Survival of the Fittest

Amid the emergence of a raft of SVOD buyers and rapid-fire consolidation among production companies, factual distributors are redefining how they do business.

In some respects, there has never been a better time to be a documentary distributor. Channels, free and pay, remain committed to the genre. Netflix, Amazon, Hulu and others have all dedicated significant budgets to acquiring and commissioning documentary and factual series and specials. John Hendricks’ CuriosityStream is among a crop of dedicated nonfiction SVOD platforms operating worldwide, alongside upstarts like DocuBay and local and regional players like iwonder in the Asia Pacific. Discovery is gearing up for the launch of its global factual streamer in 2020, powered in part by content from BBC Studios. Even content about queens and princes has its own on-demand service (True Royalty TV). But just as the market is awash with new buyers clamoring for great shows, getting access to content is that much harder for indies as talent gets swallowed up into larger groups.

So what’s an indie distributor supposed to do? In a word, evolve. The journey of TCB Media Rights, founded as a boutique distributor by Paul Heaney seven years ago and now part of the Kew Media Group, speaks to the broader trends in the market.

“Before we were a straightforward distributor with presales, then a straightforward distributor with presales that could act as an agent in terms of introductions” between producers and broadcasters, says Heaney, CEO of TCB. “And then we started working with producers at an earlier stage to develop content. And you add on to that not just developing but actually commissioning, sometimes from scratch with no broadcaster attached. What else could we do? We had no alternative. We had to go this way. Each year it’s gotten harder and harder to find third-party.”

LAND GRAB
Emmanuelle Namiech, the CEO of Passion Distribution, agrees, observing, “Very few producers are not affiliated with a group or broadcaster today. And those that are available may or may not have content that we might deem suitable for our brand.”

Nonetheless, for Passion—which is part of the Tinopolis Group, and therefore has several sister production outfits to tap into—third-party still accounts for the majority of the com­pany’s catalog. Namiech says 70 percent to 75 percent of Passion’s slate comes from companies outside of the group.

Blue Ant International, similarly, features a slate that hails from sister production companies and external creators. “There is a ton of consolidation, and that does impact who your partners are,” says EVP Solange Attwood. “Equally, it’s really important for the entire content business to be investing in incumbent and new talent. We’re working with a lot of new production partners. Even in the world of consolidation, there continue to be highly successful, creative people that are spinning off from those larger consolidated groups.”

The consolidation in the industry was among the factors that led ZDF Enterprises to acquire Off the Fence, says Ralf Rückauer, the VP of ZDFE.unscripted. “But on the other side,” he says, “most of the independent production companies, as well as companies that are part of broader networks, are still open for us to invest in their programs and work together with them to develop their ideas and projects.”

Sarah Coursey, GRB Studios’ new senior VP of international, agrees: “There are more independent producers than ever, worldwide, producing for the myriad of digital buyers as well as linear, and it is this renaissance that is creating more product.”

Since access to that product is becoming all the more competitive, providing top-notch service to your production partners is paramount.

“The producers who work with us can testify to the fact that we leave no stones unturned and are entrepreneurial when it comes to generating opportunities for their projects,” says Namiech. “That is a key differentiator. There is no low-hanging-fruit strategy here! We work long term with some of our producers because they recognize we always go the extra mile.”

For LGI Media (formerly Looking Glass International), which is not part of a broader production group, building long-term relationships has been critical. Says Nha-Uyen Chau, founder and CEO of the boutique specialist-factual distributor: “There are relationships we have where producers will always come to us with their projects. They’ve trusted us in terms of maximizing revenues. We take on a handful of projects where we know we can give all of our resources to them, from development through to the marketing campaign through to distribution. It’s a turnkey approach that we’re able to offer these specific projects that we take on.”

Like many of its competitors, LGI Media is also boarding projects early, rather than just taking on a title after it’s been commissioned and is ready for rollout around the world. “We’re becoming more strategic and working to the broadcaster’s brief,” Chau says. “We will partner with production companies and work on developing projects in-house to produce for broadcasters. It’s not so much entering the commissioning space, but it will be a hybrid model. We will work with both a broadcaster and a producer as well as source other alternative funding opportunities. It’s about how we cleverly punch above our weight when it comes to developing and producing programs for broadcast clients, while not being solely dependent on getting commissions from them, knowing their budgets are decreasing as well. In this way, we can retain more of the back-end rights, which we will then share with producers.”

As an example, Chau references Spiky Gold Hunters, from Pango Productions. “LGI has raised the budget, besides the TVNZ license deal that Pango got, elsewhere. We presold it to Blaze in the U.K., Viasat and Foxtel. This is an example where we see the commercial opportunity and we’ll jump on board and help them pretty much find 95 percent of the financing.”

