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The Plan (In Detail)

Hi all, Dave here! 



I wanted to reach out and respond to the community, I hope to do this frequently, although I hope future responses won’t need to be quite this long.

There have been a lot of really good questions raised in the last 48 hours, and I’m going to go out on a limb and be candid with you.  We live and die by our fans. What we are hearing from you, loud and clear, is that we haven’t given you all the information you want.  So let’s go through the big questions, one by one, and answer them in depth.


If you have a question not on this list, please ask (my email is at the bottom) — after all we’re here for the fans.



Why has nobody heard of us (SMGO) before?


The short answer is because we didn’t have a product to show until 3pm Friday, March 15.  For over two years we’ve been toying with this idea – we’ve tried multiple alphas, but for one reason or another, mostly life, we’ve never had a chance to actually make our concept into reality.  That changed on March 15th.

We never actually intended for word to break out quite so quickly.  We were doing some closed beta testing, and we decided to test our concept with a group that had no affiliation with us – mostly in an effort to make sure our idea was a good one.  The test went well, we got some traction, we were planning on keeping it limited there while we worked to test the website/refine our content (based on user feedback)… and then someone wrote a well meaning post about us on Tumblr, word spread far more quickly than we anticipated, and things got quite crazy for us very quickly.


We asked our industry advisors if we should try to stop the growing momentum, Hollywood is very protective of their intellectual property, and we were told to go with it.  So, we went with it as best we could.  A lot of the questions we’ve received are a direct result of having our beta site become very visible very quickly rather than having the time we planned on to refine content.  And for that, I’m sorry.

What we didn’t want to do was override your enthusiasm to bring back your shows by pulling the plug on the beta.  Perhaps that was the wrong choice considering some of the very concerned feedback we have seen, but I know if I had been given the chance to save one of my favorite shows back in the day (Invader Zim for example), and then that option vanished, I would have been pretty bummed.


We are a site for fans. For you.  The last thing we want to do is discourage you – your opinions are already widely brushed aside.



What about the Production Studios? Do you have any contact with them?


Yes, actually – despite what you might have heard, we do have an industry adviser, and we’re actively reaching out to production studios through back channels.  There are a few reasons for what may seem like mixed signals here:


First we finally have a product to show the industry – we approached a number of mid-level execs with this idea over a year ago, and their response was simple: “Great idea! Now show me a product.”  Well, we didn’t have a product to show them, nor proof of a demand for the product, until now.

Second, we were working through the proper channels, and had a planned order of operations, but the speed at which you found us (which is awesome, by the way) was not in the plan. We got such a great response from you excited fans that our beta crashed before its third day of existence!  We were, admittedly, caught off guard.  So while reaching out to top-level Hollywood executives was in the plan, it’s not easy to reach them in a week, let alone three days.


And finally – wow! – we were not at all expecting there to be such a demand for saving animated shows.  I am a Director of Marketing at my day job, but boy did I miss the mark here.  We were focusing on live-action shows, but in two days, we have had well over two-thousand people sign up for smgo.tv, and you are mostly animation fans.  And here I thought Firefly fans were the strongest force in the net . . . There has been no two-way communication with your animation studios as of yet, but we’re on it.


I have reached out to Titmouse’s CEO twice by phone and once by email, in the last two days on behalf of our Motorcity fans.  I’m taking time off from the previously mentioned day job to focus on reaching out to animation studios because I absolutely understand the need to have studio support, and at the rate we’re growing, we can’t wait.


So, because we have found ourselves in this awkward juggling act, trying to get the website done, while keeping up the premature (but very much appreciated!) fan momentum, the execution has been far from perfect.  There are things we could have done differently — locked the beta, making it invitation only, and making our beta participants sign an NDA – but what we could have done is now irrelevant.  Now it’s time to move quickly forward, and meet with the animation studios responsible for your favorite shows.



Explain your payment system –and why I should trust your crowdfunding platform?


Let me start by saying we’re using PayPal to handle all your transactions – we don’t even let you enter a credit card number on our website.  That doesn’t explain the intricacies behind the payment system nor how we keep your money safe, though.  To do that, I need to back up and clarify what you’re actually doing when we get to the funding stage.


Our whole payment system is premised on the idea that we are not collecting actual money until the show reaches its full funding goal and a written contract with a production studio is signed. What that means is, rather than having your card/bank account charged, we instead enter into a billing agreement with you – basically we’re collecting a whole lot of legal “IOUs” that can only be redeemed if certain conditions are met.   Those conditions are a signed contract for production with the same cast and crew, a fair deliverable date for the show, and the full production/delivery of rewards to our fans (in a timely manner after the season).


