Telcos join the drama club

Kate Bulkley looks at the growing interest among telcos in teaming up to acquire original drama content as they seek to compete with Netflix and Amazon. 

It’s just over a quarter of a century since Bruce Springsteen’s song 57 Channels and Nothin’ On was a huge hit. A lot has changed in TV since then.

Today there is a surfeit of good TV and in particular a lot of premium episodic drama, thanks to competition from Netflix and others. In 2017, 500 scripted shows aired in the US, up from 455 in 2016, according to a study by FX Network. There is an episodic drama arms race taking place and it doesn’t look to be slowing down.

Today’s winning strategy, for all platforms, is to offer something eye-catching. As the pressure to stand out grows, telcos and regional online platforms are looking at adding premium drama to their offerings. One high-profile project to the help these players compete in the episodic arena is Atrium TV, the ‘commissioning club’ that celebrated the first anniversary of its launch this month.

“In almost every market around the world the number three player is the telco and we saw that as an opportunity because they all are competing with Netflix and the local TV channels and they need something to stand out,” says Jeremy Fox, chairman of Atrium, which is owned by Modern Times Group-owned distributor DRG.

Atrium offers its 20 club members, including Orange in France, Scandinavia’s Viaplay, Telefónica in Spain, Germany’s Deutsche Telekom and BT in the UK, a first-look at premium, multi-episode dramas it develops.

It’s a novel approach: the members only pay for the shows they opt to buy. Atrium shouldered all the development costs across the scripts that club members greenlit last October. Two projects are in the works: Quasimodo, written by Life of Mars co-creator Ashley Pharaoh; and Stephen Kronish’s moon-landing series One Giant Leap.

Atrium’s members are not obliged to “buy” into the projects but the club needs to put up 60% of the budget for the projects to proceed, says Fox with budgets ranging from US$5 million to US$10 million per episode.

Atrium’s model is unique. A similar scheme put forward by Hollywood agents CAA was based on its members putting in money upfront. Electus also recently launched a consortium to co-produce unscripted content with a similar ambition, to lower the costs for regional players to get access to high-value content. Members of 6/26 include France’s TF1, Germany’s Nitro, part of the RTL Group, and Modern Times Group, the owner of DRG, Atrium’s owner.

The rising costs and competition for talent has spurred a lot of this activity, along with the desire of media companies to get into the direct-to-consumer game. MTG’s Viaplay will produce 12 episodic drama series this year and Jacob Andersen , group head of programing and content development, thinks there is an appetite to double that in the next two years. “The traction we get with subscribers is amazing with original content,” he says. But with the “radical changes in the business,” he adds, content production costs have risen by an average of 30% over the last two years.

For telcos, accustomed to recurring revenue streams, taking risks on content is difficult. Commissioning clubs like Atrium can spread the risk, but some telcos have taken the plunge on their own. Telefónica has, separately from its involvement in Atrium, committed to producing 11 original dramas this year under its Movistar brand, six of which have already been made, including the Ä10 million Alberto Rodriguez period drama La Peste and post nuclear disaster thriller La Zona, already sold to Starz in the US.

The Movistar originals were the most watched content on the platform, according to Domingo Corral, Telefónica’s head of original content, and are part of the group’s commitment to spend Ä70 million per year this year and next on original content.

“We are very pleased with the results of our investment in the first year,” says Corral. “You cannot buy local content because there is competition from the broadcasters so you have to develop it yourself and then it can have your own flavour.”

The shows are intended for an SVOD platform, and Corral says he can take more risks because different shows can appeal to different audiences. “I have a lot of respect for Netflix and Amazon. They do what they do very well and when you have competitors like this, they encourage you to be better,” he says. “I’m glad they are spending money to hire local talent as well.”

We’ll have to see what the audience data says about the first Atrium shows, but the products will add to choice and give the club’s backers a way to stand out against not only local competitors but also the global platforms. Given that Netflix is commissioning more local productions, including 10 European projects such as a football-themed drama from Downton Abbey writer Julian Fellowes and a comedy series by Idris Elba, there is a lot to play for. An updated title for Bruce’s ballad could be 57 Channels and Plenty On.

Kate Bulkley is a journalist specialising in media and telecommunications. [email protected]