MONEY ON THE TABLE
ZDF Enterprises has been actively involved in partnering with producers early in order to help them secure financing, Rückauer says. “This year, we’ve gone a step further: we’ve commissioned a series called Great Inventions with World Media Rights, Off the Fence, doc.station and k22film on board.”

Being involved in projects early is based partly on necessity, Blue Ant’s Attwood suggests. “You need to be in earlier to secure rights. You also need to be in earlier to take advantage of sharing any market intelligence you have to help facilitate the best return for your production partners.”

As for how to best work with producers, TCB’s Heaney says it’s a balancing act between having a “shopping list,” of sorts, without putting restrictions on their creativity. “If you’re too prescriptive, you end up getting something that is made by numbers,” Heaney explains. “We’ve got to allow the producers to have their natural creative bent. We try to work with producers who we know are well recognized and have integrity with the broadcasters and the SVOD platforms. We brief the hell out of the producers and bug the hell out of the broadcasters to make sure we’re getting a detailed brief. We’re very close to the channels. We’re always reiterating and rechecking and reaching a level of trust and trying to work with them as closely as we can to make sure that when we’re handing out a brief, it’s not too detailed and it’s going to work not just for one channel but for a few of them.”

Passion’s Namiech stresses the importance of being flexible with financing models: “We finance projects through a range of different scenarios, whether it’s an advance, deficit funding, raising presale funding, brokering co-productions or more recently fully funding some of the shows we felt had really good international potential. And then beyond the financial aspect, we also provide them with feedback on a project’s commercial viability, the international potential. We sometimes introduce them to commissioning platforms that are based overseas that might be open to working with some of our production partners. And then, by marketing their content and showcasing them as creatives, we help increase their visibility on the global scene.”

VOLUME BUSINESS
GRB Studios offers its production partners a “bespoke” service, according to Coursey. “We don’t acquire anything without giving it a fine-tooth comb analysis, to make sure it is highly salable in the most territories possible. This might mean that we pick up less than our competitors at times. However, we are thoughtful in our approach, looking to add independent content to our catalog that we know has a unique selling point and that we will be able to monetize globally.”

There are indeed many factors to take into account when determining if a title should be taken on for international representation.

“It’s not a question of just adding hours to a growing catalog for volume’s sake,” says Namiech at Passion. As for what she looks for, Namiech notes that her brief has evolved over the years. “A few years back, I probably would have said we were looking for long-shelf-life, evergreen, universal shows that would be set to continue to do well. Now, because the market is so polarized, I would say what we look for is primarily a show that proudly stands out in a crowded market. It needs to be something that gets the conversation started.”

Coursey says that she and the GRB team ask questions like, “Is the execution remarkable? Is it fantastic storytelling that will cut across cultural lines? Does it hit at something that is a prime human emotion or instinct, and explore that in an interesting or new way?”

“It’s always easy to find content,” says Heaney at TCB. “It’s getting harder to find good content that will sell. I made the mistake many times of picking up content just because it was available.”

And as for what will sell, Heaney points to market polarization as being a significant new factor to consider. Broadcasters and platforms “want big noisy and then want volume at a lower cost,” he says. “The middle ground area is getting harder and harder to fund. So we have to make sure we’re doing both premium and higher volume that has to look good on-screen even if it is low cost.”

A significant factor driving this market polarization is, of course, SVOD. While complicating windowing and financing strategies, the entry of the global streamers into the factual space and the launch of new dedicated platforms has been a boon to the industry.

“The growing VOD market allows us to expand our customer base,” says Armin Luttenberger, the head of international content sales at ORF-Enterprise. “CuriosityStream, amongst other platforms, has been acquiring from ORF-Enterprise the rights for wildlife and nature packages, including programs from ORF’s renowned UNIVERSUM strand, since their establishment in 2015.”

Rückauer says that ZDF Enterprises has been working with on-demand platforms for years, both with acquired content and co-pros. “So we are happy to have more players in the market and more competition. I see them more as an add-on to the existing partnerships; as an expansion with a lot of fantastic and new opportunities,” he says.

“The impact has been positive on balance,” says Passion’s Namiech of the emergence of a factual on-demand segment. “There’s a dynamic linked to the recent market disruption that is overall quite stimulating since it creates additional competition. The disruption impacts both commercial and editorial discussions. Whether it is how viewers consume the content, how a show is financed or even how it can spark editorial trends like how true crime came back in a serialized form with Making a Murderer.”

DIGITAL GAINS
Passion now makes about 30 percent of its revenues from nonlinear platforms, Namiech states. “That’s not insignificant. And it’s been increasing—last year it was closer to 25 percent. There’s definitely a change and this is set to continue for some time, given the number of new services being launched.”

