TV is undergoing more changes now than it has in decades, perhaps five decades.
In the old days, here’s how the few lucky talented (but still fortunate) writers got rich:
Networks couldn’t legally own shows. So studios would make development deals to tie up the best talent. That resulted in multi-year seven-figure deals. The idea was that those writer/producers were exclusive to that studio and if they created a hit show everyone stood to cash in.
Additionally, writer/producers owned part of the shows they created. And in those days the goal was to make at least 100 episodes to sell into syndication. A smash hit like CHEERS or SEINFELD could be worth hundreds of millions to the writer/producer.
Once networks could own shows those development deals began to dry up. A few high-end deals still remained but the parameters of those deals were different. At one time writers only created shows and produced pilots. Under the new model, the network or studio (often the same thing) could assign you to work on whatever show it wanted. You don't have a pilot? Guess what? You're Co-EP of THE NEIGHBORHOOD.
Now we’re in a totally different universe. Streaming services are the future. Netflix, Hulu, and Amazon are getting competition from Warners, Disney, Apple, CBS, and more to come. They don’t need 100 episodes. They don’t want 100 episodes. Syndication is drying up. Soon there won’t be shows with 100+ episodes. Series used to go seven years; in the future they'll go three. Producers once produced 22 episodes a season. Now they produce 12. Or 8.
So why should writer/producers go to Netflix or Hulu when their shows won’t go into syndication and they won’t make a backend killing if the show is a smash? Good question.
The answer is that these streaming services are now paying huge upfront money to A-list writer/producers but owning the shows outright. J.J. Abrams, Shonda Rhimes, Ryan Murphy, Greg Berlanti, and a few others are making deals for over $300 million upfront. And the deals are not even exclusive. Pretty nice signing bonuses.
Get it while you can, boys and girls, because this model is bound to collapse. Why? Compare it with the old model: Yes, everyone got rich IF the show became a big hit. If it didn’t, well, the studio was out a couple million for the development deal. Here, if shows aren’t hits the streaming service is on the hook for $300 million. How many of those hits can they absorb before they realize they made monumentally bad deals?
How has a similar model worked out for MLB? How does that Albert Pujols’ ten-year $240,000,000 deal look to the Angels now? How many championships has he led them to? How many additional fans has he put in the seats?
But at least he’s exclusive the Angels.
So Greg Berlanti, for example, has a $300,000,000 deal with the Warner Brothers/HBO streaming service, and also gets a show on NBC. If the NBC show becomes that rare hit he can make a ton in success. If the show he creates for Warner Brothers does well, so what? He’s gotten his money. Which of the two shows do you think he’s going to concentrate on more? And which of the two shows do you think he’s just going to hire a showrunner and basically attach his name to the project?
The problem for the streaming services is they have to pay stupid money to entice A-list writer/producers, especially at a time when there is a lot of competition. But here’s what will happen: Some of the competitors will fail, or more likely merge with other services. Now we have three or four big players. Next year there will be seven or eight. Five years from now there will be five again, just maybe not the same five. And once that settles, gone will be the need to overpay producers. Broadcast networks will erode even more. Netflix, Disney+, and a few others will no longer feel the need to throw insane amounts of money to a select few individuals. They'll be the only game in town.
So like I said, get it while you can. Is there a chance if you take big money upfront and forfeit any ownership rights that the show will become the next FRIENDS and it will air over many platforms, still go into syndication, and make the studio wildly rich while you’ve left millions on the table? Sure. But in this marketplace, I’ll take the upfront money any day. When they call it stupid money, the person receiving it is never the stupid one.
25 comments :
Here's a Friday question for you: How can streaming services such as Netflix justify paying this kind of money? Are there that many subscriptions at stake?
I've noticed that many streaming-exclusive series get released on DVD and sometimes Blu-Ray, which indicates that streamers are looking for ancillary revenue beyond subscriptions. Is there anything keeping Netflix of Disney+ or whomever from syndicating its shows or airing them on broadcast TV? Let's say it's three or four years from now; could Disney decide to just put The Mandalorian or one of its Marvel series on ABC and see what happens?
"The problem for the streaming services is they have to pay stupid money to entice A-list writer/producers, especially at a time when there is a lot of completion."