Per our written agreement with PayPal, we cannot ever be what’s known as the MOR – or Merchant on Record – for a crowdfunded project.  The main power we have is whether to trigger the payment or not, and the decision to trigger relies entirely off of those aforementioned contractual conditions.  During the funding phase PayPal requires us to provide an account number from the studio. When we can present a signed contract from the studio to PayPal, then and only then, can we trigger payment. The funds will be directly transferred from your account to PayPal to the Studio and SMGO will never touch money during the transaction. We encourage you to contact PayPal directly if need be.


We should also point out that per our written agreement, the MOR must be carefully vetted by PayPal’s legal and security team for its legality before they can even apply to receive the funds.


PayPal takes your security very seriously, and that’s why we chose them to handle all our payment solutions.  So, let me once again stress there is no way we can ever touch your funded money, and there’s no way studios can either, unless they agree to put your show back into production, give you your well earned rewards and do both in a timely fashion.


In your Terms and Conditions you note smgo does not offer refunds… Why?


Well, as we just noted above, we never touch your money.  We are not, nor can ever be the MOR, so there’s nothing for us to refund to you.  We do not earn revenue through the crowdfunding process, so we really don’t collect any direct money from you.

I’m sorry this was poorly worded — and I should note that I’m not saying there is not a place to cancel, modify, or return a reward pack — I’m merely stating that we, SMGO, do not touch your money and therefore are not the correct entity to contact for refunds (PayPal is).


The MOR will always be the production studio, and PayPal offers one of the best return/buyer protection systems in the world — you can and should do all of these transactions through PayPal (our site will link you there for your added convenience).  Keep in mind though, that once a show enters production, it will likely be much harder to receive your refund because your collective funds are being spent creating the show.



Why will smgo’s system work?


You have to understand how the current business side of the industry works to understand why smgo.tv is going to work. You have 3 primary types of business entities in Hollywood:  Studios, Broadcasters/Networks, and Advertisers.

  • Studios create TV shows and all related content you see on TV. Studios make their money by selling the broadcasting rights for this content to Networks here in US and internationally. The more episodes it can sell the better.
  • Networks are in the business of selling advertising time to Advertisers. They purchase the broadcasting rights for content created by Studio in order to generate advertising revenue. The value of a show’s advertising is determined by the famous Nielsen ratings.  If a show has poor ratings, watch out, it’s going to be on the chopping block.
  • Advertisers are in the business of selling goods and services to you! They want to reach a certain category of the population and TV is traditionally one of the best mediums to achieve that.

Our model has taken into account these three primary business groups, and combined it with a neat model that should help fans — essentially creating a win-win for every party involved.



You mentioned a win-win for everyone – so let’s start with you, what does SMGO get out of this?


We are a business (just like Kickstarter or Indiegogo), so we do take in revenue to help pay for the streaming costs and other costs associated with the crowdfunding process.  But unlike other crowdfunding sites, we only take revenue from advertisements (commercials) — kind of like Hulu.


We thought it would be counterproductive — downright silly, actually — to take a fee from a project’s goal like those other crowdfunding sites do.  If we took a cut, like they do, we’d make the average live action project here over a million dollars more expensive to crowdfund. Ouch.


We also thought it’d be equally ridiculous (ok, we may have said “stupid”) to have paying subscribers — the people who helped fund a show — watch commercials.  They already paid to bring the show back!

Instead, we’ve opted for a system that provides the fans with a much needed (and desired) service, and helps pay our bills, but without making the idea harder to achieve, and without double dipping — you either contribute to funding the show, and watch commercial-free, or you don’t contribute, and let the commercials’ sponsors pay for your watching enjoyment.


What do fans get out of your service?


Short answer:  You get your favorite show back!

Long answer:  You get the first ever chance to actually revive a cancelled TV show.  That alone is very cool when you consider that we haven’t ever truly had a say in what gets cancelled and what gets renewed.  Shows that favor the middle always will be renewed over shows that favor niche audiences.  If your show doesn’t meet certain criteria, it’s out, and no amount of kicking and screaming will fix that.


The current system for fan-Hollywood interaction is broken – broadcasters could not care less if you raise a bunch of petitions to bring your show back.  Petitions have become white noise to them, and if you don’t believe me, read this article: http://insidetv.ew.com/2012/11/17/canceled-shows-last-resort/ .


