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2018 Television Report PHOTO: HBO / Insecure 6255 W. Sunset Blvd. CREDITS: 12th Floor Contributors: Hollywood, CA 90028 Adrian McDonald Corina Sandru Philip Sokoloski filmla.com Graphic Design: Shane Hirschman @FilmLA FilmLA Photography: Shutterstock FilmLAinc HBO ABC FOX TABLE OF CONTENTS INTRODUCTION 2 PRODUCTION OF LIVE-ACTION SCRIPTED SERIES 3 THE INFLUENCE OF DIGITAL STREAMING SERVICES 4 THE IMPACT OF CORD-CUTTING CONSUMERS 4 THE REALITY OF RISING PRODUCTION COSTS 5 NEW PROJECTS: PILOTS VS. STRAIGHT-TO-SERIES ORDERS 6 REMAKES, REBOOTS, REVIVALS—THE RIP VAN WINKLE EFFECT 8 SERIES PRODUCTION BY LOCATION 10 SERIES PRODUCTION BY EPISODE COUNT 10 FOCUS ON CALIFORNIA 11 NEW PROJECTS BY LOCATION 13 NEW PROJECTS BY DURATION 14 CONCLUSION 14 ABOUT THIS REPORT 15 INTRODUCTION It is rare to find someone who does not claim to have a favorite TV show. Whether one is a devotee of a long-running, time-tested procedural on basic cable, or a binge-watching cord-cutter glued to Hulu© on Sunday afternoons, for many of us, our television viewing habits are a part of who we are. But outside the industry where new television content is conceived and created, it is rare to pause and consider how television series are made, much less where this work is performed, and why, and by whom, and how much money is spent along the way. In this study we explore notable developments impacting the television industry and how those changes affect production levels in California and competing jurisdictions. Some of the trends we consider are: growth in the number of live-action scripted series in production, the influence of digital streaming services on this number, increasing production costs and a turn toward remakes and reboots and away from traditional pilot production. What emerges is a portrait of an industry once more in growth mode, creating opportunities for jurisdictions seeking to capture a greater share of television production. PHOTO: HBO / Ballers 2 4 PRODUCTION OF LIVE-ACTION SCRIPTED SERIES 250 In recent years, many observers have said we are living in a “Golden Age of Television.” While opinions may differ as to whether this is true from a creative perspective, it is certainly true from a quantitative one. 203 202 201 200 186 By FilmLA’s count, over the past two years, 467 live-action scripted series were produced 173 by U.S. studios for the U.S. market. FilmLA’s169 count includes all scripted live-action one-hour and half-hour shows produced for broadcast, cable and digital streaming 159 networks. The count excludes animated projects,152 reality shows, late-night talk shows and 150game shows. It does include children’s programming. According to FilmLA’s count, the number of scripted live-action series in production increased nearly 10 percent overall from 2016–17 to 2017–18. This increase was solely 100driven by digital series growth. The number of series produced for broadcast networks declined approximately 3 percent in 2017–18 from the prior year, while basic and premium cable saw a decline of approximately 13 percent. 50 Meanwhile, production for digital networks increased 76 percent from 2016–17 (96 series count) to 2017–18 (169 series count). Since 2010–11, the number of series produced for digital networks increased an astonishing 2,314 percent. 0 NUMBER OF LIVE-ACTION SCRIPTED SERIES PRODUCED BY U.S. STUDIOS 500 467 426 169 Digital 400 368 96 357 Broadcast 329 36 57 21 300 289 17 Cable 256 113 112 108 113 15 109 94 198 200 7 87 208 218 NUMBER OF SERIES 67 200 198 178 189 154 100 124 0 2010–11 2011–12 2012–13 2013–14 2014–15 2015–16 2016–17 2017–18 Where is all this growth in digital coming from? Netflix© accounted for just over half (86) of the live-action scripted digital series, a dozen other streaming services had at least one series in production for the current or upcoming season. Amazon© and Hulu are the industry’s dominant players after Netflix, with 22 and 16 series, respectively. Other streaming services or digital networks with five or more live-action scripted series in our sample include YouTube©, CBS All Access©, Facebook© and Verizon’s go90 service.1 The volume of new series and other programming produced for digital networks shows no signs of slowing. In August 2018, YouTube Premium claimed the service had a total of 65 “shows and movies” since it launched in 2016. In 2019, YouTube Premium has plans to add at least 50 additional shows. In addition, AT&T®, which now owns HBO®, has announced plans to greatly expand the volume of programming on the network.2 1 As of July 2018, Verizon announced that it was pulling the plug on the go90 service. The status of series produced for the service is unknown. 2 By blurring the lines and making it more difficult to categorize new series by distribution media, the cord cutting phenomenon presents a challenge for production trends analysis. 