At a pricey Brentwood coffeeshop this past week, I sat down over iced tea with two long-time Hollywood dealmakers to talk about the crazy business of Hollywood amid the 20 different tectonic shifts transforming everything.
Dealmaker One rather suddenly exclaimed that the two should put together a fund to buy up streaming shows that have been in the market more than two or three years. After all, he said, most shows that “old” are basically dead, lost in the algorithm, invisible to most customers when they page through a service’s interface. Yes, the old shows are findable if you’re really looking, but otherwise they’re out of sight, out of mind. Might as well be sitting in a vault in Santa Clarita.
Dealmaker Two quickly chimed in that maybe the fund would only need $500 million to scoop it all up. After all, the “old” shows are mostly worthless to a streaming service once the algorithm forgets them. Somebody new, or maybe the original creators, could take the shows back and sell them to TV networks in Rwanda and Malaysia, or as NFTs in a virtual-reality theater, or build a FAST channel, or really, whatever. At least the shows would have a chance at another audience, and to make money in a different way.
The two were joking, I think, but their observation is a pungent one. In the age of streaming, where content access is near bottomless, how much content is enough? How long is that tail? And what do we do with the slightly older stuff no one is looking for or watching?
Amazon spent more than $8 billion last year to acquire MGM’s storied library. But other than the James Bond franchise, the real value wasn’t in showing that stuff on Prime Video or even Freevee. Instead, executives enthused, the deal was all about the spinoffs, sequels and reboots the company will generate from that giant pile of intellectual property.
Lionsgate, meanwhile, is trying yet again to sell itself, touting its library of decades worth of movies and TV series. It still hasn’t found any takers. At least the company appears close to redeeming its bad decision to buy the undersized premium channel Starz for $4.4 billion in 2016 by selling at least a piece of it to some Next Greater Fools.
Apple, of course, could scoop up Lionsgate, and reportedly looked closely at MGM, to flesh out Apple TV Plus. It didn’t bother, and still found/made original projects that won a Best Picture Oscar and a Best Comedy Emmy in the past year. We don’t know yet what counts as success for Apple with TV Plus, but spending its zillions of billions on only new stuff seems to have worked out.
Meanwhile. billions of dollars worth of content is sitting on all the streaming services, without big viewership or obvious next lives. More still could be headed for oblivion as Netflix, HBO Max and Disney cancel projects and signal more “discipline” in their programming choices.
Disney Plus almost certainly rocketed to 100 million subscribers in its first year thanks to that admirable collection of vintage Disney and Pixar animation, Star Wars projects, and the Marvel Cinematic Universe’s double-dodecahedron of interlocked films. But everybody who was deeply into watching those shows during lockdown probably has by now. What’s next? A bit fewer of those shows and a bit more adult-friendly new stuff to appeal to a broader audience, Bob Chapek has decided.
On Netflix, of course, only a few shows avoid quickly sinking into the Great Red Sargasso Sea of Stuff. The company itself acknowledges this with its near-ironclad policy about killing off series after three seasons.
Sometimes, the demise comes even quicker. This week, First Kill, a high-school vampire series that attracted more than 100 million viewing hours in its first 28 days this summer, didn’t generate the right secondary metrics. Netflix effectively renamed the show First Season Kill, and cancelled it.
Only a few sturdy franchises get a fourth season, like record-setter Stranger Things or, believe it or not, flyover-land-friendly Virgin River.. Everything else seems to quickly fall through algorithmic fissures into the Netflix equivalent of Stranger Things’ Upside Down.
But how long to keep a show is a more urgent question elsewhere in Streaming Land. Warner Bros. Discovery’s eventful earnings this week led to news that the company is not only mashing together its two flagship streaming services, but making them thinner too.
Under synergy-seeker David Zaslav, WBD seems determined to eradicate any trace of the previous regime’s handiwork, including plans to make 10 direct-to-HBO Max movies a year. The company cancelled two nearly finished HBO Max movies, including Batgirl, to take advantage of a briefly available tax write-off. Then the news trickled out that WBD also quietly defenestrated several other HBO Max-first features and series, including projects from Robert Zemeckis, Melissa McCarthy, Doug Liman, Seth Rogen, and (twice!) Anne Hathaway.
The reasoning: it costs more to keep the low-performing shows alive and online, paying out contract provisions, than it does to mothball them. That has to be a bitter pill for Hollywood creatives who did business with streamers but now must wonder if a fat but limited upfront paycheck is all there is even for those near the pinnacle of their craft. It’s piece work, cost-plus-15%, like delivering a widgets contract for the Defense Department.
Perhaps it’s time for some new deal provisions that acknowledge the evanescent lifespans of many streaming projects.
Creatives working for streamers have already given up much of the back-end bonanza that once came with a Hollywood deal. It used to be you made a series, and if it stuck around on U.S. broadcast or cable outlets for enough episodes, you had an asset you could sell elsewhere in the world, or into syndication, for a lot of money. That Lotto ticket is now mostly gone.
And among movie makers, even an indie film with a modest budget once could piece together production financing, and possibly a substantial return, by selling into dozens of overseas territories. There are projects (including some from my two dealmakers) that still do that, but fewer of them have that chance in an era when most streaming contracts buy out global distribution rights in perpetuity.
We might need to an expiration date on all those global, perpetual deals. Maybe the movie busines can, once again, take a page from the music industry, where some artists have retaken control of their masters from labels 35 years after the original recording, thanks to provisions of a 1978 U.S. copyright law.
That’s way too long a window for the streaming video business, where relatively few shows have the long-running appeal of, say, Louis Armstrong, Frank Sinatra, Elvis Presley, Bob Dylan, The Beatles, The Grateful Dead, Fleetwood Mac, U2, Radiohead, or Taylor Swift.
Swift, of course, didn’t wait 35 years to take back her masters after growing upset at the way rights to her hit early albums were sold to a new label. Swift began recording new versions of those albums, and instructed her ardent fans to only buy and listen to the newer versions.
It’s difficult to imagine, say, Robert Zemeckis calling on his fans to watch only a remade version of his mothballed HBO Max remake of The Witches.
But as streaming services continue to right-size their programming, spending, ambitions, and expectations, we need to figure out a different way to handle the old shows that didn’t become big hits. Free the orphans! Clear the shelves! Unlock the algorithm!
