Between the streaming wars and the pandemic, it’s been a topsy-turvy few years for Hollywood’s major studios.
Many aspects of the TV business have been turned inside-out by the subscription video-on-demand revolution. But now, as entertainment’s largest conglomerates face a perfect storm of financial pressures and macroeconomic uncertainty, there’s been a clear shift again to embrace the fundamentals and focus on profits, not market share, for new services.
For Hollywood, this means selling content to the highest bidder, especially to outlets outside the U.S. Business at MipTV, which runs April 17-19 in Cannes, and Mipcom in the fall, should reflect this renewed rush to bring in third-party bucks to help offset the ever-rising costs of scripted production.
“Fueled by cheap money and unbridled/naive optimism from [Wall Street], management teams were willing to spend whatever it took to establish their new streaming services,” Robert Fishman, a media analyst with MoffettNathanson, wrote in a research report published last month. But over the course of a difficult year, when media stock prices plunged, “companies [were] no longer willing to spend whatever it takes, in part because attitudes and strategies have shifted and rationalized, but also because their balance sheets no longer have what it takes,” Fishman wrote.
Indeed, Disney, Warner Bros., NBCUniversal, Paramount and others have invested heavily to the point of distraction in building new streaming platforms. To draw paying customers, Disney and others took a cue from Netflix in prioritizing exclusive content that could only be seen on Disney+ or HBO Max, a la the “Star Wars”-spinoff “The Mandalorian” and “Sex and the City” prequel “… And Just Like That.”
Netflix also changed the game in January 2016 by flipping the switch that took the streamer into 100-plus countries overnight. That move also encouraged traditional studios to think globally for the first time in a marketplace that had previously been tightly bound by geographical boundaries. All of a sudden, it seemed, the hottest properties coming out of Hollywood were not available for buyers in the U.K., Germany, Japan, India and other lucrative territories. “The Mandalorian” only patrols on Disney+ (and its sibling outlets) in those markets. “House of the Dragon,” HBO’s much-anticipated prequel to “Game of Thrones,” was the tip of the spear for driving international subscribers to HBO Max.
Amid the reality-check reckoning on content spending, Disney CEO Bob Iger has signaled that the Mouse House is easing back to a more traditional windowing strategy for some of its series and movies. Marquee titles from the Star Wars, Marvel and Pixar universes produced for Disney+ are likely to stay exclusive to Disney’s direct-to-consumer platform. But shows produced for ABC, Disney Channel, Disney XD and Freeform will be more readily available to outside buyers.
“We will consider on occasion licensing other content to third parties — that will be part of the strategy we deploy going forward,” Iger told investors on April 3 during Disney’s virtual annual meeting. “The primary shift that occurred in terms of licensing content to third parties came when we determined that the core strategy of the company going forward from a media (division) perspective would be — and should be — streaming. In order to achieve the goal of getting into the streaming business very successfully [in 2019], we felt we had to take control back of the content we had licensed to third parties.”
Last fall, Fox Corp. made a major presentation to attendees of Mipcom to talk up the company’s efforts to expand its international content licensing activity through acquisitions, such as MarVista Entertainment, and through heightened production activity at its other production banners.
Iger’s shifting sentiments have also been reflected in recent comments from his counterpart at Warner Bros. Discovery. The previous regime at WarnerMedia went all in on hoarding content for HBO Max. Since David Zaslav and his team took the reins of what became WB Discovery in April 2022, they’ve been vocal about returning to third-party content sales after realizing that the studio was leaving money on the table.
“We have the largest TV and motion picture library and we’re the biggest producer of quality content in the world,” Zaslav told investors on Feb. 23. “Selling that to drive free cash flow and to nourish the overall (company) so that we can be successful is important.”
