Distributors are finding ways to fulfill the endless need for programming resulting from new streaming platforms, viewers stuck at home during lockdowns and delayed productions.
For quite some time, we have heard repeated references to Peak TV—hundreds of series produced and rolled out year-round. This astonishing amount has created problems for channels and platforms, which have struggled with ensuring their shows get sampled, and for viewers who have to find the shows and the time to watch them.
In the past year, the industry has seen a shift to Peak Demand. The coronavirus forced productions to shut down, delayed delivery of shows and halted sports events, leaving channels and platforms with holes in their offerings. But viewers, whose lives had been disrupted by lockdowns and limited socializing, had more time on their hands and were desperate for new shows to watch.
In the first quarter of 2020, sales teams quickly and creatively pivoted to find product that would satisfy their clients’ changing needs. And they had to conduct business virtually since in-person meetings, markets and conferences had also been shut down by Covid-19. Companies with sizable libraries and popular shows from the past were in pole position to meet Peak Demand.
“One of the great things about the Banijay catalog is the amount of rights retained, especially for the big international franchises,” says Cathy Payne, the CEO of Banijay Rights. “We have product available for both ends of the spectrum—that which travels widely internationally alongside the domestic library that has strong traction for relicensing in its home market. In addition to the growing number of global OTT services, demand is high from linear broadcasters who are expanding their domestic VOD platforms.”
While rewatching favorite shows has provided pleasure to many viewers, the desire for new stories was stronger than ever. “One thing that Covid has highlighted is that new programming is in demand,” explains Matt Creasey, executive VP of sales, co-productions and acquisitions outside EMEA at Banijay Rights. “If you’ve got shows going into production and coming out the other end, scripted or unscripted, the demand for that programming is unprecedented.”
“With the impact of the pandemic, there was an instant need for schedules to be filled; sports were off the air, and production was put on hiatus,” says Katie Benbow, the director of sales planning at BBC Studios. “There was a significant need for content, which has continued throughout the whole year, not just to fill schedule gaps but also to fill that insatiable audience appetite for new content to keep us all busy. There’s been an interest in what we’ve got available, what we’ve got in the archive that hasn’t yet been explored. There’s also an interest in what we’ve got coming down the pipeline. Even among all the uncertainty, all the buyers have been really keen to hear about what we’ve got coming—just a more insatiable need for content than ever.”
Louise Pedersen, the CEO of All3Media International, notes that as productions were postponed, “particularly some of the big American projects, we have seen continuing demand for new content to fill those slots and for last-minute replacements for live events that were canceled. People are also reverting to things that worked well in the past and will look for second cycles or repeats. For example, for shows like the thriller The Missing, which did very well internationally and led to the breakout detective show Baptiste, clients are requesting extra runs within their window. Overall, it’s been a buoyant time for distribution, which is good, though it’s all about getting the content. We’ve been lucky. We have shows that film in Australia and New Zealand, two countries where production has been largely unaffected. And the U.K. production sector restarted in August. Some shows have had incidents, there have been some delays, but, generally, they have been able to shoot, so our pipeline is back up and running.”
Like his colleagues, Stuart Baxter, the president of international distribution at Entertainment One (eOne), has also had requests for library product. “From last spring through to autumn, buyers were initially focused on their immediate schedules and needing content that was already available and dubbed. Our strong portfolio of library series helped to meet those needs with tried-and-tested content like Rookie Blue, Saving Hope and Haven, which were delivered quickly.”
Since then, Baxter has witnessed another trend: “There is much more willingness to look at broader sources for content rather than the traditional way of sourcing programs. Buyers are acquiring shows from many more international markets than ever before, like the Australian drama Between Two Worlds and the French-produced limited series La Garçonne. In addition, buyers are looking at second-window options for shows like Nurses, which is now in production on its second season and launched on NBC in the U.S.”
Though the pandemic brought about entirely new sets of challenges, it also accelerated shifts that were already happening in the market. One of the evolutions in the industry was shrinking budgets. “While Covid caused the immediate issue of costs due to shutdowns and a longer production process with additional protocols, pressure on budgets existed before the pandemic,” says Banijay’s Payne.
Fred Burcksen, the president and CEO of ZDF Enterprises, agrees on the cyclical nature of available programming spend: “It’s part of the industry; budgets go up and budgets go down. In this case, the commercial channels were affected by the decrease in advertising sales, especially in the first half of 2020. It got better by the end of the year. We consider ourselves to be fair partners, so we try to find solutions. It’s not only about the license fee per hour; it’s also about the size of the package and the duration of the license, so we try to find a solution and make things possible and build on the relationship, as well.”
