A World of Choice

Buyers have a wealth of content to choose from, but are grappling with issues of exclusivity, windowing and the lack of easy-to-schedule procedurals.

Any conversation with an acquisition executive about wish lists and must-have programming will quickly come to the topic of rights—securing sufficient rights to be able to offer dramas and comedies in the many ways consumers have become accustomed to viewing their favorite shows.

This subject will undoubtedly come up again and again during the May Screenings, the annual gathering in Los Angeles where the Hollywood studios show buyers from around the world the pilots of series that will be premiering on U.S. broadcast and cable networks during the upcoming TV season. Conversations will also likely center on the sequencing of windows and the dearth of procedural shows.

Not so long ago, deals struck between studio and acquisition execs focused mainly on the number of times a given series could be run over the course of a license period. Both sides abided by the established sequence of windows, which included, in varying order, pay TV, home entertainment, free TV and later VOD and catch-up. Nowadays, negotiations can get stuck on a seemingly infinite number of different rights, prompting the emergence in recent years of a whole new lexicon: first window, holdbacks, second window, box sets, in-season stacking and more.

At the crux of all this complexity is the fact that technology keeps supplying new and improved screens, devices and platforms that consumers are lapping up like excited puppies—anything to make the viewing experience more portable and convenient. While most viewing of TV programming remains on linear channels, consumers are less and less beholden to the confines of a linear channel’s schedule. They often prefer to catch up or watch on-demand or online.

Viewer A didn’t have time to watch series X when it aired on Wednesday at 9 p.m. but wants to watch on Friday after work. Viewer B prefers streaming the show on his laptop. Viewer C hasn’t watched series Y, now in season two, but her friends won’t stop talking about it; she has to catch up on season one before she can join in the conversation. Millennial viewer D doesn’t have a cable subscription or even a TV set at home—he watches all his shows on Netflix or Hulu.

Buyers have to keep all these scenarios in mind while also keeping a vigilant eye on the new competitors in the market: SVOD services. Netflix, among them, is buying up global rights to some series and completely annihilating the traditional sequence of windows.

FIRST THINGS FIRST
Most media companies around the world have diversified their offerings to reach viewers wherever they are. Major media groups, such as ProSiebenSat.1 Media, RTL Group, Mediaset, Modern Times Group (MTG) and Bell Media, all have free-TV broadcast networks, pay-TV channels and catch-up services, and they have even branched out into the family of video-on-demand options: AVOD, TVOD and SVOD.

Not surprisingly, buyers are clamoring for as many rights as possible to keep their viewers satisfied. “Exclusivity is getting more and more important with so many new players in the market,” says Rüdiger Böss, the executive VP of group programming acquisitions at ProSiebenSat.1 Media. “Everybody wants to have exclusive content. In the past, licensors were able to give us only a piece of the cake. This is no longer possible in a world of Netflix, Amazon and binge-watching. Now we need to have exclusive rights for a longer time, which means that the old windowing strategy is no longer working for the licensors. They have to acknowledge that.”

Last year, as he explains, Böss negotiated a long-term license agreement with Disney Media Distribution, which for the first time grants ProSiebenSat.1 Media the exclusive opportunity to broadcast the company’s films and TV series across all of its platforms.

“Today, it is essential to offer attractive content that the audience can only see on your outlets,” says Böss. “Our deal with Disney is a good example: we exclusively have a series like Quantico for pay TV, free TV and our SVOD service maxdome. No one else has it.”

“Exclusivity is probably the single biggest check mark on the checklist,” says Mike Cosentino, the senior VP of programming at CTV Networks and CraveTV, part of Bell Media in Canada. Bell Media’s holdings include the national broadcaster CTV, pay-TV channels and the SVOD service CraveTV. “We do put a premium on the ecosystem that we can control and promote, whereby a show has a first window on a Bell Media linear channel and a past-seasons life on Crave, versus a world where Crave is not a home of that title. We don’t treat [a show] as a franchise if we don’t have the ecosystem in place. So the challenge for us is to try to deliver that experience to our viewers.”

