TBI Distributor’s Survey 2022 – Part 5: Conclusion

Sponsored by Rightsline

From the US, India and Germany, to Brazil, the UK, Spain, Canada and numerous others in between, the TBI Distributor’s Survey 2022 is the industry’s most extensive exploration of the global sales business. Join us as we explore what’s changed over the past 12 months and find out where we’re headed next. Here we examine results from the unscripted sector

Conclusion: Windows of opportunity

The industry’s move towards ad-supported services appears to offer the biggest revenue growth opportunities for distributors across the board, although the impact of the pandemic continues to linger

Let’s start with some positive news: revenues appear to be on the rise across the board, with almost a third of scripted distributors reporting increases by 30% or more in the past year, while just over 40% of unscripted distributors reported rises of around the same level.

Formats and kids’ content distributors also reported revenue increases, while the number of companies that saw less money coming in were in the minority.

There was a reasonably united message on how firms expected this to translate into company growth, with scripted respondents on the whole (65%) expecting their workforces to remain steady for the next 12 months – an optimistic 21% believe they will expanding headcounts by 30% or more in 2023.

“Revenues appear to be on the rise across the board – almost a third of scripted distributors reported that they increased by 30% or more in the past year”

Unscripted distributors were less bullish, although more than half of respondents expect levels to remain static over the next year.

Some of the boutique outfits that have been seeing more growth believe this is going to continue, with 13% suggesting that staffing levels will rise by 10-19% and 9% expecting their workforces to increase by up to a third over the next 12 months.

Kids distributors were by the most optimistic, with 67% of those that took part expecting their teams to expand between 20-30% in the next 12 months. This confidence is perhaps due to the rather large demand that the sector is currently enjoying from global streaming services, with kids’ content having emerged as one of the keystones of subscriber retention.

Post-pandemic progress?

The impact of the pandemic – plus shifts in the industry as many people and countries around the world have learned to live with it – were clear to see. Sticking with kids content, live-action shows may still be in less demand than animation, but the trend of growth is beginning to increase.

The incredibly nimble animation industry was able to quickly adapt to the pandemic and the necessity for remote working that it brought, with the result being something of a boom over the past couple of years. The Survey results indicate that this trend is now stabilising, however, as live-action gets back on something of a more equal footing.

“Kids live-action appears to be getting back on something of an equal footing after the animation boom of the past couple of years ”

Scripted, meanwhile, is largely back on form after the woes inflicted on the sector by the pandemic. While new issues, such as crew shortages and rising costs, have presented themselves, scripted catalogues are growing as production backlogs have cleared.

Factual shows also experienced a boost in demand throughout the worst of the pandemic, as savvy producers adapted their approach to content creation to help keep broadcasters and platforms stocked with new titles.

Unscripted grew in popularity among audiences as a result, but there are indications that this heyday might be easing too, with the sector becoming a victim of its own success as costs being to increase. A-list talent being attached to factual projects is becoming more commonplace and the cost of working in this competitive space seems to be on the rise.

AVOD growth expected

On the content front, adventure still appears to be doing the business for the format industry while the popularity of comedy is also noteworthy on the scripted side, although science fiction, horror and historical series have suffered something of a dip.

Curiously, history doesn’t seem to be having that problem on the unscripted front, with 48% of Survey respondents reporting good sales in that area.

However, it was evergreen favourite true crime that took the factual crown, with more than half of respondents putting shows from this genre as being among the biggest drivers on their bestseller lists.

AVOD continues to be an area to watch, with a small but not insignificant 15% of scripted distribution respondents claiming it contributes more than 50% of their overall revenue.

It was less important, however, for those in unscripted, with 30% of respondents saying that AVOD represents between 10% and 25% of their overall revenues, while a further 42% said it accounted for just 10%.

“FAST is being predicted to be the major area of expansion by respondents across all areas of the content distribution industry”

If there was one single trend to report regarding future growth, it came via FAST, which is still being eyed as a major area of expansion by respondents in all areas – 72% of scripted distributors expecting to see opportunities grow on these channels in the next 12 months.

Unscripted and kids distributors also view FAST as offering significant growth potential, particulary in the US.

Taken together, the consensus seems to be that the influence of ad-supported services, and the opportunities they can provide, are only set to grow. Indeed, with the rapid expansion of platforms like Amazon Freevee, and both Netflix and Disney+ prepping AVOD tiers, there is certainly room for further growth coming soon.

Lastly, seeing as you are likely reading this report at MIPCOM, you should be heartened to know that the majority of respondents identified it as the most important market to attend throughout the year.