BBC Studios’ Benbow says her team also showed flexibility in dealing with clients’ varying financial situations: “We worked very closely with our customers to offer them a package of measures and allow them to exploit the content they had more extensively. We offered additional linear transmissions. We also offered a package of content at cost. That’s worked well for us, and we’ve maintained close relationships with those key buyers to keep understanding their needs.”
Formulas for jointly financing and producing shows also began changing before the pandemic.
Like many of her colleagues, All3Media’s Pedersen works with producers to help position shows for the international market and find financing for them. “We’re financing some big shows that are going into production a year ahead of delivery,” she says. “It’s a Sin, the series from Russell T Davies and Nicola Shindler,for example, was filmed just before the pandemic. It’s a show from RED Production Company and Channel 4. We raised between 40 percent and 50 percent of the financing by bringing in HBO Max and a distribution advance. We found presale partners, for example Stan in Australia, and the show has [sold] really well around the world.
“What is now disappearing is the model where an expensive show can be financed by a U.K. broadcaster with a distribution advance of 10 percent to 20 percent of the budget,” Pedersen continues. “As budgets are so much higher now, you do need one strong additional partner from somewhere, probably America if it’s a British show, plus the distribution advance. This was happening in advance of Covid, though.”
For Banijay’s Creasey, it’s been business as usual, with Covid accentuating factors that were already at work: “We’ve been actively working with our producers for a long time, from development through to production and delivery of the shows. The need to find financing on shows has never been more vital, and our role within that has been key to a) help the deficit financing and b) find partners for shows.”
Production delays and a wave of new on-demand services in the U.S. have increased platforms’ willingness to produce, Creasey says. “Our position working and pitching with our producers has been accelerated in the last year.”
As Banijay’s Payne explains: “The challenges in financing premium scripted have been around for the past couple of years. If a channel or platform wants a show that costs 3x and their domestic market is only paying 1x, it will only happen with a partner and a contribution from distribution. What has hit those premium dramas during Covid are the delays and additional protocols needed that result in not only production hiatus costs but ongoing costs once production commences. In general, broadcasters have been very good and stepped up, as have the distributors. Everyone has been amazing because they want those shows to continue.”
That spirit of working together has brought projects to the screen that maybe wouldn’t have been completed. “Recently, because there has been a bit of a hit in advertising revenues and the contributions to budgets have been readjusted on certain projects, we’ve brought in partners, or we had partners before who have become a greater partner,” explains Creasey. “We’ve had shows that would have fallen over if other partners hadn’t stepped up. Everyone wins in that situation because the commissioning broadcaster is still keeping the show going, which they wanted. Another partner gets maybe more rights than they previously would have had because of their step up, and we’re then able to take that show internationally as well.”
For quite some time, linear and nonlinear platforms have been asking for more rights, with exclusivity the holy grail of many negotiations. From a channel or VOD service’s perspective, the reason is simple. There is a lot of competition and offering a show that can’t be found elsewhere is an effective way of attracting viewers and subscribers.
WANTING IT ALL
As BBC Studios’ Benbow points out, the issue of exclusivity is complex: “I think it’s more nuanced than we’d like to believe. Every deal, every customer, is different, but also every show is different. Our job in sales is about working closely with that piece of IP and the producer to understand the right way to get it to the best audience. For A Suitable Boy, we did an exclusive deal with Netflix for most of the world. We worked with Acorn TV in the U.S. and Canada. With our natural-history programming, we premiere in some regions on our own branded channels; we have co-productions in places like Germany, France and China; and then we have the SVOD premiere with discovery+. So, I would say exclusivity is always a benefit to a buyer, but we are seeing a great willingness for people to work collaboratively and find the right audience for that piece of IP.”
“With the rise of SVOD platforms, you need to be recognized by original content,” adds ZDF Enterprises’ Burcksen. “Having said that, there is a greater trust for what I call true co-productions—dividing territories or finding solutions for working with SVOD platforms on a co-production basis. What remains difficult is sharing rights in a certain territory. If a broadcaster or platform steps in for a co-production, they want to defend their own territory. So that remains difficult. But around that, it’s all about fair deals, creativity, finding financing models—it’s very inspiring.”
