Will Paramount Skydance succeed in pursuing Warner Bros. Discovery? Will Netflix, Apple and Amazon jump at the chance to buy HBO and Warner Bros. And will the big European media players jump in?
As industry leaders in the global content business converge on Cannes for the annual Mipcom conference and market, the United States is seeing a surge of activity in the form of a reconsolidation of major media assets. Warner Bros. Discovery is currently the hottest target, but it’s not the only one.
The outlook for Hollywood’s biggest brands is sure to be one of the big topics discussed at the weeklong gathering of buyers, sellers, producers, distributors, marketers and advertising industry professionals on the Croisette from October 13th to 16th. But this year, there will no doubt be more discussion than ever about energy, innovation, and investment from far away from Los Angeles and New York.
“These are exciting times where we’re becoming global. We’re global in terms of production and we’re global in streaming,” Warner Bros. Discovery CEO David Zaslav said last month at the Goldman Sachs Communacopia+ Technology Conference.
In short, the dawn of streaming platforms with global reach such as Netflix, HBO Max, Disney+, and Prime Video created a global entertainment market that was easily accessible to both consumers and producers. With a focus on showcasing content from around the world and producing local language series and films, we have rapidly strengthened our production infrastructure in regions across Europe, Asia, Latin America and Africa, which otherwise would not have allowed us to develop such a skilled workforce or such a wide range of production-related ventures.
And this global push is also having regional effects. The rise of the “micro-drama” trend in Asia is spreading to other markets, including the United States. This is a great example of how an influx of money, resources and talent can drive innovation and profit from the grassroots. Micro-dramas are continuous streaming programs that are typically presented in one- or two-minute episodes. It also allows for micro-sized budgets, an attractive proposition at a time when Hollywood is struggling with soaring costs.
“This is a new storytelling medium for us… that allows us to quickly reach local, if not global, audiences,” said Angeline Poe, chief customer and corporate development officer at Mediacorp in Singapore, noting that brand partners are already consolidating into the short-form scripted format.
The hit format “Love Island” is still a big hit internationally.
Another recent deal that has drawn significant attention to how major US companies are leveraging technology and global media is Amazon and Netflix’s advertising partnership. The streaming giants have partnered to allow Amazon Ads to sell a portion 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 help address the traditionally large gap between advertising and sponsorship sales in the United States and the rest of the world.
This was made possible by Amazon’s investment in advanced advertising technology and Netflix’s need for an efficient solution to selling ads outside the United States. The partnership is sure to put pressure on major euro players such as Germany’s RTL and ProSieben, Britain’s ITV, and France’s Canal Plus and TF1 to explore similar solutions to gain advertising reach and efficiency. Advanced advertising technology systems are one of the hottest areas of digital media innovation as every business sector looks for new ways to do more business with less. In that regard, the growth of artificial intelligence tools (pros, cons, unknowns) is definitely a theme at Mipcom.
But with the impending auction of two stalwart entertainment brands: the powerful Warner Bros. Studios and the groundbreaking HBO, the fate of Warner Bros. Discovery is sure to take center stage.
Paramount’s new mogul David Ellison surprised many by announcing that Paramount was working on a bid for WBD. Rumors of Skydance’s acquisition of Paramount began circulating less than a month ago. In the eyes of many observers, the swiftness of Mr. Ellison’s moves suggests that Skydance’s $8 billion acquisition of Paramount was part of an ambitious strategy to take on the biggest media giants.
“This deal confirms Paramount’s desire to once again invest significant capital into the business for long-term expansion,” said Robert Fishman, senior media analyst at MoffettNathanson. “In Ellison’s own words, ‘we can’t cut corners to grow.'”
“But what if these announcements were part of a much bigger plan? While we expected aggressive plans from the start for the incoming Skydance team, Ellison seems ready to move much more quickly than take his time digesting Paramount’s assets for his now widely anticipated bid for Warner Bros. Discovery,” Fishman wrote.
Of course, Paramount may not be the only candidate for WBD. Some media analysts believe it will be difficult for Netflix to sit on the sidelines with a once-in-a-generation opportunity to acquire a premium service with a major studio that set the standard for subscription television in the 1970s.
HBO Max is still in the midst of international expansion in markets where Netflix is already strong. It doesn’t take much imagination to see the benefits of this partnership. But that’s just one consideration. Laurent Yun, a media analyst at Bernstein & Company, suggested that absorbing HBO Max won’t expand the company’s overall subscriber base. This will certainly be a big factor weighing on co-CEOs Ted Sarandos and Greg Peters as they plan their next move.
“90% (or more) of HBO Max subscribers are Netflix subscribers, so there is limited scope for subscriber growth, and Netflix already has “Max enjoys top penetration in other developed and growth markets where it plans to launch. Churn rates could improve with further content enhancements, but upside is constrained given Netflix’s already market-leading churn position,” Yoon wrote in a Sept. 29 research note on the rise of Netflix-WBD. rumor.
The do-or-die debate over WBD will continue at Cannes’ Palais des Festivals and other venues where industry figures gather. And in between, you’ll get your first glimpse of the next big thing we’ll be talking about next year.
Naman Ramachandran contributed to this report.
