NEWS/L'EDICOLA DI LOU - Tv americana al collasso? "Variety" lo aveva predettto un mesetto fa (con tanto di cover): troppi titoli (145 serie in prima serata, +14% rispetto all'anno scorso) e previsioni bulimiche (350 progetti seriali ordinati fino all'estate!). Domanda: quanti di questi spaccheranno e quanti scoppieranno?
Articolo di
Cynthia Littleton per "
Variety"
Even the most devoted
couch potatoes may be overwhelmed by the deluge of new and returning
series premieres that will unspool over the next year. And they’re not
the only ones.
Industry executives are quietly starting to use the B-word — “
bubble”
— in surveying the landscape of scripted skeins across the dozens of
broadcast, cable and digital outlets that are serving up original
programming. That growth has been fueled by the windfall of licensing
revenue from expanding international sales and digital platforms that
barely existed a decade ago.
But after a more than 1,000% spike since 1999 in the number of
scripted series produced for just pay and basic cable, there are growing
concerns, even among those in the production world, about the unwelcome
consequences of so much capital chasing talent, viewers and, most
important, off-network profits.
At a time when every aspect of the traditional television business is
in the throes of transition, some see big losses and a decrease in
volume as inevitable, and soon. According to
Variety research,
broadcast and cable networks this year have aired
145 scripted original
primetime series and miniseries, a
14% increase over the same frame in
2013. At least
350 new and returning scripted series have been ordered
for the 2014-15 television cycle (including summer 2015), and that’s not
including digital outlets. The long-tail theory may not be long enough
to support this exponential boom in high-end production.
“Everybody is enjoying
Netflix’s emergence as a buyer of all this
scripted content, but what we worry about here is supply and demand,”
said
Michael Nathanson, a veteran media biz analyst and partner in the
research firm MoffettNathanson. “The supply of dramas is increasing to
the point where in the coming years, there are just going to be too many
shows.”
FX Networks chief J
ohn Landgraf
sees the expansion as a symptom of the audience fragmentation that’s
been a fact of life for programmers for decades. He noted the number of
scripted series on broadcast TV is actually down about 15% from its peak
in the early 2000s — with lower-cost, unscripted shows making up the
difference — and he sees a similar scenario on the horizon for pay and
basic cable.
“The question is when does the fragmentation become so great that the
ability to sustain and nurture these programs from a financial
perspective become compromised,” Landgraf said. “We’re probably getting
real
close to the end of the growth curve for premium and basic cable
right now.”
Industry veterans said that the biggest issues resulting from the gusher of production include:
» A significant spike in the cost of securing top talent and
sought-after source material, from hot scripts to life rights to
existing books and movies.
» Rising prices for crews, equipment, stages and locations, among other necessary ingredients for production.
» Higher demand for promotional time coupled with declining ratings for
linear channels, making marketing campaigns more costly and less
effective.
» Top cable nets cutting back on off-network buys because of increased commitments to original programming.
»
Netflix gaining outsized influence due to its growing clout as an off-net buyer.
The skyrocketing number of scripted series flooding the airwaves has,
of course, coincided with an equally dramatic shift in the way people
that watch TV. Time-shifted viewing patterns are becoming the norm, and
that in turn is having a huge impact on how producers make money on content, from the first exhibition window to long-term library value.
The world’s biggest media congloms are more invested in television
programming than ever before, because cable networks and
content-licensing are the main profit drivers for Disney, 21st Century
Fox, Comcast, Time Warner and CBS Corp. But even the biggest players are
facing the how-much-is-too-much question, and adjusting to new
financial realities.
“We’re in an evolving ecosystem,” said
NBCUniversal Cable Entertainment Studio president and chief content officer
Jeff Wachtel.
“There will be some version of a winnowing where the business says,
‘Let the strong survive.’ But it’s also about recalibrating our
expectations as viewing patterns shift.”
The focus on content production is reflected by recent exec moves at
the majors, from Wachtel’s appointment last year to rev up
NBCUniversal’s cable studio to feed its inhouse channels as well as
non-NBCU outlets, to the restructuring in July that put Fox
Broadcasting’s programming operations under the guidance of 20th Century
Fox TV studio chiefs
Dana Walden and
Gary Newman.
Elsewhere on the Fox lot, FX Networks has stepped up activity at FX
Prods. now that it has to feed two general-entertainment nets (FX and
FXX). Having greater control over more of its programming gives it the
ability to profit from content licensing well beyond FX Networks’ walls,
and lets the cabler afford more shows.
“If your business strategy is predicated on having hits and hits
alone, it’s going to be very fragile,” Landgraf said. “We started FX
Prods. because we couldn’t figure out how to pay for as many shows as we
wanted. We chose to build a (financial) plan based on what was
achievable for us through content ownership.”
The glut of programming has helped drive consumers’ embrace of the
time-shifting options that are challenging traditional ad-supported
network business models. Sunday night, even in the summer months, is a
war zone of competing prestige series that taxes the DVR storage ability
in many homes.
With every new show, the dependence on time-shifted viewing for
ratings points grows for all but the biggest hits. As more viewers
embrace binge-viewing — waiting to watch multiple episodes in one
sitting — measurement and monetization questions become even more
muddied.
“It’s as if you had a retail store that used to be open in one
location from 9 to 5, and now there’s one on every corner that is open
24 hours a day,” said
CBS Corp. chief research officer David Poltrack.
“With greater access to all programming, it’s no surprise that it’s the
hit network shows that gain the most. With so much time-shifted viewing
going to the (broadcast) networks, the question for cable becomes, at
what point does the return on investment in developing and launching new
programming become challenged?”
