Positive days ahead for Nordic creators with US media giants’ M&A spree

In a prophetic speech in March at CPH:DOX, Ted Hope, former co-head of movies at Amazon Studios and esteemed US independent mogul told Nordic industry delegates about the fierce competition between global players in the Direct-to-Consumer (DTC) streaming space: “We refer to it as hyper competition, but it’s just the tip of the iceberg, it’s just the beginning!”, he said.

Just two months later, the global entertainment business was shaken by two mega-deals, set to have considerable repercussions on a global and local level for the entire content value chain and pipelines.

This Wednesday May 26, Amazon announced its acquisition of the venerable US studio MGM - home to the James Bond franchise - for $48.45 billion, with MGM set to retain its famous label, under Amazon’s brand.

Under the deal - still subject to regulatory approvals - the world top e-commerce retailer takes control of the 97-year old Hollywood studios’ vast library of over 4,000 titles as well as 17,000 TV shows, such as The Handmaid’s Tale, Fargo and Vikings. “The real financial value behind this deal is the treasure trove of IP in the deep catalogue that we plan to reimagine and develop, together with MGM’s talented team,” said Mike Hopkins, Senior VP of Prime Video and Amazon Studios. It’s very exciting and provides so many opportunities for high-quality story-telling,” he stated.

The acquisition came on the heels of US telco AT&T’s decision to merge its WarnerMedia assets with competitor Discovery Inc, a venture announced May 17.

The deal - anticipated to close mid 2022 - sees the rise of a new global media giant worth $150 billion according to the Financial Times, combining under one portfolio, nearly 200,000 hours of programmes from 100 brands, including HBO, Warner Bros, Discovery, DC Comics, CNN, Cartoon Network TNT, Animal Planet among others.

The consolidation of AT&T and Discovery is meant to bring their joint partnership closer to rivals Netflix and Disney+ in the global streaming war. So far Discovery’s global subscription base through Discovery+ is estimated at 15 million and WarnerMedia’s combined HBO Max and HBO services counts 63.9 million global subscribers (as of mid-April). This compares to 208 million for Netflix and 104 million global paying customers for Disney+, gathered in only one year.

Impact on the Nordic market
On a Nordic level, AT&T/Discovery’s combined new streaming group would weigh in at around 15% of the aggregated market share, according to Stockholm-based Mediavision. It would “substantially improve their position”, says the media analyst, but not outperform the two current leaders Netflix, which boasts around 4.2 million + subscribers according to UK analytics firm Ampere, versus 3.2 million for Nent Group’s Viaplay.

Content-wise, the new standalone giant streamer will be an attractive player for Nordic customers, combining Discovery’s strong focus on non-fiction and recent increased investment in original scripted content, together with HBO’s high-end quality content signature.

Meanwhile Amazon’s Nordic presence on the streaming market through Amazon Prime Video is still negligible, although the group has been available for the last four years in the region. “Amazon has a huge library. But they haven’t really entered the market in the eyes of the consumers,” told Marie Nilsson, head of Mediavision to nordicfilmandtvnews.com. “They have a small share of total subscriptions, which is marginal today. However, there are rumours in the Nordics that they are looking for Nordic management to build a stronger position on the market,” she said.

For Nilsson, the two separate transactions between the US media giants are fundamentally different, both financially and strategically. “The aim for Amazon is to strengthen their retail business by adding strong video content to their Amazon Prime customers, which then would serve as a ‘retention tool.” This is a different ball game than merging two giants on the same market,” she observes.

However, “both mergers are set to have a spill-over effect on the global market and the Nordics as well,” she says. “This will likely spur further consolidation also in the region, since everyone will have to become ‘bigger and stronger’, to handle an increasing global competition,” she predicts.

The battle of US titans on the Nordic market will create tougher market conditions for local Nordic TV and VOD players, with prices set to spiral to new heights. “It’s a game of big numbers,” continues Nilsson. “Having a huge library is one aspect, but you also need the ability to market it and reach out to the different segments of the consumers. Technology, marketing, content-all those aspects are part of the equation,” she stresses.

For local public and commercial services, the challenge will be to differentiate themselves on the market to stay in the ball game, and “to take the fight over the best talents and best content”, according to Nilsson. “I believe the local services will be very important in this respect, since they supply content that big players don’t”, she says.

Demand for Content
Ultimately under this new dawn of US merger and acquisitions, creators will continue to thrive, as demand for content, will most likely grow exponentially, at least in the medium term, according to Nilsson. “The big commercial players will need to find content partners, one way or another to run the game, and indie producers are part of the value chain,” notes the media analyst. They will meet strong global players, with enormous wallets. Competition over creativity and the best content will likely not be decreasing anytime soon,” she said.

SF Studios’ CEO Michael Porseryd agrees with Nilsson: “On a content perspective I believe that the demand will continue to be high, and the combination of strong newly produced content, and very attractive library rights will be very important,” he stresses.

Regarding the role that the Scandinavian major could play under the new rules of engagement with global streamers, Porseryd says: “We see SF Studios as an independent Nordic studio that works with all parties in our business. We develop, finance, produce and distribute film and scripted series. With a strong creative force, a big internal producing arm and a very attractive rights catalogue, we believe that we are well positioned for the future in this fast-changing environment. Also the fact that we are not, out of an owner’s perspective, in a “streamer context”, makes us clearly independent and an attractive partner,” he notes.

The boss of SF Studios also foresees an inevitable change in the theatrical market.

“What AT&T/WB/Discovery as well as Amazon/MGM will eventually do they have to answer, but at SF Studios, we believe that the theatrical business will continue to be a strong and an important part of our overall business, and that what we do for our partners on the theatrical side today, we will do, more or less, also tomorrow,” he said.

“However, I think it is also clear - even before we knew about these deals - that the windows will change, primarily the length, which means that the nature of our work as a distributor could change. Exactly how it will look and work is being discussed and negotiated as we speak. That will of course ask for flexibility, as always in a time of change," he notes.