Queen Elizabeth II may have popularized the phrase “annus horribilis” decades ago, but the Latin term feels more relevant than ever when thinking about the state of the U.S. TV sector in the last year.
Midway through 2022, the industry was rocked by an unanticipated Netflix subscriber slide that sent shockwaves through Wall Street. Since then, there have been a series of struggles for virtually all legacy studios and streamers, thousands and thousands of layoffs across the sector and dual labor strikes for the first time since a young Ronald Reagan was helming the actors’ union.
When it rains, it pours, as they say, but what did this all mean for the industry outside the States? As globalization has taken hold, the international business has become more intrinsically linked with the U.S. and is also largely driven by the streaming revolution.
Deadline has spoken to around a dozen creatives, producers, sellers and analysts from around the world — some of whom preferred to remain anonymous — to piece together how a year to forget for the U.S. has impacted the international TV biz. At the same time, a global economic downturn has deepened its grip. Major European players such as Viaplay and ProSiebenSat.1 have been forced to shed hundreds of staff members and cull hours and hours of shows in response to economic turmoil, which has run concurrently with the strikes, buttressing an across-the-board commissioning slowdown.
Sources vary in their position on the doom-and-gloom spectrum, but they leave Deadline in no doubt that the ripple effects from the U.S. have, at times, felt like tidal waves.
“The year the bubble burst”
“This was the year the bubble burst,” says Frank Spotnitz, The X Files exec who has been based in Europe for more than a decade, running an indie and training writers. “These huge American corporations suddenly realized they were in a money-losing business. They realized they had to change tack and at the same time the strikes hit, so it’s really been a perfect storm — a tough year for everyone.”
Spotnitz’s summary is reflective of the view of almost every Deadline source interviewed for this piece. All acknowledge that these once-in-a-generation tectonic shifts have hit them in some way.
The majority identify the Netflix subscriber dip as a never-to-be-forgotten catalyst, leading to major strategic rethinks across the legacy studios and streaming services, plenty of which fell outside the States. The streamer formerly known as HBO Max (now Max), for example, rolled out numerous European commissioners at Series Mania 2022 with a “We are open for business” message, before Warner Bros. Discovery pulled the plug on originals in a number of these nations just a few months later. Sources flag this cautionary tale as setting the pace for things to come.
“What has been painful this year on this side of the pond is seeing streaming platforms, which were augmenting our local markets significantly, pulling back or freezing entirely,” adds Spotnitz, who also cites Sky Deutschland’s recent shift away from originals. “HBO, in particular, was nurturing so much local talent in places like Central and Eastern Europe and that has really been curtailed.”
The Hebrew saying “far from the eye, far from the heart” springs to mind when Danna Stern, who used to run Fauda and Shtisel outfit Yes Studios, ponders the approach of the big U.S. giants during the subsequent period.
“It’s easier to target people on the ground in other countries and territories, who are far away from those sitting down the hall from the decision makers,” she says. “There is less money, less commissioning, fewer executives and less risk-taking all round, and that filters its way through to other markets. When the U.S. does badly, we all do badly.”
The sentiment Stern raises feels ever more pronounced due to the sharp growth in local commissioning that preceded the downturn, birthing the phrase ‘local for global,’ (or, rather sickeningly, ‘glocal’), which echoed round Covid-era confab halls and Zoom calls throughout Europe in 2021. The virtues of non-English language hits such as Squid Game, Lupin and Money Heist were extolled at many a trade show, while newer players such as Paramount+ committed big to spending outside their home nation.
“But then we suddenly felt these guys shift away from what had been a very aggressive [local] commissioning stance,” says the boss of an internationally facing indie that makes shows in a number of territories. “It’s not as dire as in the U.S., but there is now this general uncertainty and reticence for the streamers to move forward or commit to anything interesting. The scale at which producers thought we could operate at is no longer the case and we are having to readjust, which is sh*tty.”
