Is the movie business a tenth the size of the TV business?

movies tv

 

 

 

VS

 

 

 

 

 

 

 

 

 

How much do movie tickets cost (on average)?

$8.38 at the theatre.  However we also have to watch ads, which account another for 7% of revenue ($.61), so $8.99 total. At 110 minutes per movie, movies cost  $4.90 per hour.

However unlike TV, only 13% of us watch a movie in a theatre every month. In the USA+Canada 1.36B tickets were sold for $10.8B. With a potential audience of 332M, that’s 4.1 tickets per person per year. The average USA/Canadian spends $3 per month on movie tickets. The average frequent (1 or more movies per month) moviegoer spends ~$12 per month.

Question: Is the movie business one-tenth the size of the TV business?
Answer: No*. In the USA we spend $10B on movies and $140B on TV so it’s only 7%.

*However, if we add in movie rental, sales and subscription service revenue … [future post]

Interesting that movies ($3 or 40 minutes/month) get so much Media attention and TV (~100 hours and $50/month) so little…

Bonus question: I can get a season pass to the ballpark. Why can’t I get a season pass to the movie theatre?

Since all-you-can-eat (e.g. Netflix) is the optimal (maximal revenue) media business model, why don’t theatre owners offer it?

With the typical theatre holding 225 seats, a fraction of the 20,000+ of a sports stadium, theatre owners must ration seats and spread out demand over several weeks. Unlike the steady demand for sports tickets, movies draw the largest audience in the first weekend and smaller audience after that. Theatre owners would like to increase revenue through (all-you-can eat) subscriptions, but keen movie fans don’t want passes that deny them from watching when the movie is most in demand. Nor do wall-sized movie displays offer any advantage to the closest seats, unlike live performances.

Over the past 100+ years, theatre owners have learned to optimize revenue with all-you-can-eat soda and popcorn, but don’t sell the tickets to seats this way, as the number of seats (unlike soda and popcorn) can’t be super-sized at near-zero cost.

Answer: Despite the problems listed above, MoviePass is trying to offer ‘Unlimited Movies” for $29.99 per month, a safe 10x ‘normal’ ARPU (average revenue per user).

What costs more, a cigarette or a TV show?

smoking

Part one of a series on what every media reporter and executive should know, but probably doesn’t.

What is more expensive, playing Batman or watching it? What is the real cost of watching TV or surfing the Internet on your smart phone? If you hate video ads or Facebook ads, how much should you have to pay to remove them? How much should it cost to be able to play everything, watching everything, listen to everything?

In the next series of posts I’m going to cover the cost of

  • TV
  • Movies
  • Books
  • Music and Radio
  • Games
  • Magazines & Newspapers
  • Phone service
  • Other services

Unlike many harried journalist I have reliable data sources for my many stats…

First, how much do Americans spend to watch TV?

We pay for TV in 3 ways:

  1. We buy a TV (or other hardware)
  2. We subscribe to a TV service
  3. We watch ads (or buy/rent a DVR)

How much do our TV’s cost?
We buy 37.1 million TVs at an average TV costs of $704. However it’s replaced only about once every 7 years. Per viewer (in the USA there is slightly more than 1 TV per person) this works out to $97/year, plus another $25/year in electricity. That’s a total of $122/year or just about $10/month per viewer.

How much does our TV service cost?
289 million viewers (USA) combine to spend $76B/year, or $22/month per viewer.

And what is the cost of those TV ads?
We watch $64B worth of Ads or $18/month per viewer.

The cost of TV + TV service + TV ads
$10 + $22 + $18 = $50/month.

For this we watch ~3 hours of TV a day or ~$.50/hour. That’s cheap entertainment!

Why ~3 hours a day and not ~5 (what Nielson reports)?

Nielson

I use Bureau of Labor Statistics (BLS) data and then add 10%. I chose the BLS because Nielsen adds ‘background’ time; when the TV is on but we’re not in the room, when we’re in the room but not watching since we’re sleeping, playing a game, reading, surfing, cleaning, talking on the phone, …

Multitasking-While-Watching-TV

My 10% addition to the BLS estimate represents my estimate that one third of this multitasking time (we spend 30% of our TV hours multitasking) we’re focusing on the TV.