What broadcasters and studios do care about is money.  They are businesses–it’s their job to entertain you.  And they’re pretty good at it.  When a show gets cancelled, it’s almost always because that show did not provide good Nielsen ratings when stacked up against other shows during a timeslot.  It’s not personal, the broadcasters and studios themselves may love the show, but ultimately they have a minimum cost of capital that they need to maintain, and if advertisers don’t like a show’s numbers, that show will get the axe every time.


What we’re trying to do here is monetize your opinion.  Basically we’re putting you and your voice on an equal playing field with advertisers, to compete for Hollywood’s attention.  By leveraging your buying power, we’re giving you a real and practical chance to save your show.


And because we realize that not everyone will just want to give away money to see a TV show, we’ve sweetened the deal by offering collectible items in return for your contribution.  We want you to walk away feeling like you had power, and you got something wicked cool during the process too.  We tried to accommodate income levels of all sizes with our reward packs – from simple T shirts to box sets to more expensive (and way cooler) experiential rewards like visiting a cast party, or even appearing in an episode.  It’s really no different than pre-purchasing a gift for yourself, and letting us use that money to fund your show.


We want you to walk away feeling empowered and that you got your money’s worth, that’s the whole goal here.  We’re doing this for fans.  For you.  (That may sound overly sentimental if you haven’t already read our About us on smgo.tv, but we started this whole thing because we were fans like you, frustrated at losing some of our favorite shows, so we really do mean it!).



What do broadcasters get?


Broadcasters, the business entities that air and stream produced shows, get two things out of our arrangement.

First, they can finally give fans a viable avenue to vent their frustration, and don’t have to be the “bad guys” that “cancelled your favorite show” because it wasn’t “mainstream enough.”


The second thing broadcasters get is an additional stream of revenue.  As we noted, broadcasters (and studios) are businesses, and by giving them an additional stream of revenue, they can help make their shareholders happy, and help grow the industry to provide even more high quality entertainment without changing anything in how they currently conduct their business operations.


We’re not out to cut in line or step on toes – we just want to give you want you want, and make sure everyone at the table is happy with the arrangement.



What do the production studios get?


Production studios, the actual entities that make/produce the shows you watch, get broadcasting fees that subsidize the cost needed to produce a show (broadcasting fees are, on average, 50% of the production costs ).  By paying for these broadcasting rights (just like any current broadcaster does) we’re helping them to push the show towards syndication.  The upfront costs of producing a show are tremendous, and most shows produced in Hollywood do not earn a profit for their parent studio until they pass into syndication.


Syndication is where production studios typically make their money back (and then some).  Shows that reach the minimum 88 episodes, are eligible for syndication to other cable networks, and also to networks overseas.

In our model, production studios keep all their original syndication rights and intellectual property, receive full broadcasting fees for a season, and get to continue to create good television.


 Finally, what do the advertisers get?


The advertisers get exactly what they want — they receive access to a very niched, exclusive and targeted audience. This niched and exclusive audience provides them with the ability to actually target ads directly groups most likely to purchase it.  Ads aren’t so bad when they’re actually for stuff you’d want to buy — advertisers know that and that’s why they spend so much money analyzing target audiences.


They want to sell stuff to you — so for example, if you’re a 25 year old male, they’d rather not show you a bunch of expensive woman’s perfume advertisements (not that there’s anything wrong if you actually are a 25 y/o male who likes perfume ads  ).  I hope that makes sense.


In Conclusion…


If you’re still reading by now, you’re a champ – this is a long long press release.

It also means you actually care and you actually want to save quality TV shows as much as we do.  Thank you for that.


You know we started this project because we wanted to create a better system, and this type of change will always meet resistance.  We’re not perfect, but we earnestly want to help fix what we see as a growing disparity between fans, broadcasters and studios.  If you support us, and want to work with us to save your show, we’re more than honored to have you here with us.  If you don’t, thanks anyway for taking some time out of your day to learn about us, and what we’re trying to do.


I didn’t get much time to talk about us (the founders here), I hope to do that later on if time permits – but right now I need to work hard to get a hold of a few animation studios and make sure they realize we’re here to help.The last request was to get a full name, so my name is David M.Coduto and my business partner is Chehin Toumi. We both live in San Francisco, and if you’re living here too, please shoot us an email.  We’d love to meet the people we’re helping personally (seriously).


And of course, If you ever have any questions, please reach out to us.  My email is dave@smgo.tv  and my partner’s email is chehin@smgo.tv.


Finally, we’ll be at wandering around at Wondercon this year.  If you plan to go, shoot us an email, and find us there.


Let’s save your collective shows everyone, thanks very much for your time.