The Rise of ‘Arms Dealers’: Studio Production in the Streaming Age

Studio Arms Dealers
Cheyne Gateley/VIP

Independent TV studios, which are unattached to major media companies and lacking the distribution pipes of linear TV and/or SVOD services, have been considered “arms dealers” for some time. 

Independent studios producing TV out of the U.S. include BBC Studios, ITV, ITV America, Lionsgate Television, MGM Television, Sesame Workshop, Sony Pictures Television and the Jim Henson Company.

In the narrative of a “war” between streaming services such as Netflix, Amazon Prime Video and Apple TV+ and traditional media companies including ViacomCBS, NBCUniversal and Disney, arms dealers were fueling both sides, supplying content to the highest bidder. 

But that narrative is getting messier now that most traditional media companies have launched their own streaming platforms and are providing content from their own studios.

When analyzing Variety Insight data for productions scheduled to air in 2020, an interesting trend emerges. The big five traditional media companies are more likely to sell to a rival streaming platform than to a rival TV one (such as Paramount Television selling “13 Reasons Why” to Netflix instead of, for example, Disney-owned Freeform). This is the inverse of independent studios, which in 2020 have more deals with TV networks than streaming services. 

This is the continuation of a questionable business model that began in the early 2010s with networks licensing out the streaming rights for their content to Netflix, which the networks could have kept to grow their own VOD businesses. The short-term increase in revenue they received came at the expense of a dire long-term consequence: turning Netflix into their largest competitor, which prompted their subsequent streaming migration. Yet the studios keep selling to rival services.

Another point to note is that in out-of-network TV sales, independent studios (41 titles sold) and traditional media (42 sold) have a very similar scale. This is due to most media companies keeping the majority of their shows produced for TV in house, unlike their streaming strategy, for which only Disney keeps more shows than it produces for rival platforms.

When it comes to producing for TV, the individual studios with the largest volume of content were led by studios that are part of big media conglomerates (ViacomCBS and NBCUniversal, respectively), with independent studio Sony Pictures Television coming in third.

Arms dealing isn’t restricted to TV series. The COVID-19 pandemic opened the door for a new “weapon” to be traded in movies slated for theatrical release, though not all studios have engaged in this new trade. It’s worth noting that, of the two studios trading in movies, Sony is one without an SVOD service to pass titles along to in house. In contrast, Paramount is part of ViacomCBS and could have passed its titles along to Showtime or CBS All Access in an effort to drum up new subscribers, instead of selling to Netflix and Amazon.

Tellingly, not one broadcast or cable network got involved, despite the fact that broadcast and major cable networks offer reach anywhere from 70 million to 90 million U.S. homes, a wider swath than Netflix in the U.S. Premiering the new Tom Hanks movie “Greyhound,” which Sony intended for theaters before selling to Apple TV+, on either cable or network TV over the July 4 weekend could have drawn big audiences and generated a ton of ad revenue, instead of it being released via streaming. 

When formats with greater distribution than streaming opt not to get involved, it is a sign of how times have changed. The focus on streaming from traditional media will only intensify, with VIP expecting sales to rival services to continue growing for the next few years.