Another media bombshell announcement: Sony, the only major Hollywood studio without its own streaming service has chosen Netflix as its exclusive outlet in the USA. Sony has also awarded Netflix the first-look rights to all its direct-to-streaming films worldwide.
The deal is the latest in a series of changes which is having major consequences for broadcasters and for viewers. It is rapidly changing the way programmes and movies are distributed and licensed and what appears on our TV schedules.
Until 20-25 years ago it was still common for broadcasters to purchase rights to screen programmes from a variety of producers and distributors. So it was not uncommon for the BBC, ITV or Channel 4 to rely heavily on such deals allowing them to fill their schedules with imported programmes. Notably BBC Two and Channel 4 became the home of US series and sitcoms. Consequently, the UK’s main channels showcased the best programmes from around the world alongside their homegrown productions.
The advent of streaming means most Hollywood studios are now choosing to cut out traditional broadcasters. Affected broadcasters are grappling to increase their investment in their own original programmes, securing content for their own linear and streaming TV services. The BBC, for example, is stepping up investment in BBC Three and moving to exploit the archives for BBC Four. At the same time, the public broadcaster continues to work with UK rivals to safeguard free-to-view platforms from the US onslaught.
The BBC is however in a better position than others. Funding cuts meant it had to already cut back on acquisitions, losing some third-party programmes to other broadcasters. Money has been ploughed into maintaining key flagship drama and documentaries in the key 9pm slot.
Major moment for Sky
For Sky, the situation is more serious. It has traditionally been the home of exclusive content from the likes of Disney, Sony, Warner Media and ViacomCBS. 10-15 years ago, Sky was reaping the benefits of hoovering up exclusive broadcasting rights for top US series. It was a move that left traditional broadcasters including Channel 4 looking for other ways to fill its late evening schedules. It also meant there was no way around Sky to access the latest US hits. Its clout led to numerous channels being locked into pay TV deals. Only a small number of US broadcasters were able to provide a limited free-to-air service direct to viewers. Given the choice between high Freeview carriage costs and limited bandwidth for new services and lucrative carriage terms offered by Sky, the winner was Sky.
Streaming has allowed US media giants to change tack – they now have the ability to go direct to consumers through the internet. Rather than licence programmes to Sky, they’ve taken control of the entire process from production to distribution. The result: Disney has already pulled its content from Sky in favour of Disney+. Discovery is growing its own streaming service, while ViacomCBS can side-step Sky with its mix of free-to-air and streaming services. Warner Media has confirmed it is preparing to launch HBO Max in the UK, once its current Sky deal expires.
Fortunately for Sky, it is now owned by US media giant Comcast, guaranteeing it content from NBCUniversal for the foreseeable future.
Original productions
To fill the gap, Sky is now heavily investing in ‘Sky Originals’. Centrepiece of that investment is a new studio complex being built in Borehamwood, near Elstree. The total area of the site will cover the equivalent of 17 football pitches. It will house productions for Sky Originals, plus content being created by subsidiaries of NBCUniversal.
The studios need to be working at capacity by 2025 to make up for the likely loss of hundreds of hours of HBO/Warner Media content on Sky.
Fortunately, there’s great appetite for UK original programmes. Discovery and UKTV have also increased investment in original programmes. Last week, Discovery confirmed that UK-made programmes were helping boost viewing figures for its channels.
In the meantime, Sky continues to turn its main platform into satellite/internet hybrid service. It is working hard to secure new streaming apps for its Sky Q receiver. But in an era when most new smart TVs will include the same apps and the number of Sky channels is decreasing, exclusive content is the key to retain subscribers.
The Scottish approach
Meanwhile, Scotland’s STV has taken a different strategy. Unlike most broadcasters, it hasn’t been as dependent on imported TV programmes. But it has been very reliant on network programmes supplied by ITV. In the last few years, STV has been quietly signing numerous deals with smaller production companies. Breaking the link with ITV means it can, for the first time, officially make the STV Player available nationwide. Sony is also involved in this alternative approach. Rather than build its own streaming service, Sony Pictures Television has teamed up with STV. As a result, classic TV shows Hart to Hart and Party of Five are streaming on the STV Player.
The changes so far have affected series, movies and documentaries. Going forward, broadcasters may encounter growing issues with sports rights. Minority sports, having given up on getting much promotion on traditional channels, are increasingly streaming their own content. At the same time, the biggest sporting events are being courted by new streaming services. Sports rights holders may be content to provide limited free-to-air rights to broadcasters to help promote their sport. But that won’t help maintain the number of traditional sports channels.
For viewers, this will mean difficult decisions. For example, Sky Cinema will no longer be the exclusive home of all new blockbuster movies. But do movie fans want to have to subscribe to a multitude of streaming services at a cost that’s greater than a current Sky subscription? And if you are a sports fan, how much do you want to pay to watch your favourite teams?
As streamers cut out traditional broadcasters, the coming years will be a test to see if viewers can afford to sustain all these different direct-to-consumer services. It will also provide an opportunity for traditional broadcasters to carve out a niche with new original programmes.