Not so sick after all?

This may seem an odd topic, but stick with me. Yesterday Disney’s ABC television network said it was licensing two canceled daytime TV soap operas to a production company that would be moving the shows to the Internet. I seem to be the only one who thinks this is a brilliant move. In fact it might be the Internet’s next killer app.

All My Children and One Life to Live as killer apps? Yes.

A killer app, remember, is the Silicon Valley term for an application that all by itself justifies to certain users the acquisition of hardware needed to run that app. People will go down to the store and buy hardware just to be able to use that application, whatever it is. VisiCalc was the killer app for the Apple ][, Lotus 1-2-3 was the killer app for the IBM PC, Halo was the xBox killer app, and Bonanza was the killer app for U.S. color TV.

Every new platform needs a killer app to get beyond the early adopters and reach a broader audience. Some experts are arguing that Netflix is the killer app for Internet TV, which might be right. But I think it might just as easily be All My Children.

ABC had nothing to lose in this deal. The two soaps in question were already canceled, winding down their casts and story lines. I’m sure they were acquired for a dollar each or less. If moving online saved ABC some costs from closing-down the series they may have actually paid Prospect Park to take the shows off its hands. So these iconic brands were cheap to acquire.

But they are expensive to produce, right?

Not so fast.

Nobody outside the shows and their networks knows for sure but a $50 million figure is often thrown out as the annual production cost of a major soap, so let’s work with that.

Fifty million dollars is $192,000 per episode or $4,370 per finished minute based on 44 minute shows. That’s a lot of money but a lot less than primetime TV budgets. It’s also the absolute most any soap has ever cost with most costing less. Certainly there are some savings to be found in there. Let’s claim a 20 percent labor savings from moving to the Internet, bringing per minute costs down to $3,496.

Actually, there are plenty of additional savings. Some savings will come from lower labor costs as actors accept smaller paychecks as an alternative to retirement or unemployment. But an even greater savings will come from any Internet soap’s ability to offer online every episode ever broadcast — the long tail — at an effective production cost of $0 per hour.

If a third of Internet viewers are watching old episodes that drops the effective cost of new episodes by a third, so we are down to $2,342 per finished minute.

Don’t forget potential subsidies from hardware companies. As a killer app for Internet-connected TVs, for example, All My Children might get some cash from TV manufacturers. Bonanza got money from RCA that way and many popular shows were moved to HD production with financial support from HDTV makers. Why not the same for Erica Kane?

Our All My Children budget is now down to $26.8 million per year, so let’s figure $4 million of that might come from Samsung or Panasonic or maybe even Google TV if any of those platforms can be somehow uniquely linked to the shows, possibly through additional or interactive content.

Heck, what if All My Children could be accessed solely through its Facebook page? How much would Mark Zuckerberg pay for that?

I don’t know what Zuckerberg would pay, but I do have one number to work with — the rumored production budgets at YouTube’s upcoming professional channels. According to Variety, YouTube will shortly bring some professional channels to its service with budgets of $1000-$3000 per finished minute.

Our straw man budget for All My Children, which now stands at $22.8 million per year, just happens to work out to $2000 per minute — right in the sweet spot of those rumored YouTube numbers.

I am not saying that All My Children and One Life to Live are headed to YouTube as the basis of a Soap Channel, but I am saying that they’d be profitable both for their producers and for YouTube if they were headed there.

Each show has about 2.5 million daily viewers — each a potential buyer of an Internet-connected TV. That’s $2.5 billion worth of TVs and well worth a $4 million production subsidy.

If YouTube or any of its competitive services could reliably get 2.5 million viewers per original episode they’d see that as well worth the money, too.

This is long form video with commercial breaks going to a dedicated audience which can now be global (that last part could be huge). Remember 2.5 million viewers of a 44-minute soap opera is the equivalent of 36 million typical three-minute YouTube video views. As professional content with a 40 year heritage that’s an easy sell to advertisers — a no-brainer for P&G.

So contrary to all the skepticism, moving soaps to the net could easily become a goldmine — one with a lifespan far longer than that of VisiCalc.