No other sector has had to adapt as quickly to the rapidly changing content market as distributors, but select boutique and mid-sized players have been among those to have retooled themselves fastest. TBI’s latest roundtable gathers some of the brightest UK-based distribution minds together to discuss the financing, commissioning, selling and marketing of content – and finds out who the key buyers will be in the coming years
The entire content business has consolidated rapidly recently, what is the role of boutique and mid-sized distributor in this world and how can you capitalise?
Chris Bonney, CEO of rights at Cineflix Media: The opportunity is in our service to producers and broadcasters. Ultimately, it’s about finding a platform or home – or these days, homes – to get the show financed in a world of decreasing commissioning funding. It’s all in delivering something tailored and niche, and broadcasters appreciate that.
Will Stapley, head of acquisitions at TVF International: Absolutely, although it is tricky. We always lose out to people gazumping content and people who are paying too much, so we have to be working with companies we really trust and who trust us and who know what we do, which is specialist – it’s just factual. But it is harder, there’s a Goldilock’s tendency now in pre-buying and commissioning: if it’s too hot it’s not quite right, if it’s too cold it’s not quite right – it has to be just the right temperature for buyers to want it. And that means we need the right producer, a trusted commissioner, the right price and of course the right timing.
Karen Young, CEO at Orange Smarty: It’s a completely different service we offer, too. If you want a big brand that is known and has a huge catalogue – and in the case of BBC Studios, a very prestigious line-up that they are very fortunate to get – then you can go there because that brings brand confidence, but it also takes you further down the catalogue. It doesn’t necessarily mean people selling your product have seen it either, because how can you watch so many thousands of hours. With a smaller boutique, we all watch our content and are passionate about all our shows. We must work hard and sell hard.
Richard Halliwell, MD at DRG/NENT Studios UK: We have almost thrown away the older systems and processes in terms of what we do when we get a piece of content. Now, it is about what a particular project will require, we encourage a degree of hustle both for our acquisitions side and our sales teams in terms of what the producer needs in each particular case.
Diane Rankin, EVP rights at D360: Absolutely. We don’t just have a team that only looks after certain territories, we have people saying I can move this forward by doing this and we move the project forward together in that way, we work as a collective.
Consolidation has created a pinch point for distributors in securing a content pipeline, leading to some of you commissioning your own shows. How is this developing?
Jimmy Humphrey, head of acquisitions & co-pros at TCB Media Rights: We have been allowed to fail, which is refreshing. Not every project we have commissioned has recouped and perhaps some will never recoup, that is the nature of it and that is very important. For us, the most important thing is to have a mixed economy, we need straight acquisitions, we need to be doing deficit financing, pre-selling, co-producing and commissioning. Without all that, we aren’t offering enough value to the producer.
RH: That is one of the fundamental changes. For us in scripted, terms like gap and deficit are redundant. We are very often the first at the table, the gap is the first thing in. Then there’s tax credits and broadcasters. We’re not in deficit financing very often anymore, unfortunately.
How hard has it become to secure talent, given the soaring demand?
CB: A beauty parade goes on, but it’s about striking a chord with the producer who you’ve worked with before and building trust. It means we need to be talking regularly. There’s also forecasting – we’ll all have similar values on shows but some will have more value to us than others, because we’re stronger in one genre to another and we know what we can do. So we might pay a bit more and even look at a loss leader on a certain title because you know what it will do for you across your catalogue. Those are the sorts of things we have to do at our scale to not be taken out of the market by a BBC Studios or Fremantle or the US studios. And it happens relatively regularly, particularly if we’re playing in the US market – we can put really good solid offers down and they can just disappear.
JH: We’ve definitely been used as a stalking horse. For us, those first look and development deals – while they definitely work sometimes – can feel a bit old fashioned. Ten years ago, it seemed OK to give a producer $200,000 over two years in return for X hours but that was when there were thriving commissioning budgets. Gone are the days when you’d get a call from a producer asking if you’d like to sell their six-parter for Channel 4.