The streamers, for what it’s worth, have consistently sought to downplay these local pullbacks, with the likes of Disney+ confirming at the Edinburgh TV Festival that it has “pretty much” hit its target of creating 50 original international titles, although this came just a few days prior to Deadline revealing the high-profile canning of UK live-action series Nautilus and a few weeks after German drama Sultan City was axed. Netflix has simultaneously continued to greenlight series from its various local hubs and has committed big to territories such as Korea, while a small number of projects have been quietly put to bed.
But chatter abounds about shows that have been taken out of early-stage development across the streamers, who were seeking to protect their coffers by culling projects before they got too far down the road. Speaking at the Edinburgh TV Festival in August, Ian Katz, Chief Content Officer at Channel 4, declared grandiosely that the industry could be “heading towards a reset that sees lower levels of production globally” due to Wall Street’s lost confidence in the streaming behemoths. (A number of streamers declined interviews for this article.)
For Tom Harrington, Head of Television at media analysis firm Enders Analysis, the international community should have been more cognizant of the slowdown when the sun was shining in the pre-Covid era. He isolates the troubles as beginning not after the Netflix subs drop but rather when the likes of Netflix and Prime Video began taking “their foot off the pedal,” bringing an end to a ‘blank cheque’ culture.
“We wrote a report years ago saying this was coming and people at the time disagreed, and then it happened,” he says. “In a mature market, the streamers worked out how much they needed. First, they cut budget and then they cut volume.”
While Squid Game, Lupin and Money Heist no doubt hit global popularity heights unimaginable for an international show of yesteryear, replicating that success has been much harder than some would have believed at the time they were breaking records around the world. “Squid Game is a huge international show, but I don’t think many viewers can name another one from Korea,” adds Harrington.
This realization has led the streamers to retrench and focus on hero titles, according to Kantar Media Global Consumer Insight Director Dominic Sunnebo. He flags Amazon’s big bet on the likes of Lord of the Rings and Citadel as an exemplar here and ponders the subsequent effect on local content.
“It’s a fairly dangerous strategy given that these shows might not get a good reception, but then the days when consumers signed up to streamers for an overall programing solution are behind us,” he adds.
A senior exec at an international drama indie concurs with Sunnebo. After conversations with local SVoD execs, they conclude that the “in between” has been taken out of the international streaming market. “It feels like the streamers only want the really low budget stuff or the stuff that works globally,” they say.
Dual strikes
These shifts have been further compounded by the dual writer-actor strikes, which led to a virtual Hollywood shutdown in a case of rather poor — or, some may argue, fortunate — timing for the studios and streamers.
As Deadline went to press, the WGA had finally secured a deal with the studios and writers went back to work, but the effect was yet another example of the interconnectedness of the global industry. Sources are torn as to the extent of the damage outside the U.S., while being united in agreement that the current strikes are more impactful than the previous labor action, which took place 15 years ago.
The 2007-2008 strikes saw the unscripted sector boom in lieu of scripted, and content licensing flourished. Not this time, sources say, with our international producer source citing the “perfect storm between the strikes and streamer re-examination” leading to a commissioning slowdown across all genres.
“Because this is such a foundational dispute about really huge matters, you are seeing unscripted people show solidarity [with scripted],” says the boss of a well-known unscripted indie. “Things might change when networks look at their schedules and say, ‘We have a gap.’ I’m respectful of the strikes and wouldn’t want to do anything to undermine that.”
The landscape for licensing and distribution has therefore been complicated to say the least.
While Harrington spotlights several intriguing licensing tie-ups such as Channel 4’s deal with Disney for shows including The X Files and Abbott Elementary, he says his research has only found “a bit of an uptick in licensing, but not a massive one.” That’s a notion echoed by several in the international distribution community.
On the other side of the coin, U.S. buyers are only just beginning to splash out on content from around the world to fill those all-important schedules. “The likes of ITV may have said that they will license a bit more but that doesn’t mean ABC is suddenly going to put [long-running ITV drama] Vera on at 9 p.m.,” Harrington says.
Budget cuts and a desire to buy ‘fewer, bigger, better’ “ratings chasers” have combined to keep the international distribution market fairly quiet, according to Jonathan Ford, whose Abacus Media Rights outfit shops the likes of Dan Reed’s Leaving Neverland and buzzy upcoming Australian drama Scrublands.