Question: What costs more, a cigarette or a TV show?
Answer: About the same:

  • Since Americans spend $77B for 327B cigarette equivalents that’s $.24 a cigarette. At $.50/hour (above) that’s $.25 for a 30 minute show. So a cigarette ($.24) costs about the same as watching a TV show ($.25). 
  • Since a typical cigarette lasts about 6 minutes, smoking is 4x more expensive per minute than watching TV.  
  • Per month, Americans (on average, smokers and non-smokers combined) spend $34 on Tobacco, a bit more than the cost of the TV, TV service and electricity ($32/month per viewer), but less than the cost of TV service plus TV ad revenue ($18/month, or a total of $50/month). Of course as ‘only’ 44 million Americans smoke, our non-smokers spend $0 and our smokers spend $240 a month to smoke!

Bonus question. Which is worse for you, smoking or watching TV?
Answer: They are equally bad. Either watching a (half hour) show or smoking a (six minute) cigarette will shorten your life by 11 minutes.

References

  • 317M people in USA
  • 2.6 persons per household

More on TV

Electricity Stats

Get fast, smart

MrSmart

Strava, Garmin, MapMyRun, Runkeeper, Endomondo, Runtastic, Nike+, MiCoach, … you’ve pioneered the exercise app, but it’s time to Get Smart. Leverage the great data we help each other collect.

First remove the bad data. Here’s what not to do. On July 7, 1995, Hicham El Guerrouj of Morocco ran the world’s all time fastest mile of 3:43.13 in Rome.  Go Hicham!

Guerrouj

But according to your records, on April 1, 2012, Tina Harrison ran a 1:58 mile. Go Tina!!

Tina

Let’s stop embarrassing each other. Don’t publish that I broke Usain Bolt’s world record time of 9.58 seconds in the 100-meter dash, when actually all I did was …

  1. Finish my run
  2. Didn’t turn off my watch
  3. Drove off at 60 MPH

So if my GPS reports that I’m running 100 meters in 9 seconds, don’t mess up our* records, throw out the bad data.  

* Why do I say our records, and not my records? My stats feed the global data pool. My bad data messes up everyone’s records.

After you throw out our false world records, then use our heart rate monitors to double check our (less reliable) GPS measured speeds. It’s not that hard to determine how fast a runner should be able to run, given heart rate, distance, slope and prior running history. If I’m not wearing a heart rate monitor (HRM) then sanity check my speed against segments from HRM double-checked runners who normally run like me.

Check the wind and weather data too. We both know it’s not a personal record if there is a 20 MPH tailwind. Correct for these weather effects. Your hill adjustments are also off. Uphill you should use heart rate (HR) as a proxy for effort, showing our normal speed at that HR, not some abstract calculation based on GPS speed and slope.

What we want is a RealSpeed™. RealSpeed would correct for all external effects; hills, wind, wind velocity, temperature (too hot or too cold = hard), even path roughness. The key is to use your millions of runs to generate real data, not to use simple (but false) calculations.  The HRM (heart rate monitor) is the key (except for downhill runs). If you run 7.5 MPH (8 minute miles) at a HR of 150 beats per second (bps) with perfect temperature, no wind, no hills, flat road, then whenever you see a HR of 150 you know the RealSpeed is 7.5, (at least until your running form and conditioning improve, and RealSpeed is the key to measuring this improvement).

Once you’ve got my RealSpeed you can start comparing every run I do, regardless of slope, wind, course, … Give me a cool chart that shows me, at a glance, my progress over time. We love charts – especially when we’re training and improving. Find a clear, visual way that lets me compare my last 6 months of runs versus today’s run.

Veteran runners might have a problem with Real-Speed. We eventually get slower. We might want an age-adjusted RealSpeed. Otherwise we’ll train and train and get slower. That isn’t fun. In fact any runner who works hard will be tired the next day and slow down a bit. Maybe we need a rest-adjusted RealSpeed too.

Next, stop asking us to manually create courses. There are algorithms to identify if any two paths match, that is if I (or anyone else) has run this path before. Use these algorithms to instantly acquire 100% ‘course’ coverage of every step I run, without any manual input, duplicates or gaps. A good path-matching algorithm is as important to managing outdoors activity as a good search algorithm is to managing Internet activity, and we need Google, not Alta Vista. For route names, default to the name on the map, or allow the course regulars to propose better names, which all those who have completed the course can vote on.