Nick Tanner, director of sales & co-pros at Passion Distribution: I tend to agree – we find in the UK, for example, there is a compelling story to tell the producer that we could give you a first-look deal and over the next two or three years we wait for you to finally get a script read at the BBC. Or, we could just forget about the UK and take that project – which is brilliant – and anchor it outside of the UK. Then, we can back it into the UK. You cannot sit back and wait for a producer to get a script in and wait six to 12 months.
Talking of scripted, how hard is it to play in the market now?
CB: There were more than 500 series last year and there are always some nuggets that don’t get picked up. Or if you go to the festivals early enough you will come across them. We picked up Israeli series Tehran, which has made a lot of noise and offers have been coming in thick and fast, which is great. You have to be scouring the market. We see investment back from unscripted pretty quickly, whereas with scripted, you might have to wait for second or third season.
And perhaps unlike most unscripted, if you have a scripted flop that can be major problem.
RH: It can be, which is why we only back winning horses! From a broad perspective, you balance between scripted and unscripted, where the return is quicker. Waiting for a primary UK broadcaster increases the risk so a relationship with the producer is key to allow you to step out of the UK with their beautifully crafted piece of work. The risk is increasing, we’re paying early stage development on scripted and we’re starting to engage with talent, so we’re much more invested before a project has even been pitched. We have to be more selective and cautious, and make sure we have the right people making those decision. You need someone with serious editorial chops to make those decisions.
And how are things looking for unscripted?
WS: Co-production is something we’re doing and have done since we began. It’s maybe not to such a great scale but we’re going out to producers and saying you film what we need and we have our in-house who can put it together, and we know it will sell and make money for everyone. We then co-own that property too. And there’s reversioning – turning existing shows into something else, or taking a foreign language show and translating it and putting an English voiceover and selling it again. It works. We had Snake Master, with a Thai talent who goes into the jungle and wrestles with snakes – and that has sold really well to some of the pan-regional channels.
JH: We are very fortunate to have someone as brilliant as Hannah Demidowicz to oversee our commissions but it doesn’t often make sense commercially to do shows with talent. We’ll absolutely still acquire shows with talent but for commissioning, it is much riskier. Saying that, we are launching an adventure survival show at MIPTV with two very new pieces of talent out of Canada, which is a full commission – that’s more risky than normal but it’s looking good so far.
NT: We have commissioned over a number of years. We have supported internal production companies internally by fully financing too and are continuing to do that but it is supply and demand. Male-skewing factual has boomed… now it’s about identifying the next patch for distributor led-financing.
It seems the marketing burden on distributors has surged too, is that a fair assessment and what does it mean to distribution longer term?
WS: We are spending more on advertising for sure, but we had our best year ever in 2019 and it is probably because we are shouting louder. We’ve been quite modest about blowing our own trumpet but the more we do that the more people believe us – it is quite a British thing, but we are finding that the more we say we are actually very good at this, give us your show, producers start to take note.
Direct-to-consumer is also growing, but is putting content onto YouTube still predominantly a marketing tool?
NT: It goes further than that. We have a small network of YouTube channels managed directly – we had clip rights so we thought why not truncate some of the docs and put them on YouTube within a brand and look at the data. It’s now grown into a viable business that we’re expanding. There are more barriers to entry and it is acorns at the moment, but our strategy is evolving day by day. We’re looking at the value of commissioning our in-house to produce for You Tube too, and maybe reversioning and repackaging content.
CB: There are more routes to markets, for sure. The challenge is still finding the best route for each show and finding the best home – and then you are often narrowing down quite quickly in terms of targets. In scripted, we often find there are only two or three buyers, and that’s scary and exciting. I wouldn‘t say prices are escalating on individual deals, but there are now more windows and routes to exploitation so rights management is key. Exploitation on YouTube, making difficult decisions about non-exclusive AVOD rights on a title when that might preclude a US deal down the line – that’s where we have to make strategic decisions. One of the biggest things is money now over money in three-to-five years. And that is the producer’s decisions and it’s dependant on their business plan. It depends, but it can make complete sense to give a show a global deal if it’s topical or needs to be aired.
