Kate Bulkley, Media Analyst.

Let billionaire battle commence

By Kate Bulkley

Broadcast News

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For Broadcast September 14, 2017

Digital giants’ increasing investment in originals could be a gamechanger

One of my favourite shows of the past couple of years is Showtime’s Billions, which airs here on Sky Atlantic.

Starring Damian Lewis and Paul Giamatti, it’s a tale of hedge funds, ambition, egos and, of course, beautiful people.

The drama’s name is non-specific; it could be about a business beyond finance. Indeed, the title is a perfect way to sum up the current ambitions of the digital giants that are starting to flood the television industry with their cash.

The likes of Facebook, Netflix, Amazon and, most recently, Apple are all flashing the cash, promising ‘billions’ of dollars for programming investments.

Apple is reportedly talking $1bn (£750m), as is Facebook. HBO already spends $2.5bn-plus (£1.9bn-plus) a year. But all of that pales in comparison with Netflix, which is anticipated to spend a whopping $6bn (£4.6bn) on originals this year.

These are astonishing sums, but the figures are not mere bravado. The digital guys figure that this is the only way to play the TV game in the digital era.

In July last year, Facebook boss Mark Zuckerberg said the social media site needed to become a “video-first platform”. A $1bn pledge for original programming was not far behind.

Facebook doesn’t give much away in terms of viewing statistics, but it has revealed that one in five videos consumed on the site are live streams. Great for Facebook eyeballs, but less so for a traditional broadcaster like Channel 4, according to Channel 4 News anchor Jon Snow.

In his recent MacTaggart lecture, Snow said Facebook is not only a “threat to democracy”, given the echo chambers of only seeing what like-minded people are posting, but that the site should pay more for “feasting” on third-party TV content.

Instead, Facebook’s priority is original content, which looks set to include live sport. The site reportedly bid more than $600m (£455m) for five years of Indian Premier League Twenty20 cricket, but lost out to 21st Century Fox’s Star India Sports, which paid $2.5bn.

In 2008, the 10-year rights were purchased by Sony for $1bn (£750m). Talk about rights inflation – that’s a serious increase for an important audience.

“It’s all about capturing the fleeting attention of millennials”

Planet Earth II

This space is getting more crowded: witness Disney’s recent decision to take its ESPN brand into the online streaming world.

Meanwhile, Apple has its own $1bn set aside for programming from Hollywood. Last month, it hired two long-time Sony Pictures TV executives to lead the strategy: Jamie Erlicht and Zack Van Amburg, who have developed TV franchises such as AMC’s Breaking Bad, NBC’s The Blacklist and Netflix’s The Crown.

Snapchat is in the game as well: the insta-messaging app says two-thirds of its 173 million users regularly post video and it has already partnered with the likes of BBC Worldwide (on Planet Earth II) and NBC (The Voice) to produce brand new spins on already successful shows. More original content is now in the works.

It’s all about capturing the fleeting attention of millennials. The move from primarily short TV-style clips towards longer-form, premium video will be a test for everyone. What will all these billion-dollar budgets be spent on? Will the world’s TV production companies simply have new paymasters, or will they need to develop totally new formats to fit short(er) attention spans and mobile phone screens?

What we do know is that Facebook and Google combined capture the lion’s share of online advertising and control 20% of global ad spend, according to media analyst ZenithMedia.

The fight for viewers and ad revenue looks to be waged with more TV fare, from quality drama series to documentaries, live sport, hit comedies and all the regular TV genres.

So let the battle commence. After all, it’s only money, right?

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