When I do run the same paths I’d like to see how I’m doing versus my previous steps on that path. This may sound simple, but it isn’t. Why? Look at the GPS plot below. I don’t think most GPS data this bad, but …

swim

This GPS data is so bad you might not even realize I’m actually just doing laps in the bottom lane of the pool (the bright blue rectangle in the middle).  Before you can compare two identical runs, you’ll need some tricky DSP (digital signal processing) work to clean the GPS data, to extract simple, easy to understand feel for speed and effort.

Right now my speed graphs show a lot of random spikes, even when I’m running smoothly.

Without this clever DSP work, when you compare two or twenty identical runs you’ll get a barrage of spikes and noise, hiding the signal or ‘true’ speed.  Digest our noisy data so we can understand it.

You might be amazed how nicely a top-notch signal-processing expert can clean up noisy data, given enough data. Here’s some non-expert signal processing.

smoothed

This graph looks pretty, but its smoothness is a lie. Bad signal processing, in this case smoothing data over 60+ seconds, created a false smoothness. Neither was the terrain smooth, nor was I trying to run smooth. Here’s the same run, without the fake smoothing.

spikey

  • The first, biggest spike is where I walked down some stairs.
  • The second spike is where I stopped after my speed mile.
  • The third, small but sharp spike is where I stopped to drink from a fountain.
  • The fourth spike is where I encountered a flight of (very) steep stairs (and stopped for a breath at the top).

When I got to the (obvious) very flat spot on Great Highway (along side the very flat Pacific Ocean)

great highway

I increased my pace from about a 9 minute miles to a 7 minute miles, just to see if I could run this fast, starting at the moment when I pushed my lap button (which should have been noted).  The smoothed graph entirely misses this 7-minute mile – that’s not helping me analyze my run.

While the little spikes may be noise, OK to smooth, the big spikes are not OK to smooth. When I ‘change gear’ from fast to slow (or slow to fast) the graph should jump, not connect, and certainly not blend in speeds from 30 or 60 seconds before my abrupt pace change. It might more meaningful to skip or drop non-running spots from my running graph, since I’m actually not running.

More important, you need a meters per second graph or MPH graph. The current Seconds per Mile display goes up to infinity as I slow down. This makes ugly graphs, with the ‘slow’ spikes so high they take up all the vertical space.  It’s more than a cosmetic problem. My fast sections are critical for training, the slow parts literally just junk.

Our fast sections must stick up and be emphasized. 10 MPH should be higher than 8 MPH. Anything less than a running pace (5 MPH), should be just noise at the bottom of the graph. This is exactly what a MPH graph does.

MS

Unfortunately, the popular Minute:Seconds per Mile graphs highlights the meaningless, easy sections or our workouts, and squashes the important, hard sections of our workout.  Stops become huge spikes, sprints are practically invisible.

SPM

The blue and red graphs show the exact same speeds, but the red, Seconds Per Mile graph emphasizes all the wrong information.

Since many runners stop at the same places (a turn around point at a fence or wall, a water fountain, bathroom or traffic light, …), looking at everyone’s data will help separate what is a ‘stop’ from what is data noise. The clean up process will need to be fed, not only my GPS data, but also my lap button presses, terrain data, and places we take breaks. Big data combined with good DSP work should clean up my noise without wiping out my signal.

The most valuable thing you could do for me is to give me a Big Data-driven virtual coach. I want my big-data coach to: Tell me if I’m not warming up enough before pushing hard. Pester me when I over-train and tell me I need to take a break. Coach me when I need intervals, both how much to rest, and how much to push. Motivate me with real data on how much faster I’ll be if I run 5 miles more a week, or lose 5 pounds, or can push harder on my hardest hill. Have an expert, like Owen Anderson, PhD., author of the new book, Running Science, or another famous scientific data-driven coach co-design and endorse your big-data coach.

Maybe I’m biased after working on games, but can I get a score? How much have I improved over the last four years? Am I the 10,000th fastest half marathoner in the world? If I’m not, how much faster do I need to go? How much help was my last training run? Coach – encourage me! If I’m going to live an extra 100 minutes thanks to my 40 minute workout, let me know my sweat just bought me an extra hour of life.

