Video Age International October 2015

40 Ten Steps to 2030 For example, ICM Partners packaged a number of the most successful TV shows ever, including Friends , The Simpsons and Breaking Bad to name a few. By representing writers, executive producers, actors and showrunners, the agency is able to make significantly more money by participating in above and below the line, and in back-end participation in perpetuity from all sources. Agencies will continue to reinvent themselves to maximize the potential returns they can earn on various projects. Crowdfunding will continue to grow, but not in any meaningful way (i.e., studio-level crowdfunding). Right now, crowdfunding provides an investment opportunity, but mainly to brag and say “I am in the film (or TV) business.” There are three forms of crowdfunding: donation, reward and equity. Equity is where the serious investors will participate. Getting a film made is very different from getting one made and then widely distributed. Feature film financing is a potentially lucrative endeavor, but also extremely risky, and crowdfunding could not be sustained for a TV series. As for public television production (taking U.S. Public Broadcasting Service as an example), program funding will continue to flourish. Their revenue flow is safe and secure, not subject to ratings, and their programming is very high quality and expertly produced. Internationally, most PBS stations are government funded. Some of them are also donation-centric and can sell advertising. In the annals of U.S. broadcasting, they have a trifecta: ad revenue, donations and government funding. Their programming reaches a wide audience that is very loyal, and PBS provides excellent programming to both kids and over-50 demos. W here will production money come from 15 years from now? The answer is very simple — from the people of the world. One way or another, it all comes down to viewers, shoppers and subscribers. The U.S. studios will get the money they need to develop and produce from a variety of license fees, royalties, branded content and sponsored content. Looking into the future, direct TVprogramming sales to Hulu, Amazon, Netflix and the like will be offering up to 200 percent of production costs because they will then own and control the global rights to distribute that programming to consumers forever. People will continue to finance development and production, just through different channels. This development will negatively affect all global distribution opportunities and will affect broadcast and cable industries. The cable companies know this too, which is why their current model is to control as much broadband as possible. They know that is how programming will be delivered in the future. Major feature films will still go to theaters, for that experience is very hard to duplicate. There will be a simultaneous release to home video, in whichever form home video is defined. Financing for feature films will continue to come from the public as well, who go to see the features on a global basis, and then from all ancillary sources. Features will not be initially exhibited on Netflix and other streaming services. For the features, Netflix et al . is actually part of the back end. In the case of features, even more so than TV, embedded content will continue to play a financial role as it has in the past. TV will benefit as well, but there is always an argument as to who has the right to those funds: Are they ad dollars or contributions to production costs? Films will continue to be produced on spec. People with lots of money love showbiz and companies love to raise money from people who want to be in showbiz. So, production funding from individual companies and individual entrepreneurs will produce films on spec. Production costs will increase, but this relates to those productions done under union rules. They have built-in increases in their agreements. Even when the business slowed down and the writers strike hit hard, overall costs continued to rise. The U.S. guilds and ASCAP/BMI have already begun negotiating for the productions going directly to Netflix and the like, so they will be unionized as well. Other non-union productions and digital productions will bring those costs down. Producing in right-to-work U.S. states and Canada will help offset those costs, but the actual costs will increase. All of the costs will not come out of the producers’ pocket, however. Costs will continue to be shared among production companies, but only on very big films or those films where it helps to manage the potential risks, and only on rare occasions. Subscription outlets will have better content than ad-supported outlets. Subscription outlets have been putting up some pretty successful, well-produced and compelling content. For years the ad-supported outlets have had the best and most creative minds coming to them with ideas backed by studios with very deep pockets, able to finance the production of those big ideas; but the subscription outlets will not be ordering millions of dollars worth of scripts, billions of dollars worth of pilots and then selecting what they believe is the best of the best. The process for the subscription outlets will be very specific and very targeted. Branded and sponsored content is something that is always being experimented with. Integrated programming and features will continue until they no longer achieve the desired results. Branded and sponsored content will continue to evolve and will always be a big part of helping to reduce costs of production and promoting and advertising a brand. This trend will also become more sophisticated. As for agencies becoming producers, they have been doing that unofficially for ages via packaging.Officially,agenciesareprohibitedfrom developing and producing programs and feature films in order to maintain their agency status. They also have created investment companies to invest in properties so as to participate in the proceeds (and not only take a percentage of the talent’s income). Major agencies sign exclusive deals with their clients and part of the reason is to take advantage of the practice of “packaging” projects, which amounts to maximizing the agency’s commissions by developing projects that include as many of their own clients as possible. By Len Grossi Film, TV Production Finance To Follow A Predictable Pattern Len Grossi Len Grossi is CEO of Los Angeles-based BaselineMedia&Entertainment. He’s a former president of Columbia TriStar Television, a division of Sony Pictures Entertainment. Grossi was also responsible for Telemundo and for overseeing SPE’s Telemundo investment; he was a board member of Telemundo and Game Show Network. Prior to joining Sony, he served on the board of Film Roman, iBeam Broadcasting Network, and Protozoa. Earlier, he was SEVP at United Paramount Network. He segued to UPN from his post as EVP at Twentieth Television. Grossi served as EVP and CEO of Metromedia Producers Corp. prior to its acquisition by Fox. Previously, he was VP, Finance and Administration for Paramount Pictures’ television and video distribution division. October 2015 V I D E O A G E