“There are far more prospective buyers than there ever have been before,” adds Blue Ant’s Attwood. “That has increased the demand for original first-run programming in the factual space. That’s great for everybody. Some people will benefit a great deal, and some may not be able to. Having a whole new set of buyers that are very well capitalized is going to have positive benefits for the vibrancy of the market itself. There’s far more competition. That has also opened a lot more possibilities from an editorial perspective. So different types of stories are now finding homes that may not necessarily have had that opportunity in the past.”

LGI’s Chau agrees that SVODs have created platforms for shows that may not have been able to find homes on linear. “Broadcasters’ slots are quite rigid,” Chau notes. “It’s either a science program, a wildlife program or a lifestyle program and of course, they only have so many slots per year they acquire for.”

Heaney says that TCB has broadened its acquisitions remit in response to increasing demand from SVOD platforms, recently moving into theatrical docs and premium factual. “Those 1×90-minute, 3×60-minute formats wouldn’t have been looked at a few years ago,” Heaney says.

DEMANDING TIMES
Dealing with streaming services does require a new set of skills, Attwood says. “If you’re looking to tap into these new buyers, you need to understand how to sell at a commissioning level, understand how to structure co-production models and be able to capitalize on effective sales-deal flows. And then, of course, exploring alternatives for the funding models as well as the traditional licensing business, which remains important.”

ORF-Enterprise’s Luttenberger says that streamers are increasingly looking for worldwide rights, “raising the complexity of licensing as well as the commercial potential.”

As such, having smart, strategic windowing strategies is critical. “It’s increasingly important for us, as well as our competitors surely, to retain global SVOD rights, or hold them back for shorter and shorter windows, to better serve these emerging platforms,” says GRB’s Coursey. “This is not always an easy endeavor, but worth fighting for.”

“The key factors that are relevant to worldwide licensing include complex management of distribution rights, holdbacks and territorial overlaps,” Luttenberger adds. “The exploitation strategy also has to be examined globally and extensively with regard to brand awareness, placing our blue-chip lineup on premium platforms first.”

LGI’s Chau says that Netflix remains the “first port of call when it comes to any global deal that you would consider for an SVOD window. It does complicate the mix in terms of windowing, and linear broadcasters still want their premieres. That takes SVOD out. But you can negotiate up, depending on how much they want your programming. You’ll know how much they want your program when they choose to either shorten that SVOD window or extend that SVOD window. They will have to pay a higher license fee if they do want a longer exclusive period.”

When weighing up a global SVOD opportunity versus a territory-by-territory rollout, Heaney at TCB cites “exposure” as a significant consideration. “Is this show going to get returned? There’s no point going for the big deal if season two doesn’t happen. Recently, we went for a slightly lower offer from a channel, knowing they’ll probably come in on season two. There’s no point going for flights of fancy. Are they going to nurture that show?”

“The allure of an Amazon or Netflix sale cannot be denied, both in terms of prestige and also in terms of global coverage,” notes GRB’s Coursey. “A show gets an automatic international footprint and is localized into different languages, giving more people access to the content and providing instant impact for our homegrown productions as well as third-party programs. However, our distribution team’s main focus is monetizing [titles] at the highest possible price point, and country-by-country sales often bear more fruit over the long run, adding up to bigger license fees per episode. The bottom line is if the global SVOD license is big and attractive enough, and we can put limits on exclusivity in key territories, then it becomes an interesting proposition.”

“We simply have to recoup and earn back the money that we have invested at a very early stage,” says Rückauer at ZDF Enterprises. “We have more than 25 years of market expertise, so we can exactly calculate which sales in which territories are realistic or not. We’ve had some experiences with [revenue] share models in the past. You automatically stop selling this way on the day you get a statement for $24 on a one-year exploitation of a 500-hour package.”

SWITCHED ON
Navigating this changing landscape, TCB’s Heaney says one key to success is simply keeping up. “We all have to move faster. There’s no room for anything that doesn’t move the dial or grab you editorially. It’s never easy. You have to work harder on the relationships. So ‘super-serving’ is the word I always use about us. We have to super-serve those producer relationships and broadcast relationships; otherwise, we won’t get good content.”

And there is plenty of good content being made, says Blue Ant’s Attwood. “It does feel like there’s a real renaissance in the factual space and people are willing to take big swings. It’s a really exciting time. You have to continue to be pretty diverse in terms of the offering that you’re presenting. You have to make sure you’re taking care of everybody’s needs, and you’re tailoring your business to make sure you satisfy those needs.”

ZDF Enterprises’ Rückauer anticipates a rush to access “prestigious programs, especially feature-length and award-winning titles. The swamp men will disappear and people will be interested again in the big questions of mankind: Where do we come from? What can we learn from history? How can we save our planet? Will we ever be able to live on other planets? There is so much to be explored and to be told in beautiful pictures. So much time to watch and learn!”