In his August 2015 address to the Television Critics Assn., in which he coined the phrase “Peak TV,” FX’s John Landgraf predicted, “My sense is that 2015 or 2016 will represent peak TV in America, and that we’ll begin to see declines coming the year after that and beyond.”
There are signs that parts of the industry may, at last, be tipping; according to Landgraf’s January 2018 data, the volume of original scripted series on broadcast networks has been roughly flat since 2015, and basic cable series production has shrunk by 6% during the same period. But these traditional platforms face more pressure than ever from streamers, who continue to aggressively expand the scope and scale of their content offerings.
As we look ahead to Landgraf’s semi-annual “Peak TV” address at FX’s upcoming TCA presentation, it’s worth asking: How will broadcasters, cable networks and independent studios adapt to that ongoing pressure from their well-funded digital rivals?
Broadcasters: A Return to the Good Old Genres
For the broadcast networks and their sister studios, the future of television may look a lot like its past.
Over the last several years, broadcasters have followed their cable and streaming rivals by investing in more premium shows featuring complex serialized storytelling and sparkling production values. This shift was helped along by the emergence of the lucrative domestic streaming window — that is, second run on Netflix, Amazon and Hulu — that principally values bingeable dramatic content.
But while audiences still flock to this programming, they continue to look for it primarily in premium cable and streaming, not in broadcast (where tighter standards and practices can limit creative freedom). The ongoing arms race among streamers — which has only intensified since Apple entered the fray in 2017 — has also driven the market for the highest-demand actors, directors and producers, along with aggregate budget levels, to new heights where broadcasters have been hard-pressed to follow, especially in the face of declining advertising revenues.
But broadcasters may find refuge in the less premium programming that has always worked for them but never truly taken hold among their spendier competitors: procedural dramas, multi-camera comedies and formatted unscripted series. These genres give broadcasters the opportunity to go where their better-funded competitors are not (and to do so at lower cost than it would take to challenge the streamers and premium cable networks head-on in their genres of strength). Moreover, procedural dramas and multi-camera comedies have better long-term prospects for traditional cable- or broadcast-station syndication deals, an especially important benefit in light of the decline in second-run streaming license fees that has accompanied Netflix, Amazon and Hulu’s deepening focus on original content.
Basic Cable: Embracing International Flair
In 2015, Landgraf predicted a slow and agonizing deflation of basic cable, with only the strongest brands surviving. And indeed, many cable networks have pulled back on their investments in original scripted programming, or gone out of business altogether. But there is still opportunity in cable, for those who are willing to also look abroad.
License fees from international broadcasters are at historic highs, amounting to $1 million per episode or more for major territories such as the U.K., Germany, France, Italy and Scandinavia. These premium license fees, of course, come with premium expectations: enhanced creative control, increased demands for meaningful local relevance, and a general expectation from international buyers of being treated as equal partners to American commissioning networks.
Cable networks that are willing to navigate complex deals, share control and accommodate an international creative sensibility can enjoy premium programming at discount prices by offloading a higher share of the cost burden onto their international partners. The willingness of Netflix and Amazon to co-produce series, acquiring worldwide first-run rights for series already commissioned in the U.S., also provides a one-stop-shop pathway for executing on this strategy.
As the pool of capital in basic cable continues to shrink, we can expect a growing international character among cable series that win their place on the programming schedule by lowering the risk and cost for the U.S. network through premium license fees extracted from foreign buyers.
Independent Studios: The Power of IP
The conventional wisdom within independent studios used to be that their shows needed to be 25% better than those of the network-affiliated studios in order to win a pilot or series order. After the 2018 pilot season, which largely battered independent powerhouses Warner Bros. Television and Sony Pictures Television, that multiplier might be going up to 50%.
In the face of growing consolidation and pressure toward vertical integration, the key for these independents to break through across all platforms — and to lure deals with creators who may be skittish about these studios’ ability to get and keep shows on the air — is control of underlying intellectual property.
While every new series is a speculative venture, in today’s high-volume, high-competition, high-stakes environment, underlying intellectual property gives a proposed new series an edge, by offering the promise of a steady and certain long-term creative plan, a built-in audience, and/or valuable name recognition/brand awareness. In addition, familiar and beloved underlying intellectual property can sometimes inspire the passion (and win the participation) of desirable talent, behind and in front of the camera, more effectively than purely original pitches.
For independent studios that are having more trouble than ever overcoming the network-affiliated studios’ institutional competitive advantages, these edges may be prove crucial to success in the challenging market ahead.
Ken Basin is senior VP of business affairs at Paramount Television and the author of the new book “The Business of Television” (Routledge). For more with Basin, listen to this episode of the Variety podcast Strictly Business below.