MIPTV: How Long Can the Content Boom Last?

Like the stock market surging in response to a trillion-dollar government stimulus package, the global television industry is enjoying an unprecedented boom, with producers across all genres — from high-end drama series to quick-hit reality TV formats — benefiting from the truckloads of cash global streamers are pumping into the business. 

“From the major SVODs Netflix and Amazon, new players like Disney+, Apple and HBO Max and more niche streamers, the opportunities are off the board,” says Matt Creasey, global sales, co-productions and acquisitions executive for French-based TV studio Banijay. “We’re working with everyone, from [AMC Networks-owned streamers] Acorn TV and Sundance Now to the likes of Hulu and Peacock…. We’ve also seen a huge appetite for content on traditional linear TV in the last 12 months, driven in part by the pandemic lockdown, and the AVOD [advertising video on demand] business is exploding.” 

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Every area of television production is benefiting. Sports documentaries, once a tiny niche, are suddenly big business. Buoyed by the success of Netflix’s Michael Jordan documentary series The Last Dance, Amazon has signed overall deals with tennis champ Serena Williams and the Manchester United soccer star Paul Pogba for behind-the-scenes docs and other content. Fellow sports icon David Beckham this week confirmed he would team up with Disney+ on a reality-TV series, Save Our Squad, set in England’s grassroots soccer scene, and has unveiled multiple documentary and nonscripted projects he plans to produce through his TV shingle Studio 99, including the BBC docuseries A Whole New Ball Game, and World War Shoe, a factual miniseries about the family feud that led to the corporate rivalry between sportswear giants Puma and Adidas. 

“Our advice to producers is to think big and think outside the box,” noted Thomas Dubois, head of originals for Amazon Studios in France, in an online session for the digital MIPTV. Amazon colleague Nicole Morganti, originals head for the Italian market, noted that the streamer is looking to invest in every kind of TV content possible. “We are doing drama, we are doing comedy, we are doing reality. We are going to test cooking shows, every type of nonscripted,” she said. “We don’t have a good daily format in Italy so if you have one, call us.”

With all that capital sloshing around, merger and acquisition activity is heating up. Banijay — which owns Keeping Up With the Kardashians producer Bunim Murray Productions, Survivor producer Castaway Television in the U.K., and Popstars maker Screentime in Australia — was already one of the world’s largest independent TV producers when it completed its takeover last year of Endemol Shine Group, the producer of hit shows including Big Brother, MasterChef and Black Mirror, in a deal valued at $2.2 billion. This week saw plans for a $4.8 billion deal that would merge Mexico’s Televisa and Univision, two of the world’s biggest Spanish-language media companies, to create a true global powerhouse. 

On a smaller scale, AVOD network Chicken Soup for the Soul Entertainment last week snatched up film and TV assets of Sonar Entertainment, a leading indie producer of TV drama, with series such as MTV/Netflix’s The Shannara Chronicles, Hunters on Amazon Prime and Disney+’s Mysterious Benedict Society. American Idol and The Young Pope producer Fremantle added to its international network of production assets taking full control in hot Israeli production firm Abot Hameiri (Shtisel, The Attaché). 

But amid all the froth and excitement of the current boom market, a bigger question lingers: how long can it last? In a report published this week, titled “U.S. Media: Is Streaming a Good Business?,” MoffettNathanson noted that while investment in new content is shooting up as traditional broadcasters pivot to streaming, there is no guarantee revenues and profit will follow. Analyst Michael Nathanson wrote that most U.S. television groups are moving away from the “high-margin/low-capital model” of cable TV toward a streaming model that offers, at least initially, “low to non-existent margins [with] high capital intensity.” 

Studios and streamers are investing a lot now in a big bet that online TV will be similar to cable, where, as Nathanson puts it, business structures are so favorable, “that operating margins hardly vary by size of company revenues [and] everyone is a winner.” He warns that streaming could instead look more like the business of online search and digital advertising, which “are wonderful profit models” but only for the “those few lucky enough to achieve critical mass.”

Nathanson argues only those media companies able to build a truly global subscription base will come out as winners, justifying today’s sky-high investment in content. “Netflix’s greatest asset — and the likely Achilles’ heel of many of their competitors — is indeed their international footprint, which should drive incremental profit [in the future],” he writes. “We struggle to see how many of these nascent SVOD/AVOD services will profitably scale.”

Netflix this week published its results for its South Korean division — a rare look under the hood of the streamer’s business, prompted by new public reporting laws — showing that it made a slim operating profit of $7.5 million (8.82 billion won) on revenues of $356 million (415.45 billion won), a margin of just over 2 percent.

And Netflix is far ahead of all of its competitors in the region, as it is in most international territories. The streaming giant says it topped 3.8 million paid subscribers in South Korea as of the end of last year and has pledged to spend more than $500 million on films and series in the territory this year alone. 

Nathanson concludes that while Disney+ and Amazon Prime are also well-positioned to match Netflix’s global reach, the outlook for the rest looks doubtful. 

“HBO Max already has a strong domestic presence thanks to its HBO linear relationships and a quality brand but still needs to prove its international rollout. NBCU also still needs to show Peacock can scale both in the U.S. and perhaps use its Sky assets to scale internationally,” he notes. ” ViacomCBS’ relaunch of Paramount+ looks to scale domestically at a faster rate than CBS All Access but due to initial limited flexibility with international licensing appears unable to grow quickly outside the U.S.”

For producers pitching shows at digital MIPTV, which wraps up Friday, the message is obvious. “It’s make hay while the sun shines,” says one international executive. “It’s all about racking up the commissions right now because no one knows when this bubble will burst.”