Will Paramount Skydance succeed in its quest for Warner Bros.? Discovery? Will Netflix, Apple or Amazon seize the opportunity to take over HBO and Warner Bros.? ? And will one of the major European media players embark on this path?
As global content industry leaders gather in Cannes for the annual Mipcom conference and market, there is a flurry of activity in the United States that is shaping up to be a new round of consolidation of major media assets. Warner Bros. Discovery is currently the most high-profile target, but it’s not the only one.
The prospects of Hollywood’s biggest brands are sure to be one of the big topics of discussion at the week-long gathering that will bring together buyers, sellers, producers, distributors, marketers and advertising experts on the Croisette from October 13-16. This year, however, there will certainly be more discussions than ever about energy, innovation and investment coming from places far removed from Los Angeles and New York.
“It’s an exciting time as we go global – global in terms of production and global in terms of streaming,” said Warner Bros. CEO David Zaslav. Discovery, last month at the Goldman Sachs Communacopia + Technology conference.
Indeed, the emergence of global streaming platforms such as Netflix, HBO Max, Disney+ and Prime Video has created a global entertainment market that is easily accessible to consumers and producers. The focus on showcasing content from around the world and producing local language series and films has boosted production infrastructure in regions of Europe, Asia, Latin America and Africa that otherwise would not have developed such a workforce with such skills or such a range of production-related businesses.
And this global push has had local ramifications. The rise of the “micro-drama” trend in Asia is spreading to other markets, including the United States. It’s a great example of how an influx of money, resources and talent can drive innovation – and profits – at the grassroots. Microfictions are serialized streaming programs that are typically released in one- or two-minute episodes. It also allows for micrometer-sized budgets, an attractive proposition at a time when Hollywood is struggling with spiraling costs.
“This is a new storytelling medium for us… immediately reaching a regional and even global audience,” says Angeline Poh, director of client and corporate development at Mediacorp Singapore, noting that partner brands are already integrating the short-form scripted format.
The hit format “Love Island” is still a big seller internationally.
Another recent deal that has highlighted how US majors are embracing technology and global media is the advertising alliance partnership between Amazon and Netflix. The streaming heavyweights have teamed up to allow Amazon Ads to sell some of Netflix’s ad inventory in the US, UK, France, Spain, Mexico, Canada, Japan, Brazil, Italy, Germany and Australia. This well could be the first of many bridges to bridge what has traditionally been a large gap between advertising and sponsorship sales in the United States and the rest of the world.
Amazon’s investment in advanced advertising technologies and Netflix’s need to find effective solutions for selling ads outside the United States make this possible. This alliance will undoubtedly put pressure on major European players such as Germany’s RTL and ProSieben, Britain’s ITV and France’s Canal Plus and TF1 to seek similar solutions to gain advertising reach and efficiency. Advanced advertising technology systems are among the hottest areas of digital media innovation as every industry seeks new ways to do more business with less. In this regard, the growth of artificial intelligence tools – the pros, cons and unknowns – will certainly be a theme at Mipcom.
But with an auction on the horizon for two major entertainment brands – powerful studio Warner Bros. and the groundbreaking HBO – the fate of Warner Bros. Discovery will definitely take center stage in conversations.
David Ellison, Paramount’s new mogul, surprised many people by announcing that Paramount was working on a bid for WBD. Skydance’s acquisition of Paramount was barely a month old when the news began to spread. To many observers, the speed of Ellison’s move suggests that Skydance’s $8 billion acquisition of Paramount was part of an ambitious strategy to take on the biggest of the big media outlets.
“This deal reinforces Paramount’s willingness to once again invest significant capital in the company in a long-term growth effort. In Ellison’s own words, ‘You can’t cut to grow,'” wrote Robert Fishman, senior media analyst at MoffettNathanson.
“But what if these announcements were part of a larger plan all along? We expected an aggressive plan from the start for the new Skydance team, but rather than taking time to digest Paramount’s assets, Ellison appears ready to move much more quickly, now with a widely anticipated bid for Warner Bros. Discovery,” Fishman wrote.
Of course, Paramount may not be the only WBD contender. Some media analysts believe Netflix will struggle to stay away from a once-in-a-generation opportunity to acquire a marquee studio and the premium service that set the standard for subscription television in the 1970s.
HBO Max is still expanding internationally in markets where Netflix is already strong. It doesn’t take much imagination to see the benefits of this partnership. But that’s just a consideration. Laurent Yoon, a media analyst at Bernstein & Co., suggests that absorbing HBO Max would not expand the enlarged company’s overall subscriber base — that’s an important factor that will surely weigh heavily on co-CEOs Ted Sarandos and Greg Peters as they plot their next moves.
“The room for growth in the number of subscribers is limited, because [more than] 90% of HBO Max subscribers are Netflix subscribers, and Netflix already enjoys leading penetration in other developed and growing markets where HBO Max plans to launch. Churn could improve with an even stronger content slate, but upside potential is limited given Netflix’s already leading position in market churn,” Yoon wrote in a September 29 research note on the rise of Netflix-WBD rumors.
The debate around WBD will certainly continue at the Palais des Festivals and other Cannes venues where industry insiders gather. And in between, they’ll be among the first to get a first look at the next big thing we’ll be talking about next year.
Naman Ramachandran contributed to this report.
