×
You will be redirected back to your article in seconds

Revenues From TV Production Offset Risky Returns for Film Studios

The major film studios have been enjoying a period of healthy growth. The eight largest studios — Disney, Fox, Sony, Universal, Paramount, Warner Bros., Lionsgate, and MGM — saw a combined revenue gain of 14% from 2014 to 2015. But many are banking increasingly on television production to fuel gains and to offset the “lumpiness” and risk inherent in film production.

All eight studios produce TV content, are part of larger entities that do so, or both. For Sony, Warner, Lionsgate, and MGM, the percentage of revenue from motion-picture production has fallen in the past few years. (MGM began reporting this split only recently, but it has changed dramatically even within the past year). At Warner, film has represented less than half of overall production for some time now.

Sources: Company Reporting, jackdaw research Analysis; Note: Sony Motion Pictures numbers represent its content production arm only, and exclude its Media Networks business which is also part of its Pictures subsidiary.

Growth in ancillary businesses, such as content licensing and video games, has contributed to the changing mix, but TV is the major driver, for two key reasons. First, studios are looking for ways to diversify revenue into sources that can stabilize the unpredictable returns of films. Second is that new buyers of content have emerged, thanks to Netflix and Hulu, as well as more aggressive buying and commissioning of original content by major cable networks.

Lionsgate is one of the few studios to report TV production at the show level. Netflix and Hulu have bought Lionsgate shows, notably “Orange Is the New Black” and “Casual.” But much of the rest of Lionsgate’s TV content in the past three years has gone to cable networks such as FX, Starz, AMC, Showtime, and E. “Rosemary’s Baby” and “Nashville” are the studio’s only major series that went to broadcast networks.

Sources: Company Reporting, jackdaw research Analysis; Note: Sony Motion Pictures numbers represent its content production arm only, and exclude its Media Networks business which is also part of its Pictures subsidiary.

There’s downside to a TV-centric strategy. Though TV production promises some revenue, there is no guarantee that shows will be renewed. Indeed, Lionsgate delivered 28% fewer hours of TV in the last year, even as revenue from the segment grew — a situation that may not be sustainable. More broadly, should talk of a glut of small-screen content prove true, resulting in fewer commissions of new shows, TV may begin to dry up as a growth sector for the studios.

Netflix, in particular, is a big buyer of content and intends to spend even more, but it may rethink that investment in the face of consistently slowing subscriber growth (though it did see a larger-than-expected rise in third-quarter subs). Meanwhile, cord-cutting could lead to reduced spending from cable players, as owners consolidate or the focus shifts back to buying rights.

So while the studios are riding high today on the burgeoning TV revenue stream, they shouldn’t expect it to last forever.

Jan Dawson is the founder and chief analyst at Jackdaw Research, an advisory firm for the consumer technology market.

Popular on Variety

More Voices

  • Margot Robbie, Nicole Kidman, Charlize Theron.

    Charlize Theron Could Win Second Oscar for Playing Megyn Kelly in 'Bombshell'

    Charlize Theron walked on stage before a screening of “Bombshell” at West Hollywood’s Pacific Design Center on Sunday night and announced to the crowd, “I’m about to s— myself.” The Oscar winner had good reason to be nervous. The screening of the Jay Roach-directed drama about the fall of Fox News boss Roger Ailes was [...]

  • Tom Hanks Mr Rogers A BEAUTIFUL

    Tom Hanks' Portrayal of Mister Rogers May Put Him Back in Oscar's 'Neighborhood'

    Sony recently hosted a SAG-AFTRA screening of “A Beautiful Day in the Neighborhood,” the Marielle Heller-directed drama starring Matthew Rhys as a magazine writer who befriends Fred Rogers, played by Tom Hanks. While the screening didn’t include a guild Q&A with cast or the film’s creative team, the audience was greeted with a video message from [...]

  • Joe Pesci, Al Pacino, Martin Scorsese,

    Martin Scorsese and 'The Irishman' Enter Oscar Race With World Premiere at NYFF

    Even with its three-hour run time and a short 28 days in theaters before it’s available on Netflix, Martin Scorsese’s “The Irishman” is likely to be a major contender at the Oscars. The 57th New York Film Festival opened on Friday night with the world premiere of the epic real-life mob drama. Scorsese and his [...]

  • Brad Pitt Once Upon a Time

    How Much Does Hitting the Awards Season Circuit Really Matter to Stars Like Brad Pitt?

    “Do you want an Oscar?” That’s the first question one top awards consultant asks any potential contender when they first start talking. Everyone is wondering how Brad Pitt would answer that question these days. He recently raised eyebrows and made headlines when he proclaimed that he would not be campaigning this awards season. “Oh, man. I’m [...]

  • Renee Zellweger'Judy' film premiere, Arrivals, Samuel

    'Judy's' L.A. Premiere: Renée Zellweger Takes Another Ruby Step Toward the Oscars

    Renée Zellweger continues to follow the yellow brick road to the Oscars. The Los Angeles premiere of Judy on Thursday night in Beverly Hills kept the Academy Award winner on track for a possible second win come February. “We’re just so happy we’re able to share it with you tonight,” Zellweger said to the crowd [...]

  • Barry Bill Hader

    Emmys 2019: Clear Favorites and Top Challengers for This Year's Winners (Column)

    If this felt like the longest, most expensive Emmy campaign in history, you might be right. For one thing, the 2019 Primetime Emmys will be held Sept. 22, which is the latest the ceremony has taken place since 2013. That also happened to be the last year of TV’s quaint, pre-streaming era, before outlets like [...]

  • Fleabag Succession Emmys

    Could 'Fleabag' and 'Succession' Be Spoilers on Emmy Night? (Column)

    At the onset, this year’s Emmy Awards felt a bit anticlimactic, as the final seasons of “Game of Thrones” and “Veep” appeared to have this year’s drama and comedy categories locked up before campaigning even began. But that’s how upsets happen: Just when we’re pretty confident about how things might go, a couple of wild [...]

More From Our Brands

Access exclusive content