Warner’s apparent eagerness to do business with JK Rowling in order to bring Harry Potter’s Wizarding World to the small-screen for HBO, despite an inevitable backlash, underlines an obvious and unmissable point - streamers are starving for quality content and ‘fan favourite’ intellectual property.
It is, at the same time, the reasoning underlying the newly announced US$21bn merger of ‘sports entertainment’ and mixed martial arts behemoths WWE and UFC, and, at least partially, what’s driving the apparently massive premium in Manchester United’s supposed £6bn valuation.
For content acquirers the rationale is quite simple, find a brand that the audience has enough attachment to that month after month they won’t cancel subscriptions.
Whatever the particular tastes or demographics, each of the major streaming platforms is put together with a fairly similar formula.
Each platform has sticky ‘must watch’ exclusive or self-produced shows that anchor subscriptions, and, around those are built a mass of filler content that’s essentially there to keep viewers busy enough while they wait for the next season of their favourite shows.
- Disney: Marvel, Star Wars, Pixar, Walking Dead
- Warner (HBO): Game of Thrones, Last of Us, Succession, DC Comics
- Netflix: Stranger Things, Squid Game
- Amazon Prime Video: The Rings of Power, The Boys, Vikings, Clarkson’s Farm,
- Paramount: Yellowstone
- Apple TV: Ted Lasso
Subscriber growth has, however, stalled across the streaming sector and that is evidently driving some compelling valuation stories.
Disney+ has amassed close to 162mln subscribers, while Netflix has around 170mln paying accounts and overall Amazon has 200mln Prime members (who get the streaming platform along with shopping benefits).
HBO Max quickly picked up nearly 100mln paying users, whilst Paramount has 77mln, Apple TV+ has built up 25mln and Peacock has 20mln subscribers.
The problem with making TV and movies is that creative fiction is expensive, it takes a long time to make, and, in the ‘binge’ era is consumed very quickly.
Amazon is believed to have spent more than US$700mln on the first season of The Rings of Power, its Tolkien prequel TV show, which bought Amazon nine and a quarter hours of run time.
Season one of The Mandalorian, a Star Wars TV show on Disney+, reportedly cost around US$100mln and altogether, according to internet guestimates, the three seasons streamed to date have cost at least US$360mln to make – that’s for 24, 45(ish) minute episodes.
It came as little surprise, then, when Disney announced major cuts to its global workforce in February, the second round of which commenced in the first week of April.
“The difficult reality of many colleagues and friends leaving Disney is not something we take lightly,“ Mouse House head Bob Iger in a memo obtained by CNN. “In tough moments, we must always do what is required to ensure Disney can continue delivering exceptional entertainment to audiences and guests around the world – now, and long into the future.”
Most non-US layoffs are occurring in London, England, where Disney+’s content team is predominantly based.
It poses some big questions for Iger regarding Disney’s output. Are viewers fatigued by the seemingly endless barrage of rehashes? Are they worth the price tag?
Netflix meanwhile spent just under US$22bn on content in 2022, down from US$23.16bn in the preceding year.
It doesn’t take a mathematical savant or a marketing genius to see the appeal of a sporting schedule given, for example, that each Premier League team plays at least 57 hours of football every season and that’s excluding all cup and European fixtures.'
Next: Is sport the answer?