TBI Weekly: What Amazon & HBO Max’s TV ads tell us about global content trends

House Of The Dragon

If you want to make sense of the content industry right now, just turn on a US network and watch Amazon’s advert featuring both its flagship Lord Of The Rings spin-off and HBO’s Game Of Thrones prequel. Richard Middleton explores why partnerships are key in 2023.

Barely six months ago, rights owners such as HBO owner Warner Bros Discovery (WBD) were all about holding back content.

Now, Amazon is using all of its advertising might to illustrate how its Prime Video and Channels service allows you to watch not just its own Rings Of Power series but also HBO’s House Of The Dragon.

The reason is because it seems DTC streaming doesn’t really pay and almost everybody, even the biggest rights holders in the business such as WBD, are finding there is more value in partnerships than siloing their content.

The Lord Of The Rings: The Rings Of Power

This turnaround in strategy has been rapid, kickstarting cost-cutting at unprecedented levels. Jobs have been lost and content investments have been cut as the numbers people try to make the sums add up.

At the same time, the funding models that had propelled the business steadily forward until three or four years ago are very much back in vogue. And fortunately for producers, there are signs that while global streamers might be cutting budgets, other players around the world are willing to fill gaps.

Wily new Fox

Among those looking to provide more financing options for producers is Fox.

Following the $71bn sale of 21st Century Fox assets to Disney in 2019 – a move that looks now to have been impeccably timed – the new-look Fox is firmly back on the prowl, leaner and probably meaner than ever as it looks to compete.

After ramping up production divisions and investing in AVOD via Tubi, it launched distribution arm Fox Entertainment Global.

Now, it is looking at how it might increase investment on scripted product with international partners, and the good news for producers and broadcasters outside of the US is that it is open to investing on projects that “don’t touch the Fox ecosystem”.

“We are beginning to look at international opportunities,” Fernando Szew, Fox Entertainment Global’s CEO, told TBI at Content Americas in Miami this week, highlighting how gap financing from distributors remains a vital tool for those looking to get shows off the ground.

Szew also pointed to the 2021 launch of Fox’s $100m unscripted format fund as a successful scheme that could be replicated as it looks to grow its scripted catalogue.

FAST & funding

TBI broke news this week that FAST revenues will hit $12bn by 2027 and the medium is beginning to offer potential to producers with originals, as well as those with giant swathes of unused library.

Mike Holmes

Chatting to attendees at Content Americas, it was clear that the growth of FAST in the US is injecting capital and prompting some to explore potential revenue as a way to expand production.

Roku has already done this with a growing originals slate, but production & distribution groups such as Blue Ant Media are also moving into the space.

Its deal for Mike Holmes’ lifestyle shows underlined the bullishness around not just unscripted programming but FAST as a means to deliver it, and with its four FAST channels – Love Nature, HauntTV, Total Crime and HistoryTime – averaging 527 million minutes viewed per month through 2022, the potential is clear.

Unsurprisingly, FAST has become awash with channels and operators attempting to grab a piece of the pie, in what many describe as a Wild West ecosystem.

But this growth of channels – which analyst firm Omdia estimates stands at more than 1,500 in the US – means a flight to quality is underway.

“We’re seeing them become pickier,” says Jamie Schouela, Blue Ant’s president of global channels & media. “And as they add channels, they want them to bring real value, to be unique and to have exclusive content.”

These three attributes were part of the reason why Blue Ant splashed out back in September to buy the unscripted original series and specials of veteran US lifestyle star Mike Holmes, host of DIY Network’s Holmes Buys Homes.

The channel, Homeful, is now running and Schouela admits that the 200 hours of shows acquired in the initial deal are only part of the strategy. The ambition is that original programming will also be possible, part funded at least by the revenues that can be expected to come via FAST.

Venturing capitalists

Private equity cash and venture capital funds are also becoming more prevalent and while they might not be for everyone, it is a trend that continues to expand its reach and provide timely support for producers looking to fill holes in budgets.

LR: Angel Zambrano; Edgar Spielmann; Francisco Cordero

While prevalent in the US and Europe, schemes are now expanding into other regions such as Latin America, where firms such as Chilean outfit Screen Capital – run by the former COO of Fox Networks Group Latin America – are looking to expand.

It is backed by the country’s government and is working with accelerator firm Story A to find projects to fund, with a $20m audiovisual investment pot available to spend. Six TV series are currently in the due diligence stage.

Talking to TBI at Content Americas, Story A’s CEO Angel Zambrano said it would also consider funding international scripted series, adding that they had to involve a Chilean “element”.

Zambrano explained that there was “no pre-set quota or amount” that could be invested, adding that projects did not need to already have a commissioner attached to be considered.

“The process of finding out whether a project goes to a streamer or a broadcaster can be figured out – we are absolutely open to exploring how we can put the puzzle together,” he told TBI.

Grupo Secuoya growth

Spain’s Grupo Secuoya, which helped establish sprawling production facility Madrid Content City, also made a splash in Miami this week by unveiling plans for a new studio in Guadalajara, Mexico, as part of an ambitious expansion strategy in Latin America.

Guadalajara Content City will house four sets, post-production offices, an educational facility for 2,000 students and four warehouses, according to Grupo Roots, which is behind the expansion.

But perhaps of most interest is the fact this move is being made at a time when Mexico is also looking to attract productions, with tax incentives its tool of choice.

Raúl Berdonés, president of Secuoya and Grupo Roots, said he wanted to “take the success of Madrid Content City to other territories”, a strategy potentially made easier by Guadalajara’s state film body, Filma Jalisco, revealing plans of its own to launch a tax rebate scheme of around 25%, applicable to all state (but not national) taxes.

Referencing Jalisco’s plans, state governor Enrique Alfaro Ramírez said that the scheme would ensure his state had “the most advanced legislation in Mexico.”

And such competition is only increasing, as local states and countries look to tempt producers and their spending. This trend has accelerated recently in Europe, with Spain in particular offering huge rebates, providing another tool for creatives to use.

‘Redefining’ streamer content

Against this backdrop of partnerships is the increasing focus of cost-efficient programming from streamers, something Warner Bros Discovery’s chief in Latin America touched on during his keynote at Content Americas.

Fernando Medin admitted that a “redefinition” of streamer content is required as operators look to combine local, regional and global shows on services.

Succession

Originals on the block include Mariachis from Mexico and Felices Los 6 from Argentina, while a series based on 2006 movie City Of God is also in development, but he said that third-party acquisitions are also a key part of the play.

“It’s time for a redefinition, not just for WBD and streaming, but for everyone in the market to determine what is the right mixture of global, regional and purely local programming,” Medin said.

“There’s no room to leave anyone behind but it is something we will learn as we go along. And I bring acquisitions into that too – it is impossible to populate our offer solely with originals.”

This realisation should mean more revenue for companies outside of the studios and their streamers. And if WBD can stomach putting its HBO flagship House Of The Dragon alongside Amazon Prime Video’s biggest series of 2022, then two things become clear.

First, the fear is real. Revenue – wherever it can be found – must be exploited.

Secondly, the potential of partnerships is blossoming. And it’s not because of any altruistic or creative need, it’s because the market has demanded it. With increasing options for those needing production capital – be it via gap financing, tax incentives, FAST or third-party acquisitions – perhaps things don’t look so bad after all.