Finding the right home for a show and satisfying the insatiable demand for content of so many outlets have increased the need for skillful windowing. As All3Media’s Pedersen explains: “We’re seeing a little bit more flexibility from some of the SVODs, not necessarily around exclusivity but around territories. So they may request a bespoke clutch of territories rather than global rights.”
And windowing is getting even more complicated. “You can have a show on pay TV, then you have a linear window, and then a limited SVOD service window,” continues Pedersen. “You might have AVOD at the same time that is nonexclusive. There is no one-size-fits-all. A show like Midsomer Murders, an established brand in a market like the U.S., is on PBS syndication via APT. We work with Acorn TV and other SVOD clients in the U.S. on this series, then on some of the AVOD services like Pluto TV. It’s running in different places at the same time, but perhaps they’re not all doing the same [season], and you’re releasing a premiere to one, and the library is playing on another platform. We have people on our team now who are basically just helping the sales team with availabilities and windowing, which we didn’t have three years ago.”
Banijay licensed the series The Fall to several outlets. In the U.K., it was on Netflix while simultaneously available on other platforms. In the U.S., it was originally on Netflix. “Those rights expired, and we’ve been able to do nonexclusive deals with a couple of platforms where it performs very well,” explains Creasey. “We’ve put it through Amazon Prime Video, on linear TV through Ovation and then another deal on Peacock for its launch.”
When it comes to working with SVODs, the global ones are not the only nonlinear players offering distributors opportunities. Regional SVODs are proving to be reliable partners. “I’m pleased we’ve worked well with Stan in Australia this year on a couple of shows,” says All3Media’s Pedersen, referencing The Tourist and Eden. “They have been great as a high-end local Australian drama partner that shares our tastes and is willing to come in as an anchor broadcaster. HBO Max has also been a great partner recently on shows including It’s a Sin. I think we’ll see our relationships with both the local SVOD platforms and the studio SVOD platforms grow.”
The launch of new AVOD services is providing distributors additional business opportunities. Their relevance to viewers had been increasing pre-Covid, but their libraries of “comfort” shows available for free have recently been of significant appeal to consumers.
“The number of minutes being watched in AVOD and the number of active viewers on platforms like Roku, IMDb TV or Pluto TV is rapidly growing,” says eOne’s Baxter. “AVOD is an exciting new medium, which is why we’re pleased to be in business with a number of the AVOD players like Rakuten and Huawei in the U.K. and Spain, Globoplay in Latin America, Plex in Canada and Kidoodle.TV in the U.S. and U.K. We recently concluded a deal with Roku in the U.S., Canada and the U.K., which signifies a revenue stream not seen before.”
All3Media’s Pedersen adds: “If you love Gordon Ramsay shows or motor and car shows, you can find them on AVOD. So AVOD has been particularly useful for filling that gap for people who have canceled their cable services but still want to find shows that satisfy their interests and hobbies. I suspect that over the next 18 months, we might see AVODs moving up to perhaps come in as a pre-buyer on a few shows or co-producer on shows. Not necessarily a drama, but perhaps in the case of an older series that’s worked very well for them, if we can offer a new season, maybe they will come in first. Their influence is growing. We’re projecting big growth in that area of our business. And we might see them put even more money on the table for perhaps a first window.”
As Creasey explains: “For a distributor with the size of library that we have, the AVODs have proved to be a brilliant new source of content supply and income. The majority is still nonexclusive library. We’re not going there yet for exclusivity or certainly not for co-productions. It’s still mostly library; however, we are seeing that open up more.”
ZDF Enterprises’ Burcksen likens AVOD to the new commercial television: “It’s on-demand commercial television, and it might, someday, be as strong as linear television. From the perspective of the platforms, the advertising can be pinpointed toward the user through algorithms and software solutions. That is amazing. You probably need two or three commercials per half-hour or hour, and they are targeted to your behavior, your age, your needs.”
In addition to transitioning from Peak TV to Peak Demand, distribution executives have had to adjust to working with colleagues, motivating teams, guiding producers and negotiating with clients, all on a computer or smartphone screen instead of in person.
ZDF Enterprises’ Burcksen observes: “If you had asked me a year ago, Can you go a year without markets and personal contact with clients? I would have said, No, that’s impossible. But we did well. We’ve even exceeded our turnover goals for this year by a bit. If we defeat this pandemic, we shouldn’t try to go back to working the way we did before the pandemic. Nothing will be as it was before. But we are very much looking forward to sitting down with clients again, having dinner with them and some profound conversations in person. That is something that we really miss and are looking forward to doing again.”