NetworkNewsWire
Editorial Coverage: As video streaming grows to dominate media
consumption, companies are on the lookout for new ways to profit
from the burgeoning trend.
Wonderfilm Media Corporation (TSXV: WNDR) (OTCQB: WDRFF)
(WDRFF
Profile) has developed a low-risk approach to content
production by providing original works with top Hollywood talent.
Apple Inc. (NASDAQ: AAPL) is launching its new TV+
service with a slew of big-name stars and big-budget productions.
Netflix Inc. (NASDAQ: NFLX) continues to be a
dominant player, with a strong mix of original and established
content. The Walt Disney Company (NYSE: DIS) is
using its range of high-profile entertainment brands to carve out
its own place in the market. Lions Gate Entertainment
Corporation (NYSE: LGF.A), which has produced content for
other streamers, now has its own Latinx platform in the successful
Pantaya.
- Leading streaming services are now valued in the billions of
dollars.
- Original content is critical to success, creating opportunities
for new production companies to gain entry into streaming
markets.
- A variety of channels are targeting different niches and
business models.
To view an infographic of this editorial, click here.
Streaming Services Explode
This month sees a dramatic moment in the growth of streaming
services, with Apple and Disney each kicking off their own
platforms. The market for streaming video on demand is now worth $36 billion per year, an extraordinary figure
for such a young industry. As viewers shift away from the schedules
of broadcast media to a format where they can watch what they want
when they want, the $2 trillion media and entertainment industry is
facing serious upheaval.
The performance of the most-profitable streaming services,
especially Netflix and Amazon, has drawn the attention of other
companies. Apple’s background in technology and media distribution
makes it a natural player in this arena. Older media firms are also
leaping in, as they try to avoid hemorrhaging profits to upstart
firms. The question now is which strategies will lead to
success.
The Video-Streaming Revolution
This period of upheaval has created opportunities not just for
established players but for newer companies such as
Wonderfilm Media
Corporation (TSX.V: WNDR) (OTCQB: WDRFF). Backed by
four Hollywood producers with a billion dollars’ worth of movie
revenues between them, Wonderfilm aims to use its collective
expertise to tap into investment in streaming services, quickly
financing and flexibly producing films for the streaming
market.
Wonderfilm is up against some big players. Apple+, launched on
November 1, sees one of the pioneers of downloadable content make a
move into video streaming. Even before the channel launched, a
Morgan Stanley report assessed the service’s future value at
$9 billion a year by 2025. With its devices
already in so many people’s hands, Apple has a head start in
reaching a big audience.
The other new entrant in the video-streaming game is relying on
its reputation for content rather than technology to draw viewers
in. While Wonderfilm focuses on creating new content, Disney+ will
rely on established properties. Alongside its host of animated
princesses and kid-friendly TV, Disney owns the rights to the
Star Wars and Marvel superhero franchises. New shows such
as The Mandalorian will draw in fans eager to see more of
their favorite fictional worlds, while the streaming of some of the
biggest cinematic blockbusters will be concentrated in this one
channel.
Wonderfilm has discussed plans to launch its own
streaming channel, but for now the company is focused on
creating films for other distributors, both cinematic and online.
The boom in streaming services isn’t just good for the companies
running those services, it’s also a potential windfall for content
creators such as Wonderfilm, as streamers launch a content gold
rush.
The Appeal of Original Content
The boom in streaming services has led to what some have called
a “golden age of spending” on TV content. The success of
high-profile Netflix original shows such as “House of Cards” and
“Daredevil” has inspired others to follow suit. Amazon has shifted
from a pure distributor model to a leading content creator, while
Disney intends to draw in audiences with new material set in its
established worlds.
Media companies are expected to spend $107 billion over 2019 on content creation, with 22%
of that coming from Disney alone. Do that math, and that equals
hundreds of millions of dollars every day going to companies
producing films and TV shows. Audiences have shown that they want
more than just repeats on their streaming services, and that
original content draws attention, awards, and most importantly
subscription fees. With more companies going into streaming, the
demand for new content is expected to escalate, fueling interest in
and success from companies such as Wonderfilm.
