Documentary Business

Peter Hamilton Consultants, Inc

MIPTV & MIPDoc Takeaways #1-5: That Unsettled Netflix Feeling Along the Croisette

What caught my attention at MIPDoc and MIPTV this year?

  • Lots of producers and network executives called to ask.
  • They are curious because their business models and career options are becoming more unsettled by the rise of Netflix and online video distribution platforms.

Here are my Takeaways from Cannes (#1-5):

1. What You Know. And What You Don’t Know!

  • For nearly 40 years, I’ve enjoyed a good handle on the business models of the broadcasters and cable/satellite channels who have driven the boom in the Unscripted genre.
  • The models have been constantly updated by current data that is readily available to professionals, and covers:
    • The scale, quality and viewing behaviors of particular audiences.
    • The revenues that they generate from subscription fees and advertising.
    • And the programming and other costs expended to reach them.
  • Netflix, Amazon, Facebook and niche subscription video services don’t share their viewing data.
    • Their business models are hidden inside a black box and often by inch-thick NDA’s for outside consultants like me.
  • Who knows Amazon Prime’s formula for valuing a specific program or genre?
    • Is it for the scale of the audience?
    • Its impact on subscription renewals?
    • The press it generates?
    • Or for how it relates to viewers’ online shopping behavior?
  • And to complicate the work of outside analysts, Facebook, Amazon, Google and others are in the early days of their strategic learning curves for Video.
  • Takeaway #1 from the Croisette: Our industry’s ability to strategize and pitch projects is partially but increasingly clouded by the closed data practices of the online subscription services.

2. Analog Dollars. Digital Cents

  • A successful producer of quality, long-running Lifestyle series sold DVD’s for a net of around $6:00 / unit, mainly off the prodco’s website.
  • When the DVD market tanked, the producer tested Amazon’s DTO (Download To Own) platform.
  • The initial revenue share was .16 cents / download.
  • Amazon recently cut the revshare to around .08 cents!
  • Takeaway #2: Very few Unscripted series can earn meaningful revenues from the massive scale of the digital platforms. The dramatic shift to online video platforms is dragging more dollars out of the ecosystem than the cents it adds back in.

3. Duck Lessons: Scale Up or Get Eaten

  • The Disney / Fox and Discovery / Scripps mergers have lots of industry participants asking: “What can we learn about scale from the Mouse?”
  • Several successful production companies at MIPTV were quietly looking for partners who might offer them such benefits as improved access to buyers, cross-border relationships, sharper business models, creativity, operational efficiency and the like.
  • Partnering is tricky:
    • For example, many merged production / distribution majors fell into financial distress when their franchise series was cancelled.
    • The pain was passed on to the niche production companies who had sought comfort within the scaled up larger entity.
  • Takeaway #3. Scale does matter, and more than ever in our business. But scaling up is no guaranteed solution.

4. Buyers Move Upstream. Distributors Step In

  • Network buyers confide that they are losing programs to nimble and often bigger-spending SVOD services.
  • Their response is to seek out producers with promising projects and tieing them up at the development stage.
  • Distributors are playing an enhanced role in this process.
  • Takeaway #4. As buyers move upstream, distributors are leveraging their market intelligence to offer financing for qualified projects where they can partner with key buyers and identify downstream catalog sales potential.

5. Back Office Becomes Front Office: Legal & Ops

  • Close deals or lose!
    • Network buyers with slow-moving Legal / Business Affairs teams are losing even their premium acquisition or copro opportunities to competitors who sign off fast.
    • This is a growing challenge for L/BA departments because parsing rights across the cascade of emerging digital platforms requires deep expertise and up-to-the-minute study.
  • Top-class back office technical operations are also more important then ever.
    • Channels and platforms require ever more complex technical deliverables and “Bibles”.
    • Producers and sales teams put their reputations at risk if their operations team isn’t first class.
  • Takeaway #5. Programmers: Get yourselves A-grade, fast–moving L/BA and Ops teams or suffer in the competitive marketplace.

Next Post

  • Takeaways #6-12.
  • Tentpoles vs Tents. Elvis. China is back. Cost clampdowns. The theatrical documentary economy, and much more!

My Upcoming Markets & Conferences