To some, the current moment in TV echoes the era of irrational
exuberance on Wall Street. Venture capital and private equity have been
flowing into TV in the form of independent production entities such as
Media Rights Capital, which made its mark with
Netflix’s “
House of
Cards”; and Georgeville, with backing from India’s Reliance.
“It sometimes feels like the Internet bubble in the early 2000s. You
had a jillion startups and lots of money pouring in,” said a veteran
production exec. “The bubble burst because there was massive failure.
Some version of that will occur here. Some of the smaller outlets taking
big shots will not be able to keep investing at this level.”
Call it the
AMC effect. The dawn of “
Mad Men” in 2007 quickly
transformed the cabler from a second-tier movie channel to an
Emmy-winning contender that saw its market value more than triple
because of its targeted investment in original scripted series.
The same strategy had worked for FX with “
The Shield” a few years
earlier, but
AMC’s metamorphosis was more surprising because of its
relative lack of resources compared with
FX and what was then News Corp.
Today, channels across the listings grid — from CMT and E! to WGN
America and We TV — are looking for that same bounce by fielding what
they hope will become signature series.
Netflix’s bold entry into the same territory has been nothing short
of a stimulus for the creative community. The netcaster’s big upfront
commitments, starting with its two-season order for “
House of Cards” in
2012, and
HBO-sized budgets, have upped the ante for all top-tier
networks.
Hulu and Amazon Prime to date haven’t been as free-spending on
originals, but they are still factors in the marketplace, as is
Yahoo.
There’s so much competition now that the broadcast networks, which
used to be the first stop for creative talent, struggle during pilot
season to find seasoned writers, directors and producers who aren’t tied
up on existing shows.
The hunt for talent has driven up prices, particularly for
experienced showrunners and established actors. Showrunners who were
making $30,000-$35,000 an episode after the cutbacks that followed the
2007 writers strike and 2009 economic crisis are in many cases now able
to command $50,000-$60,000 per episode, along with rich overall deals.
Below-the-line costs and equipment rentals
have seen a similar spike, especially in states that have become
production magnets because of tax incentives: New York, Louisiana, North
Carolina, New Mexico and Georgia.
Execs note that in the past two years, the traditional discount in
salaries for creative talent working on cable shows vs. broadcast has
essentially disappeared. “If you want anything good, you have to pay for
it,” said one seasoned exec. “The talent agency community has been very
effective at equalizing rates among media.”
The rising costs of content production are all the more sensitive
considering the surplus of shows has likely contributed to a thinning of
margins from TV advertising revenue. The more the audience fragments,
the more linear ratings erode. Stemming this shortfall has meant an
increasing dependence on after-market licensing for profitability, which
in turn has given considerable leverage to deep-pocketed Netflix as the
rest of the syndication marketplace shrinks.
Studios traditionally made their money from syndication sales rather
than the firstrun license fee, but
SVOD and
international sales have
become the linchpin. With the right properties, execs boast that shows
can now be in the black from day one, thanks to a patchwork quilt of
premium network license fees, worldwide and SVOD sales.
Netflix demonstrated the industry’s new economics in a pact that
jolted the programming marketplace earlier this month, locking up rights
to Warner Bros. TV’s Fox drama “
Gotham” for at least
$1.75 million per episode. The deal was significant for two reasons: It
came weeks before the show’s network premiere, and it included all of
Netflix’s worldwide territories.
Such all-encompassing pacts for rights in all markets served by an
SVOD platform are becoming the norm, industry vets say — and these deals
chip away at the studio’s ability to sell a show to the highest bidder
in every overseas market.
Netflix has used its market clout to deter content owners from making
all current-season episodes of a show available via ad-supported
streaming or VOD platforms by letting it be known that it will pay less
for shows that have had such broad exposure. Fox will be able to offer
only five episodes of “Gotham” at a time via on-demand platforms, which
is a standard template for Warner Bros. and other studios to maximize a
show’s after-market value. The restriction has led to tensions between
studios and networks over so-called stacking rights as networks look to
enhance their own VOD offerings.
“The ‘
Gotham’ SVOD announcement made us once again stop and think
about Netflix’s ever-increasing hegemony, and the proper balance between
the now and the future for global media content and distribution
companies,”
Rich Greenfield, media analyst for BTIG Research, wrote in a
Sept. 4 blog post. “We have continually questioned media companies’
strategy in ‘taking the check’ enabling a new video powerhouse that
could ultimately undo the current video ecosystem vs. building their own
direct-to-consumer business.”
What also worries observers like Nathanson is how much shows that
don’t have the sizzle of a “Gotham” might lose amid the flood of
product. In the fourth quarter of 2013, AMC Networks took a
bigger-than-expected writedown of $52 million on two canceled shows:
“
Low Winter Sun” and “
The Killing” (the latter was resurrected for a
final-season run on Netflix this year). Between production costs and
marketing expenditures, cable programming is becoming as pricey as
broadcast fare to produce.
“People like to say ‘content is king,’ ” Nathanson said. “I say
‘great content is king.’ And there’s just not that much great content
out there.”
Perhaps the biggest challenge facing TV’s creative community overall
is the need to adapt to new ways of doing business and new definitions
of success. In an on-demand environment, networks need to think as much
about how they serve as curators of content as they do about investing
in “watch tonight!” ballyhoo; and studios need to find better means of
measuring the “stickiness” of shows beyond Nielsen ratings.
“Our business is evolving from a pure home run business to one that
focuses on what succeeds on (different) platforms,” said NBCU’s Wachtel.
Landgraf echoed that sentiment, and noted that the staggering level
of engagement viewers now have with favorite programs is a big reason
why networks small and large want a bigger menu of original series.
“I see this cresting wave and all of these challenges, and yet
people’s love of the content has never been greater,” he said. “I see
various forces driving the total number of series probably beyond what
could be sustained in the long run. But I don’t see a cliff.”
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