Streamers’ Evolving Acquisition Strategy Brings New Opportunities

Last month, Netflix CEO Ted Sarandos enjoyed a coronation of sorts at the Royal Television Society conference in London, which the streaming giant was hosting. In a show of muscle, Netflix pulled in appearances from speakers including “Peaky Blinders” creator Steven Knight and soccer star David Beckham, both of whom have projects at Netflix. Sarandos also took the opportunity to announce a first-look deal with “Baby Reindeer” creator Richard Gadd.

But it was his keynote speech that the audience, which included U.K. captains of industry such as BBC boss Tim Davie, had come to see. In it, Sarandos paid homage to the U.K.’s TV production sector but warned of the industry’s need to “embrace change.”

In recent years, however, it is the streamers who have had to change, particularly in Europe. When Netflix first arrived on the continent less than a decade ago, it imported a strategy that had already been unleashed to great effect in the U.S.: cost plus. No syndication, no performance bonuses, it was a take-it-or-leave-it approach that, in the words of Jason Blum, who wrote an about it in a 2022 New York Times op-ed, “treats every creator as part of a hit movie or TV show before the camera ever rolls.”

In the U.K., where 2008 legislation enabled producers to control and exploit their own IP, the cost-plus model, which was soon adopted by other global streaming platforms looking for content, was an anachronism, albeit a well-paying one. But as execs across the U.K. and France — another key territory yielding original hits such as “Emily in Paris” and “Franklin” — tell Variety, the U.S. streamers are starting to move away from aggressive rights grabs, in part because, as Blum pointed out, it is a “fundamentally unsustainable” strategy.

“Back in 2020, 60% of the top 10 shows on Netflix were originals, and now, 60% of the top 10 shows are acquisitions, licensed in from AMC and others,” says Guy Bisson, executive director and co-founder of Ampere Analysis. The change reflects the “fundamental shift in attitudes towards licensing.”

Now the streamers’ goal is to get the message out. “Most people don’t know this, but we own less than 25% of the IP in our U.K. catalog,” Sarandos said pointedly in his RTS speech. Meanwhile, Kelly Day, Prime Video’s VP for international, tells Variety: “We prefer to keep the rights globally where we can but we have been much more flexible, in particular in Europe.”

New models include partnering with local public service broadcasters on co-productions, such as “The Outlaws” (a BBC/Prime Video co-commission) and upcoming drama “Lockerbie” from Netflix and the BBC, and even making deals for single territories, such as Prime Video’s upcoming drama “Fear,” which it has picked up for the U.K. only. Banijay Rights will be at Mipcom this month to sell the three-part series, which stars “Line of Duty’s” Martin Compston, to international buyers.

“They’re much more open to taking a single territory or a handful of territories and allowing the others to be sold off, especially if the content is quite [country] specific,” says Fulwell 73 co-founder Leo Pearlman.

Even in France, where streamers initially faced pushback from local players, Netflix and Amazon have been collaborating with major free-to-air TV channels. Prime Video has teamed up with France Televisions on action thriller “Dark Hearts” and fantasy series “Anaon,” with Prime getting the first-look window on both shows. It has also picked up the second window for manga adaptation “Cat’s Eyes,” on which it’s partnering with TF1.

“The windowing model and number of territories included in those deals vary from one show to another and it’s not set in stone,” says Sahar Baghery at Prime Video France.

The new strategy allows streamers to provide subscribers with new content while appeasing Wall Street by reigning in spending. One producer, who requested anonymity to protect his relationship with Amazon, said the streamer’s fee for licensing a project for just the U.K. was similar to that offered by local public service broadcasters: “Maybe slightly better paid than the BBC but not massively different.”

Some producers are welcoming the change. For Pearlman, “every project has its own unique structure and jigsaw that you want to build and put together,” he says. “I prefer having optionality in every deal.”

Others are more circumspect, especially given the golden era of high-value international acquisitions is gone. “While you might get rights, if you end up in the same place having had to license everything away in order to raise the money to make [the show], and it’s taking you a lot of time, maybe that’s not so good,” says John McVay, CEO of U.K. producers body PACT.

Wild Mercury managing director Derek Wax, who produced “Fear” and Prime Video exclusive “The Rig,” which is returning for a second season this year, says the single-territory licensing model is “swings and roundabouts.” In particular, there are benefits to streamers globally backing a show that go beyond financial recompense. “It means you know they’re really, really behind it,” he says.

In McVay’s view, the ideal scenario is a joint commission from a streamer and local broadcaster, such as Hulu and Irish network RTE’s black comedy “Obituary.” It means producers can still get “Netflix money” while retaining the underlying IP. “Co-pros are brilliant,” says McVay. “Our guys love doing it that way.”

But with local broadcasters increasingly prioritizing their own proprietary streaming platforms over linear, such as BBC’s iPlayer and ITV’s ITVX, Variety hears that some public service broadcasters are balking at partnering with what they see as their deep-pocketed U.S. competitors. “The BBC turned that tap off some time ago,” says a source, referring to streamer co-commissions. Another source has a telling anecdote about a returning Netflix series that the BBC was interested in boarding, licensing the first two seasons and co-producing a third. “It got to [BBC content chief] Charlotte Moore-Sarandos conversation levels and they couldn’t agree to a deal because Netflix were too aggressive,” says the source.

But over at TF1, which has partnered with Netflix on a number of hit shows including “The Bonfire of Destiny,” CEO and president Rodolphe Belmer says the commercial channel “has great relationships with [our] streaming colleagues.”

“They aren’t direct competitors and we work very well [together],” Belmer says. “It’s a way to put more money into shows and have programs that are more spectacular.”

Regardless of which strategy streamers are pursuing, increasingly there’s a sense that if the era of make-it-rain buyouts is over, there need to be new incentives on the table — such as bonuses for high-performing shows. The problem with that, of course, is the culture of secrecy platforms have cultivated around their viewing figures, which make it difficult for producers to ask for exactly that. But that may well have to change too. Says McVay: “If they want to remain attractive for the best projects, then maybe they do have to sweeten the deal a bit more.”