NEW YORK, Nov. 5, 2019 /PRNewswire/ -- As video streaming grows to dominate media consumption, companies are on the lookout for new ways to profit from the burgeoning trend. Wonderfilm Media Corporation (TSX-V: WNDR) (OTCQB: WDRFF) (WDRFF Profile) has developed a low-risk approach to content production by providing original works with top Hollywood talent. Apple Inc. (NASDAQ:AAPL) is launching its new TV+ service with a slew of big-name stars and big-budget productions. Netflix Inc. (NASDAQ:NFLX) continues to be a dominant player, with a strong mix of original and established content. The Walt Disney Company (NYSE:DIS) is using its range of high-profile entertainment brands to carve out its own place in the market. Lions Gate Entertainment Corporation (NYSE:LGF.A), which has produced content for other streamers, now has its own Latinx platform in the successful Pantaya.
- Leading streaming services are now valued in the billions of dollars.
- Original content is critical to success, creating opportunities for new production companies to gain entry into streaming markets.
- A variety of channels are targeting different niches and business models.
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Streaming Services Explode
This month sees a dramatic moment in the growth of streaming services, with Apple and Disney each kicking off their own platforms. The market for streaming video on demand is now worth $36 billion per year, an extraordinary figure for such a young industry. As viewers shift away from the schedules of broadcast media to a format where they can watch what they want when they want, the $2 trillion media and entertainment industry is facing serious upheaval.
The performance of the most-profitable streaming services, especially Netflix and Amazon, has drawn the attention of other companies. Apple's background in technology and media distribution makes it a natural player in this arena. Older media firms are also leaping in, as they try to avoid hemorrhaging profits to upstart firms. The question now is which strategies will lead to success.
The Video-Streaming Revolution
This period of upheaval has created opportunities not just for established players but for newer companies such as Wonderfilm Media Corporation (TSXV: WNDR) (OTCQB: WDRFF). Backed by four Hollywood producers with a billion dollars' worth of movie revenues between them, Wonderfilm aims to use its collective expertise to tap into investment in streaming services, quickly financing and flexibly producing films for the streaming market.
Wonderfilm is up against some big players. Apple+, launched on November 1, sees one of the pioneers of downloadable content make a move into video streaming. Even before the channel launched, a Morgan Stanley report assessed the service's future value at $9 billion a year by 2025. With its devices already in so many people's hands, Apple has a head start in reaching a big audience.
The other new entrant in the video-streaming game is relying on its reputation for content rather than technology to draw viewers in. While Wonderfilm focuses on creating new content, Disney+ will rely on established properties. Alongside its host of animated princesses and kid-friendly TV, Disney owns the rights to the Star Wars and Marvel superhero franchises. New shows such as The Mandalorian will draw in fans eager to see more of their favorite fictional worlds, while the streaming of some of the biggest cinematic blockbusters will be concentrated in this one channel.
Wonderfilm has discussed plans to launch its own streaming channel, but for now the company is focused on creating films for other distributors, both cinematic and online. The boom in streaming services isn't just good for the companies running those services, it's also a potential windfall for content creators such as Wonderfilm, as streamers launch a content gold rush.
The Appeal of Original Content
The boom in streaming services has led to what some have called a "golden age of spending" on TV content. The success of high-profile Netflix original shows such as "House of Cards" and "Daredevil" has inspired others to follow suit. Amazon has shifted from a pure distributor model to a leading content creator, while Disney intends to draw in audiences with new material set in its established worlds.
Media companies are expected to spend $107 billion over 2019 on content creation, with 22% of that coming from Disney alone. Do that math, and that equals hundreds of millions of dollars every day going to companies producing films and TV shows. Audiences have shown that they want more than just repeats on their streaming services, and that original content draws attention, awards, and most importantly subscription fees. With more companies going into streaming, the demand for new content is expected to escalate, fueling interest in and success from companies such as Wonderfilm.
