Despite the messaging, streamers are increasing their programming budgets this year and those dollars should go to building franchises
After Netflix’s recent first-quarter earnings and the continued tumbling of financial markets, many believe content spending by the major streamers will go down. Wrong! Never before has there been more of an existential need for exclusive marquee content by all major streamers and media companies to break out of the pack and hold our attention (especially now, as we hold on more tightly to our collective wallets). Increasingly fickle consumers need to make snap decisions about what they watch in our increasingly overwhelming world of content. And that means one thing. Content spending will continue to rise as all players scramble to acquire the best of the best.
The ever-increasing massive content dollars speak for themselves. Disney has increased its 2022 content spend $8 billion (up to $33 billion), NBCUniversal is doubling its Peacock spend this year (up to $3 billion), and Netflix’s 2022 content spend is going up, not down (up to $18 billion). Amazon and Apple are also massively increasing their content spends. Not surprising for companies that have multi-trillion dollar valuations and where content is used as marketing to increase net promoter score (NPS), a metric for customer loyalty, and overall brand “stickiness” and consumer spending.
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So the question isn’t whether content spending will rise (it will). Rather, the relevant question is where those burgeoning content dollars are best spent. And the increasingly obvious answer is for content spending to focus on instantly recognized and impactful literary and intellectual property franchises and name brands that solve the consumer viewing dilemma. Franchise content is the ultimate weapon. It gives consumers the short-hand they need to navigate this content barrage via a “less is more” content strategy — i.e., less sheer volume (fewer titles), but more impact (content that immediately grabs our attention via instant “brand” recognition).
Disney is “Exhibit A” in this regard with its holy programming triumvirate of Marvel, “Star Wars” and Pixar — not to mention its beloved Disney princesses. Its continuing paid subscription success in the face of the challenges of others makes the case. The Mouse House added to its IP franchise fire power, of course, when it acquired the X-Men and Avatar franchises from Fox in a galaxy not so far, far away. Smart. Smart. Smart.
Data insights firm Kantar recently underscored this reality and offered this solution: “This means platforms need to heavily market and recommend specific titles as opposed to broader platform catalogues to help consumers with decision paralysis.” In other words, less is more — franchises! Kantar cites the power of the “Star Trek” franchise in accelerating Paramount+‘s first-quarter 2022 growth by 20%. “Paramount+, still one of the younger platforms on the market, is demonstrating how a single title can drive growth,” concluded Kantar.
Franchises come with built-in mass audiences around the globe and can be the gifts that keep on giving — endlessly repurposed and repackaged for decades across all media platforms. If done right, IP franchises never get old. And want added franchise power? Bring the audience itself into the act. We will ultimately see content/IP franchise owners give audiences incentive-aligning “skin in the game.” Web3 promises to enable fans to accelerate the value of their favorite franchise IP over time via their own individual social marketing and distribution — and even direct financial investment. Audiences ultimately will share in the financial value they create.
But these content franchises are increasingly harder to find, and that scarcity makes them even more valuable. That’s great news for “brand” names and IP franchise owners. Not so much for the media buyers in an increasingly hyper-competitive market.
The great hunt for the elusive franchise is on. Grab your popcorn (and your calculators) to watch this thriller unfold.
Peter Csathy is chairman of CREATV Media, a boutique media, entertainment and tech M&A and advisory firm. You can follow him on Twitter @pcsathy.
