Licensing and / or Buying
Streaming Content Content
William Sondheim, Greenfield Media
Stephen J. Kerr, Bel Age Medias &
Sarah Nean Bruce, Bel Age Medias
– 15 MINUTE READ –
Like Home Entertainment (DVD) distributors and Broadcast (cable & free TV) before them, many Streamers start out licensing content from many sources, but then find it essential to create their own original shows. They may contract with known third party producers or have their in-house creative/producers/crews make the programming.
William “Bill” Sondheim, a long-time media executive, who has built, run, and purchased streaming media companies brings his own unique insider insights on how to build a better streaming business.
Stephen J. Kerr, a 25-year veteran corporate and intellectual property appraiser, as well as an M&A intermediary, who has bought, sold, and valued streaming and home media companies, contributes his investment banking perspective to this topic.
This second article focuses mainly on purchasing and licensing content from independent third parties.
We’ve valued and sold many copyrighted and classic film and television libraries over the years, but those transactions seem to be hard to find these days. Most of the best independent film libraries have been sold/licensed a long time ago, and the major studios that control the largest IP archives have all but closed their doors to licensing – instead, they prefer to populate their own OTT streaming channels with their own branded content.
“I think a lot of the best film libraries have been acquired. You are going to see very few independents left because there has been so much acquisition and consolidation. It’s not like five years ago when there were 15 to 20 libraries out there that were substantial.” )
~ Philip Elliott Hopkins, The Film Detective (a Division of CINEDIGM)
We interviewed executives at five well-managed streaming companies to get their insights on producing, licensing, and buying programming for their linear and streaming channels. Their answers were illuminating.
One thing we discovered was that acquiring content that fits and helps build an OTT Streamer’s BRAND is more important to some Streamers than it is to others.
“The alternative approach would narrow the content selections to appeal to a specific audience and focus your marketing on a specific segment which you can satisfy. With limited resources, having a focused audience provides greater potential to satisfy existing consumers and find additional subscribers that match your core audience.”
When new shows or movies are created, usually – but not always – the Executive Producer is in control of how (and where) the content can be used. Often the Streamer did not pay 100% of the cost of creating the content, or they may have pre-sold the show to other, bigger customers (like HBO or Netflix) that have first window rights.
“Licensing provides the small and medium sized streamer some important advantages as they start to build their customer base. The Streamer only pays a fraction of the total cost to make the shows they license. Your channel benefits from pre-existing awareness the property has already created, which makes your service look valuable, with known and recognizable assets.
“Finally, those well-known shows help to define your service. You become known as a ‘Family’ channel or a ‘Kids’ channel or a ‘Horror’ channel, because of well-known programs you use to help define your service profile.”
“Streaming media companies keen on building their audience may not care about ROI, or how much they pay for a particular movie or show, compared to what others paid, or even what they paid for similar content in the past. Building an audience and building a brand can often take precedent over the price Streamers pay for any single piece of content.”
“To arrive at a rational price for films or television shows, the buyer or seller should have someone run a Present Value Analysis. To do that, one needs to project out what the future value that program will bring to the channel – less all the prep and exhibition expense. That Net Revenue can then be projected over the expected economic life of the content. One should then discount that Future Value to account for the risk they are taking, and the cost of capital.”
“It is important to consider how the marketplace has changed, or will likely change, in the coming few years when reading past data to forecast future value. If you have a catalog that has strong DVD sales you will need to heavily discount that in future projections. Equally, if you have modest or no data for AVOD on that same catalog there could be substantial upside.
“Understanding the macro market trends and how they affect your specific genre or titles is an art that comes from years of industry experience.”
“It often falls to IP appraisers to intervene between buyers and sellers and render a neutral Fair Market Value opinion of the IP being considered. Sometimes even professional valuations do not end the disagreement between sellers and buyers of content. Emotions, misconception, and simple greed often cloud these negotiations.”