MTG operates free-TV, pay-TV and SVOD platforms across various territories. Jakob Mejlhede Andersen, the company’s executive VP and group head of programming and content development, notes that some studios are open to providing all the rights MTG needs as a multiplatform operator. “But with other studios, it’s still taking forever because they look at an old windowing structure, which doesn’t give us what we need; that means we find it more difficult to do deals with them. I need to respect that the studios have a way of making money, and I can’t dictate that as a buyer, but we need to find ways to work together.”

BEING EXCLUSIVE
“To be honest, it’s still very, very difficult to get exclusive rights [for all platforms], including free TV and VOD,” notes Jörg Graf, the executive VP of productions and acquisitions at Mediengruppe RTL Deutschland. “It has become more difficult in the last few years to have at least a decent amount of exclusivity or holdbacks before and during the free-to-air broadcast of a show.”

Graf acquires product for a wide range of channels, including RTL, VOX, RTL Nitro and Super RTL. “We think that VOD rights—catch-up, box-set, stacking and in some cases VOD preview—are connected to free-to-air broadcast rights,” he adds. “In every developed market, a VOD component in addition to [free-TV] broadcast became a standard. So we think there shouldn’t be any discussion about what has already become common sense.”

MTG’s Andersen appreciates that the studios must monetize their content in this rapidly evolving television world. “The general thought two years ago was basically that Netflix or the other big SVOD operators were happy to take the so-called second window, which meant the box set [all seasons of a show], and then we left the premieres with linear or the traditional broadcasters,” he says.

Broadcasters were happy with the first window and the SVOD platforms were satisfied with allowing customers to binge-view previous seasons of a series, but this situation has changed as American dramas have become more serialized, explains Andersen. “What the market very quickly realized was that the traditional broadcasters and linear outlets quickly lost interest in the first window because a lot of content changed creative direction [became more serialized] and was more suited for the new platforms.”

As a result, Andersen explains, “there isn’t the first-window need that [terrestrial broadcasters and linear channels had] a while ago. We also can’t have a global player [read: Netflix] dictating how we do our business in our first window. So what needs to change, if we want to stay within a traditional first or second window or library definition, is that we need to know how to go about the first window.”

“The studios will not survive if there are only one or two [customers] who just cherry-pick one or two shows,” adds ProSiebenSat.1’s Böss. “We are taking more product because we have more platforms and more possibilities to air it than anybody else. And this will be the case for the next several years. I believe in the strength of free TV, but of course it is important for us to [keep pace with] changing viewing habits.

“The studios have to decide if they want to sell their shows to ten people or to two,” continues Böss. “If they want to sell only to two people, maybe at some point those two people will dictate the prices and what the studios produce. Economically this would be a nightmare for any company.”

The big SVOD player attempting to put down deep roots in several territories is Netflix. For now it is not encroaching on free-TV broadcasters, but the key idea is “for now.”

“Does Netflix currently harm our business? No, I don’t think so, because the Netflix subscriber likes shows like Narcos or Fargo or True Detective [and we don’t compete for those series],” says RTL’s Graf. “But on the other hand, it will affect us over the long term because people don’t feel that a classic procedural show like Bones has to be watched only on linear. [People are starting to] feel that every show [should be available] everywhere.

“Are we really in competition to get Bones?” continues Graf. “Not really, but at the end of the day we are in competition about where people spend their time watching programming and where they get their content. We saw that with feature films. Feature films is a genre that has had the most exploitation—theatrical, DVD, pay TV and linear—and this genre has suffered the most erosion. All channels lost up to half of their market share in that genre in the last few years. This is because people think they can get films anywhere and anytime. SVOD providers accelerated this process.”

VIEWERS RULE
Buyers, and the outlets they work for, are carefully monitoring viewing habits as consumers increasingly feel they can get any programming anywhere. Sky, with pay-TV operations in the U.K., Germany and Italy, has always been an innovator, and the company recently launched Sky Q in the U.K.

“We’re in this constant state of evolution because our customers really want to be able to watch in lots of different ways; that is what the Sky Q rollout is also about,” says Sarah Wright, Sky’s director of acquisitions. “Sky Q gives subscribers more ways to watch the content they love, so we have been premiering [shows] on-demand or premiering on-demand and linear at the same time. We are experimenting with putting the first episode up and then putting the rest of the series up at the same time. On Sky Deutschland we might go ahead with an English-language version [of a show] and follow up with a dubbed version later. There are lots of different models that we are trying. Each show lends itself to a different way of working.”

