The New Hollywoodland Deals

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Image Courtesy of the Associated Press

The Netflix-Paramount and the Apple-A24 distribution and production deals signify change in Hollywood.  History tells us that such partnerships were a big no-no when Lew Wasserman ran the town, but the times have changed.  The new deals are a reminder of when Hollywood was Hollywoodland, and yet a Golden Age of content in the entertainment and media industry being dominated and disrupted by technology and innovation.

 

However, Hollywood was already changing prior to Netflix, Paramount, Apple, and A24 coming together in separate deals.  The major players have been moving pieces, people, and assets for several years to stay ahead.  The new deals are therefore not a complete disruption of the entertainment industry, but there are three things that are likely to result from the new deals.

  1. More Content without the Traditional Distribution Model in Place

In the past, when movie studios like Paramount wanted to produce and distribute a film, they generally looked at the four-quadrants of consumers and decided whether the demographics met revenue projections before it began the filmmaking process.  If Paramount can (1) skip the theatrical window, or (2) have a much shorter theatrical window, while hoping for awards recognition, and (3) still reach massive amounts of subscribed consumers via Netflix’s existing audience, it may not need to adhere to the four-quadrant model.  Quite possibly, Paramount can now focus on creating more great content, which benefits the artist, consumer, and creator, while the finished product can be licensed directly to Netflix as the distributor.  Viacom, which owns Paramount and Bellator MMA, just completed a similar deal with DAZN for its sports content.  This as opposed to Disney (who bought 21st Century FOX’s library) and Universal whose focus is on building their own streaming platforms and distribution models.

Without the financial restrictions of traditional distribution, consumers are likely to see more diverse content being made and distributed.  The question has changed from what sells to what content can we feed to the audience’s ever-growing appetite.

  1. Traditional Players joining or following the New Players 

Technology and innovation brought the change, the studios are only following the logic if you cannot beat them, join them.  The new deals allow the existing studios to survive the wave of change.  Expect similar deals going forward.  More pointedly, there has been a lot of role shifting where the techies and streamers have become the money handlers and distributors, while the studios produce and license content for them.  In some sense, it goes back to point one; Everyone is producing content, including the agencies, while Netflix, Amazon, and YouTube will continue (or in the case of Apple, plan) to produce their own original content as well.

  1. Questions that Remain

What has really changed?  The new deals are more of a content revolution, or a consumer disruption, rather than anything else.  As technology and innovation provided the needed platform for better content consumption, consumer’s grew fond of and expected the new OTT/DTC model.  Consumers have always wanted more content (i.e., information and entertainment), it is just that there is an easier way to access content now.  Existing businesses have had to change to meet the consumers’ needs.

What does history tell us about more control in the hands of a few: expect more business consolidation until the Federal Government says no more.

Will the Academy and festivals update their standards with the changing industry to allow for non-theatrical distribution?  Maybe a new deal in Hollywood is needed there too.

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