I believe you meant to write "Competition"
Reminds me of the 1990s, when the likes of Joe Eszterhas got million-dollar deals for scripts. None of us who write screenplays get that sort of $$$$ anymore.
Netflix doesn't need a full lineup every year though. They have people watching The Office and Friends, which appeared 25 years ago. Each of these $300 million deals produces some shows that they can sell for decades. Netflix has $15 billion in revenue. They can afford a few bombs while building up a library that keeps their 150 million subscribers on board.
Hey Ken,
So much to say about this. Right now, if you're an actor, director, screenwriter or filmmaker -is there a better time to be alive?
"Stupid Money" is the term here. In the near future streaming services will be the only business but for right now- STUPID MONEY!
Apple TV is just throwing money (throwing money!) at people- Reese Witherspoon, the untitled CIA Brie Larson project, the untitled Richard Gere project, Oprah has show, Selena Gomez, etc etc I can't keep track. But hey, Apple has over $250B in the bank- what's a billion in start up money to launch their TV service? Same with Hulu/Disney (never mind their content library is ridiculous)
Same with Netflix, same with Amazon. Deep pockets. All competing for the same talent.
I'm sure you read last week that Netflix paid the Duffer Bros (Stranger Things creators) a 9 FIGURE DEAL $$$$$!!!!
Those kids are going to be running around in the woods of Hawkins, Indiana (real life Atlanta) until they collect social security.
Part of me thinks I could come up with a script and pitch it to one of these companies and get a Stupid Money deal,
keep up the good work Ken, I read you every day --LL
I confess I`m not completely sold on the change in the number of seasons. Shows that continue to produce and attract viewers are still profitable, and the upfront cost is lower. On a simple cost-benefit basis, even adjusting for raises over time, I think a show that works and is profitable is a better profit magnet than risking all on a new show that (might) flops.
However, I agree they are unlikely to get to 100 EPs. They do a lot more 10 EPs seasons to keep the costs manageable. But if they don't inflate over time, and talent is not exclusive, there are more opportunities for those shows to keep going.
I think a bigger issue is the Berlanti-style juggernaut -- in the end, why would he give up anything rather than keep it ALL for himself. At some point, some of those sellers are going to be direct vendors selling seasons on other platforms a la carte. At which point I think the price will drop. $25 for a season of a show? More like $10 in my view for a natural rate. $9.99 on iTunes or something. For life. Ask the modern publishers who are losing out to direct vending of ebooks (you know, the ones that Amazon sells like crazy, not the limited few that the pub industry counts in the stats).
Or it will all go back to the 50s model :)
P.
Chris G: Already happened. Last summer CBS aired season one of The Good Fight, which is up to season three on the CBS streaming service.
"Stupid money" was the term the Phillies' owner used when his team went on a spending spree for Harper, Realmuto and others this past off-season. Really paid off this year, didn't it?
I get why this is a challenge to the industry, but as a viewer, I like that there will be less episodes. All my favourite sitcoms - Fawlty Towers, Yes Minister, Blackadder, The Office, Extras - had very short runs. With all due respect to your own work, but there simply has never been a show that ran 50+ episodes, that managed to keep me consistently entertained throughout. Regardless of the motivation and machinations, I am only too glad if Americans are about to discover what the Brits have know along, less is actually more.
I think the difference is that success on broadcast TV depended almost entirely on ratings -- if not enough people were watching, a show would be canceled. But with Netflix, Hulu and Amazon Prime -- and even more so for the new streaming services -- a large part of what they're looking for is increased prestige and publicity, which will bring in more potential subscribers. So even if "Fleabag" had a relatively small viewership, its visibility and critical success are what have made Phoebe Mary Waller-Bridge such a hot commodity in the streaming world.
To be fair, syndication has meant that a lot of shows went a lot longer than the writers could sustain the quality. On the other hand, what's going on here is not just competing for talent; Amazon, Apple, Netflix, et al are spending those huge sums in order to knock others out of the business. It's predatory pricing, subsidized by other parts of their business. Netflix has been riding on its inflated stock price to borrow bigger and bigger sums every year in order to finance building its library of content; its burn rate is astonishing given the age of the company. Amazon can fund Prime Video through subscriptions and revenues from its cloud business; Apple's hardware and services business generate more cash than it knows what to do with.