But the most important fact, emphasizes Wright, is that linear viewing is not dead. “As far as we are concerned, linear is still very much alive and kicking. It’s how our brilliant on-demand service supports the linear. It all works together. If you are a customer, you really value Sky because you have that whole proposition.”

Other broadcasters are also trying new ways of offering series. “We have to face the different habits of our viewers,” says ProSiebenSat.1’s Böss. “For dramas, they prefer more and more to binge-watch. Thus, we are experimenting with that: we air back-to-back episodes. We show two or three episodes in a row and create event programming. On a weekend, we sometimes repeat the whole season of a series on one of our small channels.”

But in order to have this scheduling flexibility, explains Böss, “it is crucial that we get the rights for these dramas. We offer catch-up services on our channels’ websites so that viewers can access the episodes for a couple more days. Maybe we can extend this period in the future.”

Clearly, having the ability to satisfy viewers’ demands on all platforms requires having the rights to do so. “The situation during the last five years has changed,” explains RTL’s Graf. “OTT, SVOD and VOD usage has become a bigger issue. So when we see that a growing number of younger viewers not only watch linear but also want to watch a show on their handheld devices, on their mobile phones or iPads or whatever, we have to offer shows on these platforms, as we have been doing for nearly ten years now. It’s no longer a situation where licensors can grant some VOD rights; it’s a must-have for us. We wouldn’t do any deals without at least a catch-up window after every free-to-air run and some preview or box-set rights to promote, such as the second season of a show. It’s no longer a discussion of a nice add-on; it has become a must-have.”

Sky offers its subscribers ample ways of watching episodes they may have missed. “It varies from show to show, but now we are increasingly getting in-season stacking rights [all episodes available for catch-up as the season progresses] so viewers can always catch up, whereas in the past we didn’t have quite as much in-season stacking,” says Wright. “We’d get four or five episodes at any one time, and viewers wouldn’t be able to catch up. Now we are working very hard to make sure people can always get into a show because we don’t want there to be barriers to entry at any point.”

FEEDING THE DEMAND
Wright points out that a vibrant on-demand offering supports viewing on linear channels. “We know now that on-demand helps linear grow. So we know that the better we schedule and use our on-demand rights, the more people we deliver back into a new season. In the past it was always difficult getting people to keep returning. We could never spend as much marketing on season three of a show as season one because obviously we have other shows. But now with on-demand you can bring people in and keep linear growing.”

Bell Media’s Cosentino looks at an ecosystem strategy that feeds both linear and nonlinear offerings. “Where it makes sense, we absolutely look at acquisitions across multiple platforms,” he says. “We do have conversations that include CTV and Crave. For instance, when we licensed The X-Files, we licensed it for CTV and in the same negotiation licensed the SVOD rights for Crave. It debuted on CTV and then quickly followed on Crave, where it is exclusive today.”

Bell Media has exclusive partnerships with HBO and Showtime. “As a result, we have flexibility in how we exhibit the programs,” explains Cosentino. “Our national pay service, TMN, is the first-window home of HBO, and the off-air catalogue is on Crave—that’s the only place in Canada where you can see it. Similarly, Showtime programs also have a first window on TMN and then move very quickly to Crave. So Crave is the catch basin for both of these super-premium pay partnerships.

“There are also instances where we will negotiate à la carte for other titles,” he continues. “For example, we negotiated with Lionsgate for the exclusive window of Casual. The conversation is different depending on the nature of the show.”

BUYING TIME
For all the talk that will certainly take place regarding rights, runs and windows, the main purpose of the L.A. Screenings is for studios to showcase their new dramas and comedies. As much as international broadcasters fill their schedules with in-house or commissioned programs, the need for imported shows remains high. And the right acquired show can deliver quite a bang for the buck. “An acquisition is always more economical than producing,” says Zelda Stewart, the head of acquisitions at Mediaset.

Mediaset operates a plethora of services, from terrestrial free-TV networks and pay-TV thematic channels to online channels and SVOD, and can accommodate a wide variety of genres. Stewart acquires almost all the shows from NBCUniversal, including Game of Silence and Shades of Blue, and from Warner Bros., including Supergirl and Blindspot. In addition, she has picked up Ash vs Evil Dead and The Girlfriend Experience from Starz, and Deadbeat from Lionsgate.

