Beverly Hills, Calif. — Advertising and basic subscription revenue are not enough for networks anymore, said FX exec John Landgraf Wednesday during the Hollywood Radio and Television Society State of the Industry Luncheon.
“I really believe that most established brands, HBO owns virtually all of their programming, are going to have to own most of it,” said Landgraf, CEO of FX Networks and FX Productions.
“It’s just the reality that between the two other revenue streams you have - advertising and basic subscription revenue - you can’t quite make the economics work,” he added. “You need that third stream.”
Landgraf was joined on stage by Kevin Beggs, chairman, Lionsgate Television Group; Gail Berman, chairman and CEO, The Jackal Group; Kathy Savitt, CMO and head of media, Yahoo; Chris Silbermann, founding partner of ICM Partners; and moderator Ben Grossman, principal at Selhurst Media Ventures.
The FX exec continued: “If we can’t retain brand then we can’t retain scale and if we can’t retain scale then we can’t invest in programming.”
“If brands can’t hold together and be a meaningful mediating principal for discovery of new programming then we’re going to have a lot of trouble economically sustaining investment and distribution,” he added.
Sevitt addressed branding from the video streamer’s perspective, explaining that streamers, like Yahoo, need to enable networks to retain their brand identity.
“It’s very, very important for us if we want to be user focused to bring that great content to make sure they know where it comes from because the next time we partner with you they’re going to want to tune in,” she said.
Another branding opportunity, said Berman, comes through the artists. People know what to expect from certain show creators, such as Seth MacFarlane and Shonda Rhimes.
But of course networks need to be able to show potential buyers that their brands are successful. Nielsen, which recently started rolling out viewing data on mobile devices, has been the primary method of measurement for years.
With digital content creators, such as Netflix and Hulu, though, data availability and measurement is less consistent to consumers and the media.
“Some of us are playing in the public space with a set of numbers and some of us are not playing in the public space,” said Berman.
Landgraf took that idea a step further saying that startups like Netflix have more leeway when it comes to ratings reporting, whereas established networks like HBO need to be transparent.
Savitt, though, said that Yahoo, which recently entered the content creation space with the pickup of the NBC-canceled sitcom Community, will provide advertisers with metrics but added that she didn’t know if that data would be shared publicly.
Whether working with advertisers or providers, though, flexibility is important.
“Every deal is makable if like-minded parties want to get together and push content forward,” said Beggs. “Everyone has to think about every window, footprint differently.”
One changing window mentioned was viewing habits. With more and more young consumers turning to second screen devices for their content, the traditional sense of television is changing. But Landgraf said that despite the change in mode, viewers will still pay.
“I think this notion that young people won’t pay for content, in my opinion I think it’s a misnomer,” he said. “I think what they won’t do, is they won’t enter the system that their parents have been a part of in the manner their parents were asked into the system.”
He added: “Ultimately, those who deliver this content are going to have to figure out how to get to them the way they want.”
