Dressed for Success

As the streaming wars shift into high gear, Anna Carugati checks in with a range of leading production and distribution groups about the arms race for the best IP.

Hardly a day goes by without news about one of the major streaming services. Netflix subscriber growth slows. Disney’s increases and exceeds forecasts. The Discovery and WarnerMedia merger receives regulatory approval. What shape will their streaming services—discovery+ and HBO Max—take? ViacomCBS rebrands to Paramount and bets heavily on Paramount+. Comcast’s NBCUniversal will shift content from Hulu to Peacock. AVOD is poised to overtake SVOD this year. And on and on it goes.

Behind the headlines, the streamers are battling for subscribers, talent and IP. Broadcast groups, meanwhile, not believing their days are numbered, are fighting back by commissioning programming tailored to their domestic audiences.

Viewing the battlefield from the sidelines, leading production companies and independent studios see myriad business prospects. Having scale, ongoing contact with producers and jumping on projects early are the secrets to success.

“In the last two years, there has been an amazing explosion of opportunities,” says Stuart Baxter, the president of international distribution at Entertainment One (eOne). “More broadcasters and platforms are commissioning shows than ever before, and the major beneficiary is the production community. Our distribution business is also benefiting from the culmination of streamers, AVODs and broadcasters, resulting in more choices and sales opportunities for our vast library. These are the golden days for both the producer and distributor.”

Cathy Payne, Banijay Rights’ CEO, sees three concurrent waves impacting the distribution business: “Firstly, studio-backed streamers continue to hold their product for their own direct-to-consumer services while reclaiming certain library content as it comes out of license off other platforms. This has reduced the amount of content available to other services and traditional linear clients, which means they need to look elsewhere.”

But at the same time, Payne continues, “linear broadcasters are still performing extremely strongly. [They] are competing by expanding what were originally their catch-up services into unique VOD offerings in their own right—often comprising a heavily domestic flavor. This allows broadcasters’ commissioning budgets to focus across linear and VOD. Going forward, you will see an increasing number of content partnerships aligning with linear broadcasters to fund their original shows.”

“Finally,” adds Payne, “there’s the area of regulation and audience preference to consider. Local viewers like to see local stories, as well as international ones. Layered on top of that, we are seeing increased regulation in relation to streaming services around local market spend. International streaming companies know they need to cater to those local audiences for both reasons, and this is evident through their increased domestic market commissioning.”

These three waves combined create quite an exciting time, Payne explains: “It’s competitive for the best talent, best stories, best IP, and you have to be in a position to be able to offer that. When you have something that everybody wants, leverage can be very high.”

“It’s fantastic,” agrees Tim Mutimer, the CEO of Cineflix Rights. “There is so much demand for content, which is great news for producers and distributors! AVOD has added another dimension, providing a buoyant market with big audiences coming to find content, particularly factual content.

“So, for us, at the moment, that increase in competition has been great,” Mutimer continues. “It means there is a real appetite, whether it’s for premium scripted, premium unscripted or returning shows, which form a staple of our catalog. Broadcasters want shows they know are going to work, will come back again and again, and only have to [invest in marketing] once.”

SIZE MATTERS
Undoubtedly, a company consisting of numerous production studios has advantages in today’s competitive market.

“We are very fortunate to be part of the Banijay group, as this provides Banijay Rights with a product pipeline from our companies,” notes Payne. “That said, we still have to compete for said product, and my mantra remains in place that I don’t want any internal producer to work with Banijay Rights unless they feel we’re doing the best possible job for them.

“When you work with Banijay Rights, you’re dealing with a global team of sales experts located in key territories,” continues Payne. “They know their markets and are deep into the individual ecosystems of those territories.”

Production companies within a large group can also share knowledge and best practices. But mostly, being part of a group sends a message to the market: We have heft; we can source talent and fund projects.