“When the market is buoyant, U.S. buyers are more interested in international programming, but when it is not, they want stuff that hits the spot for U.S. audiences,” adds Ford. “This creates a catch-22 when we try and sell to the U.S. during a strike.”
Canaries in the coal mine
For what it’s worth, Ford is confident the market will broadly “pick up from Mipcom onwards,” but local territories are nevertheless feeling the pinch.
In the UK, the strikes have thrown into focus the success that the British acting and writing community has had in Hollywood. Conversely, this has been one of the factors that has led to a slump for the local sector, as high-profile projects such as Disney+’s Andor and Apple TV+’s Silo were forced to a halt. A petition pleading for the UK government to forge an Income Replacement Scheme to help freelancers with lost earnings had amassed tens of thousands of signatures by the time of press.
“The canary in the coal mine will be the impact on crew bases,” considers a UK drama exec who has been closely surveying the scene. “Suddenly, the next 12 months look quite bleak. Only time will tell how much of that is down to the strikes and how much is down to the streamers not playing the game as much as they used to.”
Alex Boden, the former chair of the Production Guild of Great Britain and a producer on HBO’s Tokyo Vice, which filmed mainly in Japan, has had a 360-degree view of the labor conflict’s global impact. He worries that diversity gains made in the past few years since the Black Lives Matter protests will be hit hard by the loss of work, a sentiment shared by Spotnitz, which the latter describes as “tragic.”
Boden strikes an optimistic note when considering the short-to-medium term impacts of the WGA and SAG-AFTRA shutdowns and says he’s observed some crew returning to the local TV or independent movie sectors, while many have used their experience of Covid-19 slowdowns to good effect.
“[UK broadcasting union] Bectu has cautioned against an over-reliance on the U.S., and this is a good reminder to make sure our local industry is in the best shape possible,” says Boden.
He has also observed big U.S. players on some productions “holding on to [international] crew,” which he says is no bad thing. He cites examples of productions in English-speaking nations that are keeping their teams employed during the strikes, sometimes by extending pre-production. In countries such as Germany and the Netherlands, local crew bases are “far less reliant on U.S. studios, and are protected by their local language,” he adds.
Marcus Ammon, managing director of content for Das Boot indie Bavaria Fiction and former Sky Deutschland content chief, backs Boden when he says, “the less reliant a platform or broadcaster is on American product, the smaller the impact of the loss.”
He adds that the “demand for local productions over the past years has established a TV industry in Europe that is less dependent on U.S. product.”
Furthermore, a rise in co-productions has been another positive outcome, with U.S. buyers showing more interest in putting smaller amounts of funding towards larger projects to secure some domestic rights.
“In Europe specifically there is a lot of this going on,” says Stern, who is consulting on a number of such projects. “Local broadcasters and international players are being really creative on windowing, understanding that rights need to be given up and that they can also access public funding.”
One indie boss says that three of his recent greenlights were only possible due to the strikes pushing U.S. players to seek out co-productions. He believes the consequences of the co-pro boom will be U.S. players re-considering the premiums they pay for domestic content once the strikes are done and dusted.
“The two-tier price system that has developed between the U.S. and rest of the world will be equalized hugely by all this,” adds the source, who has worked on some of the biggest UK shows of the past two decades. “In the U.S. you pay ten times more for a script and that just isn’t sustainable.”
The nature of the U.S. strikers’ demands could also have been a boon for working conditions around the world. UK actors’ union Equity has very similar demands to SAG-AFTRA in its upcoming negotiations with producer trade body Pact and is pushing hard in areas like AI provisions, while the Korean actors union has based its own talks with Netflix on SAG-AFTRA’s desired residuals structure.
Many sources indicate that the international industry will slowly correct itself amidst the doom and gloom and that a reduction in commissioning may be just want the sector needs.
“While painful in the short term, the bursting of the bubble could be good in the long term,” Spotnitz says. “There is way too much TV. A lot of programs shouldn’t have got made and a lot of good stuff got lost in the churn. We will find a more rational business model to proceed with that will be better for all of us.”