Streamers’ Evolving Acquisition Strategy Brings New Opportunities and Challenges for Broadcasters, Indie Producers

As a seasoned producer with over two decades of experience in the industry, I’ve seen my fair share of shifts and changes. The latest trend – streamers moving towards single-territory licensing deals – seems to be a game-changer. While it may offer more optionality for projects, it also raises some concerns about the future of collaboration between local broadcasters and these deep-pocketed U.S. competitors.

Last month, Netflix’s CEO, Ted Sarandos, experienced a type of recognition at the Royal Television Society conference in London, which was hosted by Netflix itself. In a display of power, Netflix invited speakers such as “Peaky Blinders” creator Steven Knight and soccer legend David Beckham – both of whom have projects with Netflix – to attend. During this event, Sarandos also unveiled a first-look agreement with the creator of “Baby Reindeer”, Richard Gadd.

However, the keynote speech was what primarily drew the audience, consisting of influential figures in the U.K. like BBC leader Tim Davie, to attend. In this address, Sarandos expressed admiration for the U.K.’s TV production industry while simultaneously highlighting the importance of adapting to change.

Over the past few years, it’s been the streamers who have had to adapt their strategies, particularly in Europe. When Netflix initially entered the European market less than a decade ago, they brought with them a strategy that had proven successful in the U.S.: cost-plus. This meant no resale, no performance incentives; it was essentially an all-or-nothing proposition. As Jason Blum, who wrote about this topic in a 2022 New York Times op-ed, put it, “this approach treats every creator as if they were already part of a hit movie or TV show before the cameras even start rolling.

In the U.K., legislation passed in 2008 allowed producers to manage and profit from their intellectual property. The cost-plus model, which was subsequently adopted by various global streaming platforms seeking content, became somewhat outdated, despite being financially beneficial. However, executives in both the U.K. and France (a region known for hit originals like “Emily in Paris” and “Franklin”) say that U.S. streamers are shifting away from aggressive rights acquisitions. This change is due in part to the observation by Blum that such a strategy is “fundamentally unsustainable.

In 2020, about 60% of the most popular shows on Netflix were their own productions. However, as of now, around 60% of the top 10 shows are licensed from networks like AMC and others, according to Guy Bisson, executive director and co-founder of Ampere Analysis. This shift indicates a significant change in approach towards licensing content.

Currently, streamers aim to disseminate information. In an RTS speech, Sarandos stated, “Surprisingly, fewer than 25% of the intellectual properties in our U.K. collection are owned by us.” Meanwhile, Kelly Day, the VP of Prime Video for international, mentioned to EbMaster that they tend to retain rights globally but have been more adaptable, especially in Europe.

The new strategies involve collaborating with regional public service broadcasters on joint productions, like “The Outlaws” (a BBC/Prime Video co-production) and the upcoming drama “Lockerbie,” a collaboration between Netflix and the BBC. Additionally, agreements for specific territories are being made, such as Prime Video’s acquisition of the U.K.-exclusive drama “Fear.” Banijay Rights will be attending Mipcom this month to offer international buyers the three-part series, which features Martin Compston from “Line of Duty,” on sale.

According to Leo Pearlman, the co-founder of Fulwell 73, they’re more inclined towards controlling a single territory or a few territories, and are open to selling off the rest – particularly if the content is nationally specific.

Despite initial resistance from local gamers in France, streaming giants like Netflix and Amazon have been working together with prominent free-to-air TV networks. For instance, Prime Video has partnered with France Television for the action thriller “Dark Hearts” and fantasy series “Anaon,” securing the first-look window on both productions. Additionally, it has claimed the second broadcasting slot for the manga adaptation “Cat’s Eyes,” collaborating with TF1 on this project.

According to Sahar Baghery at Prime Video France, the way the windowing model works and the number of regions involved in each agreement can differ from one program to another, and these aren’t fixed rules.

The new approach enables streamers to offer fresh content to their subscribers and keep investors satisfied by controlling expenses. One creator, preferring to remain anonymous to safeguard his relationship with Amazon, mentioned that the streamer’s fee for acquiring a project, specifically for the U.K., was comparable to what local public service broadcasters provide: “The compensation is slightly higher than the BBC, but it’s not a significant difference.

Some manufacturers are embracing the transition. For Pearlman, “each undertaking possesses a distinct framework and puzzle that you wish to construct and assemble,” he explains. “I lean towards flexibility in every agreement.

In simpler terms, John McVay, CEO of PACT (U.K. producers body), suggests that while acquiring rights might seem beneficial, it could potentially lead to a less favorable situation if you have to license away most of your rights just to secure funding for the production, and this process takes a lot of time. This, he argues, may not be as advantageous as one might initially think. The golden era of high-value international acquisitions is no longer prevalent.

According to Derek Wax, the managing director of Wild Mercury – known for producing shows like “Fear” and the Prime Video exclusive “The Rig,” which is coming back for a second season this year – the single-territory licensing model can be seen as having its ups and downs. This model offers advantages to streaming services on a global scale that extend beyond just financial compensation, Wax notes. He explains, “It signifies they are fully committed to it.

According to McVay, an optimal situation would involve a collaboration between a streaming platform and a local television station, like Hulu and Irish network RTE, for their black comedy series “Obituary.” This way, producers can reap the financial benefits similar to those offered by Netflix, while maintaining ownership of the intellectual property. McVay finds co-productions to be excellent, as his team enjoys working in this manner.

With local broadcasters increasingly favoring their self-owned streaming services over traditional broadcasts, such as BBC’s iPlayer and ITV’s ITVX, it is reported that some public service broadcasters are hesitant about collaborating with what they perceive as their financially powerful American counterparts. “The BBC has already closed that valve regarding streamer co-commissions,” notes a source. Another source shares an interesting tale about a Netflix series that the BBC was considering joining, licensing seasons one and two and producing season three together. “It reached the level of discussions between [BBC content chief] Charlotte Moore and Sarandos from Netflix, but they couldn’t reach an agreement because Netflix was too pushy,” says the source.

However, at TF1, who have collaborated with Netflix on numerous successful series like “The Bonfire of Destiny,” CEO and President Rodolphe Belmer notes that the commercial network cherishes its strong ties with their streaming counterparts.

Belmer states, ‘We’re not rival businesses, but rather we complement each other exceptionally well.’ This collaboration allows us to invest more funds in our productions and create spectacles that are even more captivating.

Independent of the strategies used by streamers, there seems to be a growing understanding that if the time of extravagant acquisition purchases has passed, then fresh motivators are needed – such as rewards for exceptional shows. However, the issue with this is the secretive environment surrounding platform viewing statistics, which makes it tough for creators to demand these incentives. Yet, this might need to be reconsidered as well. McVay states: “If they wish to continue attracting top-tier projects, they may need to offer more attractive deals.

2024-10-18 17:47

Streamers’ Evolving Acquisition Strategy Brings New Opportunities and Challenges for Broadcasters, Indie Producers

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