MIPCOM 2023 trends: Navigating industry turmoil as reality of executing on the new ways of business bites

The above article is a review of the key trends that emerged at this year's MIPJUNIOR & MIPCOM (MIP Markets - MIPTV, MIPCOM & more.) , written by Guy Bisson from Ampere Analysis .

Tumultuous weather during this year’s MIPCOM seemed appropriate, matching as it does the turmoil facing the TV and entertainment industry as a whole as content companies—finally back in full force for MIPCOM 2023—struggle to come to terms with the new reality facing streaming and direct-to-consumer, coupled with the declining outlook for traditional business lines in the TV window. We characterized the feeling at MIPTV back in April as ‘looking back to move forward’, meaning major content owners had been hit with the realization that going all-in on direct may not be the best way to fully realize the value of content in an increasingly saturated and competitive market for streaming. If that was the trend at April’s MIPTV, then the key focus of executives at MIPCOM, which wrapped Thursday, was actually executing on that strategy.

The last 12 months have been about embracing advertising as part of the business mix for streaming and the market has evolved rapidly from a subscription-only model to the point (with Amazon Prime’s recent move to embrace ad dollars) where only one major streaming service (Apple) is now not carrying ads. At MIPCOM a similar ‘odd man out trend’ was clear: it now seems there is only one major content or streaming player (Netflix), which is not (re)-embracing windowing and licensing as core to its monetization strategy.

Paramount’s Bob Bakish said licensing was a business that Paramount ‘had never left’. But he went further, saying that launching stand-alone owned-and-operated streaming services as the only model for audience reach made little sense. Instead, a multi-faceted approach is needed, combining strategies that include branded partnerships with traditional pay TV operators and the use of licensing content to third part networks as part of the overall business mix. This business mix is the best way to boost Paramount+’s Total Addressable Market (TAM), Bakish said.

The mix of business models extends way beyond the TV and streaming window, however, Warner Bros. Discovery’s Gerhard Zeiler talked of embracing every window as part of an overall content strategy saying ‘there is nothing more powerful than a theatrical release’ for boosting content demand and adding that WBD also ‘believed in transactional (windows)’ as well as linear. Licensing too is key and WBD was ‘not religious’ about keeping its content for its own networks and services, Zeiler said. Zeiler was clear on the point he thinks the industry has reached: ‘the era of over-delivering content and under-pricing services’ is over, he said.

Add to this recent statements from Disney on re-embracing windowing and licensing (even of its own streaming originals) as well as NBCUniversal’s long-time mix-and-match approach to streaming models and the fact that Sony, from day one, remained platform and window agnostic and we have a royal flush of major studios executing on the new old models of windowing and licensing. What a difference a year makes.

All of this, of course, is about maximizing revenue and pushing direct-to-consumer business units towards profitability. This is especially true as both Bakish and Zeiler were open about the decline in linear TV as an income stream, but both were also keen to point out that, unlike streaming, linear remains a profit centre for the studios. As a result, it needs to always feature in strategy decisions. Zeiler said that at WBD, there is no decision taken on content investment, promotion or marketing that doesn't involve both the linear and streaming sides of the business.

But even with the new (old) strategies in place and profitability for some studio streamers just around the corner, there was broad industry consensus during the market that consolidation among global streamers and content majors is coming. How many will survive? ‘We want to be one of the 3-5 global content suppliers (remaining)’, said Zeiler, adding that the surviving global players would complement all important local players in regional markets.

Local content is still a central drive for the US studios as the centre of the entertainment universe increasing moves away from Hollywood. Zeiler said ‘you can’t have global success without investing in local content’, as his colleague Leah Hooper Rosa, SVP International Streaming, revealed that Max would roll out across 22 European markets early in 2024. In a similar vein, Bakish said Paramount was investing heavily in local content, especially in markets where it owned local broadcast channels (UK, Australia and Argentina).

Local content is also central to the strategies of Canal Plus and Tencent. Speaking during a media mastermind address, Canal Plus CEO Maxime Saada said the group would invest more in African content as the market has become a key growth centre for the group. The missed opportunity of investing in Africa was also highlighted by Ebony Life CEO Mo Abudu, who bemoaned the lack of vision among commissioners and their failure to invest global budgets in local African stories. That may be about to change, Amazon is focusing on Africa for some of its new original unscripted production.

