- Hollywood streamers’ walled gardens are starting to open up again.
- Netflix popularized the model of owning shows outright, but now streamers are reconsidering licensing.
- Producers hope the shift will restore backend payments to creators.
Netflix paved the way for entertainment companies to seek full ownership of films and series as they built up their streaming services by creating so-called walled gardens of exclusive content.
But now those walls are beginning to come down at competitors like Amazon, Apple, and Warner Bros. Discovery, industry sources say, and even Netflix is showing some flexibility.
In recent years, producers and creators increasingly signed away ownership and the opportunity for future revenue streams (backend payments, in industry parlance) in exchange for bigger up-front payments. Under the cost-plus model championed by Netflix, the streamer paid more for shows upfront than legacy TV platforms had traditionally paid.
But as part of those rich deals, Netflix retained future licensing rights, depriving producers of windowing opportunities — i.e., syndication or foreign distribution rights — that could fund future projects.
This funding model also fueled an imbalance that led to the twin Hollywood strikes, with creators and producers feeling like they were missing out on future revenue streams. It’s one reason that some industry insiders and observers lay the blame for the strikes at the feet of Netflix more than other big entertainment companies.
Now, with Hollywood entering a new phase of penny-pinching, the entertainment giants are easing up on exclusive ownership of content.
The conglomerates’ walled gardens have already started coming down in more visible ways. WBD has started licensing originals like HBO’s “Insecure” to Netflix. Disney’s Bob Iger has said he would be open to licensing some titles to third parties.
Insider spoke to seven producers, agents, and dealmakers about the trend. Many are welcoming the shift, which they hope will give content creators the ability to more fully monetize their shows by selling them in different geographic markets and windows. Some of them see it particularly benefiting producers with a track record of selling shows overseas as well as broadcasters that just want to license a show in their local market.
“It’s going from being all being controlled by these giant platforms to being neutral again,” said a top agent, who added they were doing some deals that would let them share ownership rights.
Producer Sean Furst recently licensed a show, “Classified,” to Amazon’s Freevee in the US and another major streamer in a different country — a deal he said broke with the streamers’ past practice of owning shows outright.
“Most everybody is saying they’re interested in exploring any and all models,” Furst said. “Going back to a more traditional windowing model allows the studios and people who create the shows to pursue a model that allows for greater flexibility in funding a show and monetizing a show, and for people putting sweat into making the shows, it reintroduces the concept of backend and profit participation.”
A separate producer said some of the streamers were willing to pick up some shows for the US market after they were already broadcast elsewhere — something that would have been unthinkable a couple of years ago.
“The sharing between linear local broadcasters and streamers seems to be a thing,” this producer said. “There’s also been a conversation where ‘We won’t put in cost-plus but we’ll put in 70% of financing.’ Those conversations a couple years ago used to be all or nothing.”
But the enthusiasm for the shift away from distributors looking for 100% ownership is tempered by the knowledge that after spending like crazy on content to catch up with deep-pocketed tech giants like Netflix and Amazon, entertainment companies like Disney and Warner Bros. Discovery aren’t spending like they used to.
The co-financing model that’s coming back in vogue means independent producers have to help front the cost, which not all can afford to do in these tight economic times.
A production company exec recently completed a round of meetings with all the big streamers who all expressed openness to splitting ownership rights. But the exec said the streamers are also trying to drive down costs of TV series by as much as 75%, even for shows with top stars attached.
With the spending pot getting smaller (and with the strikes grinding on), some sources are skeptical that the return to windowing will lead to a huge windfall for writers and actors.
“It’s a lot of bad news for dollars going into production spending,” the production company exec said. “I don’t know how the world of entertainment can compete with the money tech operates on.”
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