Category: streaming content

AMC’s chief has it right

I’ve been posting about the relative value of content and its place in the financial landscape of streaming media. One revealing interview was on Charlie Rose a few weeks ago with the president of AMC Networks, Josh Sapan. It is well worth a listen, but it also leads into this particular post.

In a recent interview with MultiChannel News, Sapan expounds on the pricing strategy for the likes of AMC, IFC, WeTV, Sundance and BBC America. It is the age-old adage about supply and demand, and said demand it a function of its importance to the other programs out in the programming universe. He puts it simply:

“We take some comfort in that we have shows that are very important to some people,” he added. “If I was a video retailer I would pay a lot of attention to that.”

Pricing to what the market will bear is standard operating procedure for entertainment, and the article also has some interesting numbers that reveal the perceived value of some channels:

“…affiliate fees range from 13 cents per subscriber per month for WeTV to 40 cents per subscriber per month for AMC. That stacks up against monthly charges of more than $6 per month per subscriber for ESPN and $1.60 for TNT.”

As a dedicated “The Walking Dead” fan – and based on the fan chatter in cyberspace – I suspect AMC may be underselling its channel, but I grant that I am biased. Still, it is an important peek into how cable suppliers look at the popularity of a given channel and decide what the market will bear. It also points to the promise and peril of sports programming. As ESPN can really only license a sports program, they will never have the leverage needed to avoid a bidding war over and given league.

And that’s why owning  content is so crucial in the evolving media landscape.

Why original content is so crucial

As reported in Tech Times, the cost of content, original and licensed, at Netflix will exceed $12 billion dollars this year, which is more than 50% of its annual revenue, but a fraction of its $44 billion valuation. It is also the reason why their efforts to build a robust library of original content is so important. The article states:

“Netflix original content production is one of the main reasons viewers subscribe to the service, according to a recent survey, in which the VOD streamer overtook HBO for the first time when consumers were asked which pay TV service produces the best original content.”

 

This demonstrates the stakes in an environment where a streaming service must establish its own bona fides in the original content competition. Like HBO in its early days, or more recently, MTV or TV Land, reruns, music videos and old features can only do so much beyond launching a channel. At some point, the reason for a viewer returning to a channel or service must be something that cannot be found elsewhere.

HBO did that with Oz, Curb Your Enthusiasm, The Sopranos,  and now, Game Of Thrones. Netflix is succeeding with House Of Cards, and the pressure to deliver more hits will only accelerate. And I expect that, as content suppliers leverage their libraries to keep competitors – like Netflix – at bay, the price of even reruns will become out of reach for streaming services.

What is your content tolerance?

There was a time when I would subscribe to HBO solely for seeing “Curb Your Enthusiasm” and “Deadwood,” but today’s crowded field of content providers means that you’ll likely be forking over cash for access to beloved content. You can access HBO through HBO Now, as well as offerings from Netflix, Hulu, Amazon, and now, Fullscreen.

Assuming you’re an aficionado of Bret Easton Ellis or “Electra Woman & Dyna Girl,” and you can afford the $4.99-a-month subscription fee, you may be a Fullscreen customer. But this begs the question: With limited resources, how will you prioritize both your time and money to see certain programs? This will be the question many of us will face as the days of broadcast networks fade away in lieu of subscription fees become the norm. Already, the advent of cord-cutters have viewers getting the bulk of their content from the likes of the aforementioned content distributors.

There is a lot to be learned about how viewing habits are acclimating to this brave new world of media, and the days of channel surfing have given way to ordering from a menu, knowing that even the menu is limited by who owns what. Or will advertising-based content take over subscriptions because of the cost and time limitations?

Content is back to being king!

Media’s love affair with content has been in an ebb and flow for years. But as the means of distribution continue down the path of more choices for less cost, the value of owning content has returned to its throne of supremacy in this digital age. Increasingly, content consumers are choosing their online destination by virtue of where it can get the desired programming.

Once upon a time, the major studios would supply content to the highest bidder, even if that was a direct competitor. Indeed, it was common for Warner Brothers Television and others to supply the spectrum of broadcasters, without regard to who was distributing it. But in this age of Netflix, Hulu, Amazon, etc., owning content takes on greater importance.

That is what makes this Ad Age article particularly enlightening. Clearly, Comcast is pursuing a strategy of owning as much of its content as possible, with its move to acquire DreamWorks Animation.

“Content owners have become increasingly valuable as of late and we could argue Comcast sees potential value in the library of franchises, characters that could be integrated,” said Eric Wold, a B. Riley & Co. analyst covering the entertainment industry.

It is likely that the success of Netflix has been largely a result of its being the sole source of programs like “House Of Cards” and “Orange Is The New Black.” And, apropos of the DreamWorks Animation news, Amazon Studios has been an avid producer of children’s programming.

This is good news for creators, but like everything in entertainment, conditions can change on a moment’s notice, so get while the getting is good, because it may not last. One scenario that I think may be a trend is the sourcing of content via app, as opposed to cable, satellite or SVOD (Subscription Video On Demand).

The king is dead! Long live the king! And then there’s Louis CK…

And when I say king, I mean content… as in, content is king. In the halcyon days of multi-million dollars “overall” deals for show creators in network television, the idea was that major TV studios (WBTV, Twentieth Television, Carsey Werner, Castle Rock, etc.) were keeping folks like David Kelley, Stephen Bochco, Dick Wolf, and Angell, Casey & Lee, under their respective corporate umbrellas. The arrangement would go something like this: They would be guaranteed a few million dollars a year over the course of a few years, and anything they created would first be offered to the studio to develop. If they passed, then the creators could take it to other buyers (usually, but not always). If nothing resulted in a series that particular season, then they could either just sit and create for the next season, or might be placed on another of the studio’s shows to help.

After reading this item from Business Insider, I am increasingly convinced that we might be returning to those days. As network loyalty is becoming a quaint notion, the providers of digital media will simply auction their talents to the highest bidder. But this won’t be just a matter of dollars. As Kevin Spacey and David Fincher have demonstrated with “House Of Cards,” artists are willing to exchange some of the upfront money for a piece of the company or greater creative freedom. I recall some rather upset writers who were forced to acquiesce to the “network suits” of yesteryear.

I guess what I’m saying – and seeing – is the creative path will go one of two ways. One is to follow folks like Louis CK and create your own product and distribute it yourself. But as he’s learning, that path has its own challenges. The other is to ply your wares to the highest bidder, and that bid may be in the way of dollars, creative freedom or a piece of the action.

This sounds a lot like TV Land…

So, Fullscreen is introducing a subscription service, and in reviewing its offerings, I was struck by how much it sounds like another version of the cable network, TV Land.

The $4.99-per-month subscription will feature scripted and unscripted original content as well as movies and TV shows from the ’80s and ’90s like “Saved by the Bell,”…

My question is, will TV Land compete for these online viewers by simply taking its expertise from cable to the internet? And will this see the start of bidding war for access to old television shows and other content?

Ultimately, it does point to the need for every player to create their own unique content, much like Netflix, Amazon and Hulu are doing now.