Matt Stoller has done a very good analysis of all this, which he titled "The Slow Death of Hollywood". You may like to peruse: https://mattstoller.substack.com/p/the-slow-death-of-hollywood
wg
But particularly with Netflix, it's difficult to know who owns what. How much of she-ra, one day at a time, arrested development did it actually buy?
Remember nf didn't have any real share in shows like house of cards until the practice started getting bad press
also think that the WH should produce documents requested by the Democrats.
And it's hard to argue that Pelosi needs to agree to give the Republicans
sikiş Republicans subpoena power at the same time the Dems' own subpoenas are being resisted.
I'm really curious to see what Netflix will look like in 5 years, they're losing a ton of money and their stock has lost a 1/3 of it's value in the past few months. They're competing with incredibly well funded and deep pocketed businesses like Amazon and now Apple. It doesn't seem like it can go on forever. (Of course I keep thinking that about Uber and Lyft)
I don't have a problem with fewer episodes, but I do think viewers' loyalty to a show can suffer as they get produced on increasingly irregular schedules. The first season of Ozark debuted in 2017, and Season 2 came out just over a year later. But now it's been over a year since Season 2, and they're still in the middle of shooting Season 3. No idea when it will actually be released.
Similarly, Better Call Saul's season 4 ended almost exactly a year ago, but the producers still haven't said when Season 5 will finally air. I actually like that show, but at this point I can hardly remember anything about it. Same for Atlanta, which hasn't even started production of its third season more than a year after the last episode aired.
How long will the executives behind these decisions stay in their positions? It can't be long. The Crazy Uncle Moneybags model of business is not well liked by shareholders.
What has evolved is that OWNING the content is key. Don't look at $300MM being a short-term investment in programming, but rather over the long haul. Why are all the traditional programmers now focused on their own streaming services? Because the direct-to-consumer revenue stream is where the future money lies. And if you have exclusive content you grow (and keep) subscribers. Ken's stance on the old platform is based on the OLD PLATFORM that is dying out. That's why CBS is diversifying into streaming, why Comcast/NBC is doing the same and Disney/ABC are all fortifying the streaming side while filling the old platform with low cost productions.
I expect that the broadcasters will soon be relegated to showing programming weeks AFTER it premiers on streaming services. And all other content will be "reality", contests and other low-cost, non-essential filler.
https://www.forbes.com/sites/greatspeculations/2019/08/20/all-the-reasons-why-netflix-is-doomed/#6fdf46a465e5
Another issue is that every network or studio have their own streaming service and are now hordeing their shows for their own streaming service.
Example Hulu had MOM now since CBS has started its own All Access streaming service if you want MOM you have to pay CBS
Same with Disney starting to only allow Disney streaming channel to show Disney movies etc.
As the contracts between providers and services expire they are not being renewed.
This is in part why Apple is starting its own streaming channel and "original" content because if they don't make it for themselves they wouldn't have anything to show.
Hi Ken,
Kind of long winded Friday Question here.
Do you think the fragmentation of the streaming market into more and more exclusive services (Amazon, Netflix, Disney, CBS etc etc...) will eventually grind to a halt when the audiences for these services naturally get smaller and smaller? From a consumer point of view - I don't particularly want to have to pay for 5 - 10 different streaming services in order to watch TV. It doesn't appear to me that the way the market is moving currently is sustainable. What are your thoughts?
From what you're saying, the TV/Streaming industry's financial model is a Ponzi scheme. I guess they got that from Hollywood.
And all people want is characters they can love. Not superheroes, wizards or flawed geniuses.
More and more viewers are moving to online websites either than stream TV or just enable more interaction. I agree that the business model of many shows is well and truly past its sell by date.
In some ways its like the early days of radio and television where companies like RCA and GE sold receivers and paid for content to encourage sales.
I've noticed that many streaming-exclusive series get released on DVD and sometimes Blu-Ray, which indicates that streamers are looking for ancillary revenue beyond subscriptions. Is there anything keeping Netflix of Türk sikiş Disney+ or whomever from syndicating its shows or airing them on broadcast TV? Let's say it's three or four years from now; could Disney decide to just put The Mandalorian or one of its Marvel series on ABC and see what happens?
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