Analysis: Tim Westcott, senior principal analyst for digital content & channels, Omdia

Volcanic eruptions, recession, conflict and flash floods… over the many years that I have been joining the TV business migration to Cannes, it has had to contend with some pretty challenging and unforeseen developments. In the aftermath (at least let’s hope so) of a global health crisis and the impact of a European war, it should surprise no-one that distributors are coming across as resilient in TBI’s survey.

More than resilient, in some cases – almost one-third of distributors report that their revenues have gone up more than 30% over the last 12 months. This is no doubt largely due to distribution bouncing back from the doldrums of COVID.

A year ago, MIPCOM (the most important event for distributors, according to the survey) was a shadow of itself, with some countries around the world still locked down and travel restrictions making travel impossible or at least risky.

“This healthy picture for scripted is certainly due in large part to the lavish investments by streaming players and more established linear players upping their game” Tim Westcott, Omdia

Things have been looking up since then, especially for scripted – with 27% of respondents seeing an above 30% uptick in sales. This healthy picture for scripted is certainly due in large part to the lavish investments by streaming players (notwithstanding Warner Bros. Discovery’s recent cutbacks) and more established linear players upping their game in response.

Distributors of unscripted have, though, done even better, with 40% reporting a 30% or more uptick in sales, with fewer seeing the existential 20-30% fall in sales reported by some scripted distributors. Profits, however, were almost unchanged for a big chunk of the unscripted sample (31%), which implies rising costs of doing business.

Another drag on profits could be the increasingly important role of distributors in financing productions, with 82% of respondents saying that they are financing scripted series earlier than before. Broadcaster (or streamer) commissions remain crucial, and more than half (56%) of unscripted distributors say they would not finance a show before they get a commission.

Distributors come across as an optimistic bunch and among the reasons to be cheerful are FAST channels (scripted distributors expect them to be the biggest crowing category of buyer over the next 12 months) and continuing custom from streamers (AVOD as well as SVOD). Among the challenges are the (seemingly contradictory) threats of fragmentation and consolidation. Still, the business has overcome worse obstacles.

Sponsors comment: Jeremy Howell, VP of strategic accounts at Rightsline

2022 was a tumultuous time for many. Even as we emerged from a global pandemic, we witnessed various new crises take center stage, from staggering inflation to extreme weather disasters and the spectre of a global war.

Against this backdrop, this TBI Survey reflects on a year where rising costs offset increased revenue, and trends towards global rights availability and risk aversion drove content production and distribution decisions.

For content providers, scripted programming continues to drive viewership and revenues, but the rising costs of talent and production have created new opportunities for unscripted programming and formats as risk-averse streamers and broadcasters seek less expensive content and proven concepts. Additionally, content for children has never been more important, as streamers prioritise family-friendly productions and back catalogs to retain subscribers. As content providers consider global distribution deals, many are strategically windowing content to maximize sales revenue.

The need to program services globally has led to intense competition between broadcasters and streamers as platforms bid for exclusive worldwide rights to first-run content. Additionally, as SVOD viewership has declined, AVOD and Fast Channels continue to offer opportunities to retain cost-conscious consumers. Broadcasters with a traditional linear footprint have now firmly established digital platforms, and CPM rates have risen to record highs as targeted advertising may be offered across all viewing experiences. All of this is, of course, an overture to 2023, as Netflix introduces an AVOD tier and looks to disrupt the industry once again.

As we look ahead to 2023, we will see more shifts toward cost-effective content, global rights strategies, and technology innovation. Therefore, the need for scalable, interoperable, cloud-native technology has never been more critical. Understanding your rights position quickly, calculating the cost of sale effectively, and efficiently driving localisation, scheduling, and reporting processes will be crucial for both content providers and distribution platforms. Because, in an uncertain world, those who are ready to adapt with agile and reliable services will be well-positioned to survive and thrive in an ever-changing media landscape.

Jeremy Howell is a 20-year industry veteran who held senior positions at Troma Entertainment and Starz Entertainment, before joining Rightsline in 2017. Now serving as VP of strategic accounts, Howell works with clients including Warner Brothers Discovery, National Geographic, PBS and FIFA on content avails and data.

About Rightsline

Rightsline is a global IP commerce SaaS suite that provides IP owners of all sizes with innovative technology tools to manage and monetise content across the entire intellectual property lifecycle. It gives finance, legal, operations and strategy teams 360-degree visibility into their content’s rights, royalties, contracts, and additional sales opportunities. For more information, click here.

To view other sections of the TBI Distributors Survey follow the links below

Part 1: Scripted click here

Part 2: Unscripted click here

Part 3: Formats click here

Part 4: Kids click here

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