An example of the importance of scale and message is ZDF Studios, the commercial arm of the German public broadcaster ZDF (formerly known as ZDF Enterprises). As Fred Burcksen, president and CEO, explains, the new name “expresses more precisely and more accurately what we are. On the one hand, we are a large licensing company selling, co-producing and buying rights. On the other hand, we are a big production group—one that we have built over the last ten years. We are a studio that covers all the elements of the creative process, from early development to the long-tail sales and everything in between.”

“Having scale also means we can make investment decisions fast and early,” adds Banijay’s Payne. “It also boosts the group’s ability to provide resources that support producers in longer-term development or acquiring specific IP. As a result, this certainly provides more options to our production companies.”

However, sourcing programs within a large group is not the only way to successfully service the current high demand for content.

“Being part of a group helps because you get access early, information early and can start sorting out the path [to market],” explains Tim Gerhartz, the president and managing director of Red Arrow Studios International. “Yes, it helps, but I should stress that it’s also part of our ambition and tradition to show the same collaboration and aspirations when we work with third-party producers. Even throughout the pandemic, we increased our investment in shows from both the Red Arrow Studios group and third-party productions.”

“Whereas some distributors can be somewhat forced to work with affiliated production companies in whatever territory they’ve got them, we can scour the world for interesting stories we think resonate,” adds Cineflix Rights’ Mutimer. “We can work with everyone. Experience has taken us to territories such as Israel, France and the Nordics, where creatives are coming up with globally appealing shows that stand out like Rebecca, Manayek, Tehran and Happily Married.”

ENABLING CREATIVITY
In today’s race to secure talent and ideas, finding out about projects at their inception has become critically important. “Getting involved at a very early stage, investing in development, making sure you are in the game as early as possible,” explains Gerhartz. “It’s making sure you are a good partner for everybody in the ecosystem, including the client, the streamer, the platform and the producer.” Whether a show is from your group or a third party, the key “is getting involved and positioning yourself as an enabler rather than just a distributor,” Gerhartz adds.

ZDF Studios also works closely with producers. “We invite them to come to us; we go to them, especially to independent producers, production companies, writers and talent,” says Burcksen. “We like to talk about ideas with them. What would you like to do? And how can we help you? Very soon, we are talking money, so we try to help with development money. We try to help with the financing of the project. We try to find co-production partners for their projects. Sometimes we bring in our own production companies if that is helpful. It’s a complete spectrum of what we can offer as to how they can realize their visions.”

“For us, it has always been about finding the right talent,” says Jean-Michel Ciszewski, co-head of international drama at Federation Entertainment. “If you look at how we have been interacting with new companies, it’s been focusing on finding the best talent all over the world. We look for local shows that can travel globally—that has been our focus from the beginning—but the range is becoming bigger. We are still considering the best talent locally who can make a show that can travel globally.”

SCOUTING TALENT
Partnerships and first-look deals with talent have become indispensable to securing ideas and projects.

“These relationships are especially key for production and commissioning,” explains eOne’s Baxter. “Traditionally, many of the longer-term deals we’ve had were with producers. However, we’ve seen an evolution over the last couple of years under Michael Lombardo’s stewardship [as eOne’s president of global tele­vision], with increased investment in talent-driven deals with actors, writers and showrunners, in addition to first-look deals with producers. We partnered with a variety of talent and storytellers, including James Patterson for a new series based on his book The Noise; Freida Pinto’s Freebird Films Entertainment on the adaptation of Anuradha Bhagwati’s memoir Unbecoming; [Michael and Paul] Clarkson on Red Rose; and Rawson Marshall Thurber on a live-action series based on Hasbro’s Dungeons & Dragons.”

Cineflix Rights also benefits from working with partners and having early access to content. “We have a joint venture with Buccaneer Media in the U.K.,” says Mutimer. “They produce Irvine Welsh’s Crime and Whitstable Pearl and have lots of other projects on their slate. We work very closely with them. We can help bring in partners early and find presales or co-production partners. It’s important to have that flow of content. Obviously, we work with Cineflix Studios. They produce Coroner, a great show that is four seasons in and doing well all around the world. Reginald the Vampire is also co-produced by Cineflix Studios. And, of course, there’s Tehran, which they co-produce.”

