Dramatic Future

As the drama commissioning landscape undergoes a course correction, leading distributors weigh in about how financing and windowing strategies are evolving.

We’ve all seen the reports about the end of peak TV and the dramatic slowdown in commissioning across every sector, including what had been a severely overheated market for drama. The producers and distributors surveyed for this piece are employing a range of strategies to adjust to the new normal, including finding smarter, savvier ways to finance shows—and fully mine their monetization potential across every window.

“Like a lot of businesses, we’ve adapted and become more flexible in how we approach the financing of a series,” says Tom Misselbrook, senior VP of scripted sales and development at Cineflix Rights. “For us, it all starts with the creative, and we take it from there, looking closely at the ambition and scale of a series to understand whether it fits within our model, and if so, plot out how to best piece it together.”

“I think it’s more important than ever that your creative development is done in parallel with an executable business plan,” says Dan March, managing partner at Dynamic Television. “Shows now tend to fall into one of two buckets: you can still swing for bigger-budget global streaming commissions or finance smart and efficient co-productions through multiple partners. But know what your plan is as early as possible.”

At Boat Rocker Studios, the emphasis has been on “being flexible in the types of deals we pursue and projects we make,” says Nick Nantell, executive VP and head of scripted creative. “During ‘peak TV,’ we were much more focused on the American market and cost-plus deals. We have been able to pivot in the face of the evolving market there and utilize our size, financing ability and incredible distribution team to find new opportunities throughout the world to make premium, high-end content.”

Miguel García Sánchez, sales director at the distribution arm of Spain’s Atresmedia Televisión, also emphasizes the importance of flexibility, “adapting to the new times, strengthening international relationships and exploring new collaboration strategies with third parties through different formulas and agreement models.”

Carlos Garde, managing director of Onza, says the market’s course correction has created new opportunities for the Spanish distribution and production outfit. “It may sound paradoxical, but we have seen growth opportunities in these times of budget realignment for content platforms. Onza has been a pioneer in finding creative financing solutions and taking advantage of the best tax incentives in the market. This, combined with our experience in closing sales in different windows to different clients, has allowed us to gain a competitive advantage in the market.”

Meanwhile, at Electric Entertainment, despite the industry upheaval, the financial model behind that company’s boutique stable of shows has largely stayed the same.

“The budget will start with a domestic license fee and what you can get between a rebate and foreign sales,” says CEO Dean Devlin. “That’s been our model from the beginning. We’ve also been fortunate enough to make ‘traditional’ television. The entire industry moved away from that toward dark, edgy, serialized, expensive shows. There’s been a resurgence of blue-sky shows where bad guys get their comeuppance. We’re doing more shows now than we’ve ever done. It’s because we’ve been in this unique position of figuring out how to do more for less without it showing up on the screen.”

For Natalie Lawley, managing director of Escapade Media, one of the most significant shifts of the last few years has been the “greater need to ‘package’ each project well before it goes to market—ensuring you have your cast and creative team attached and have sourced a percentage of your budget. The bigger, the better. We have looked at all sources of financing, from private funding, brand support and contra budget line items to presales to striking smarter deals with potential commissioners and platforms.”

FUNDING JIGSAWS
As Lawley indicates, there are a variety of funding routes to pursue, but co-productions and tapping into soft money remain key to most international drama distributors’ strategies for getting shows made.

“We are still seeing the need to secure the anchor sale/commission, preferably in a major territory, but then build the finance plan via an international co-production or multi-territory presales,” Lawley says. “Escapade is seeing a big appetite for presales in the scripted genre.”

Boat Rocker is tapping into the benefits of its home base of Canada, Nantell notes. “We are adept at tapping into the strategic soft money to help us keep our projects in the Canadian marketplace and make them more economically than elsewhere. Having said that, in this more international marketplace, we are looking for partners around the world to help tap into their local soft money to help make the best project possible.”

Similarly, Onza is well-versed in accessing funding systems following its own experience in Spain. “We have always used them in most of our productions, and they have allowed us to develop productions with tighter budgets,” says Garde. “We are producing a major series in Bilbao with incentives from the Basque Country, and we have several productions planned for the coming months. Onza is not only focused on taking advantage of these incentives in our productions—we are also offering our production services to companies in the U.S., Latin America and other territories. We are offering them the opportunity to record part of their production with us in the Basque Country, the Canary Islands or other areas of Spain with incentives, which will allow them to save a lot of money on their productions, and thus be able to carry out projects that would otherwise not be viable.”

Misselbrook at Cineflix Rights explains that it has become “much more common to pull together financing from multiple sources, be that local or state funding bodies, tax incentives, third-party financers or co-producing partners in which a specific project creatively lends itself to two or more territories.”

Misselbrook adds that multi-territory co-pros have been on the rise and notes that soft money tends to form a significant part of the productions the company invests in. “When assessing new material, these types of incentives can make all the difference in closing the financing of a series and make the case for investment much more straightforward.”

