• by kyle , Daisy Whitney , March 1, 2010

News Corp's digi-studio produces TV for the Web (and maybe back again)

The pile of wreckage in the digital studio business is impressively high, littered both with venture-backed and network-owned in-house shops. Given the economic climate of the last year and given how very risky content creation is in the first place, it seems a bit insane for a media company to start a digital studio today.

But that didn't stop Fox Television Studios from launching its new digital studio, Fox 15 Gigs, last summer - because finding the Web properties that can successfully make the leap to television is still the brass ring in Hollywood. There have been a number of attempts, most notably "Quarterlife," which famously failed when NBC launched the Web show as a mid-season replacement two years ago.

The promise, though, of a Web-to-TV crossover show is so alluring that Hollywood creators like Fox keep trying. 15 Gigs is housed within Fox Television Studios, the cable studio best known for USA Network's Burn Notice. The modus operandi of 15 Gigs is to use the Web as an inexpensive proving ground for concepts, ideas and talent. The better ones to emerge from the Web stew could graduate to TV.

That's how 15 Gigs differs from predecessors, such as Disney-ABC's Stage 9 that launched two years ago, but laid off most staffers last year after its lackluster lineup of shows didn't take off. It's also a different beast than a pure-play digital studio like 60Frames, which went under last year.

That's because 15 Gigs isn't going after Web hits. Its goal is simple - to use the Web to nurture ideas cheaply. Then, the digital studio can call the best ones up to the major leagues of TV, because that's where the big bucks still are. As an example, 15 Gigs is currently pitching its successful online series "When Ninjas Attack" as a Wipe-Out style game show for network TV.

"Most of the stuff we have done is done for less than the cost of a script," says Gabriel Marano, vice president of programming at Fox Television Studios.

Another distinction is the fact that 15 Gigs doesn't operate alone. "We aren't a network. We're just one of the studios here at Fox, and we feel 15 Gigs is an extension of our development process," says Ilsa Berg, director of programming at Fox Television Studios. "We can produce a Web series cheaply, and once you get it on tape you can see if you even want to do the rest of the series. It's not that different from what we do as a studio every day. You need to make things in a cost-efficient way."

That includes looping in advertisers. Marano said 15 Gigs is pursuing branded entertainment deals and expected to have inked advertiser partnerships by late last year. The studio also works closely with Fox Digital Media on digital strategy, sales and marketing.

"It's not meant to be a deficit-financed idea," Marano says. "Right from the get-go there is a vision of how to be profitable, such as partnering with the right distribution platform where it's ad supported, where ad dollars are high enough value, and where advertisers are brought on board."

As part of its incubation approach, the digi-studio inked a development deal with Web producers Black20. The creative shop is best known for edgy comedic videos as well as regular Web series like "The Middle Show." Collectively, Black20's videos have earned 60 million views. Now, the Web creators are working with 15 Gigs to test ideas for possible TV development.

Black20 is a good fit for the ultra low-cost model at 15 Gigs. With just nine employees in Queens, N.Y., and only $500,000 in angel funding, Black20 has learned to produce on a shoestring. Black20 also relies on multiple revenue streams, earning money by producing promos for cable networks, creating video series for portals like ign.com, and via its own ad deals with Colgate, Loopt and others.

15 Gigs also has another Black20-style development deal in the works and is aiming to be the go-to development studio for creative talent who know how to leverage the Web, Marano says.

Still, any digital studio faces inherent challenges, points out Keith Richman, CEO of Break Media, which produces Web videos and commands a distribution network reaching more than 60 million unique visitors each month.

"I think the challenge they will have is no different than any other digital studio: They lack distribution online, which makes monetization difficult. Alternately, if their goal is just to pilot stuff and test the content for television, the challenge is that scripted episodic content has not done great online at any mass scale," he says.

Marano pointed out that 15 Gigs videos are distributed on Hulu and YouTube, as well as on MySpace and FunnyorDie in many cases. But the digi-studio is platform agnostic, so its content can be pitched and sold to both its sister divisions, like the Fox networks, as well as Web portals and other places.

The "digital incubation" model has proven successful with others such as multimedia studio Electric Farm Entertainment. "Introducing a franchise through low-cost digital platforms with the intent to slowly grow an audience and, in success, grow the franchise up the media food chain makes sense to me - it's the model Electric Farm and MTV used on Web series 'Valemont,' which is now in consideration for becoming an on-air series," says Brent Friedman, one of the founders of Electric Farm.