TBI Formats: What next for IP creators in a world of diminishing returns?

MasterChef Sweden

The format business is unlike any other part of the TV sector. The right idea can keep a company afloat for years or even decades after it was first thought up – and what works for one country often works for another.

That means repeat customers in multiple markets over the long-term, all derived from that one initial brainwave. If you’re a group, keep production in-house and all the better. At least that’s the theory.

The Coronavirus pandemic has hit the entire TV industry square in the jaw though – as it has most sectors of the global economy – and it is starting to look like the format business could be impacted harder than most.

Drama and factual programming has flourished on SVODs over the past few years and despite the lockdown, there seems little reason to assume the big streaming players will curtail spending following a period in which their services have seen an uptick in revenue generation. That uptick is reflected in the share price of Netflix, which earlier this week saw its market cap surge above Disney’s for the first time ever.

Holding out for a streamer

The interest in formats from streamers, while certainly increasing, has not reached the same stage as those other genres though, despite deals for show such as Love Is Blind and The Circle. And that looks likely to provide a challenge to creators and distributors in what are fast becoming lean times.

The traditional model of selling formats country-by-country has been evolving for several years as it largely relies on broadcasters, which have had a tough time of it since streamers burst onto the scene. And now, it is this traditional part of the content delivery business that is bearing the brunt of the Covid-19 crisis.

In the UK, Channel 4 has slashed its spending and commercial rival ITV has made cuts of its own. As Siobhan Crawford, head of sales & acquisitions at Belgian distributor Primitives highlighted to TBI earlier this month, there have been deep falls elsewhere too. They include an 85% ad revenue reduction in Israel, over 50% ad revenue fall in Southern European territories and networks across the US are also suffering.

Danyaal Rashid, thematic analyst at GlobalData, recently described the pandemic as having a “devastating impact” on the broadcasting landscape, which has probably been compounded by the fact that execs are seeing soaring viewers thanks to that locked down audience.

But without advertisers wanting to spend, those rising ratings cannot be converted into cash.

An un-risky business

In this world of diminishing returns, it seems unlikely that broadcasters will be willing to fork out for a new, untried, untested new format. For the creative side of the business, it looks like it’ll take some pitch to convince a cash-strapped commissioner to take a punt any time soon, not matter how much they might point to the potential returns of taking a risk.

As such, perhaps it’s not a surprise to see a recent flurry of format deals involving veteran titles. Just today, Endemol Shine Group revealed a swathe of deals in the Nordics including Sweden’s TV4 commissioning the country’s first local version of culinary competition series MasterChef All Stars.

Alongside that was an order for an 11th season of the original MasterChef format, a seventh season of MasterChef Junior and a spin-off version from the main show, titled After Hours.

Great news for Endemol Shine but, however you cut it, that can’t be good news for a small, independent format creator looking for an opportunity to test out a new piece of IP. From TV4’s perspective, it is of course entirely understandable.

The hope has to be that streamers, which look likely to emerge from this incredible period of recent history in better shape than when they went into it, will take up the slack. Further, if they can show the sort of bold, deep-pocketed spending and risk appetite that has already provided returns in other genres, perhaps the truly innovative side of the format business can hang onto some hope that the good times will come again in the not-so-distant future.