A company that can quickly pull together mass amounts of
appealing original content is likely to thrive in this environment,
and Wonderfilm has the leadership to make that happen. The company
was created by Kirk Shaw, the second-most prolific filmmaker in
America. A hardworking producer, Shaw has 230 films and seven TV
shows under his belt. He founded Insight Film Studios, Canada’s
largest independent film studio, and played a part in crafting
award-winning blockbusters such as The Hurt Locker.
Shaw’s experience, skills and contacts put Wonderfilm in a
strong position to provide streaming services the content they
crave. But in such a busy market, having the right business model
is going to be critical, and it’s on this that companies in the
streaming arena could rise and fall.
Business Models for Streaming Entertainment
The basis of the Disney+ model is clear. As one of the largest
entertainment providers in the world and owner of many of the most
popular characters and properties, the company is relying on the
appeal of its existing creations. While Disney plans some original
content, the company’s offerings audiences will likely see known
characters and situations in new arrangements, such as shows
featuring characters from the Marvel cinematic universe.
Upstart companies can’t compete with Disney on the same terms,
and so have to find their own niche within the streaming ecosystem.
Wonderfilm has identified that sweet spot by focusing on producing
plentiful content while minimizing risk through an established
three-part strategy.
Two parts of this strategy are relatively obvious. By partnering
with established stars, such as Ryan Phillippe in
action-thriller The 2nd, the company can increase its
potential returns. Add to this its ability to create quality
entertainment on relatively low budgets and the company should
produce films that will provide plenty of bang for their buck.
But it’s the third part that sets Wonderfilm’s model apart. Once
the company secures a script and signs an A-list star, Wonderfilm
pre-sells the film before shooting starts. Whether the project is
sold to a streaming service or a cinematic distributor, this
approach eliminates distribution risks. Not only does this secure
much of the finance needed to make a film happen, it also ensures
that the project will reach its audience. That allows the company
to confidently produce films on a fast, steady production
schedule.
Vying for Viewers
Of course, Wonderfilm isn’t the only entertainment company
seeing the streaming opportunity.
Apple Inc. (NASDAQ: AAPL) is using its brand
recognition, together with convenient connections to its existing
software and hardware, to sell a whole new entertainment brand to
customers with its streaming service. The business savvy behemoth
has shown an awareness of the important of high-profile original
content for a streaming service. From day one, Apple TV+ featured
original content designed to appeal to a range of viewers. Among
its original offerings is The Morning Show, a drama about
a newsroom starring Jennifer Aniston, Reese Witherspoon and Steve
Carrel, and See, a sci-fi show starring Jason Momoa.
The service that made streaming big, Netflix Inc.
(NASDAQ: NFLX) goes from strength to strength with its
ongoing combination of established favorites and original content.
The appearance of Friends on the service created a renewed
surge of interest, as fans of the 1990s sitcom surfed a wave of
nostalgia. But it’s Netflix’s new productions that make the company
stand out and have gained it over 158 million viewers in 190
countries. Netflix is currently starting production on its first Egyptian show, based on a best-selling novel,
and has announced its first French
animation, as it seeks to appeal to a truly global
audience.
Disney (NYSE: DIS) is also trying to
demonstrate the diversity of content on its Disney+ channel. The
company recently announced nonfiction content
featured on the platform, including a documentary about
legendary lyricist Harold Ashman. But it’s Disney’s fan-favorite
properties that are creating a buzz. High School Musical: The
Musical: The Series has been renewed for a second season just
as it’s about to appear on Disney+, while Star Wars fans
await The Mandalorian, a much-anticipated offering
designed to add live-action TV to one of the world’s greatest film
franchises.
Helping to fill the content libraries of these platforms is
Lions Gate Entertainment Corporation (NYSE:
LGF.A), one of the largest independent television
businesses in the world. The company behind Mad Men,
Dear White People, and Orange Is the New Black,
Lions Gate has entered the streaming market directly through its
Latinx content platform, Pantaya. Established two years ago, the
service has succeeded by targeting a specific niche, exceeding
expectations by acquiring half a
million subscribers for its mixture of English, Spanish and
bilingual content.
The explosion of streaming services creates great opportunities
for creative businesses. From fast, low-risk productions to
targeting specific niches, each one will flourish by finding its
own unique model.
For more information on Wonderfilm Media
Corporation, visit Wonderfilm Media
Corporation (TSX.V: WNDR) (OTCQB: WDRFF)
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