European Content Quotas and the Future of Streaming

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Was there a big awards show last week? There was! I should write a lot about that, right? Nope. My most important story of the week isn’t the Emmy, though it’s a story that is a few weeks old, so the “this week” part seems not quite right. But it’s a good story.

The Most Important Story of the Week – European Content Quotas Will Impact Streaming Services

Variety had an exclusive (that I saw via Engadget, to give them credit) about the proposed EU law/regulation requiring streamers to have 30% of their content to be local content. The news is that the head of the EU agency said, “Oh this will happen.” I’ve been following this story since my time at a streaming company, and seeing it in the news gave me a chance to write about it.

It’s the “most important” because it passes the “dollar amount” test: potentially Youtube, Amazon, Disney, CBS, HBO, Hulu (if it goes global) and Netflix will have to spend hundreds of millions (or more) in smaller countries to build out local content. The devil, of course, is in the details.

Depending how the regulations are specifically written will go a long way to determining how Netflix and other streamers will comply. If you do it by just number of shows, then Netflix will buy a lot of content very cheaply for volume. If you do it by hours, same thing. If you do it by dollars spent, then you could have a small number of shows that cost a lot. The best way would be to weight by “demand” but that gets really, really tricky for a regulation. My advice? Stick to money. That’s what “markets” are based on.

Also, is it “European” content or country specific? A place like Poland already imports a lot of content–from what I understand (I’m not the entertainment strategy guy for every country, to be honest)–so how much local content is available?  If it is just “European content” there is already a lot available and the current big players (France, Germany and UK if it doesn’t leave) will benefit from this regulation.

(Side note: I tried to look for the text of this regulation, and honestly I couldn’t find it. I’d love to read the actual text if someone can find it.)

The US and other places with less restrictions could benefit from this in that more original productions with worldwide rights may be available in more places. That said, if every country passed these restrictions, then by definition Netflix would have a larger catalogue than is available to all customer, but with lots of restrictions by territory. Let’s see what happens.

Other Contenders for Most Important Story – Warner Bros. Reorganization in “Franchises”

I have a rule of thumb when debating the most impactful story of the week: when in doubt, just calculate the net profit impact of various decisions. Or cash flows. Whatever financial metric could move the most dollars. This is why most box office weekends don’t make my list, but Solo flopping did.

So I thought about being flippant or joking and putting the news that Warner Bros. elevated Pam Lifford to head of a new group handling “consumer products, DC comics, theme parks and global franchise teams” above the Les Moonves story last week. The logic being that if Warner Bros. can finally make DC successful than billions are to be had. Currently, they make a lot on licensing and merchandise, but as I’ve said before, not as much as you think.

Ultimately, I don’t know that Lifford will have control over the creative. Or even how much influence. Content is king, and franchise management is at best the bishop, more likely the knight. Overall, though, it is the “DC-ness” of this that made it a candidate. Next year, Warner Bros. will launch a DC-only streaming platform, for some reason. The DC digital platform will be interesting, but I don’t quite understand why Warner Bros. is narrowcasting all their streaming plans, with prices near what Netflix charges. I can’t wait to analyze Warner Bros. digital/streaming strategy in a future article.

Mergers & Acquisitions in Media & Entertainment Update – Comcast Says it Doesn’t Need M&A

Comcast CEO Brian Roberts said Comcast doesn’t need M&A to drive growth. We’ll talk about this in our next update. (Comcast just offered a huge bid on Sky TV in the UK.)

Lots of News with No News

The Emmys! And all awards shows

I put my thoughts on Twitter here, but the most important one for all the entertainment & media news consumers out there is to know this truth first: winning awards is statistically meaningless.

There were only what, 26 awards given out at the ceremony? A few other dozen at the Creative Arts Emmys? So if you’re trying to draw meaningful trends from such a small sample size, well good luck. Especially since most voters tend to “vote in a block” which really just means that in any given category one show was the most popular among Emmy voters.

I italicized that last point to double down on the fact that the body of Emmy voters does a terrible job overlapping with the American or global viewing public. Drawing conclusions about what is popular from an awards show is just several steps removed from accuracy. Draw conclusions about what is popular by measuring popularity.

That doesn’t mean I don’t enjoy the spectacle and have my own thoughts on the best shows. I think, for the most part, the Emmys got it right in a number of categories. (I’m fine with the drama list, because Better Call Saul wasn’t eligible, though GoT is clearly the best show on TV. Comedy should have had The Good Place and Top Chef should win one of these days.)

But don’t draw business conclusions. See my Twitter thread from Wednesday here.

Lebron and his new media company!

I’m a Lakers fan, so let’s put that on the table. Expect a lot of basketball references, especially as the season heats up in a month or so.

But here’s the thing: a super rich and super famous person starting a production company is just not that huge of news. Certainly not worthy a front page story, unless it’s more about selling copies than educating on the business impact.

Not to mention, does every famous NBA player have a production company now? How many documentaries were filmed for people’s “decisions” this off season? Including, the most famous Los Angeles Laker, Kobe Bryant? He has his own, Oscar winning production company. To be honest, I’d love to do an “analysis” piece on “Kobe vs Lebron: Whose Production Company is Winning?” but there isn’t enough publicly available information.

Long Reads of the Week – Dueling Interviews Hinting at Streaming

For some reason, both of the interviews with Bob Greenblatt of NBC at Vulture (now formerly as I publish this) and Bob Iger of Disney at The Hollywood Reporter resonated with me. Both interviewer/interviewee can’t avoid talking about streaming and hinting at what the respective companies are or aren’t doing in response. That said, the idea that Disney will lose billions to move to streaming is the elephant in the distribution room. I’ve tweeted my skepticism before, and a deeper dive into streaming economics (by me) is definitely needed.

Bonus topic: The Iger interview sort of confirms the Star Wars slowdown, which reinforces my point from this article that economically making better movies is more valuable than making more of them.

And as always, be careful of executive speak in the interviews. It’s a PR jungle out there, kiddos.

The Entertainment Strategy Guy

The Entertainment Strategy Guy

Former strategy and business development guy at a major streaming company. But I like writing more than sending email, so I launched this website to share what I know.


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