How can rights-holders navigate the swiftly evolving streaming landscape?

There has seemingly never been a better time to be a creator of feature films or scripted television. The SVoD space is expanding at a dizzying rate.

Disney+, Apple TV+, HBO Max, Peacock, Paramount+ and more have muscled into the field alongside Netflix and Amazon Prime. This rate of change can be daunting for creators to navigate.

Alongside the US giants, there has been a proliferation of mainstream SVoD competitors, many backed by telecoms operators or broadcasters, that themselves are not global (yet) but are either expanding their territory footprints or are forces to be reckoned with locally. They often position themselves head-on against Netflix et al in mainstream content as well as buying and funding originals that draw on local strengths. These include Orange/OCS, which operates in France, Spain, central and eastern Europe and Africa; Nordic powerhouse Viaplay, which is expanding into the US; Sky/NOW in the UK, Italy and Germany; and Telefonica Movistar+ in Spain, Portugal and Latin America.

Further competition in the SVoD space comes from the thematic platforms, of which Mubi has become the standard-bearer at least in terms of arthouse and festival titles. Dedicated to a specific niche, there are multiple players in this field, including arthouse/indie-oriented sites such as Filmin in Spain, Curzon Home Cinema in the UK and Indie­Flix in the US, to documentary-focused sites such as Curiosity Stream and genre specialists like Shudder. Often global or multi-region, they target a passionate fanbase, and many are also funding originals.

While posing an existential threat to cinemas and theatrical exhibition, the Covid-19 pandemic has conversely hastened the rise and proliferation of platforms. The changes continue apace, and rights-holders suddenly need to know a whole lot more about working with SVoDs today.

The pandemic has accelerated trends and evolution in the SVoD space

The pandemic was a ‘forcing function’ for the traditional industry to adapt rapidly and evolve further into the digital space, from new models such as premium TVoD and SVoD to online/hybrid festivals to rights-holder-specific platforms. A key driver from a commercial sales perspective has been the tremendous growth in VoD appetites and the buying of curated library titles. The sweet spot for SVoD is for titles between two and seven years old.

Overall, and certainly since Covid, if rights-holders focus mostly on SVoD platforms that pay a flat fee or minimum guarantee (MG), with some good exceptions, a film can be sold across many sites — if not to the big US players, then to their mainstream competitors and complementary thematic and/or niche sites.

With this approach, most deals will be non-exclusive. If close attention is paid to elements including windows, pricing terms and territorial reach, it could mean significant cumulative monies and audience access, opening new long-term pipelines for producers and sellers.

In this way, Covid-19 has been a great leveller. It has allowed platforms that didn’t attend markets or festivals, quietly buying and selling online via email and phone calls long before the pandemic, to gain exposure.

Platforms have become more open during the pandemic, and are not buying just from their regular sellers and aggregators. To differentiate themselves in programming from their competitors, they are now willing to deal directly with producers or explore hybrid models. They have widened their appetites and pocketbooks for other niches and genres, subsequently opening up new business pipelines for the platforms and rights-holders.

Shifts in the business model

The mainstream competitor SVoDs, although relatively more flexible in deals than the big guns, are paying more premium pricing than niche or genre services. But they also have some strict rights restrictions, such as premiere status as well as holdbacks. However, they also buy non-exclusively, particularly in less mainstream categories.

As for the thematic and niche SVoDs, those that pay flat-fee licences have mainly bought non-exclusively even before Covid‑19 and/or paid for exclusivity or premium-first windowing. During the pandemic, more thematics added MGs or higher flat fees for current titles, as well as more volume and thematic packaging with library titles. Yet, at the same time the opposite has occurred: various higher-end, flat-fee-paying SVoDs in the thematics category suddenly changed their model to revenue-share only — a take-it-or-leave-it approach — so it depends on the platform and its strength and positioning in the market.

Those in the first category are addressing strong pushback from an industry by now fed up with the ‘promise’ of revenue share, against ever-expanding territory demands, but generating poor returns (less than €1,000 in some cases). Those in the second category, often more established and reputable services, are generally able to switch models because they have a proven track record and/or subscriber numbers are sufficient to remove the need for a flat fee or MG. And in other cases, they are reacting to a larger supply of titles available during the pandemic, giving them greater bargaining power against suppliers who had earlier not focused on mid-sized or smaller SVoDs.

Generally, SVoD deals range from one to three years, but some platforms choose shorter windows to lower the price and/or to keep their catalogues refreshed. Some have stopped funding originals altogether during the pandemic, just as the big guns had to pause similarly, turning attention to buying third-party current and library titles. It was notable, for instance, when Netflix licensed various mk2 Films classics — such as the Francois Truffaut collection — during that period.

Foreign-language titles are less of an issue, with many platforms willing to flexibly trade off subtitling, dubbing and versioning in return for lower pricing, and rights-holders can negotiate to access those versions at half the cost, which is an attractive feature for on-selling. Similarly, deliverables are more relaxed. The top-tier services continue to require a high iTunes-type spec and so tend to go through digital aggregators, but also deal directly for select indie ‘discoveries’ for differentiation.

In the short term, box-office indicators have become less of an influence on pricing. Other measures of quality or audience receptiveness have come to the fore — such as festival awards and press, social-media followings, event screenings, engagement or impact — as well as topical thematic changes. For example, one telecom in Europe had two years’ earlier declined a controversial, female-centric SXSW audience award winner, but returned to request licensing of the title given audience interest in #MeToo topics.

