In his capacity as a Columnist for California Sports Lawyer®, Founder Jeremy Evans has written a column about early adopter businesses having increasing challenges to stay dominate in the entertainment, media, and sports industries.
You can read the full column below.
In early 2022, when Netflix lost subscribers for the first time since the dawn of creation of streaming, it was as though the entertainment industry simultaneously gasped for air and breathed a collective sigh of relief that the Titan of Hollywood streaming had finally taken a fall, albeit a slight one. Unfortunately, too many people take pleasure in seeing winners fail at something. It might be correlated to the underdog mentality, but more likely it comes from a deep-seated need to win, be competitive, and maybe to have more of what someone else has.
Hollywood insiders and executives not connected to Netflix immediately thought there would be more opportunity for their businesses and would be sign of things to come. In other words, Netflix’s early adopter advantage and dominance were being challenged. There is now evidence that the early adopter phenomenon that benefited many entertainment companies is traveling beyond Netflix and Tinseltown.
The almighty Disney was surpassed by Viacom as the winner of a multi-billion bidding process for the broadcast and streaming rights to showcase Indian Premier League (“IPL”) games. The total package paid was over $6 billion dollars. Disney through its very successful Indian subsidiary streaming “Hotstar” held the IPL rights for the immediate past term and yet lost to Viacom who to that point in time had never purchased major live sports rights for a streaming platform. Disney may lose 15-20 million subscribers for losing the IPL rights to a Viacom-owned property.
In sports, the third-iteration of the XFL has been introduced and the second-iteration of the United States Football League (USFL) is playing football for the spring of 2022, with the established early adopter business being the National Football League (NFL). The issue in sports is that all the best athletes, coaches, brands, and teams play in one established professional league and Major League Baseball maintains an antitrust exemption. There are established players, pun intended, in the entertainment and media business, but the rights to live sports content are generally up for sale every five years. The constant selling and re-selling of live sports rights allows the purchase price to rise and fall with the market, but the price is almost always going up.
Intellectual property rights for film and television studio and network libraries generally last for longer terms and do not often change hands unless being distributed non-exclusively on various streaming platforms. However, the wide distribution strategy is beginning to change as content owners and creatives continue to push the boundaries on consumption and monetization of content. Meaning, on the one hand, Web 3.0 is driving creatives to reach consumers more directly with self-controlled distribution, but also that studios and networks are increasingly pushing towards more exclusive control over how their content is distributed (e.g., on one platform) and/or owning horizontal distribution partners (e.g., through mergers and acquisitions).
Competition for content will continue as streaming platforms and networks look to drive subscribers to their owned-media distribution outlets. Early adopters beware as challengers will bring competition. Innovation and change is the antidote, and maybe some luck.
About Jeremy M. Evans:
Jeremy M. Evans is the Chief Entrepreneur Officer, Founder & Managing Attorney at California Sports Lawyer®, representing entertainment, media, and sports clientele in contractual, intellectual property, and dealmaking matters. Evans is an award-winning attorney and industry leader based in Los Angeles. He can be reached at Jeremy@CSLlegal.com. www.CSLlegal.com.
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