Report: Five myths about online TV

These are: 1) The sector is experimental, 2) Internet production is cheap, 3) shows are packed with product placements, 4) webisodes should be only five minutes long, 5) good shows automatically go viral.

Says Colin Donald, Director, Futurescape, "Although original Internet comedy and drama production is still in its early stages, serious misconceptions are already being taken for fact. Our interviews with producers and analysis of budgets, sponsorship, production and promotion correct commonly-held, but mistaken views."

Myth 1: The sector is experimental

The Internet television production sector is increasingly well-established. Producers are proving highly resourceful in obtaining funding from a wide range of sources, not only broadcasters, but also new ones such as social networking sites and the online studios being established in Hollywood. Many shows have multi-season sponsorship in six and seven figures, either from a single advertiser or successive advertisers over seasons.

Where experimentation and innovation do continue is in formats and audience interactivity, the aspects that give online its advantages over broadcast television.

Myth 2: Internet production is cheap

Analysis of British and American productions reveals a wide range of budget levels, with budgets rising for foreign locations, sophisticated special effects and well-known actors.

Per-minute costs range from £1,000 for college mockumentary Dorm Life, through £2,500 for Michael Eisner's Foreign Body, shot partly in India, £5,000 for the BBC/Endemol thriller Signs of Life, £16,000 for Canadian sci-fi show Sanctuary, employing expensive CGI effects, and over £20,000 for In The Motherhood, with US television stars Leah Remini and Jenny McCarthy.

Myth 3: Shows are packed with product placements

On the contrary, production companies and the social networking sites that commission them are reducing the number of sponsors per show. Whereas KateModern season one featured several brands, the second season is limited to Cadbury Creme Egg and the Toyota Aygo. Similarly, Eisner's first production, Prom Queen, contained a wide variety of sponsors, whereas his latest, The All-For-Nots, has only two, Expedia and Chrysler.

Fewer sponsors mean less intrusive product integration and less difficulty for the production team in finding ways to incorporate products. If the trend holds, agencies will need to move quickly to secure more limited opportunities for clients in forthcoming shows.

Myth 4: Webisodes should be only five minutes long

Producers interviewed by Futurescape maintain that viewer feedback contradicts the widely-held belief that an episode should be just five minutes.

Kathleen Grace, producer of The Burg and The All-For-Nots, describes a possible tension between the requirements of advertisers and viewers.

"The ad industry [wants] three to five minutes because you can get more impressions and views with shorter content. But we've had very successful episodes that are longer. People will watch five minutes, 15 minutes or even 22 minutes if it's compelling."

Longer episodes, with the opportunity to deliver more complex and entertaining storylines, look to be a likely development.

Myth 5: Good shows automatically go viral

Futurescape has dubbed this the "viral fallacy," that good quality productions will automatically be discovered on the Internet by the target audience and then forwarded by them. Producers are adamant that launching a show requires a full-scale promotional campaign, possibly employing broadcast television.

Even online, not all promotions are equal. MySpace's hidden camera show Special Delivery gained 250,000 views from the MySpace home page, but only 450 via its YouTube channel.

Creative and media agencies have a competitive advantage over rivals entering online TV production, such as talent and PR agencies, by drawing on their expertise in creating, planning and buying for this essential promotional work.

The report: About 2008: The Birth of Online TV: is an 80-page report published by Futurescape.

It provides in-depth analysis of the new wave of original online television shows, particularly scripted comedy and drama, in the USA and UK. It explains why the sector is growing, how it is making money via a range of business models, what challenges confront the producers, how they are developing formats, and predicts the future for shows, funding, distribution and the new studios.

The report costs from $499 / £250 and can be ordered online at www.futurescape.co.uk