Specialist
Former EVP at Metro-Goldwyn-Mayer Studios Inc (MGM)
Agenda
- MGM Studios' operating environment – implications from growth of D2C OTT (over-the-top) distribution on independent studios
- Demand trends across TV and film production and licensing
- Monetisation runway of MGM library portfolio
- Outlook for H2 2021 and beyond – takeout potential and long-term studio outlook
Questions
1.
What is your outlook for content spend over the next several years across the various content producers? What will they be trying to accomplish and how might content spend evolve?
2.
How long is the tail of content and membership for the niche and subscale players such as A&E and Shudder? Are they having to drop the model because they’re not big enough? Does it significantly impact content spend in aggregate?
3.
What are the content spend considerations across different segments? Series could be said to have a better retainer because a season can be extended over eight weeks, meaning a subscription for two months at the very least, whereas a two-hour film could have a customer churn out immediately after watching. It seems that day-and-date with WarnerMedia has been a good acquisition vehicle. Do you expect a shift in original vs licensed as the model matures away from original productions because they’re expensive?
4.
What are the considerations around Q1 2021 and Q2 2019 being particularly light content slate quarters for Netflix coming alongside very low net adds? To what extent do you think content is the biggest marketing vehicle? Is there less of a need for traditional brand and performance marketing methods because the CAC [customer acquisition cost] relies on spending on content? Does this give Netflix and others an incremental budget to spend more than originally expected?
5.
What’s your take on WarnerMedia and what it did with day-and-date? It seems to be one of the primary drivers for some of the recent subscriber growth, yet it is trying to revert back to more of a hybrid model in 2022. Is that a pure function of box office returning to a level where the economics make sense to not forgo it? How does the reversion play into how studios typically think about theatrical longer term?
6.
What other non-financial aspects should be tracked? There seems to be flywheel aspects for all the companies – Amazon with Prime, AT&T with Wireless, WarnerMedia and Disney with Parks. Are you concerned about the tech invasion of Hollywood? What other aspects might be detrimental?
7.
What nuances do you focus on when assessing model profitability across the different studio players? What could indicate the likelihood of accomplishing something sustainable?
8.
Do you think there is room for additional players beyond Netflix, HBO Max, Disney+ and Amazon Prime in general entertainment? Is that as crowded as it gets in the long term? Would a new player’s success rely on differentiation from general entertainment as a genre?
9.
How do you think about sizing the streaming wallet if households subscribe to about 4-5 services? How much pure SVOD [subscription video-on-demand] pricing power exists? Is USD 20 per month achievable or will a lot of the ability to drive up streaming ARPU depend on ad-supported options because of gradual subscriber fatigue?
10.
Do you think a platform such as Netflix would have to diversify from being pure SVOD? What makes more sense? It seems to have flopped several times on consumer product licensing because there’s been a different head almost every 12-18 months and never been a tone around advertising. Do you think that longer, mature state would be necessary?
11.
What about the opt-out period for sports? The term length exists but there’s an opt-out period over several years where the NFL can relinquish the digital rights. Are you tracking that closely and is it driven by advertising success?
12.
To what extent do you think Lionsgate, MGM, Universal and Paramount may ultimately revert to what Sony is doing now as that agnostic seller of content?
13.
It sounds like the main priority for MGM is getting the business sold. What are the puts and takes there? How might this play out over the next few months?
14.
What factors do you consider behind why Bond never went to streaming? It seems as if maintaining Bond and the release of it prior to sale is in the driver’s seat, but what about the longer-term importance of theatrical distribution? There were reports of a USD 600m price tag for SVOD licensing on No Time to Die while Netflix’s USD 400m deal for two Knives Out sequels The USD 600m amount seems to have been scoffed at. To what extent might the bigger properties not go to streaming just because of the expense?
15.
Do you think now is the best time to be in SVOD licensing deals? Might Netflix be less willing to pay the prices it is probably doing on licensing of series or co-producing a series? What about co-producing a series in the long term? What’s your take on SVOD relationships for series and studios? Can you expand on pricing power and how deals are set up? There’s plenty to be said around the waterfall aspect being pulled away, but will it generally be as lucrative for studios to do business with SVOD as it is currently?
16.
Do you think we are past peak studio margins? How daunting could the rationalisation trends be as Netflix and others assess cost structures more closely?
17.
Is it important to assess who the output deals are with? Sony and Netflix seem to be industry-leading relative to MGM having something with Paramount+, and there are many question marks around where Paramount+ will be in the next 3-5 years. Is a studio’s success largely dictated by who the partner is?
18.
What are the biggest trends in AVOD and advertising in general? Is it the gatekeeper role, such as Roku, and the ability to get things programmatic from insertion order? What’s your focus when assessing success drivers for advertising in an OTT world?
19.
What might an ad-supported ARPU be on a monthly basis given that Peacock and Hulu report USD 6-7? That’s a bit daunting in comparison to where streaming might end up. To what extent is more scale needed for the AVOD model? It obviously seems necessary for SVOD. What might critical scale mean?
20.
Which player might win globally and why? Is it a case of distribution relationships or studio footprint? What are the key considerations here?
21.
Could you share your post-coronavirus outlook or any closing comments about MGM?
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