A company that can quickly pull together mass amounts of appealing original content is likely to thrive in this environment, and Wonderfilm has the leadership to make that happen. The company was created by Kirk Shaw, the second-most prolific filmmaker in America. A hardworking producer, Shaw has 230 films and seven TV shows under his belt. He founded Insight Film Studios, Canada's largest independent film studio, and played a part in crafting award-winning blockbusters such as The Hurt Locker.
Shaw's experience, skills and contacts put Wonderfilm in a strong position to provide streaming services the content they crave. But in such a busy market, having the right business model is going to be critical, and it's on this, that companies in the streaming arena could rise and fall.
Business Models for Streaming Entertainment
The basis of the Disney+ model is clear. As one of the largest entertainment providers in the world and owner of many of the most popular characters and properties, the company is relying on the appeal of its existing creations. While Disney plans some original content, the company's offerings audiences will likely see known characters and situations in new arrangements, such as shows featuring characters from the Marvel cinematic universe.
Upstart companies can't compete with Disney on the same terms, and so have to find their own niche within the streaming ecosystem. Wonderfilm has identified that sweet spot by focusing on producing plentiful content while minimizing risk through an established three-part strategy.
Two parts of this strategy are relatively obvious. By partnering with established stars, such as Ryan Phillippe in action-thriller The 2nd, the company can increase its potential returns. Add to this its ability to create quality entertainment on relatively low budgets and the company should produce films that will provide plenty of bang for their buck.
But it's the third part that sets Wonderfilm's model apart. Once the company secures a script and signs an A-list star, Wonderfilm pre-sells the film before shooting starts. Whether the project is sold to a streaming service or a cinematic distributor, this approach eliminates distribution risks. Not only does this secure much of the finance needed to make a film happen, it also ensures that the project will reach its audience. That allows the company to confidently produce films on a fast, steady production schedule.
Vying for Viewers
Of course, Wonderfilm isn't the only entertainment company seeing the streaming opportunity.
Apple Inc. (NASDAQ:AAPL) is using its brand recognition, together with convenient connections to its existing software and hardware, to sell a whole new entertainment brand to customers with its streaming service. The business savvy behemoth has shown an awareness of the important of high-profile original content for a streaming service. From day one, Apple TV+ featured original content designed to appeal to a range of viewers. Among its original offerings is The Morning Show, a drama about a newsroom starring Jennifer Aniston, Reese Witherspoon and Steve Carrel, and See, a sci-fi show starring Jason Momoa.
The service that made streaming big, Netflix Inc. (NASDAQ:NFLX) goes from strength to strength with its ongoing combination of established favorites and original content. The appearance of Friends on the service created a renewed surge of interest, as fans of the 1990s sitcom surfed a wave of nostalgia. But it's Netflix's new productions that make the company stand out and have gained it over 158 million viewers in 190 countries. Netflix is currently starting production on its first Egyptian show, based on a best-selling novel, and has announced its first French animation, as it seeks to appeal to a truly global audience.
Disney (NYSE:DIS) is also trying to demonstrate the diversity of content on its Disney+ channel. The company recently announced nonfiction content featured on the platform, including a documentary about legendary lyricist Harold Ashman. But it's Disney's fan-favorite properties that are creating a buzz. High School Musical: The Musical: The Series has been renewed for a second season just as it's about to appear on Disney+, while Star Wars fans await The Mandalorian, a much-anticipated offering designed to add live-action TV to one of the world's greatest film franchises.
Helping to fill the content libraries of these platforms is Lions Gate Entertainment Corporation (NYSE:LGF.A), one of the largest independent television businesses in the world. The company behind Mad Men, Dear White People, and Orange Is the New Black, Lions Gate has entered the streaming market directly through its Latinx content platform, Pantaya. Established two years ago, the service has succeeded by targeting a specific niche, exceeding expectations by acquiring half a million subscribers for its mixture of English, Spanish and bilingual content.
The explosion of streaming services creates great opportunities for creative businesses. From fast, low-risk productions to targeting specific niches, each one will flourish by finding its own unique model.
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