The giants in the streaming world like Netflix, Amazon Prime, and Hulu currently have the ultimate bargaining chip.
Unlike traditional TV, whose lifeblood is advertising and fees from cable providers, streaming companies live off direct user subscriptions completely untethered from that old model. This gives them the power to hoard all the data on how many and what kinds of people watch their TV shows and movies for themselves, free of outside pressures. Because, basically, they have no one to answer to.
Many in Hollywood are wondering how long they will have that luxury.
With the major streaming companies gaining a higher profile thanks to the popularity of the award-winning original content they have been developing, more and more people in the industry want some hard data on the number of people watching shows like “House of Cards” or “Transparent.”
That includes the filmmakers responsible for making streaming content, who are almost as clueless as anyone else.
“I finally accosted [Netflix head of content acquisitions] Ted Sarandos recently to try to give me the numbers,” “Beasts of No Nation” director Cary Fukunaga told Business Insider. Fukunaga said the numbers he got were “reassuring,” but he had to jump through hoops to get them.
Sarandos told Deadline shortly after “Beasts” came out simultaneously in theatres (where it had a weak opening) and on streaming that it had three million views in North America alone. That figure is still vague, however, since it’s unclear if it counts people who finished the film or simply started it.
When Fukunaga was asked if he thinks streaming companies should release their numbers publicly he said, “I think they should. Why not?”
The answer, of course, is that Netflix would then lose an enormous advantage.
With a studio knowing how its content is performing, the streaming service would no longer be in control of the price of the deal, and a more level negotiation for the content would take place.
According to numerous sources aware of the negotiations who spoke to Business Insider, the major studios are making billion-dollar deals with streaming companies known as output deals — selling a group of titles from a studio’s library to a streaming service — with little knowledge of whether the dollar amounts they’re selling for align with the performances of those titles on the streaming platforms.
“We’ve giving the family jewels over to a platform and we’re not understanding what’s working and what’s not,” said one source who’s familiar with a studio’s analytics.
At the moment, the best sense of viewership for studios comes from third-party companies that are beginning to pop up. These outside entities have built algorithms to provide data about who’s watching what. One of them, Luth Research, does so by gathering a sample of Netflix subscribers. But this data is nowhere close to being as reliable or specific as the internal information a company like Netflix has.
Numerous people interviewed for this story all pointed to one solution that would level the playing field: If one of the media conglomerates such as NBCUniversal or Sony were to insist on streaming companies being transparent with their data when negotiating for output deals, it could turn a corner.
“It would be a wake-up call to the streaming world if a major player would walk away,” one source told BI.
Time will only tell if anyone has the fortitude to refuse a billion-dollar deal.
Disclosure: Jeff Bezos is an investor in Business Insider through hispersonal investment company Bezos Expeditions.
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