TV series and film content
Premium fiction is at the heart of the war between TV and OTT
Production of films and series is in a phase of sustained growth worldwide, driven mainly by competition between TV and OTT. However, both of these fiction sectors are evolving in different ways. How they are financed – including the source of funding and the sums involved – differs based on how the content is exploited.
Unprecedented enthusiasm for fiction
Fiction content, which is driving the growth of SVOD services, is benefiting massively from the competition between OTT players and TV channels. The number of films produced worldwide has increased by 50% in 10 years, driven by fast-growing emerging markets, and has surpassed 8,200 films annually (20% produced in India, 14% in Europe, 13% in China and 9% in North America).
There is also unprecedented enthusiasm for series. The number of series produced in the United States increased by 86% between 2011 and 2018, and by 172% since 2002, reaching nearly 500 original titles per year. Nearly 1,000 titles are produced each year in Europe, with Germany accounting for a third of these. In both the United States and China, growth in series production is only driven by OTT platforms, whereas they account for less than 5% of titles in Europe.
Disparate market dynamics for films and TV series (Top film (2018) and TV series (2017) producing countries in Europe)
Distributors, producers and public authorities are playing a variety of roles in financing of works
Fiction content financing is provided in different ways depending on the market and type of content. In Europe, direct public funding accounts for a major share of film financing, especially for films with small budgets. France is unique for the major role played by broadcasters in direct funding of national works. Self-financing by production companies is vital in the United States.
The top broadcasters, who are the primary beneficiaries of series exploitation, are also the major funding sources in all countries. The share funded by US producers is still large because there is greater potential for later exploitation from international sales. About 65% of the exploitation revenues of US series now come from exports, versus 30% in the early 1990s.
Netflix spending more than all of its direct competitors combined
Progression of the top OTT platforms' spending on original production and acquisitions
Emerging-market countries are driving film growth, whereas developed-market countries are driving series
The dynamics in the series market differ to those in the film market. In the film market, growth in film production is quite strongly linked to growth in box office sales. While cinema attendance has started to plateau in traditional markets, it is growing rapidly in Latin America and Asia.
Series have become major competitors to films in developed markets, mainly due to a proliferation in “premium” series, which are now costing up to 10 million USD per episode in the United States. Although European productions are not costing such large sums, productions are also becoming more polarised between ambitious projects and low-budget serialised content. In China, medium-sized budgets are also growing rapidly: two to three times more in 2017 than in 2015.
OTT: better exposure vs. loss of rights?
Pros and cons of OTT distribution for film and TV producers
Is Apple a new audiovisual production giant?
When Apple announced the launch of its own SVOD platform, the company initially said it had a content budget of 1 billion USD. The US giant ultimately spent 6 billion USD on developing original content to accompany the launch of its Apple TV+ service – a similar amount to Amazon’s expenditure on all its video content. The big difference is that Apple has invested solely in original content, whereas the budgets of all its competitors are mainly dedicated to catalogue programmes. For example, of the 15 billion USD spent on content by Netflix in 2019, only 2.44 billion USD was invested in original programming. Disney invested 1 billion USD in new programmes for the launch of Disney+, and this is expected to rise to 2.5 billion USD by 2022. Amazon and Hulu only spent 0.38 and 0.14 billion USD on original productions respectively.