Subscription Streaming Driving Waves of Change in Entertainment Market, Speakers Say

LOS ANGELES — The enormous cachet and power of subscription streaming services such as Netflix and Amazon — and the proliferation of like services — are major drivers in entertainment market disruption and are giving content creators increased clout.

That was the opinion of speakers at the Entertainment Finance Forum presented by Winston Baker Feb. 27.

“It’s never been a better time to be a content creator,” said Michael Lee, CFO, Perfect World Pictures (USA), but he added for his company it’s also “getting incredibly more difficult to greenlight a film” with all the competing entertainment outlets. That means the company must get more involved in getting closer to and helping film creators.

“It is very scary for us that are still part of the establishment,” added Ron Hohauser, CFO, Legendary.

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While subscription streaming is the future, he noted adding up all of the charges for the different services can amount to “a car payment.”

With the proliferation of subscription services “your car payment goes from a Prius to a Porsche,” Lee added. “Consumers aren’t going to want to have 32 subscriptions.”

What is developing is “a content bubble that’s going to be paid for by a lot of investors,” Hohauser said.

For the time being, capital from the American stock market that funds the big streamers “makes them formidable competitors,” said Eric Briggs, CFO and chief strategy officer at media company Macro, adding “they can buy whatever they want.”

But that, too, could change.

“I do think investor-funded content creation will come to an end at some point,” added Ambereen Toubassy, CFO at Quibi, a short-form content subscription entertainment company backed by Jeffrey Katzenberg. “Content will need to be economically feasible.”

“Chasing Netflix is a lose proposition,” noted Adrienne Becker, CEO of Level Forward, which backs projects driven by women and people of color. She supports concentrating on serving underserved communities with content.

On the content side, Toubassy added there are ripe opportunities in the short-form arena, which Quibi plans to mine when it launches as a subscription service to consumers in 2020.

“The reason we’re so excited about the short form video market … is it’s a huge market,” she said, citing YouTube’s 1.9 billion users.

Quibi plans to bring premium content to those short-form content viewers used to settling for grainy, underproduced YouTube fare. That includes everything from scripted storytelling in 10-minute chapters to tell a two-hour story to “quick bites” of reality programming, documentaries or content from young, lesser known filmmakers to “daily essentials [that are] meant to be habit-forming news programming,” she said.

Indeed, content must become more premium to succeed, noted Adhrucia Apana, an executive with Creative Wealth Media, as the entry of so many subscription players has raised the bar for all entertainment companies.

“No longer can you make Dude, Where’s My Car? and expect that to be a blockbuster,” she said. “You’re seeing the bar on all of those platforms go up.”