Naturally, you have to look at those incentives carefully, Electric’s Devlin explains. “It will always be a combination of the rebate versus the cost of shooting in that country. Some places have quite big rebates, but shooting there is so expensive that you lose most of the rebate due to the increased costs. We shot in Portland, Oregon, for 11 years. They only had a 17 percent rebate, but everything else was much less expensive. As we calculated it, even though it was only a 17 percent rebate, we saw a 30 percent reduction in costs from the show’s first season, which was shot in Los Angeles. The rebate is super important, but it’s not everything.”

LIBRARY CLOUT
With commissions on the downswing, distributors are looking to drive additional value from back libraries.

“We’re always on the lookout for series that can run for multiple seasons and have a long shelf life because that’s how you maximize your return,” Misselbrook says. “Library offers buyers high-quality series, high volume and a strong track record at a more affordable license fee. In a time when commissions are down and budgets are tight for buyers, library series are a great option to offer our customers.”

“Atresmedia has an extensive catalog of series, including some of the biggest successes in Spanish-language fiction,” García Sánchez notes. “Our library is a vital asset, allowing us to offer clients the opportunity to relicense beloved productions that continue to captivate audiences even years after their original release.”

And with the AVOD and FAST sector quickly becoming a critical window, having a solid back catalog of series can be an important advantage. “Nearly every distribution com­pany is ultimately buoyed in challenging markets by its catalog,” March says. “With the growth of AVOD, this is certainly applicable now.”

WINDOW WATCHING
The emergence of AVOD and FAST is helping to change the conversation around holdbacks and exclusivity as IP owners look to expand the monetization potential of shows.

“At Atresmedia, we always strive for maximum visibility and the best exploitation of our series,” Garciá Sánchez says. “We have historically negotiated exclusive and non-exclusive deals, depending on the specifics of each negotiation. This flexible approach allows us to adapt to the evolving conversation about exclusivity in the scripted space and optimize our content’s reach and impact.”

Misselbrook adds: “Historically, there was much more emphasis on exclusivity in the scripted space, as platforms and broadcasters sought to take ownership of content in a more robust way. More recently, we’ve seen a move away from this to an extent; the first window will always be key as this is where platforms and broadcasters realize the most value, but that window has become shorter for many ser­vices. There is evidence of more flexibility around secondary window exploitation. This works well for commissioners and distributors as they look more closely at cost and revenue potential. There is an ecosystem in which the same series can sit across multiple services at one time, that audiences can access on their preferred service and that these series can still perform well.”

SVOD streamers, in particular, are starting to be less insistent on being the exclusive home of titles; that strategy helped drive Suits to the top of streaming charts in the U.S. with its homes on Netflix and Peacock.

“You’ll always have full ownership by the platforms, especially on the bigger-budgeted shows,” Devlin says. “But if they want to have enough new content that their subscribers feel good about paying a monthly subscription all year, they will have to maintain a certain level of new product. If they want to do that on a budget that’s not going to continue to give them crippling debt, they’re going to go back to the license deal. It makes it a little bit trickier for us because now we’re not just selling it to one person in one territory, but it allows us as an independent to create more realistic modeling on the value of our library. If you’re not reselling the library—if you’re just letting it sit on a hard drive—you’ve lost an enormous amount of that value. It makes more work for us, but it’s better for us at the end of the day.”

Electric Entertainment made an early bet on AVOD and FAST with its ElectricNOW app, delivering access to some of its key franchises. The monetization aspect is important, but Devlin highlights that the service does more than just generate additional revenues. “We need to aggregate our fans. We need to create a place where, if you like our stuff, you can come to this home and feel like it’s yours and have a sense of proprietary involvement. That’s been successful for us. When we launch a show on SYFY or TNT, we can communicate to [our fans]. It’s been working at a level that’s been surprising.”

FAST TIMES
Cineflix Rights operates a portfolio of FAST channels in the unscripted space and has seen their value, especially when it comes to data and analytics.

“AVOD and FAST provide an exciting opportunity to exploit series in our library that, for whatever reason, we may no longer have a home for through a traditional licensee,” Misselbrook says. “We’re seeing very strong engagement from audiences on these services being reconnected with their favorite series in a free environment, and this area of business remains a real growth engine for us and an integral window in a show’s lifespan. What’s also particularly interesting is the rich level of data we get from these platforms, which we can feed back into the business to inform broader editorial decisions.”

AVOD and FAST aren’t teeming with originals yet, with just a few of the major players—among them Roku, Amazon Freevee and Tubi—commissioning their own productions. But producers and distributors are eagerly watching this space.

“We’ve seen impressive growth of AVOD services in recent times, and we’ll continue to see expansion,” Misselbrook says. “AVOD services are already investing in the scripted space, albeit it’s quite limited when compared to SVOD or broadcast, but with the continued trajectory of AVOD, my feeling is we will see an increase in investment across both film and scripted series.”