Tencent CEO Zhonghuai Sun, talking to the MIPCOM audience as part of China’s position as MIPCOM country of honour, also talked of his strategy to invest in content based on local Chinese IP. He showcased a number of new dramas produced by Tencent, including pioneering sci-fi as a genre in Chinese production with book adaptation Three Body. Proving that China’s content industry has taken huge strides in the past few years, the production value of the dramas and animations that Sun showed was, frankly, exceptional. Finding significant international distribution opportunities will be the next thing to crack for the country’s industry.

Sun said Tencent was also embracing AI as a technology central to production saying Tencent has made use of AI in its content production ‘for years’ as well as reducing animation production costs through the use of AI to create 2D and 3D versions of animation. AI should serve both creators and users, Sun said. Not surprisingly, AI was one of the themes of MIPCOM’s conference programme, with much talk but still limited practical application evident in the sessions.

Among the companies exhibiting at MIPCOM this year, 50 were entirely new to the market. That was fueled by an influx of AI and Free Ad-supported Streaming TV (FAST) tech providers. The last time there was a big influx of new tech players to MIPCOM was in the early noughties, when every boat in the marina alongside the Palais was taken by a dot com. That didn't end so well. Hopefully AI and FAST has legs.

FAST, though, is another area—and another of the conference streams at MIPCOM—that is increasingly being spoken of in the same sentence as the word ‘hype’. That's in part due to low ad loads and fill rates as advertisers are slow to fully embrace the FAST opportunity. The difference is that FAST is an area where a number of major content owners are making serious investments and moves through the launch of branded channels and starting to make real money from the exploitation of catalogue content.

Despite lack of full buy-in from advertisers, the industry is already seeing the emergence of FAST original content...albeit in partnership with sponsors for the economics to make sense. It was clear from conversations during the market that the US remains the key market where the majority of money is made, but Europe, Latin America and Australia are the markets to watch. FAST, alongside other forms of free streaming, is increasingly a part of the multi-faceted approach to making content pay.

Studio business practices also featured heavily in the talks during MIPCOM. It’s impossible to talk about content trends today without talking strikes. Directors and Writers in the US are ready to roll with their new contracts in place with the AMPTP, but US actors are still out on the picket line, leading to a reduction in the usual ‘star’ photo calls during MIPCOM. The CEOs were clear though: they are still talking and will do whatever it takes to work through the issues with actors’ union SAG-AFTRA so business can get back to (the new) normal. In the meantime, increasing output—and format length—of unscripted shows and using content made for cable on network TV and streaming was going some way to fill the gap.

Rethinking the whole studio model also came to the fore with Banijay’s launch of a new studio that will invest in creator-producers and other so-called job and skill ‘hyphenates’. Called…Hyphenate, the studio will be run by Banijay’s Cris Abrego and actor-producer-director Eva Longoria. The studio and its business model to enable hyphenates to stand alone and work outside of overall studio deals is a reflection of another area of the entertainment business that is looking back in its re-think on the way business is done: financing of content. The shift towards cost-plus and producer-for-hire models that grew in number with the growth of global streaming, is seeing a revamp and push back from producers wanting a return to participation deals. Hyphenate, said Abrego, will act as a business incubator to help creator-producers operate without the security (and restrictions) of a studio overall deal.

The return to old business models, the re-thinking of how content is monetized and the expansion of companies interested in the sector through the entrance of numerous new FAST and AI players, was a boon for MIPCOM this year. Summarizing the market at the end-of-market press conference, RX Global Director Lucy Smith said 11,072 participants passed through the doors of the Palais during this year’s MIPCOM. Of those, there were 3,576 buyers and 320 exhibitors.

The return to pre-pandemic scale was reflected in the buzz at the market this year, that buzz extended beyond the Palais floor with tables in traditional outdoor meeting spots like Café Roma impossible to come by. Smith said the next edition of the re-imagined MIPTV will go ahead 8-10 April 2024 alongside Cannes Series, running from 5-10 April 2024 and a pre-event weekend focused on factual content. MIPCOM 2024 will take place 21-24 October 2024.

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Article written by Guy Bisson , Executive Director & co-founder at Ampere Analysis.