MIP Takeaways #6-12: Budget Cuts. Elvis & A-Listers. Tentpoles vs Tents. China and more...

A fast-changing economic model creates anxious conversations and lots of sharing of useful information.

6. Budget Cuts Hit a Mature Industry

The Cab / Sat channels business has peaked and is in decline.
The Business School playbook for a company facing a slow sunset is to empower CFO’s to preserve margins by drastically cutting costs.
Content is being targeted because it is the biggest outside cost category for a channel:
- Production budgets are being pressed across the board.
- Merged channel operators like Discovery / Scripps are concentrating their commissions on fewer, large-scale production companies.
- This ‘preferred vendor’ strategy encourages efficiency in deal-making and operations.
- But it raises the bar for newbies.
- Marginal channels that don’t qualify for “skinny bundles” will be shuttered or moved online, removing the ‘minor leagues’ where many emerging producers established their reputations.
Takeaway #6: Producers will feel the pain as the Cab / Sat channels protect their generous gross margins.

7. Elvis and A-Listers

Elvis wasn’t spotted in Cannes, but I did detect his spirit.
HBO Documentaries’ Elvis Presley: The Searcher is a current, two-part release that is EP’d by Priscilla Presley.
The project captures the trend towards documentaries that are pre-sold to audiences because they cover super-celebrity subjects, and that often credit A-Listers like Priscilla Presley and Leo DiCaprio as EP’s.
In a shift from the producer-led model that characterized the factual channels business, many of these projects revolve around award-winning ‘auteur’ directors.
Some notable directors are working on so many projects that they appear to be running little factories rather than creating the hand-crafted documentary jewels on which they built their ‘auteur’ reputations.
Takeaway #7: Netflix, HBO, Nat Geo and other premium brands are relying on A-List subjects and creatives to break through the promotional clutter. Their reliance on over-committed star directors is becoming a choke-point in the new director-led system.

8. HBO Defies the Falling Tide

The Elvis documentary reminds me that while most basic channels are losing subscribers, HBO is gaining them.
In Netflix’s shadow, traditional premium TV networks including HBO and Showtime are being revitalized by OTT (online) delivery.
- HBO recently reported record subscriber levels for 2017.
- HBO gained over 5 million subscribers, driving its U.S. base to 49 million.
- Half of the online subs came from HBO Now, its standalone streaming service, with the other half coming from distributors like Amazon Channels and skinny bundles like DirecTV Now.
Remember, though, that HBO Documentaries commissions 30-50 projects a year, while major basic factual channels green light 500+ hours of unscripted content.
Takeaway #8: HBO’s rise is good for the HBO Documentaries unit. However, the rise of Netflix and HBO doesn’t offset the cutbacks in the production pipelines, and hence industry employment, that are result of the declining footprints and viewing levels for dozens of basic channels.

9. Tentpoles vs Tents

We recently saw a strategic shift by several basic channels to double down on A-Lister, big budget, events like Genius: Picasso to propel their brands into the streaming era in competition with Netflix.
There is evidence from research specialist Parrot Analytics that these super-specials can break through in terms of online awareness and viewing.
However, this tentpole strategy drains budgets from the day-to-day primetime programming schedule that delivers audiences to advertisers.
The tentpoles haven’t lifted audiences for the primetime outside the events.
Takeaway #9: At MIPDoc, we heard that channels with tentpole strategies are re-balancing their refocus on the tent, and are seeking affordable, advertiser-friendly series for primetime.

10. China: A Green Light?

China’s promise for Western factual producers swings from wild optimism to dashed hopes.
The signal at MIPTV was a highly-qualified green light.
China’s video market has evolved into two sectors:
- Government: CCTV and the regional public broadcasters.
- Commercial: The exploding online streaming market dominated by Tencent, Baidu’s iQiyi and Alibaba’s Youku Tudou.
The good news is that both sectors want high-quality, Western factual content from Blue Chip partners.
They particularly value programming that ‘educates while it entertains’, and is in the comfort zone of ever-vigilant censors.
The BBC’s Blue Planet 2 was acquired for an eyebrow-raising fee by both CCTV and Tencent, where it attracted more than 80 million online viewers.
Producers and distributors who enjoy long-standing relationships in China report that deal-making is on the upswing.
Meanwhile, China’s court system is said to be making steady moves towards enforcing Western content rights against local pirates.
(Read my historical coverage of the China market here).
Takeaway #10: China’s long-delayed promise may be coming… but only for highly-qualified producers and distributors.

11. Focus / Diversify

Woodcut‘s Kate Beal gave a very well-received presentation at the invitation-only MIPDoc Copro Summit.
Kate explored the three keywords that guide her successful strategy as a relative newcomer:
- They are Creativity, Commercial & Collaboration.
- Read Kate Beal’s full presentation and watch Woodcut’s trailer here.
In a MIPDoc panel on Distribution, Off The Fence‘s Ellen Windemuth described how her long-established company selectively targets governments, foundations and private donors to commission Blue Chip projects that are consistent with OTF’s mission.
Takeaway #11: Focus! Diversify! Whatever works for you given your strengths and weaknesses. But do it strategically in a fast-changing market. (And read Takeaway #4)

12. Public Television Copro Opportunities

At MIPDoc, I presented a panel covering JAPAN FROM ABOVE with EP’s Shin Yasuda & Nicolas Deschamps (above).
This 4K project is a successful 1.5 Mn Euros budget copro between NHK and France’s Gédéon Programmes.
(Read my Case Study in English and in French, and watch the trailer.)
The project was leveraged by public funding from France’s CNC and the Japan Foundation, with public broadcaster ARTE as a key partner.
Takeaway #12: This project is unique and can’t be easily replicated. But it does point to the relative scale and stability of public broadcasting systems. They offer a continuing source of commissions and copros, even if these projects are very individual and depend on long-term relationships.

Previous Post

MIPTV & MIPDoc Takeaways #1-5.
The Netflix / Amazon data gap; Analog Dollars: Digital Cents; Duck Lessons: Scale Up or Get Eaten, and much more!

My Upcoming Markets & Conferences

INPUT (International Public Television Conference)
- Brooklyn. April 30-May 4
- Panel: “Financing Independent Production for Public Television”
SUNNY SIDE OF THE DOC
- La Rochelle, France. June 25-28
- Panel: “The Future of Pubcasters: Adapt or Die”
NEWF: Nature, Environment & Wildlife Filmmakers Congress
- Durban, South Africa. July 16-18