How big tech became the new titan of television

How big tech became the new titan of television

Hollywood power is in flux, as traditional broadcast and cable networks, which for decades shaped popular culture, try to keep up with technology companies

By Rory Carroll in Los Angeles Friday 15 September 2017 05.00 EDT Last modified on Friday 15 September 2017 10.25 EDT

In Hollywood, the screenwriter William Goldman once observed, nobody knows anything. But that was before technology companies rolled in sure of one thing: to conquer television you have to spend, spend, spend.

The geeks are raiding their digital vaults to transform themselves into lords of entertainment – or at least owners of content – and in the process shape what we watch and how we watch.

Apple has budgeted $1bn for original content and is reportedly eyeing the studio where Gone with the Wind was shot.

Netflix and Hulu are vying for awards glory this weekend with Stranger Things and The Handmaid’s Tale, after one of the most intense marketing campaigns in Emmys history.

YouTube is ramping up production of original shows and films with budgets and ambitions a world removed from kitten videos.

Facebook is waving a billion-dollar checkbook and may splurge up to $4m an episode on new programming, with Snapchat possibly not far behind.

Traditional broadcast and cable networks, giants which for decades shaped popular culture, are scrambling to keep up.

“I think at this point ‘arms race’ might be an understatement,” said Craig Erwich, Hulu’s senior vice-president of content.

It reflects the convergence of television, the internet and wireless technology. For traditional broadcast and cable networks it’s no longer enough to make hit shows. They must make them available for streaming and downloading on multiple platforms or risk losing advertising and subscription revenues.

And to grab a share of those revenues, and to differentiate their products and services, technology companies must own content – either by buying or making it.

Original content, especially prestige fare such as The Handmaid’s Tale, defines a company and fuels subscriptions, said Erwich, of Hulu. “This is something that we can own, that comes out of our DNA. Exclusivity is key.”

For Apple, breaking into Hollywood could help offset declining sales of iPhones and iPads and shore up its music streaming service. Adding a library of shows and films to the service will give existing subscribers much greater value for their $10 monthly fee and should attract new subscribers. Should the content be available only on Apple devices, it will be an added incentive for people to buy them.

The evolving hierarchy will be on display at the Microsoft Theater on Sunday when Stephen Colbert hosts the 69th Emmy awards. Hulu has 18 nominations – 13 for Handmaid’s and five for its first original documentary, The Beatles: Eight Days A Week. Amazon has 16 nominations.

HBO remains an Emmy behemoth with 111 nominations, Westworld alone bagging 22. But Stranger Things, The Crown, and House of Cards have helped Netflix close the gap from previous years, the former DVD mailing service garnering a total of 91 nominations.

Apple stumbled into original content with Planet of the Apps and Carpool Karaoke, critically derided reality shows streamed through its music service. But since hiring Jamie Erlicht and Zack Van Amburg – Sony executives who shepherded hits like Breaking Bad and The Crown – and earmarking $1bn to build an arsenal of original TV shows, the iPhone maker is expected to become a formidable player.

“That billion-dollar number is a very clear signal that Apple is a lot more serious about original content than a year or even six months ago,” said Jan Dawson, a media analyst with Jackdaw Research. “They want to produce quantity and quality. Game of Thrones-type stuff.”

The tech company will inhabit Hollywood history if its original content division moves into the Culver Studios, a possibility first reported by the Financial Times. The iconic lot, formerly owned by RKO, Howard Hughes and Cecil B DeMille, was used to shoot The Matrix and Gone with the Wind. Gloria Swanson’s “night spirit” reputedly roams the studio. Apple declined to comment for this story.

Amazon – which is reportedly in competition with Apple for the James Bond film franchise, with potential for 007 spin-offs – has also been linked to the studio.

Netflix led the way when it decided being a platform was not enough. It decided “to become HBO faster than HBO can become us”, as content chief Ted Sarandos said in 2013. He meant that content creators would eventually create their own streaming platforms, and stop giving them to Netflix.

He was right. Last month, Disney announced it would end its deal with Netflix and launch its own streaming service in 2019.

Netflix, however, has been busy creating a vast library. Its budget for original programming soared from $300m in 2013 to $6bn this year, a massive war-chest that will fund the release of at least 20 shows.

YouTube, despite boasting 1.5 billion logged-in-users per month, and 1bn hours watched a day, also feels the need to cultivate original content. It is scheduled to release more than 30 original shows and films through its subscription service, Red, this year, and more than 40 next year.

“We want YouTube original programming to stand for premium, entertaining content,” said Susanne Daniels, global head of original content. She cited Step Up: High Water, a dance show; Cobra Kai, a Karate Kid-inspired comedy series; and partnerships with YouTube creators and celebrities such as Demi Lovato and Katy Perry.

In addition, Facebook will spend as much as $1bn this and next year to cultivate original shows for its new Watch video platform, the Wall Street Journal reported this week. And Snapchat has signalled a move into scripted content. That should complement traditional broadcasters, not drive a stake through their heart, the company said.

The cash torrents pouring into Hollywood have made some uneasy. “It’s like getting shot in the face with money every day,” FX’s chief executive, John Landgraf, told a news media event last month.

Netflix turned heads by paying Dave Chappelle a reported $60m for two comedy specials. In such a climate competitors with smaller budgets struggle to afford big name talent.

But the revolution has gifted viewers quality, choice and convenience in what has been called a golden age for television. And in theory, it’s also a gilded time for creatives – courted by old and new money, exhibited on multiple platforms.

For those lower down the food chain, though, it can still feel like the old days. “For me and a lot of acting friends it’s like, why aren’t we working more? You still have to hustle, still do the grind, go to the auditions,” said Mike Funk, an actor.

Acting gigs for online content often pay below state minimum wages, said Dea Vise, a casting director. “It’s much harder work, longer work and less money than ever before.” Some Netflix shoots push crews to the breaking point, said one technician. “You have to cram more and more in. The schedules are insane. We’re exhausted.”


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