The Information says that Vox Media, Group Nine and Vice Media are all building up film and TV businesses and that Vox’s studio, for example, will account for about one-third of its $300m revenue this year.
It says that the podcast series “Land of the Giants” from Vox’s Recode – which chronicles the history of tech companies including Amazon and Netflix – will soon be a TV show, made by Vox for a major cable network “for a fee of several millions of dollars”.
Vice TV production – which is responsible for an upcoming “American Gladiators” documentary series on ESPN and the true-crime show “India Predator” on Netflix – is reportedly driving growth in revenue to an expected $600m this year and $750m in 2022.
The Information notes that the growth of digital media firms – which have long struggled to compete with Facebook and Google for a share of the ad market – increasingly depends on the production of TV shows and movies. Vox Media has sold 50 such projects in the last 15 months to streaming services Netflix, Amazon and Apple, and to TV networks including CNN and HBO. It reportedly has 14 films and TV shows currently in production.
The Hollywood focus of the digital media companies is intended to demonstrate to would-be investors that they can build sustainable, growth businesses with a revenue mix beyond just advertising.
But The Information notes that: making TV shows and movies is a high-risk business, that some projects can take years to bring to fruition, and that profit margins are lower than in advertising. The risks are underlined by BuzzFeed which, all of seven years ago, announced its ambitions to be a film and TV producer but whose most notable release has so far been a single season show on Netflix. Now, that division had been reduced to fewer than 10 people, although it has now negotiated deals with NBCUniversal and Lionsgate.
The Information is cautious about the longer term: “One challenge of relying too heavily on TV production is that a shakeout in the streaming market – if some new entrants abandon the business or merge with other firms – is likely to reduce demand for new content. What is now a bubble in content production could easily burst…”