For bonus credit, if more experienced runners or riders take variant courses, we’d love to see them (on your map, of course). I’ve been pounding down the steep Point Lobos Avenue hill for years.

Point Lobos Ave

I just found out there is a nice, soft (dirt) footpath hiding just across the street.

sutro heights stairs

Ideally less experienced runners of the Point Lobos hill could now benefit from my experience. If the system were paying attention it would see I’ve changed my routine (say after 5 repeats of the new route instead of the old route) and then ask me if I’d recommend this change to others.

I don’t always want to run alone. I want something like a game matchmaking service, to let me discover potential training partners: people who run where I run, who aren’t too fast or too slow.  If I run by them, send me a sign. A simple text will do. Tell us both how much faster we’ll become if we start running together. Tell me which of my coworkers (my address book), neighbors (your service), contacts (LinkedIn), or friends of friends (Facebook) might want to run with me. Let running clubs and running stores promote their weekly runs and sign up their friends. Allow coaches and trainers to monitor and message their athletes. Encourage race organizers to set up their exact courses and give out virtual prizes.

Get super smart! You have more data than any coach or exercise study in history. Look for patterns in your millions of runs to predict how we’re most likely to get hurt, and then warn us. How do you detect an injury? Look for regular runners that stop in the middle of a workout and then don’t run again for weeks. Take me as an example. If you look at my March 28th log, you’ll see me running as fast as I can down a steep hill, then stopping about two miles from home, then no running for the next ten weeks. Once you can see where we get injured, help us not get injured. If you see us running too fast down a steep hill, tell us how risky that is, and how to mitigate that risk.  I’m not the only one who would pay a virtual coach $10/month to skip one injury. That’s a lot less cost (and pain) then physical therapy.

Want to spawn a blizzard of sparkling publicity? Enlist us in mass experiments to replace old coaches’ tales and marketing puffery with hard-data backed science. Maybe start with our shoes. Do we run the same speed at a lower heart rate when we put on fancy new shoes? Do minimalist shoes actually reduce our injury rate? Find out everything: Does stretching before running increase or decrease injuries, what’s the impact of a cool down run, how much warm up do we need, do long, slow runs increase fitness, how fast is it safe to ramp up distance (particularly after certain kinds of injuries), how much faster do we get if we join a club or get a coach, does cross training help, and if so, what helps the most, …

Finally, once you gather for me all this great information, I want it nicely organized on a single page, my race readiness fitness poster. Most runners have weekly schedules; it’s fun to compare run to run, but a real coach watches progress week-to-week and race-to-race. You don’t make this easy; my progress information is scattered on bunches of pages hiding somewhere.

In conclusion: Make yourself indispensable. Look at runners who run real races. Find out which training programs actually work best, and teach them to us.

Get fast, smart, together!

A Stake in the Game

Stake-in-the-game

“ … skill or amusement games are not considered to be gambling in most U.S. jurisdictions… since they are ‘clean,’ the lure of gaming competition and prizes represents a powerful marketing tool with very substantial profit potential.

– From “Gaming Law In a Nutshell”, a summary of U.S. and international gambling laws written in 2012.

For-profit game competitions with real-world prizes are legal.

Prizes are everywhere. Simply take a look at your TV: Sports and motorsports, dancing and singing contests, game shows and reality shows. Beyond the TV there are more, poker, bridge and chess tournaments, even eating competitions. Prizes capture our interest, for killing terrorists ($25 million for Osama Bin Laden) and capturing common criminals.

People love prizes. They give us competition and drama. So why do the people who make video games ignore the dramatic centerpiece of our best-known games: The Prize?

What is stopping game developers?

It appears that lack of real prizes in computer games is based on a simple misunderstanding: if a game pays money to winners it must be a gambling game.

If I offered a $20 PlayStation Network Card to the winner of a game contest I’d be operating a slot machine, right?

PSNcard

False

The phobia towards giving real prizes has come down to us from the early days of pinball (games with both luck and skill) . It is time to fix this error, offer game players the joy of competing for dollars, and allow game companies the joy of collecting dollars.

How would game contests work?

Call of Duty (CoD), a game by Activision, is great first person shooter. Let’s take a look at raising the stakes with real rewards.

