How Studios’ Streaming Services Affect Global Strategy, Sales at L.A. Screenings

By Cynthia Littleton

LOS ANGELES (Variety.com) – Usually at this time of year buyers for TV outlets around the world stay keenly abreast of news about programs in the works for the fall television season. Many try to keep tabs on the hot prospects to prepare for shopping trips to come at program markets such as this week’s L.A. Screenings, in which the largest studios showcase their latest wares in pursuit of international licensing deals.

But in recent months, the biggest programming headlines have come from announcements about nascent streaming platforms that aim to follow Netflix’s lead as global services. That means the shows produced for Disney Plus and burgeoning efforts at Apple, WarnerMedia and NBCUniversal won’t be up for grabs outside the U.S. Buyers are increasingly worried about a dwindling stream of high-profile series and theatrical titles coming onto the market. The flurry of media mergers over the past two years has heightened concerns as longtime suppliers such as 21st Century Fox and Warner Bros. become part of larger conglomerates with different business agendas than the studios of yesteryear.

“There is a concern. Certainly the thing that buyers are looking at carefully is the availability of great content that they can actually access,” says Keith Le Goy, president of worldwide distribution for Sony Pictures Entertainment. “Vertically aligned companies planning global rollouts of platforms where they may well keep all of the content for themselves or the best content for themselves — neither of those are great situations for [international] buyers.”

The changing business models at the Hollywood majors come in tandem with massive growth in the past decade in the volume and caliber of locally-produced scripted programming airing in markets around the world. In fact, the rise of streaming platforms has given exposure to imports that would otherwise never have been seen in the U.S., from Israel’s “Fauda” to Germany’s “Babylon Berlin.” American viewers are even overcoming their aversion to subtitles thanks to shows such as “My Brilliant Friend” (which airs on HBO in Italian) and “Deutschland 86” (which airs on SundanceTV in German).

But even as the marketplace for top-shelf programs expands beyond the U.S. and U.K., Hollywood’s dependence on international licensing to generate profits has increased. Few primetime series turn a profit for networks and studios in their first-run airings. Domestic syndication and international sales are crucial to covering production costs. At a time when a typical network TV dramas costs $3-4 million per episode, strong international sales are often the make-or-break factor in getting a show to profitability.

Disney’s decision to plow billions of dollars into launching as the central TV hub for its gold-plated brands — Marvel, Pixar, “Star Wars” and Disney — has raised questions of how quickly it will begin to eschew international sales to feed its bold subscription venture. Todd Juenger, VP and senior analyst at Sanford Bernstein & Co., estimates that the enlarged Disney receives $7-$8 billion in licensing coin (including Fox’s content) from third-party sales of new and vintage TV shows and movies, much of which comes from buyers outside the U.S. That’s a whole lot of revenue to forgo in the short term as Disney Plus builds out, starting with the U.S. launch on Nov. 12.

As such, Disney is likely to take a gradual approach in adjusting its content sales strategy. The Mouse plans to host its traditional L.A. Screening events on the Burbank lot this year from May 20-23, but one hot property that won’t be up for grabs is “The Mandalorian,” the first-ever “Star Wars”-branded live-action series that is destined to be one of Disney Plus’ first original series.

Observers say the shifting sands in the programming marketplace may encourage more co-productions. Chipping in money and production resources is one way of ensuring access marquee projects.

While international buyers are wary of the trends afoot among the largest U.S.-based media giants, it’s also true that buyers have become more selective when filling their shopping carts.

“If you look at the big traditional players — the Canadians, Australians, U.K. broadcasters — 10 years ago they came to [markets] buy a raft of shows,” Le Goy says. “Now people are looking for the one or two shows that can really make a difference on their schedule.”