By Fernando Szew 27-03-2015
HBO Now, the first standalone HBO streaming package, will be available soon on Apple devices. This is a move that most could not have predicted even a couple of years ago, one that some see as a tipping point for cable TV – and a continued transition towards an entertainment landscape where consumers can watch what they want, where they want, whenever they want.
With the explosion of SVoD and other digital platforms across the globe, especially over the past 12 months, the good news and bottom line for content creators is that an increase in platform reach creates healthy competition, allowing for the division of licensing rights to best position revenue streams and for niche programming to emerge and find more targeted audiences.
Clearly, a premiere release on SVoD is shattering the traditional TV windows business model. Now more than ever, every programming deal is up for discussion depending on the platform, the partner, or their financial involvement. The windows vary greatly from one deal to another, but now there is a new strand to the conversation that didn’t exist a few years ago: how soon can you make content available to customers on an SVoD platform without leaving potential revenue behind?
There is also a great opportunity to work collaboratively with networks and SVoD platforms to build new business models that will benefit all involved. As SVoD platforms have expanded internationally, content creators are working with them earlier in the development process, structuring multi-territory agreements and first-window SVoD exclusives — all of which were not happening in the early days but which are now of huge importance in the competitive landscape.
Our Disney Channel original movie Zapped, for example, was licensed to Netflix in several international territories after its premiere on the Disney Channel. We did a similar deal with Radio Rebel, another Disney Channel premiere that is a mainstay on Netflix Kids.
Some game-changing moves made by SVoD giant Netflix are its launch into feature film production and film premieres with its coproduction of the Crouching Tiger Hidden Dragon sequel and subsequent deal with Adam Sandler to release four original films. They are taking what they have done in TV series production into the film/theatrical model, cutting through multiple windows – in particular the theatrical window – for a premiere SVoD platform launch.
The controversial release of The Interview shows that SVoD launches are viable. The fact that Sony initially pulled the plug on theatrical and committed to digital, regardless of the unique circumstances, serves to demonstrate that people will engage en masse to watch a movie premiered on a digital platform.
That said, not all movie launches on SVoD will have anywhere near the same amount of hype. The most important questions will be: what is the most effective way to market and generate awareness for a digital film premiere; and how do we affect consumer behaviour to embrace this non-traditional distribution for feature films?
At MarVista, we view the shattering of windows as a great opportunity to best position our content to reach broader audiences where they consume entertainment. After a decade of licensing movies to broadcast on a domestic and international basis, we can leverage our core competencies in development, production, finance and distribution to best engage in the new world of flexible release windows, whether a film is theatrical, direct to digital or SVoD.
And with SVoD now seen as a premier platform for lower-budget theatricals and direct-to-digital content – something that didn’t exist just a few years ago – we’ve been able to take advantage of this ourselves with the launch of MarVista Digital Entertainment, which licenses both self-produced content and acquired content to a number of digital platforms across the US. This expansion allows us a long-term view towards worldwide digital distribution that can continue to grow alongside digital/SVoD platforms.
The future of SVoD is not without its challenges. Key to its continued growth is the economics of its business models. The platforms are trying to maintain and grow their subscriber base at great expense, but only the biggest players can raise sufficient funds to continue such an accelerated growth strategy.
Netflix’s expansion in productions and acquisitions has been with an investment in the billions of dollars, and its chief content officer, Ted Sarandos, has gone on record that it could potentially produce up to 20 new drama series annually. It will be interesting to see the pace and quality of original content coming out of the biggest players and competitors in the space: Netflix, Amazon and Hulu.
Additionally, the traditional TV business isn’t going to disappear overnight. Its demise requires a substantial investment in digital infrastructure, as well as tremendous change in consumer spending and behaviour, especially in international markets.
Even with these challenges, there are still many new entrants into the SVoD space, indicating the growth in this platform strategy, especially on an international scale. Companies such as Sky in the UK and ProSeibenSat.1 in Germany show that new players can still get into the game and establish footprints.
Some regions are still resistant to outside companies like Netflix and Amazon Prime coming into their neighborhoods to set up shop. This presents an easier entry point for local companies to make their mark and establish brand loyalty before the heft of the established players come in to create a more competitive environment.
While the traditional TV landscape is in flux and SVoD growth is creating new opportunities, nimble independent companies like ours will continue to adapt to this rapidly evolving environment by developing and producing high-quality content for traditional, contemporary and emerging distribution channels.