These experienced production and distribution entities have the connections and resources to shepherd a project from its initial idea to financing to placement on a linear or digital platform.

“We have the benefit of being a studio with significant infrastructure and a global presence that allows us flexibility and creativity in our financial models to support writers and producers,” says eOne’s Baxter. “We offer a lot of development funding. We attach funding for getting writers or showrunners on board or simply to package and build the story premise. We fund scripts. We help identify where to produce a show. We bring knowledge of tax credits and treaty co-pros that can be very complicated and differ market by market—and even those are changing very quickly. We believe that opportunities will only continue to grow.”

Baxter references eOne’s relationship with Alexi Hawley. “We partnered with him on The Rookie four years ago, and recently he created another project, Graymail. We worked closely with Alexi on the funding and scripts and brought it to Netflix. In the meantime, The Rookie has been so fabulous and consistent for ABC and successfully sold around the world. That led Alexi and our team to recognize that this series is also a great proposition for broadening out, much like other strong franchises. So, he has created an FBI spin-off for The Rookie.”

Not surprisingly, with the wide variety of genres being produced, there is an equally broad range of financing models.

FUNDING FORMULAS
“The rule nowadays is that there is no rule anymore,” says Red Arrow Studios International’s Gerhartz. “None of the standard or traditional models are completely disappearing, but the entire market is getting even more complex. Financing shows is a game that offers more opportunities than ever, but it also comes with a lot of complexity—it’s our job to put the pieces of the puzzle together.”

“Each show is a new show, fighting for itself,” says Federation’s Ciszewski. “Some are premium shows, for which we look for a co-production or presale and try to aggregate as many people as possible from an early stage. Other shows will take two or three key partners and then be distributed traditionally. But we are trying to [create a new model] each time to make a project happen. There are several combinations [available], whether between this streamer and this broadcaster or these two streamers that will join at one point—it’s fascinating how we can make it work.”

Financing models are becoming more flexible, and, as Cineflix Rights’ Mutimer explains, the deficits are getting bigger. “Part of a distributor’s role now is to work with the producer to get content funded. We talk about presales as a route [to greenlighting a project]. We will work with a producer who has a great idea and maybe interest from a broadcaster, but that will not cover anywhere near the whole budget. Even with what they can get from the commissioning broadcaster, combined with a distribution advance, we still need to bring in a presale or co-production partner. We will work with them on those projects; talk to them about the talent and editorial that we think will make the project appealing. We also look for a partner that can help fund it, and that’s usually in North America. We’ve also got a lot of expertise working with tax credits, particularly in Canada. It’s about working with partners, looking at the show they are trying to fund, figuring out if there is anything we can do and bringing on partners. We’ve been quite successful at that. That used to be the exception; now, it’s becoming the more natural way for us to invest in content.”

SPACE TO CREATE
Innovation is not just happening in funding models; it’s been in narrative techniques too, driven by streamers’ need to cast a wide net, limit churn and attract as many new customers as they can.

“In production now, basically everything is possible,” notes ZDF Studios’ Burcksen. “There is much more respect for original stories than there used to be. [The new platforms] boosted creative possibilities. We’re very grateful for that.”

The streamers have helped non-English-language programming reach a broader audience. “It comes down to the story being as original as it can be; no matter what language, no matter the topic, anything is possible,” adds Burcksen.

Burcksen is noticing a few shifts in buyers’ needs. Though the demand for diverse stories and casts remains strong, there is a trend toward series with fewer episodes. “Two or three years ago, the standard was that a season had ten episodes, maybe 12. Now it’s going down to six or eight episodes in serialized projects. [Also], the demand for stand-alone episodes is increasing slightly, probably as a reaction to all the serialized stories. Now there is demand for series with stand-alone episodes.”

Demand remains robust for big-budget drama. Banijay Rights is rolling out Rogue Heroes, based on a book about the SAS special forces unit and adapted for the small screen by Steven Knight of Peaky Blinders fame; and the historical drama Marie Antoinette from Deborah Davis, the writer behind The Favourite.

