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D2C TV Licensing Set to be the Norm Across Multiple Markets


Jack Thomas Manager

As SVOD services from US Studios rollout more across the world, Show Tracker reveals that levels of US scripted TV series being vertically integrated by studios are starting to skyrocket in many markets

While markets like Spain, Sweden and Poland have historically had high levels of vertical integration due to the presence of WarnerMedia services, which for a long time has taken most of the content coming from Warner’s distribution arm, the launch of Disney+ and more importantly its Star add-on has pushed vertical integration in some markets like Spain to an almost ubiquitous level. Even those European markets that have not yet crossed over to a majority of vertical integration are closer than ever to having half of their US premieres occurring through D2C.

All the European markets that do not yet have HBO Max instead have volume deals with Warner for their HBO output, making up the many homes of HBO. When these volume deals start to expire however (Sky’s with Warner ends in 2025 for instance) we will likely see the launch of HBO Max push these remaining territories over the edge, causing them to become majority D2C markets.

Asia Pacific at first glance appears to buck this trend. Strict policy in China regarding foreign owned entities prevents any level of vertical integration in the market. Japan has limited opportunities for vertical integration but likewise is acquiring new US shows at a level far below the global average. India meanwhile has become a market dominated by studio owned SVOD and as a result has some of the highest levels of vertical integration. Pan-Regional Asia sits just behind India, with the presence of Warner services, the only market in this region so far with them, and the recent launch of Disney+ in February 2021, alongside Star, driving much of this growth.

While Australia has low vertical integration numbers a large proportion of their third party sales are delivered via volume deals from US Studios with their own SVOD services that could replace them in the future. Nine Entertainment’s SVOD Stan has volume deals with Lionsgate for Starz content and ViacomCBS for Showtime content. If Lionsgate were to launch StarzPlay in Australia that would cut off one pipeline, while the launch of Paramount+ in August 2021 may begin to threaten the Showtime TV series available on Stan, as the SVOD in many international markets is beginning to become the home of Showtime.

The 2020/21 season saw the launch of StarzPlay, HBO Max, Paramount+ and Disney+ in Latin America, with the latter’s Star add-on launching in August 2021 as a separate SVOD service called Star+. As a result it turned a market that had typically below average levels of premieres into one with above average levels. This growth was supported almost entirely by vertical integration. Very few truly local buyers engaged with US TV content this season. In fact it was only really Globo in Brazil that acquired any new US TV series this season, premiering ‘Coyote’ from Sony (a Paramount+ Original in the US) and ‘Walker’ from ViacomCBS.

What might have been expected by some to be a gentle rate of growth for vertical integration is instead manifesting as big sudden jumps in D2C levels caused by studios making hard changes. Disney is essentially all in, with virtually of their distribution catalogue going straight into Disney+ in markets with Star and the only thing holding back WarnerMedia doing the same in more markets are volume deals with an inevitable expiration date.

The challenge is therefore on the shoulders of third party owners to find content for their services, whether broadcast or VOD, from a diminishing pool of once readily available US content. The takeover of MGM by Amazon demonstrates that even those distributors without a D2C service could effectively have their latest content drop off the acquisition market.

There may hope yet for services starved of US content to acquire. UK services have found success creating co-productions with US services, which in the past has helped HBO level content from Warner find a place on public broadcasters like the BBC in a world where it would typically be destined to release on Sky instead. International services beyond English speaking territories are likely to start finding US Studios more amenable to co-producing content with them as the demand for foreign language shows continues to grow, particularly following runaway successes like ‘Squid Game’ on Netflix.

A developing audience appetite for more TV produced outside the US, whether from the UK or further beyond, also opens the door up for international distributors outside the US to sell their content to brand new buyers. Unfortunately these services may have to compete with the US Studios acting as buyers, as most of these SVOD services require a certain amount of foreign titles to fulfil quotas in markets such as the EU. While Netflix and Amazon are happy to produce more foreign language titles than English ones to achieve this, other services such as Disney+ are instead electing to acquire foreign shows from third parties for their service.

A new world where studio owned content is directly funnelled to their SVOD services around the world is no doubt disrupting the status quo, but with it comes opportunities for international distributors to achieve more reach for their catalogues. While the types of new shows appearing on third party services will undoubtedly change, a new market for buyers, comprised of English content from the UK and Australia, alongside a rapidly evolving premium foreign content market, gives many services a potential second lease of life to become a new home for the latest in-demand titles.

Watch our FREE webinar on 'The D2C Streaming Wars: Disney, Netflix, Amazon and Beyond'.

Using the latest data, we took a fast-paced look at the significant developments in the D2C space, including vertical integration and the different approaches that the major Hollywood Studios are taking.

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Show Tracker is an essential tool for the TV industry, which monitors where TV shows are being sold around the world and the rights attached to each deal. Tracking over 1,000 TV shows and 330 different services in over 17 markets, it provides a unified view of the distribution market. Show Tracker gives you data you can trust to drive your strategy forward and give you the edge in negotiations.

All deals in the dataset are now flagged to show whether they have been vertically integrated, meaning subscribers can track these trends as they develop with each monthly update.

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