Applying Milken’s Junk Bond Theory To Animation
Michael Milken made a fortune with junk bonds back in the 1980s. His theory was so simple, it was almost too good to be true except that it wasn’t. Basically, a junk bond is one that carries a high risk of default, i.e. the borrower doesn’t pay you back. Milken however, perceived that if you buy enough junk bonds, the ones that do pay you back will more than cover the losses from those that don’t. His plan worked far beyond his expectations and he quickly became the so-called ‘Junk Bond King’ before being brought down for some insider trading.
What does this have to do with animation? It’s quite simple really: animated content (be it web series, TV show or feature) carries a large amount of risk. That is to say, that they won’t succeed. When they do, however, they often bring in a lot of money, and if they’re really good, they can bring in billions in revenue.
The current approach at many studios and networks is to identify a winning idea before it is ever broadcast. They scientifically analyse demographics and analytically predict the ones that will produce the biggest revenues. Ever wonder why there are so many action shows aimed at boys? That’s why.
That way of doing things is fine until a show comes along an upends the entire notion. My Little Pony: Friendship is Magic is one example. It succeeded because it’s a good show; not because it’s target demographic loved it.
That’s the concept behind the Milken approach. Instead of narrowing down options and targeting demographics, wouldn’t it be better to make a smorgasbord of cartoons and see which ones stick?
Admittedly Fred Seibert has already been doing that for years with his Oh Yeah! and Random! cartoon series. Adventure Time came out of the latter, and the former has produced The Fairy Oddparents and My Life as a Teenage Robot.
The problem though is that Oh Yeah and Random! were series in the traditional sense. That was fine when networks ruled, but would not be practical today.
What would work instead is a regime where new cartoons are created regularly to see if they take off. Ones that do would become series in their own right, but it would be imperative to continually develop new projects that would pick up where old ones left off.
The crux of the issue is that it is impossible to always pick the winners. Not every piece of animation is going to be the next SpongeBob. It IS acceptable to make the odd loss on a show, but wouldn’t it be better to lose it after one episode is produced as opposed to an entire series?
In such a situation, the costs associated with producing the ‘dud’ would be more than covered by the revenues brought in by the ‘hits’.
What do you think?