Former executive at AMC Networks Inc
- Cable network outlook – cord-cutting and advertising expectations and implications for network strategies
- Balancing content spend across network and D2C distribution channels
- Ability to return to margins comparable to legacy pay TV model
- Outlook for Q4 2020 and beyond – production delay impacts and recovery scenarios
Could you start with an overview of the coronavirus’ unprecedented impact on the cable network operating environment? How should these dynamics inform our outlook for content production?
What might differentiate Warner Bros, Universal or Disney over the next few months? Will factors such as access to studio lots, content prioritisation or the complexity of action production vs other genres impact which content returns quickest in late 2020 into 2021?
You noted New York-based production has been quick to recommence, and there were challenges in Canada. Do you expect structural changes relating to the geographies in which the biggest concentration of shows are made? Could there be long-term or permanent changes in built-set vs on-street, post-coronavirus?
How comparable are production costs in the US vs ex-US? Do you think moving more internationally would improve production budgets, on average? How could the budget for a typical season evolve if there is less reliance on the US?
Would you describe legacy distribution mechanisms such as pay TV and movie theatres as secularly challenged? Is cord-cutting unlikely to abate, and will consumer behaviour continue to skew away from movie theatres – which, moreover, have been closed for months? What sorts of IP across TV or film might be best positioned in light of the emerging distribution mechanisms?
What factors will studios likely weigh when assessing the difficulties of theatrical releases with IPs? Would an IP with a P&A [prints and advertising] budget above USD 200m-400m be too difficult to profit on via a streaming platform? Where do we draw a line between Disney’s Mulan going D2C vs some of these mid-tier films that have been experimented with? What will be the new norm, past the experimental phase?
You suggested that Netflix, Amazon, Apple, Disney, HBO and Universal would be the six big winners. What’s your long-term outlook for Starz network, where the D2C platform is sub-scale in subscribers?
You predicted consolidation amid a longer-term, challenged outlook for smaller players. To what extent will this likely be through M&A by the big six vs other players fading out of existence? Could players such as Lionsgate go studio-only without distribution, and offer content to augment the big six’s catalogues?
Do you expect a significant streaming platform viewership retracement, perhaps at or below February March 2020 levels? How do the production delays we’ve discussed and the enhanced pull towards streaming in the remote work environment amid coronavirus factor into this? Do you think streaming platforms can maintain high engagement longer-term?
Are consumers unlikely to be heavily impacted by the production delays? Is there a point at which consumers might notice the content slate is light on new releases on platforms such as Netflix or Disney+?
How should we frame Netflix’s and Disney’s comparative insulation from production delays? Disney has effectively just released one original show – The Mandalorian – back in November 2019, without much really engaging new IP since. Netflix churns out 20-30 shows per month, and seems like a high-water mark to avoid consumers noticing there are no new shows.
With production kicking back in, do you expect an over-weighted emphasis on returning shows that had been timelined to release in 2020? Will new projects likely be sidelined or deferred, by comparison?
How can streaming platforms balance the trend towards two, three or four seasons and not spending tens of millions of dollars per episode vs finding the next Game of Thrones? Do you expect a big cinematic universe in the near term, and which platforms have the potential to deliver that, if it’s a core pillar?
How do you expect the landscape to shake out over the next few years? Will content spend in aggregate inevitably continue to rise? To what extent can these companies substitute network spend as they continue to transition to streaming platforms, so this replaces investment instead of incurring incremental spend?
Can you conclude by summarising your near-to-mid-term outlook for OTT content production?
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