US streamers shake up European TV business model

With US streamers still driving local market growth, TV producers in continental Europe are juggling between the Hollywood studios business model – where Netflix and co. get all the rights for full funding plus a fee – and the already existing European model on co-productions, leaving the indie producers to handle the backend and giving them more creative control.

But that’s starting to change.

Thanks to the EU Audiovisual Media Services Directive (AVMS) – which is currently in various stages of pan-European implementation – there are first signs that giant platforms are slowly becoming more open to flexibly structured deals. Or at least that is the hope for the future.

In essence, the Directive simply states that streamers must offer European subscribers a quota of 30% European content. In addition, EU countries are introducing nationally tailored laws to make streamers reinvest a percentage of their earnings directly into each European country they operate in. And some countries – like France and Italy – are in the process of enacting new rules that will also force Netflix, Amazon Prime, Disney Plus and other streaming services to invest locally through independent producers and ensure producers get a slice of which retain the rights.

“First of all, we welcome all investments by streamers in all European countries,” says Martin Moszkowicz, CEO of the German powerhouse Constantin Film. He notes that platforms like Netflix, Amazon Prime Video and Disney Plus are “already investing a lot of money in the local language across Europe

and also in international English language shows.”

A recent report by London-based Enders Analysis states that many European producers “have come to prioritize streaming platforms when presenting their best projects”. It also notes that Netflix is ​​believed to be the largest buyer of scripted European content in 2020 – ahead of the EU’s major public broadcasters – and that Disney now has 60 European strands in the pipeline for delivery by 2024.
But while Moszkowicz hails the streaming giants as investors, he says their business model is “ridiculous.”

“No rights are retained; there is no benefit,” he notes. “There’s nothing that we — and the artists, the creative people we employ — share in the billions and billions of dollars in streamers’ success.”

Moszkowicz says that German producers “will use AVMS as much as possible to get a bigger piece of the pie” and believes that “we will ultimately succeed”.

Here’s a look at where things stand in the standoff between streaming giants and producers in four leading continental European territories.

France

France, where the government recently approved an AVMSD regulation, is a leader.

Under the new rules, two-thirds of streamers’ investment must go to independent production deals, where the rights revert to French producers after 36 months.

That means a third of streamers’ investment will continue to go into deals for shows with French producers under blanket contracts that instead don’t allow them to keep rights.

But while this is a landmark regulation, the new rules raise questions about how and to whom these investment obligations will apply.

The rules create competition between French producers to be included in the “two-thirds of investment” corridor, says French producer Alexandra Lebret, executive director of lobby group European Producers Club.

“How will the streamers choose who are the producers who can retain rights and who aren’t?” she asks.

Earlier in March, Netflix announced investments of more than 200 million euros ($220 million) in France when it unveiled its 2022 roster of 25 French originals, 10 of which are television series.

This includes Standing-Up, about France’s stand-up comedy scene, directed by Call My Agent creator Fanny Herrero.

Lebret points out that it is not yet known how Netflix will select projects that will benefit from the new rules, noting that Netflix’s biggest French original, “Lupin”, which is currently filming its third season, always is still manufactured under a flat-rate agreement.

Germany

In Germany, where the Audiovisual Media Services Directive regulation is expected to come into force soon, streamers have shown sporadic flexibility in structuring contracts for top-notch productions.

“The more interesting the property, the better the chances that you will get away with it [structuring a deal where rights revert]’ says Moszkowicz.

An example of this is Constantin’s series “Wir Kinder vom Bahnhof Zoo”, which ran on Amazon Prime Video in Germany.

It was also assembled as a co-production with several partners including ITV’s own Cattleya in Italy, while Fremantle handled international distribution.

Constantin is now building the high-end TV series Smilla’s Sense of Snow, based on the thriller by Peter Hoeg, for which Moszkowicz is confident he will be able to put together a co-production that will be streaming -Partner and other types of channels combined.

Moszkowicz also emphasizes that European state broadcasters and pay-TV providers still represent a viable alternative to streamers when it comes to pitching big-budget projects.

Last year, Constantin and veteran German TV executive Herbert Kloiber teamed up to form a group called High End Prods. to produce event-driven shows specifically designed for the European free and pay TV market.
Moszkowicz notes that the combined resources of pubcasters, such as Germany’s ARD and ZDF, France’s TFI, Italy’s RAI and the UK’s BBC, are much larger than the budgets of all streamers.

“It’s practically billions every year and they’re not getting enough product, obviously because a lot of the really interesting stuff is being bought by streamers around the world,” he says.

High End will soon be announcing their first record.

Spain

Although AVMS has not yet been fully implemented in Spain, there is a feeling that streamers are letting go of their all-rights diktat.

“I think in the beginning they were trying to divide and dominate,” says producer and director Alvaro Longoria, who directs Spanish indie film Morena Films.

But now many other players have joined, including Disney, Apple and Paramount.

“Many of them realize that they need to be flexible if they want to attract the best talent,” he adds.

Longoria, whose Christmas comedy Reyes vs. Santa has been acquired by Amazon for some territories, adds that he thinks it’s symbolic that Netflix’s Parallel Mothers, the latest film from Pedro Almodóvar – who was the 2017 Cannes Jury President – mounted slammed the streamer.

Netflix just secured exclusive Latin American rights to Parallel Mothers.

“The whole business model is always changing and streamers are the first to adapt,” he says.

Italy

In Italy, where AVMS implementation is still sluggish, there are small but significant signs that streamers are beginning to give way.

“Some platform dynamics are changing,” says Rosario Rinaldo, head of production company Cross Prods., owned by German Beta Film.

Cross is producing the offbeat Amazon Italy original drama Prisma, to which it will have the permanent SVOD rights.

Rinaldo is allowed to sell the free-to-air rights of “Prisma” worldwide after the show becomes a worldwide exclusive on Amazon for a certain period of time.

“During development, more attention is paid to the needs of producers,” says Rosario, noting Netflix and Disney’s willingness to develop projects together with Cross.

The prime example on the Italian market of a major US player ready to embark on the European co-production model is HBO and Pubcaster RAI’s “My Brilliant Friend”, the series based on the novels by Elena Ferrante.

In early February, the third part of the series, Those Who Leave and Those Who Stay, premiered on RAI to stellar ratings before opening in the US on HBO and HBO Max.

“As a producer, finding forms of collaboration between different types of platforms and other broadcasters, including public broadcasters, is clearly part of my quest,” says My Brilliant Friend producer Lorenzo Mieli.

Recently, Mieli was able to set up a three-way co-production between RAI, the Franco-German network Arte and Netflix via his Fremantle-based Schindel apartment building.

They are directing veteran author Marco Bellocchio’s upcoming TV series Eastern Notte, about the kidnapping and assassination of former Italian Prime Minister Aldo Moro by Red Brigade terrorists.

“The opportunity for business models to evolve – and monolithic models to break down – comes from our ability as producers to propose projects that make this disruption worthwhile,” he says.