RH: I do think the sheen from those deals is dulling a bit though, in all genres. A year ago it’d be, “Oh, you’ve got a Netflix show.” It was good for reputation and there was a good premium to be had. That premium is diminishing and the talent is less attracted to the deals they have to sign up to be on those platforms. And, although it is still really important especially in scripted, there is increasingly now an eyebrow raised – because we know that a Netflix show means the premium has gone down, it’s been given away for a hamburger today rather than payment tomorrow. It’s not looked upon negatively but it’s not that incredible deal anymore – it’s more, “Oh, you took an Amazon deal.”
WS: And as buyers are becoming more picky in linear, with VOD there are some really surprising numbers generated for one-offs, for example, that in broadcast wouldn’t have had a chance. They’re generating extraordinary numbers, and it makes us think, yes, I’m glad I did that deal as a tester – these things are proving themselves as subscribers go up.
DR: It’s true – but so many producers come to us and say, “Can we have it on Netflix?” And we say, do you really want it on Netflix? Is that right for the show, is that the best deal you can get? Maybe it isn’t actually best for the show.
Who are the key players going to be over the next few years?
WS: Roku is going to be a huge player, because they have their own channels and streaming service, they got in there for the future and it’s so easy to use.
NT: There has been a lot of talk about AVOD and there’s huge growth there. Roku is definitely one of the examples, as is Pluto, they’ve made huge strides. Their distribution is growing by the day and they are open to different types of approaches – portfolios, selling single content to existing networks, or channels.
WS: They’re not too fussy either, they can have content on three, four, five platforms at once, they have that flexibility, which is great.
JH: It’s about the revenue share. And we have that responsibility to be exploring that back catalogue.
The next 12 months look set to offer more challenges, not least with producers’ terms of trade shifting in the UK. How will things change over the next few years?
KY: Terms of trade could be great because they will recognise the profits that could come from the international market – but they’re going to be pulled by the broadcaster to make a show they want, which can be put across their various channels for the next few years. There is something in between – they have to be thinking with an international head and be collaborating with us more. There has to be a bit of a reality check to say this is your profit, don’t squeeze it.
WS: And some broadcasters seem to expect distributors to contribute ever more. Their budgets are lower, fair enough, but if we are putting that risk in and the pre-sales aren’t coming in left, right and centre, then why should the distributor take a bigger risk if they won’t take any more risk as a buyer? There has to be more shared risk across the whole industry.
“We’ll absolutely still acquire shows with talent but for commissioning, it is much riskier. Saying that, we are launching an adventure survival show at MIPTV with two very new pieces of talent out of Canada, which is a full commission” Jimmy Humphrey, TCB Media Rights
DR: And some of those UK broadcasters know who the international partners will be on some shows they commission – so they know when they commission X, broadcasters Y and Z are going to come in, so they’ll pay less because those other channels will come in.
JH: There is that and increasingly, which is not good news for the producer, deals happen between the broadcaster and distributor directly. That gap that might have been there, which would have ordinarily been the producer’s to control, is not theirs anymore. Most broadcasters now operate that model, so as a distributor you have to adapt too. The producer is making show for less money and they are mortgaged even more to a distributor, so it’s not attractive being a producer. I can understand that frustration.
So what has to give?
JH: It’s probably on the broadcaster’s side but they are squeezed as well. Greater risk will probably end up landing on distributors.
WS: But only if we let it. There is so much consolidation and change, we have to ride the wave.
RH: Broadcasters will always commission at the lowest possible rate they can but now you don’t have to play that game. There are very few producers who aspire to be at the bottom end of the market. There is a role for us to play, to say, “yes that’s fine, that’s what we can get out of the UK market, but let’s go and play with the rest of the world.” Content from the UK is among the best internationally and the world knows that. Just because the BBC isn’t paying what it should because it is so squeezed, that’s fine – the money exists out there in the world.