To enter a CoD contest players would buy a bandoleer of Special Contest Ammunition for one dollar. That single dollar purchase then becomes the contest entry fee.  The players’ money would enter into a pool with 100 other competitors, where they would compete against one another to win the challenge. The winning individual or team would split the prize money from the pool. For example, if 100 people bought the Special Contest Ammunition to enter the contest and a team of 10 won, the winning team would split the $50 prize, and earn a free ticket to the next, more difficult (and higher stakes) challenge. Activision would pocket the other $50.

Of course, the full price game would come with a few free tickets, to whet new players’ appetite for real competition. For the uninitiated in game design, loss aversion is a more powerful incentive than curiosity. To trigger this sense of loss, after players consume their free tickets, they either must buy more tickets or lose their ability to join real competitions — just at the point when they are starting to have a chance to win.

To make contests viral, winners would also be rewarded with free contest tickets to give to their friends. If game companies want to abuse social marketing, they could require winners to post their victories to Facebook to collect their prizes.

Isn’t this what Major League Gaming is already doing?

MLG-Infographic-2012

Yes and no.
Yes – they are offering prizes, made possible by a good-sized and quickly growing fan base.
No – they do not enhance game playing, except for a few hundred very serious gamers.

eSportsEarnings.com is trying to track the growing eSports market. According to them eSports has grown from $27k in prizes in 1999, to $14M (estimated) this year.

eSports Since 1999

They also report that while Major League Gaming is the largest eSports league, its competitors are close behind.

eSports Leagues

And that professional gaming is driven by the big, competitive games.

eSportsGames

Where Major League Gaming and the other e-Sport leagues uses world-class players to attract a large viewing audience, other companies hope to attract many levels of peer-to-peer competition, and monetize that broad base of players directly. There are many “bet against your friends” services in the USA. The oldest (still operating) is GSN, a joint venture between Sony Pictures Television (58% owners) and DirecTV (42%).

gsn

GSN has been in the cash-prize business since it bought Toronto-based FUN Technologies in 2007 and renamed it  GSN Cash Games. Unfortunately it seemed to have missed the social networking revolution.

In the more gambling friendly UK, King has been profitably operating games of skill since 2005.

King

King’s history shows that real world prizes alone aren’t enough. You need something people want to play, say Candy Crush Saga, to build an audience. King tried hundreds of games before finding the pot o’ gold. Perhaps if Facebook hadn’t barred P2P waging, King would have been content with simple P2P betting.

The second in the USA is Virgin Gaming, renamed from World Gaming after a 2010 investment from the Virgin Group. They take roughly a 10% house cut or ‘rake’.

virgin

One pithy quote on Virgin Gaming is from the prominent game analyst Michael Pachter, who in 2010 said, “It’s one thing to lose time playing video games, it’s another to lose your house. I am incredibly skeptical that this will work.” But by by 2013 Dean Takahashi could write: “Virgin Gaming now has 2.5 million players on the web. Gamers have won over $32 million in cash in 20 million tournaments. Cash games are up 280 percent from a year ago. Deposits are up 250 percent. Sponsorships are up over 900 percent. A recent Halo tournament, the Halo Infinity Challenge, drew 292,000 participants. They played 9 million games over three weeks.”

As more numbers come in, head-to-head betting is heating up.

Skillz received $5.5M in Series A funding on June 18, 2013. Skillz is “the US’s first platform for real-money gambling on mobile games“. “Skillz improves gameplay by tapping into gamers’ fundamental desire for meaningful competition.” And “Face-off against friends and rivals to earn bragging rights, cash and other prizes.” Sounds right to me.

skillz

From CEO of Skillz, Andrew Paradise: “We have a survey that shows 41 percent of consumers want to play in real-money competitions in their favorite iPhone or Android games.

Another platform newcomer is Cashplay.co, which went live June 27, 2013.

CashPlay

Even newer is cashbet.com, recently angel-funded by Fred Hsu and others.

cashbet

Here’s Fred’s take on it. “The only real-money platform that I have vetted from all aspects – team, technical, compliance (HUGE), marketing and distribution strategy – and have given a vehement thumbs up. A true platform not run by 25 year old kids. We are still very early on with real money platforms, this one is worth taking a look at.”