MGs/licence fees are becoming more necessary than revenue share, with exceptions

After a decade or more of digital, the industry has developed a low tolerance for SVoDs that offer only a revenue share. Too often over the past years, well-meaning and curated prestige SVoD sites led to deals with a value of a few hundred euros after a year. This is not acceptable, at least for current or top library titles, particularly when the stipulation is for global or multiple regions. By now, rights-holders do or should require a flat licence fee or MG-plus-

revenue share — with some US-scale exceptions such as Amazon Prime, Hulu and Tubi.tv given their reach and proper returns, where an MG can be moot. Rights-holders should have reasonable expectations given the non-exclusivity and depending on the profile and type of film and overall deal volume.

Still, it’s often a good filter for the seller or producer that considers licensing to an SVoD platform. There are in theory 3,000 VoD sites in the EU alone but, in my view, only 70-100 that pay a proper licence fee and/or offer some other commercial angle, marketing or audience. That said, some of the revenue share or low-MG arthouse/niche sites have strong and loyal followings, prestige programming and editorial focus, and these deals should be encouraged — with relatively reasonable returns (such as a Filmin or Criterion).

But for fledgling micro-niche sites or start-ups, a pure revenue share has the danger of disappointing the rights-holder unless it has other important goals such as accessing the fan base or editorial positioning.

A shift away from the all‑rights deals towards a hybrid model

This depends on the sales agent and the category of films, as well as whether they are dealing with current titles or back catalogue of rights reverting. All-rights deals traditionally generated more money and efficiency for sales agents and, historically, the producers. But producers also say it is more difficult today to get MGs from sales agents (and from sales agents, to get the same levels or any from all-rights buyers) than used to be the case.

It puts the producers in a trickier position, but has opened the door to some hybrid approaches.

There is now more industry realisation that there can be a broader world in terms of cumulative revenue (particularly for older titles) by going platform to platform — at least with mainstream and niche platforms that pay properly.

Some rights-holders want this new additional pipeline of buyers, so are investing for a longer-term future direct with platforms: sales agents are keen to amortise the ‘new buyers’ relationships across a broader catalogue, and producers if they want to take a more active role in distribution or at least be aware of and supplement the path planned by their sales agent.

The issue is now less about territoriality deals/rights, and more about platform multi-region reach, so as to better monetise the title beyond local reps and boundaries.

New ways to navigate this landscape

Where it is a possible match, rights-holders should start with the big players first, even just to rule them out. The deals are worth more money, but come with restrictions in terms of rights, holdbacks and deliverables. Even with an offer from the big players, it is worth considering whether to do local vs global deals now international digital has stepped up in value.

But rights-holders should be mindful of the goals of the producer, aside from big money. Will they be buried on the platform? Will they have to sacrifice other windows? What will the reach and impact be for this route? And do they care, as they can still use the first deal as a calling card for future deals, including future originals?

After or alongside that, go to the mainstream competitors who also pay more for exclusivity but may require some rights restrictions such as first window or no TVoD. Watch out for holdbacks, generally AVoD during the SVoD window can affect deal pricing, even in a non-exclusive SVoD deal.

Then try multiple (not just one) thematic and niche sites, which are mostly flexible and non-exclusive and quick to respond — although prioritise as above those willing to pay some flat licence fee and/or MG up front or at the back end.

Price ranges vary greatly when working with platforms

Pricing is tailored to the platform and the film, including its timing and what its competitors are doing. Some years ago, for example, many platforms wouldn’t buy documentaries; now they do.

One rule of thumb is to draw on earlier benchmarks such as a premium or low-pay pay-TV deal in the old days, which translates well to modern SVoDs. For non-

exclusive deals, a rights-holder is looking at a third or maybe half of the exclusive pay deal for an indie title in the past. For example, if a pay-TV network in the Netherlands might have earlier paid €10,000-€30,000 (around $12,000-$35,000) for exclusive rights in one or two small territories for an indie premiere, a non-exclusive SVoD could be expected to offer between one-third and one-half for a current title, or less again for library.

If the platform is seeking rights in more markets or windows, then ask for more. And as in traditional media, volume affects pricing. Buying 400 titles will lower the price versus a single, cherrypicked title.

Also important is if the platform buys multi-model at one flat price, or adds revenue share for other windows.

Deals are bespoke and situational and rights-holders should be realistic also to the nature and profile of the film. Broadly, mainstream SVoDs that are only in one region are usually licensing in the low four-to-five-figure range; thematics tend to be in the four-figure range; and the very niche services can be lower than that — but there are several to sell to at the same time.

If doing a non-exclusive Mubi or Shudder deal, strike a few more with their competitors and/or other broader indie film buyers. Non-exclusive deals for indie titles in an EU region can average €1,000-€5,000 (around $1,200-$6,000) per title, ranging to 20-times bigger especially when it comes to mid-size and mainstream competitors.

For example, a high-end, current foreign-language title was in the mid five-figure range, while an English-language indie title had a low-six-figure deal with a multi-region (but not global) mainstream SVoD. One French SVoD offered a five-figure deal for a new feature drama with name cast that wasn’t released in France, but the price increased significantly when other SVoDs showed interest. In that case, the rights-holder went with the lower offer as it opened a broader co-production pipeline and relationship.

In another case, three modest non-exclusive deals in the same region added up to more than the exclusive offer.

Platform buying tastes change in response to their competitors and to social trends. Matchmaking a title to a platform in a curated way, as opposed to sending long availability lists, can assist the process. It is personalised and labour intensive, but it can pay off.

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