[opendtv] What Netflix’s $300 million Ryan Murphy deal says about the future of TV - MarketWatch
- From: Craig Birkmaier <brewmastercraig@xxxxxxxxxx>
- To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
- Date: Sun, 18 Feb 2018 08:30:37 -0500
Is this the real story about the future of TV?
“The challenge facing the legacy media companies who own film and television
studios is that they do not own their greatest assets, meaning the talent
itself,” Greenfield wrote. “We sense the tech platforms have all realized
that you do not need to spend up to buy studios, when all you need to be a
major player in Hollywood is money — a lot of money — to acquire talent and
produce content yourself.”
If one looks at the history of Hollywood, there are some very real parallels to
the history of slavery in the U.S. - in the early days, the studios “owned” the
talent. Doing deals over lunch involved the studio moguls allowing their
“stars” to work on a project at another studio - they had total control over
“the plantation.”
Eventually the Hollywood slaves were freed from their studio masters - kinda.
They could negotiate for any project, but the studio moguls still controlled
the revenue splits with the talent. Everyone lived well, but the talent still
had little negotiating leverage. That all changed as professional athletes,
actors and actresses, threatened to stop producing massive profits for their
masters, unless the masters shared the wealth.
The cast of “Friends” broke the $1 million per person, per episode barrier.
Now it appears that the talent has become the masters; the old Hollywood
plantation is threatened by new competitors who are more than willing to outbid
them for the most profitable talent...
Regards
Craig
https://www.marketwatch.com/story/what-netflixs-300-million-ryan-murphy-deal-says-about-the-future-of-tv-2018-02-15
What Netflix’s $300 million Ryan Murphy deal says about the future of TV
Trey Williams
When Ryan Murphy began working with 21st Century Fox Inc. in 2003 on the
medical drama “Nip/Tuck” on FX and later “Glee” on the company’s namesake
network, Netflix Inc. was six years into disrupting the DVD rental business and
had just posted its first profit.
Fox was in its second season of airing “American Idol,” the No. 2 and 3 show
that year — “American Idol” aired on two different nights — according to
Nielsen data.
But power is shifting to streaming services, which have direct lines to the
viewers that networks and show creators like Murphy are trying to reach.
Earlier this week, Murphy and his production company signed a five-year deal
with Netflix worth a reported $300 million. Murphy has a few months left on his
current deal with Fox.
“Emboldened by the success of original programming, Netflix has now become the
actual studio making original programming,” wrote BTIG analyst Rich Greenfield
in a blog post. “It appears that Netflix may be moving toward its next
inflection point, as content increasingly shifts toward internally produced
projects created by the biggest names in television.”
Last August, Netflix wooed “Grey’s Anatomy,” “Scandal” and “How to Get Away
with Murder” creator Shonda Rhimes away from Walt Disney Co.’s ABC network.
The streaming giant has also inked deals with “War for the Planet of the Apes”
director Matt Reeves, “Orange Is the New Black” creator Jenji Kohan and
“Stranger Things” producer Shawn Levy.
Netflix’s recent focus on signing exclusive production deals with creators is a
departure from the third-party licensing model that helped it grow its
subscriber base. Netflix is still committed to buying series from third-party
producers, but Greenfield expects the mix to shift meaningfully.
The company’s ramped push into original content came as networks began
questioning whether they should continue licensing their content to Netflix.
Increasingly, the belief is that TV networks and legacy media companies need to
invest in a streaming service to survive. Disney announced plans last year to
launch its own streaming service in 2019, and in doing so will pull all of its
content from Netflix.
As this happens, the competition for talent and intellectual property has
intensified. Netflix’s deals with Murphy and Rhimes are a testament to that.
“Just as we moved from second-run content to licensed originals and then to
Netflix-produced originals, we are progressing even further up the value chain
to work directly with talented content creators,” Netflix management said in
its 2017 third-quarter letter to shareholders.
But this shift isn’t exclusive to Netflix, Greenfield points out.
Amazon.com Inc. paid a reported $250 million for the rights to a “Lord of the
Rings” series, and recently signed Sharon Horgan to an exclusive overall deal.
Horgan co-created and stars in Amazon’s comedy series “Catastrophe.”
Apple Inc. which is fairly new to the landscape, shelled out upwards of $1.25
million per episode, according to the Hollywood Reporter, to nab Jennifer
Aniston and Reese Witherspoon’s upcoming morning-show drama.
But it’s increasingly expensive, as these deals indicate, to acquire the talent
and content necessary to be successful.
Netflix plans to spend close to $8 billion on content in 2018, and another $2
billion on marketing that content. So the company, which is already swimming in
debt, will have to tap high-yield markets again to fuel its expensive, but
necessary, investments.
This all puts a lot of leverage on the side of creators. Murphy reportedly said
during the TCA press tour in January that he had concerns about Disney’s $52.4
billion bid to buy Fox, and what that would mean for his creative freedom. A
month later, he’s out the door.
“The challenge facing the legacy media companies who own film and television
studios is that they do not own their greatest assets, meaning the talent
itself,” Greenfield wrote. “We sense the tech platforms have all realized that
you do not need to spend up to buy studios, when all you need to be a major
player in Hollywood is money — a lot of money — to acquire talent and produce
content yourself.”
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- » [opendtv] What Netflix’s $300 million Ryan Murphy deal says about the future of TV - MarketWatch - Craig Birkmaier