Stewart oversees the acquisition of more than 1,000 episodes of series per year just for free TV. “We are looking for more procedural shows,” she says. “There is a lack in the market of good-quality procedurals.”

The need for procedurals is echoed by numerous buyers, in particular those acquiring product for general-entertainment terrestrial networks. “We cover all platforms and can meet the demand of the audience to watch our content anywhere, anytime,” explains ProSiebenSat.1’s Böss. “We have a lot of volume deals. We have Disney, Warner Bros., Paramount, CBS and Fox.” Böss also has a deal with NBCUniversal for sitcoms and selected drama series.

“Our group is free-TV dominated, so of course we need procedurals,” says Böss. “They are very popular among German viewers—people come home, eat something, sit on the sofa and want to be easily entertained. Most of them don’t want to search for new episodes on the web. Besides, the personal TiVo recorder in our heads doesn’t allow too many series. Ask yourself: How many series are you watching in parallel? You absorb five, maybe seven, but not more. There are over 400 series on air right now. Four years ago there were only 200. This number has doubled, but the audience hasn’t. So now there is less of an audience for any one series. In order to reach the majority of our audience, it’s still very important that we have the easy procedurals, the ones where you can even miss an episode and are still quickly into the next one.”

RTL’s Graf agrees, “We have been complaining about [the lack of procedurals] in the last few years, and unfortunately I haven’t seen a big change yet. I’m still expecting to see a lot of serialized, high-concept, sophisticated shows, and I hope to see at least one or two procedural shows for a mainstream audience watching RTL or VOX in prime time. But I don’t see a real change yet in what the U.S. networks order. How the market in the U.S. works is obviously still different from how it works in Europe. And this is the reason, by the way, why we have found co-production initiatives with TF1 in France.”

ACCORDING TO PROCEDURE
Chicago P.D. and Chicago Fire from NBCUniversal have performed very well on VOX. “We are really keen to see if Chicago Med can also work on VOX,” says Graf. “We are still hoping that maybe the U.S. market will change a little bit and that CBS or ABC or FOX or NBC will start putting more procedurals into their schedules, and hopefully they work out so that we can get a little bit more of the product we need.”

Serialized product does work very well on the right platforms, and companies that run the gamut from free TV to online streaming can accommodate both procedurals and serialized shows. While buyers at the Screenings will be focused on the new shows U.S. broadcast and cable networks are premiering, they will be equally interested in renewals. “I’m very proud of shows like Supergirl and Blindspot, which have really delivered a great audience, but I’m equally proud of the shows that keep delivering: Elementary, Criminal Minds and The Simpsons,” explains Sky’s Wright. “It’s not just about the new things; it’s about the returning shows and how we support those as well. Arrow, The Flash and Legends of Tomorrow—we’re hugely excited about [those].”

Sky Atlantic’s mission is to offer viewers the best of U.S. and international programming, and Sky has deals with HBO and Showtime. “With The Affair and Vinyl, we’re incredibly excited to bring that kind of quality of drama,” adds Wright. Game of Thrones premiered in April and Billions in May, and there is great anticipation for the remake of Twin Peaks from Showtime and Westworld from HBO.

MTG’s Andersen also has a need for a wide variety of shows. “We still see the good old shows working so enormously well,” he says. “NCIS is still a juggernaut for us. The Mentalist has done a great job. Bones is a strong show. We are looking forward to new procedurals because we have an unfilled need.”

But on MTG’s pay-TV and SVOD platforms, the programming equation is different. These services thrive on shows that compel customers to renew their subscriptions. “If you look at certain shows, they can have such a massive impact, and we know they have a lot of following,” says Andersen. “Empire is a good example [of] more than just a show. A show can mean much more than volume sometimes, so having that exclusive experience to offer on your pay or SVOD services is hugely important.”

And there is that word again: exclusive. That will be top of mind for buyers as they flock to L.A. to watch some of the best television being offered today. “The trend of more and more drama coming out of the U.S. is excellent for buyers around the world,” says Sky’s Wright. “There seems to be a golden age of acquisitions. We’re really excited about that. We are very optimistic going into the Screenings because we think this is an era when big, ambitious projects are coming to telly.”

Pictured: Sony Pictures Television’s Better Call Saul.