long tail."
Fox, bless them, gave AD it’s run. The numbers are in and the test is over. AD has found its audience: 4.3 million viewers is it. Mitch should throw in his cards. He might want to take AD to cable, but a guy with his talent and track record would do better to start again. AD gives him lots of profile and credibility. People will return his phone calls. Dump this baby. Go again.
Scenario 2: Retreat to cable
With the advent of long tail TV (LTTV?), there is a lingering hope for AD: that it takes refuge with a lesser network. There are some networks for whom 4.3 million viewers is just fine, thank you very much. On TNT, an only slightly larger number made The Closer one of the biggest hits in cable history.
The students who take this position would have to defend themselves against the accusation that there is not enough money in cable to sustain a show like AD and if some of its stars left, the show would close in any case.
Scenario 3: Return to glory
This option says, take refuge with USA network for a couple of years, let the audience build, and return to Fox (and the big money). Mitch is on record as saying, "why should we assume that when you try something different it will immediately be accepted?” This suggests that he believes that AD is a little ahead of its time. He might wish to say in play until the world catches up to him.
Scenario 4: Move to new channels and new revenue sources
[this scenario was added to the post thanks to the comments from Hey, Terry, Ken King, Ginna Dowler, and Peter McBurney. Please see their comments below. (Would these authors please let me know their full names so that I can give more complete acknowledgement?)]
Hurwitz can abandon TV distribution altogether. The advent of the DVD market gives him both a new way to get to market and a new source of funding. (See Ginna on Sternberg on Whedon’s Firefly options, below. ) There is also a internet distribution possibility, likely funded by a subscription model of some kind.
This option leaves open the "return to network glory" possibility, but I am guessing that Scenario 4 would give Hurwitz more creative freedom and better returns. It was also give him a heroic standing in the small tail markets that remain, in the case of TV and Hollywood, still pretty "fat middle."
And the winner is…
Each of these positions is defensible and every good case study should allow the class to break into camps and for controversy to ensue. But every case has, in the heart of the writer and the instructor, a right answer. And this is a section from the "teaching note" that is send to the instructor.
How do we decide which scenario? The shape of the numbers should tell us. When Liguori says, ”The fan base is unquestionably one of the most loyal in TV," this is a bad sign. This suggests that we have got everyone aboard who is coming aboard. If this is what the numbers tell us, advantage goes to students who support Scenario 1.
On the other hand, if the enthusiasm is distributed, that’s more promising. They should show degrees of enthusiasm and some evidence of conversion: that it takes awhile for newcomers to become fans, for fans to become loyalists and for loyalists to become devotees. We should see word of mouth support and the statistical evidence that WOM is indeed taking place.
Of course, there is a more fundamental problem here and that is whether news of AD actually found its way to all or most of the would-be viewers. Daniel Drezner says that news reached him belatedly…and this suggests that marketing has something to answer for. Drezner is after all pretty well informed about popular culture. If we determine that news was badly distributed, then we go with Scenario 2 and/or 3.
So the "right answer" turns on whether we think the AD audience is a long tail market, or a long tail market struggling to become a fat middle. So the "right answer" turns on what numbers we supply (or what they can be made to say). Do they show an adoption pattern for AD that is thickly packed or more stretched out? Does this flock cluster or does it attenuate?
Will this post become a case study?
If this post suddenly comes down, it is on its way to becoming a case study.
Drezner, Daniel. 2005. My Personal Apologies to Mitchell Hurwitz. Blog post. November 14, 2005. here.
Justin, Neal. 2005. Neal Justin: Kyra Sedgwick is getting her closeup — finally. Star Tribune. July 28, 2005. here.
Robinson, Tasha. 2005. An interview with Mitchell Hurwitz. The AV Club. February 9th 2005. here.
Snierson, Dan. 2005. Arrested Development 2003-2005? We say goodbye to ”Arrested Development” — EW looks back on the three seasons of the critically acclaimed Fox comedy.
Entertainment Weekly. November 18, 2005. here. (subscription required)
(all quotes and stats from the Entertainment Weekly article, with the exception of the numbers for The Closer which are from Neal Justin, as above.)