There’s Skillville from the fertile YetiZen incubator. “Since the official launch in April 2010, over 1 million tournaments have been played and over $500,000 in prizes have been won by players in the community. ”  And there’s GamerSaloon.

All the P2P betting companies pay lip service to fair play, including magic ranking algorithms and randomized matching. Since no one is offering handicapping yet, most gamers don’t want to wager against stronger opponents, so it makes sense for these companies to talk about a level playing field. However this is difficult. On a true level playing field, you’d always contend against a perfectly matched opponent in a perfectly matched game. In this case you’d win 50% of the time, lose 50% of the time, and thus end up always losing money, the amount equal to the house cut (~10%).

Of course, we’re not going to get perfectly homogenized opponents; we’re going to get, at each tier of skill, strong players preying on weak players, and sharks diligently figuring out how to masquerade as minnows.

As poker players know, collusion, not leveling, is the real problem of skill-based games. The only way to prevent colluding is to prevent playing with your friends or acquaintances. 🙁

Here’s Ned’s take:

What’s being overlooked is that we don’t have to focus on me-versus-you games: Gambling on skill is a zero-sum (at best) game. Games should be non-zero-sum, like life. To make a better game, we must invent contests that increase the average enjoyment of the average player.

That action is best which procures the greatest happiness for the greatest numbers.

–       Francis Hutcheson, 1725

Game designers should create contest rules that make people happy; aiding the weak, creating the most helpful (and viewed) videos, amazing speed runs, dying in the way that evokes the most schadenfreude (taking pleasure in other people’s pain, including virtual pain), and above all for creation of new, popular game scenarios or objects.

Another interesting approach is what World or Warcraft does: http://us.battle.net/wow/en/community/arena/

WOW encourages players to spend $20 to rent a “new level-90 character with full sets of epic gear” for 9 weeks. In addition, after playing 50 games, you receive a lovely “Armored Murloc” pet.

murloc

At their least inspired, game contests are a form of game rentals that increase game revenues, unlike Blockbuster or Game Fly game rentals, which cannibalize game sales.

What do I win?

In-game rewards, second chances, cash or $20 PlayStation Network Cards are easy to offer. Sponsors can provide additional rewards – the sky’s the limit. A good game designer (or neuroscientist) will tell you that unexpected rewards are best. On the other hand, cash rewards are ideal in return for hard work. If Joe Jones spends 400 hours making a Little Big Planet level, and the level is played one million times generating $100,000 in additional revenue, Media Molecule should be happy to pay Joe $10,000. Then Joe can quit his day job and go into business making Little Big Planet even more awesome.

Today, a runner can plop down $255 to enter the NYC Marathon for a chance to win some of the $700k purse. A student can spend $14 to take the PSATs to win a $10,000 National Merit Scholarship. Or, a gamer could take a quick walk over to the local comic book shop and spend six dollars to enter the local Magic: The Gathering tournament. A player with some extra coffee money should be able to have the same chance with Sony’s MLB: The Show.

Unlike old-fashioned contests, games with cash stakes should be designed so that average players have a real or perceived chance to win each time they play. It could be about half the time or once in every dozen tries. One in five hundred tries might even work if the perception is that anyone can win, and I should keep trying (“Next time it’s going to be me!”). The gamer, like the gambler, should feel that he’s only a shot away from something to brag about.

For-profit skill games with real-world prizes are legal.

I foresee a day, not too distant, when most games generate a nice chunk of their revenue from contests, tournaments and competition. On that day, some games are purposely built for tournament play and the prize experience. What I don’t understand is why contests and prizes aren’t already standard fare? Are we game makers afraid to grow up and make games a true adult pastime?

Even as a teen, I remember with great fondness playing in a two-dollar Diplomacy tournament, winner takes all. The inevitable loss of two dollars was insignificant to how much fun I had turning a mere game into something real. The thought of a real reward made the whole experience much more compelling. It engaged an entirely new part of my brain- the non-game part. How much sweeter would our games be if we could spend a single dollar to make the game real? As for the game maker, well, selling a $1 stake is much sweeter than selling the game for $.99.

Games are all about fun. I want more fun. I want a chance to win.

winner

Give me a stake in the game.

Comments?