Screen Wars

The economics of Woody Allen and Amazon

Nova Safo Jan 13, 2015
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Screen Wars

The economics of Woody Allen and Amazon

Nova Safo Jan 13, 2015
HTML EMBED:
COPY

The Tuesday announcement was a showstopper: Woody Allen will produce his first television series. His distribution partner: Amazon Studios.

It came on the heels of a big weekend for Amazon, which won its first two Golden Globe awards for the series “Transparent.”

Here’s how the 79-year-old Allen characterized the deal in a written statement: “I have no ideas, and I’m not sure where to begin.”

Nevertheless, in its latest move to challenge the streaming dominance of Netflix, Amazon has ordered a full season of whatever show Allen comes up with.

This rivalry could be good for Hollywood.

“The dynamics have changed rapidly in the last several years,” says Steve Ennen, president of entertainment research firm Centris. “And that means the consumer has a greater ability to find … quality content of their choosing through digital distribution. And it’s starting to show in the numbers.”

Here are a couple of those numbers:

11

That’s how many new or returning original series Netflix will release this year.

$100 million

That’s how much Amazon spent on original content in just one quarter of 2014.

“That’s part of the mission of these types of companies. Investment in good original content has a lot of value for them,” Ennen says.

Andrew Wallenstein, co-editor-in-chief at Variety, says the investment has been paying off.

“It was just three or four years ago where the notion of getting the kind of quality entertainment you get from broadcast or cable on the Internet was really almost laughable,” Wallenstein says.

Still, the vast majority of content being watched on streaming services remains shows from traditional TV, even as those traditional channels see their audiences abandon them for streaming services. Wallenstein says those dynamics could mean networks may reconsider their willingness to sell older content to Netflix.

“They’re making money from Netflix, good money, by licensing their shows. But if it hurts their own network ratings, you may see a dramatic pull-back at some point,” Wallenstein says.

That’s further incentive for streaming sites to make their own content. Netflix already has two critically praised shows: “House of Cards” and “Orange Is the New Black.” But it made less of an impact with the $90 million “Marco Polo” that debuted at the end of 2014 with much fanfare but few positive reviews.

Meanwhile, Amazon has been getting critics’ attention with “Transparent.”

“Amazon is starting to come up with content that rivals Netflix,” says Wedbush Securities analyst Michael Pachter, who keeps close watch on the streaming world.  Competition for high-quality shows could set off a bidding war in Hollywood, he says. With more stars in the mix, writers, directors and actors could be seeing bigger paydays.

“Amazon very much wants to cut into the Netflix market share. And Amazon has a much bigger checkbook,” Pachter says.

That ultimately could mean that everyone in the entertainment game could be paying more for content, Pachter says.

Stay tuned. Or stay streaming, that is.

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