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In the content risk-reward ratio pre-established franchises still win the day. Whether James Bond or Star Wars, Star Trek or Harry Potter pre-loved IP remains the bedrock on which studios and streamers are placing their biggest content bets.
Pre-loved is the apposite word here. Studios calculate that producing sequels and spin-offs of tentpole IP will continue to draw audiences to the cinema and subscribers to streaming services, despite evidence of the law of diminishing returns.
“Selling nostalgia to millennials” is how Parrot Analytics described the strategy last August in analysis questioning how sustainable it is in the long run.
However, Hollywood is doubling down on the IP it owns.
Amazon reportedly spent $1 billion to wrest creative control of the James Bond franchise from production company Eon on top of the $8.45 billion it previously outlaid for the 007 back catalogue as part of its acquisition of MGM Studios.
Warner Bros. Discovery has reportedly spent over $350 million making a new Superman movie to be released this summer in the hope it will reboot the entire DC Universe. This week, WBD CEO David Zaslav talked about a “10-year attack strategy on DC” when presenting the studio’s strategic vision at the Morgan Stanley Technology, Media & Telecom Conference.
However, Hollywood is doubling down on the IP it owns.
Amazon reportedly spent $1 billion to wrest creative control of the James Bond franchise from production company Eon on top of the $8.45 billion it previously outlaid for the 007 back catalogue as part of its acquisition of MGM Studios.
Warner Bros. Discovery has reportedly spent over $350 million making a new Superman movie to be released this summer in the hope it will reboot the entire DC Universe. This week, WBD CEO David Zaslav talked about a “10-year attack strategy on DC” when presenting the studio’s strategic vision at the Morgan Stanley Technology, Media & Telecom Conference.
Other key IP name checked by the WBD boss are video game brand Minecraft (a movie is due for release next month) and Lord of the Rings. WBD produced Peter Jackson’s multi-award winning films based on the JRR Tolkien fantasy novels and is preparing another set of films with Jackson’s involvement, the first due in 2026.
Netflix spent $686 million on exclusive rights to author Roald Dahl’s work in 2021, saying it wanted to create “a unique universe across” multiple platforms. A feature version of Matilda The Musical (2022) and forthcoming animated film of The Twits aside, there has been little else to emerge to-date.
Difficulties in getting such IP off the ground could be one reason that Netflix has been of late prioritizing localized adaptations of existing titles. Streamers are “using IP to reduce risk when creating localised versions,” said Ampere analysts, citing Amazon’s recreation of romantic drama Modern Love in India, Japan, and the Netherlands.
Netflix, in particular, is adopting this approach to franchise development. Its IP was adapted in 22 distinct markets between 2022 and 2024 - more than those owned by any other company, Ampere found. One example is Spanish language comedy series Machos Alfa which has been localized for Germany, Italy, France and The Netherlands.
Olivia Deane, Research Manager at Ampere Analysis said in the release: “From nostalgic blockbuster movies, to broadcast crime procedurals [another content staple noted by Ampere], commissioners are safeguarding spending by continuing to invest in well-loved characters and the universes they inhabit. Streamers are also leveraging existing IP to create localised versions, catering to regions where streaming adoption is still growing.”
Still, there are some signs of weakness with the all eggs in the IP basket approach. Audiences may be getting fatigued by overexposure to their favorite characters and story worlds.
According to Parrot Analytics’ Disney+ is experiencing diminishing returns from its Star Wars live-action series such as The Acolyte and Obi-wan Kenobi. Even season 3 of The Mandalorian “failed to match the demand levels of its debut season.”
Luminate Data’s report of 2024’s streaming services, written up at Forbes, found that, with one exception, no shows based on major IP made the top ten most watched last year. The exception was Fallout, Amazon Prime Video’s adaptation of a hugely successful video game. Netflix originals dominated the list with British thriller series Fool Me Once coming top with 12.11 billion minutes watched, per Luminate.
It noted the absence of any Disney IP and The Lord Of The Rings: The Rings Of Power, the second series of Prime Video’s Tolkien adaptation which saw a 60% decrease in total minutes watched from the show’s first season, per Luminate.
Luminate noted, “While franchises continue to be key drivers of engagement on streaming, 2024 saw diminishing returns for some of the biggest properties on television.”
Less hard data it may be but this past Awards season for feature film culminating in the Oscars was deemed a triumph for lower budget indie productions (Anora, The Brutalist, Emilia Perez, I’m Still Here, A Real Pain) over tentpole franchise (like Gladiator 2, Furiosa, and Dune: Part 2)
There have been warnings to Amazon about diluting the Bond franchise in particular.
Former Disney+ executive, Kevin Mayer told Fortune, “You have to do positive things that reinforce the elements of what a brand really means to consumers and be very careful to limit the withdrawals hat you make.”
Lightshed analyst Rich Greenfield told The Hollywood Reporter, “Hopefully [Amazon has] seen the mistakes others have made, and they are judicious with how fast and how much. But there is no doubt in my mind that there is franchise potential here that goes well beyond just a movie every three to 10 years.”
007 merchandise is an obvious revenue stream for the giant online retailer to exploit and another reason why large studios like evergreen IP. George Lucas
famously made far more profit by retaining rights to Star Wars merchandise than Fox did from the original Star Wars release in cinemas. Disney division LucasFilm, which now owns those rights, made $1 billion in merch sales in the year to March 2024; and Warner Bos just inked a multi-year licensing deal with Mattel spanning the entire DC library.
Diminishing audience returns? Possibly, but if pitfalls can be avoided in terms of keeping the trust of fans and not overloading them with constant releases, then we can expect a lot more content to be mined and monetized from leading IP.
After all, and crucially, studios are paying big bucks to own it. “We own those. We can monetize that,” said Zaslav of WBD’s key properties. “We make a lot of money on those platforms by bringing joy and excitement to people through content, but also through merchandising. And it’s ours. It’s ours forever.
That’s in contrast to sports, which is, he added, “a rental business.”
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