“At the end of the day, we do make a lot of gut decisions. The business and audience development teams are great to look at for advice going forward, but if you want to be ahead of the curve, which is what Complex is so much about, you need to take risks on people who have not necessarily had the exposure yet, to co-sign that they are going to be a star.”
Many small to mid-sized OTT Streamers are focused on building their brand. Companies like ElectricNow markets a brand of programming that is consistent with the movies and television shows of its founder Dean Devlin. LOL Network relies on the star power of its owner Kevin Hart to attract branded shows, movies, and specials to their network.
Social media plays an important role in the success of all of the Streaming channels, both large and small. Flixx uses social media to promote targeted programs to its audience. LOL uses Kevin Hart’s millions of followers to drive traffic to their network. And ComplexNetworks.com relies heavily on social media to promote their edgy new shows. Social media on YouTube, Facebook, Twitter, TikTok, Vimeo and others is an essential component to the marketing success of Streaming media companies. Plus, they are a constant source of new content as “influencers” rise up and fade away – along with their millions of followers.
Building and maintaining a “brand,” and building and maintaining a high-quality stream of content is the daily toil of every Streaming media company. They can never slow down, never give up, never lower their standards, because there are hundreds of other media companies out there looking to steal their audience away and make them their own.
↓ Stay Tuned ↓
With the help of veteran OTT executives on the front lines of the Streaming Media industry, we will explore the many ways to distribute content and proliferate brands over AVOD, SVOD, TVOD, and LINEAR distribution points. And - how to make money doing it. We will highlight the benefits and the drawbacks of the various channels of distribution, and hopefully introduce new strategies and tactics to proliferate streaming content everywhere it needs to be.
If you’d like to READ Part ONE Article
or SEE Infographic
HOW TO BUILD A BETTER
STREAMING MEDIA COMPANY (Part 1)
Advice for Companies Doing Business
in the Streaming Media Industry
↓ ARTICLE LINK ↓
↓ INFOGRAPHIC LINK ↓
Looking for more capital, content or other resources to help you make the right moves for your streaming media business?
Bill Sondheim and Stephen Kerr can assist.
- If you need a veteran media guru working alongside you to help fortify your streaming media business, or to initiate & complete licensing deals - please contact Bill.
- If you need a business or intellectual property valuation, IP acquisition / divestiture, or you want to discuss the sale of a company - please reach out to Stephen.
2 – HOW TO BUY SELL OR VALUE A STREAMING BUSINESS PART 2 – BMC Online – 06/24/2019 By Stephen J. Kerr http://www.bizmark.net/blogs/how-to-buy-sell-or-value-a-streaming-business-part-2
3 – HOW TO BUY SELL OR VALUE A STREAMING BUSINESS PART 1 – BMC Online – 05/30/2019 By Stephen J. Kerr http://www.bizmark.net/blogs/how-to-buy-sell-or-value-a-streaming-business-part-1
4 – CAPITALIZING ON OVER-THE-TOP CONTENT DEMAND – BMC Online – 09/11/2018 By Stephen J. Kerr http://www.bizmark.net/blogs/capitalizing-on-over-the-top-content-demand
BAM News • BMC Articles • Greenfield Articles
FEATURED-GRAPHIC HOW TO BUILD A BETTER STREAMING MEDIA COMPANY (Part 2)_FINAL.jpg – via Bel Age Medias
INFOGRAPHIC-HOW TO BUILD A BETTER STREAMING MEDIA COMPANY (Part 2)_FINAL.jpg – via Bel Age Medias
HEADSHOT-LinkedIn_BillSondheim.jpeg – via Greenfield Media
HEADSHOT-LinkedIn_StephenJKerr.jpeg – via Bel Age Medias
Categories: #content #distribution #streaming #entertainment #OTT #streamers #worldwide
LINK TO INFOGRAPHIC VERSION OF THIS ARTICLE:
HOW TO BUILD A BETTER
STREAMING MEDIA COMPANY (Part 2)
Licensing And / Or Buying
Streaming Media Content