Home #Hwoodtimes Navigating the Changing Landscape of Film Financing

Navigating the Changing Landscape of Film Financing

As we move further into 2023, the film industry continues to adapt, with new financing trends and strategies emerging. Premium video-on-demand is gaining traction, streamers are focusing on high-value projects over quantity, and studios are basing release plans on maximizing direct-to-consumer opportunities. Collaboration within the industry is also increasing as companies seek ways to generate cost savings and invest in better content, marketing, and technology. And video-on-demand advertising is expected to become even more prevalent in the coming years, with new revenue opportunities for streaming services. Here we dive into some of these evolving financing trends and strategies.

More Premium Video-on-demand (PVOD)

Traditional marketing campaigns supporting films as they advance from a long theatrical window to the home entertainment market do not yield the best ROI. Studios tried several times pre-pandemic to shorten theatrical windows to maintain the momentum of new film releases but faced strong pushback from theaters. However, COVID-related lockdowns and theater closures empowered Hollywood executives to experiment again with film release strategies.

One of these experiments, premium video-on-demand (PVOD), has gained significant traction, and studios are starting to abandon exclusive theatrical releases by offering movies early – for a price – at home. This new age of a “day-and-date” release strategy is likely here to stay but spells pressure for finance managers to create forecast models able to adjust to a wider range of potential financial outcomes.

Quality Over Quantity?

According to a new media study, global content spending will increase just 2% in 2023, representing the slowest growth in more than a decade (excluding the COVID-related plunge of 2020). This is a dramatic shift from 2022, when media companies spent approximately $238 billion, primarily on SVOD platforms. Streamers, in particular, are increasingly motivated by profits, having invested heavily to acquire subscribers. For example, some major players are announcing heavy investment in content during 2023 with streamers appearing to order

Release Reset

The content creation, distribution, advertising, and monetization process is more fluid and uncertain than ever, and media organizations are clamoring to adapt. Annual box office revenue has fallen over 30% below pre-pandemic years. The total number of films released in 2022 was well below the 10-year average leading up to 2020, leaving consumers with fewer options when considering a trip to the theater.

Since different genres come with different budgets, marketing plans, potential audiences, and monetization opportunities, studios are increasingly reviewing which genres are economically suitable for theatrical releases versus the straight-to-streaming approach. They are basing release plans on a corporate agenda centered on maximizing direct-to-consumer (DTC)— ultimately deciding that some films are most appropriate for a streaming release.

More Collaboration

Analysts predict 2023 will likely bring more collaboration within the media and entertainment industries. Calculated combinations will untangle the streaming marketplace for consumers and generate cost savings that can be used to fund investment in better content, marketing, and technology. If mergers and acquisitions aren’t doable for some industry players, partnerships and joint endeavors with industry peers will help to hasten market entry, spread out investment, and deliver collective benefits.

Advertising VOD on the Rise

Experts forecast that by the end of 2023, almost two-thirds of consumers in developed nations will utilize a minimum of one advertising video-on-demand (AVOD) service monthly, and all major subscription video-on-demand (SVOD) services in developed markets will have launched a tier funded by advertising to supplement ad-free alternatives. AVOD enables continual, more affordable access for consumers and expands new revenue opportunities for streaming services. Major players have been announcing AVOD tiers in 2022.

By the end of 2024, half of these providers will offer a free ad-supported streaming TV (FAST) service. By 2030, experts anticipate that ads will partially or completely fund most online video service subscriptions, as in emerging markets, where AVOD has always been the norm.

As we dive into the second quarter of 2023, media and entertainment leaders are taking decisive action to meet ambitious growth plans and position their organizations for future success as the industry continues to evolve.

Rights Management Done Right!

Our rights management platform bridges the gap between entertainment wisdom and the latest innovations. We’ve heavily invested in powerful features that let you effortlessly manage your film and entertainment rights, contracts, and availabilities.

Discover what we’ve been up to!