3 THE INFLUENCE OF DIGITAL STREAMING SERVICES The impact that digital streaming services are having on the entertainment industry and the television landscape is considerable. From 2012 to June 2018, the number of Netflix subscribers in the U.S. grew from 27 million to 56 million. Worldwide, Netflix boasts over 130 million subscribers. Alongside subscriber growth, Netflix has increased its spend on original content, to the point that its investment now resembles those of other major studios. In 2017 the annual spend on non-sports content by NBCUniversal© was $10.2 billion, for Time Warner $8 billion, Disney© $7.8 billion and Netflix $6.3 billion.3 In 2018, Netflix plans to spend $12–$13 billion on original content.4 The OTT (“Over the Top”) streaming model Netflix pioneered is, according toVariety ’s Cynthia Littleton, “the reason Disney and Comcast chased 21st Century Fox with such fervor” and “was a big part of AT&T’s motivation for scooping up Time Warner.” Of Netflix’s impact on entertainment industry economics, Littleton called it the “biggest shift… in decades.”5 In August 2018, Disney CEO Bob Iger said creation of the company’s planned DTC digital service, is the “biggest priority” for 2019. Disney Play, according to Iger, will feature a lower subscriber price point than Netflix, but it will also offer less. “We’re going to walk before we run,” Iger said, “as it relates to volume of content.” Still, there is probably room to grow. Amazon, Apple©, and Alphabet (Google©), have strong access to capital and documented interest in original content production. While Amazon is already established as an OTT streaming service, with content spending reaching $5 billion in 2018, the company has yet to flex its financial muscle on a scale similar to Netflix. Likewise, Apple has only begun to invest in original content, with a relatively modest spend of $1 billion budgeted in the near future. Should additional players aggressively enter this space as believed, the overall number of live-action series in development will likely increase. 3 Rani Molla, “Netflix Spends More on Content,” Recode, February 26, 2018: https://www.recode.net/2018/2/26/17053936/how-much-netflix-billion-original-content-programs-tv-movies-hulu-disney-chart 4 Dana Feldman, “Netflix’s Content Budget is Updated,” Forbes, July 9, 2018: https://www.forbes.com/sites/danafeldman/2018/07/09/netflixs-content-budget-is-updated-to-13b-in-2018/ 5 Cynthia Littleton, “How Hollywood is Racing to Catch Up With Netflix,” Variety, August 2018: https://variety.com/2018/digital/features/media-streaming-services-netflix-disney-comcast-att-1202910463/ THE IMPACT OF CORD-CUTTING CONSUMERS So-called “cord cutting” is another consumer phenomenon that can be associated with the apparent growth of original content on streaming media. The shift of viewer eyeballs from one distribution channel to another seems to correlate with new content growth on those platforms. Data collected by Leichtman Research Group shows that the top providers of pay TV services began losing customers on an annual basis in 2013, when 170,000 customers cancelled service. This number has steadily increased, to just over 2.9 million as of 2017. At the same time, customers embraced live-television streaming services like Roku©, DirectTV Now™, Sling TV™, Playstation™ Vue, Hulu with Live TV and YouTube TV. These services offer live-streaming packages delivered over the internet that are akin to pay TV cable packages, but generally at a lower price point. Monthly prices for live-streaming packages from providers like YouTube or Sling TV range from $25 to $40 versus an average of $100 for major cable providers. Thus, even though 2017–18 was the most productive series development cycle FilmLA has ever observed, none of the year-over-year growth can be attributed to an increase in the number of network or cable shows. From a production standpoint, both of these mature sectors of the business are just as robust—but no more so—than they were back in 2013–14. 4 THE REALITY OF RISING PRODUCTION COSTS When it comes to one-hour series, the budget for many of today’s top shows approaches or exceeds $100 million per season, an amount that rivals many large budget feature films. As a result, a studio making a two-year commitment to a one-hour series like Warner Bros.’ Blindspot ($79 million, S1) will spend more money to produce it than to produce a big budget film like Wonder Woman ($150 million). Every successful TV series is an economic boon to the hosting location. A partial sample of estimated production budgets for current one-hour series revealed per-episode production costs ranging from $3.1 million to $15 million.
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