In 2005, after a freelance producing career, I was hired as a network executive by HGTV and spent the ensuing decade enjoying the fruits of the growing cable-TV business from the buyer’s side. It’s hard to believe now, but back in the “aughts” (when House Hunters was hosted and Mike Rowe was crawling through sewage), cable and satellite had not fully penetrated every U.S. household. As homes added these services, the industry blossomed and a new ecosystem thrived.
Operators made money selling predominantly unscripted cable tiers, networks were enjoying incredible revenue growth through both subscriptions and advertising, and producers were getting volume orders and relatively good deals because once viewers landed on a network, their thirst for fresh content was insatiable. Bidding wars for talent and content ensued as the competition for viewers (and ad dollars) increased. Even agents, who hadn’t considered “alternative” TV worth their time, got in on the action by packaging unscripted talent, producers and intellectual property. This became a real business for William Morris, CAA and other ten-percenters. Life was good for everyone in cable — until DVRs and high-speed internet started giving viewers the power to choose when they wanted to watch, how much they consumed and the ability to skip commercials.
Digital Video Disruption
Today, time-shifted viewing, binge-watching and cord-cutting have wreaked havoc on the linear cable business. Hungry viewers found a veritable buffet of quality content on Netflix, Amazon Prime Video and Hulu, with a great user experience to boot. I initially resisted Netflix since it was a threat to my mortgage, but I eventually caved (I've since added Amazon Prime and Hulu, just in case you're wondering).
Not knowing when and if viewers will regularly return to their networks, cablers have become more cautious (with good reason). They order less; they look for old, tried and true show titles or talent consumers know; they make decisions slowly and more often by committee; and once they enter into dealmaking, the negotiations are decidedly one-sided and, with little exception, not beneficial for content creators. Because these publicly traded companies are trying to hang onto every penny and show shareholders that they are still valuable, they are compressing budgets and therefore producers’ businesses. Any type of meaningful profit participation is nearly nonexistent. Though these budgets and ownership stakes are decreasing, the risks and demands placed on producers have only increased.
Nervous network clients want to keep quality up but feel they cannot afford to pay the freight for what it truly costs to employ and gear up a production. There has been little recourse for battle-scarred producers because, in this current marketplace, we’re faced with either sucking it up or walking away from work. But all of this may be about to change as we enter a new era of content quest in the form of “SVOD Wars.” With Disney+ and Apple now entering the OTT arms race, sellers may benefit — at least for a little while.
More Outlets, More Shows
A marketplace full of content providers means well-financed buyers need a lot of fresh shows to satisfy their hungry subscribers and justify their monthly fees. In an effort to compete for content and subscribers, streamers may be willing to give creators better deals because they will need to fill their libraries and solidify their market positions. In turn, linear networks need to remain competitive and presumably won’t want to lose quality talent and projects to their digital nemeses. We could see a shift in the power dynamic and a re-emergence of a sellers’ market, mirroring the cable boom of the early 2000s.
Much like the early dot-com days, not all OTT platforms will survive. On the linear side, smaller networks will fold or be left to atrophy as corporations shift funding into their strongest assets. New technologies will continue to emerge and mobile offerings combined with AR will certainly continue to grow. While we don’t know what the next five years will look like, the quest for content may very well prove to be a good thing for sellers — at least for as long as it lasts.
Andy Singer is executive VP, TV & digital content at Alkemy X, a creative content firm with offices in Philadelphia, New York, Los Angeles and Amsterdam.
The smarter way to stay on top of broadcasting and cable industry. Sign up below.
Thank you for signing up to Broadcasting & Cable. You will receive a verification email shortly.
There was a problem. Please refresh the page and try again.