“I’m also really surprised at how much business we’re doing with what I call our ‘super-domestic programming,’ which by nature can often be a little lighter in tone,” says Payne. “Signora Volpe, My Ballerina and Detective Maria Kallio are three that sit in this banding, all of which are attracting a lot of attention.”

KNOWN OR NEW?
In the costly world of programming, mitigating risk is a top priority for buyers and commissioners. That is why the trend for movies and shows based on existing IP is as strong as ever.

“We’re getting a lot of traction with the established Hasbro brands because there is a fan base waiting for them, and to a degree, some of the risks of marketing [for them] is mitigated,” says eOne’s Baxter. “We’ve partnered with Jonathan Entwistle to develop Power Rangers and teamed up with Beau Willimon to develop a series adaptation of the board game Risk.”

“The trend to look for shows based on books, IP or shows that are spin-offs or reboots has been around for a long time, and we have had a lot of success with series like Bosch and Vienna Blood, which are both based on books,” notes Red Arrow Studios International’s Gerhartz. “The pandemic just exacerbated that trend because it was all about playing it safe and managing risk. What better way to do that than betting on something that has already been successful?”

STAR POWER
“People want shows they can market,” explains Cineflix Rights’ Mutimer. “They are operating in an incredibly competitive arena, and they want to know what can be used as a hook to bring in audiences. We’re looking to package talent into our content. Dougray Scott was in Irvine Welsh’s Crime. It was important for us to have a strong marketable name. Jacob Batalon is the star of Reginald the Vampire. He had a big role in Spider-Man: No Way Home, so we know it’s going to be very easy for broadcasters to market him. Reginald the Vampire is based on a series of novels. Established IP also helps. Irvine Welsh’s Crime is adapted by the author from his best-selling novel. Whitstable Pearl is also based on a series of novels. We’re looking at hooks that can help people market a show, but it’s got to be an authentic original story. That’s why we look around the world for ideas we think will resonate and might be a little bit different.”

LOCAL WINS
“At the same time, especially on national television, it’s original, authentic, local ideas that make a difference,” Gerhartz adds. “Local content is king for local platforms, especially as projects based on preexisting IP can come with a price tag that not everybody can afford. Original ideas are key, and if they are really good, they can take off and travel as well.”

One such example is the family drama The Friedmanns. “Commissioned by RTL in Germany, it is the first drama series produced by Redseven Entertainment and is a good example of how a locally developed show can capture the zeitgeist and a tone that works for a national platform but still has the potential to travel internationally,” explains Gerhartz.

For eOne, Cruel Summer, “a huge success both critically and ratings-wise for Freeform, is a brand-new original idea,” notes Baxter. He points to another original series, Yellowjackets. “Showtime’s second-highest, most-streamed drama series in their network’s history.”

Production and distribution companies have been nothing if not busy, keeping up with requests for programming from an increasing roster of buyers.

“As all these streaming services aim to grow and drive subscriptions, the hunt for content will remain competitive,” notes Banijay’s Payne. “And in terms of library content, the advent of AVOD platforms—including FAST offerings—is driving demand for well-established library franchises.

“Seemingly, there have never been more places to watch content, and we will no doubt see how all these services team up or consolidate to compete in this ever-competitive space,” continues Payne. “For instance, the linear carriage platform deal becomes a VOD platform carriage arrangement. Meanwhile, the market will continue to be hot for IP, and the recent investments made in music and literary intellectual property proves that horizons continue to expand in this world.”

Of course, there are questions about the sustainability of all the streamers. How many SVOD services can people afford? What about audience availability—will it decline as people return to “normal” post-Covid-19? Whenever that normal arrives—there could be another variant that emerges. But the industry has largely learned to live and work with life as we know it now. Like many of his colleagues, ZDF Studios’ Burcksen is optimistic about the coming year: “We are better prepared now, so there are reasons to be confident.”