China & Netflix: The Two Disruptors That Will Define 2017

December 16, 2016
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2016 was a big year for how filmmakers create. Drones rose to ever-greater prominence and accessibility, virtual reality inched its way closer to the mainstream, and live video spread to a new kind of social media experience. 2017 will likely continue these trends, but it will more likely be defined by two huge economic disruptors that will announce their dominance over the filmmaking world. Netflix will double its output of original programming and China’s box office will likely overtake North America’s. These two developments are monumental on their own, but they’re also connected.

Netflix Will More Than Double its Original Content

2017 might not be the year that started the arms race, but it could be the year that solidifies it.

$6 billion is a lot of money. Actually, it keeps Netflix as the second-highest spender among its TV network and subscription video-on-demand peers (second to ESPN only).  Its next biggest rival is NBC, which will spend $1.7 billion less. Netflix will produce 30 pieces of original content, with a new focus on unscripted formats.

Netflix has been spending big for a few years now, but it’s the company’s content ambition that is the most telling. Original programming wasn’t always a sure thing for Netflix - “House of Cards” only began four years ago - but it has spearheaded the company’s success since, and has created an original content arms race amongst competitors.

House of Cards

If Netflix’s commitment to original programming expands its audience the way the company hopes, then the floodgates have truly been set open for content providers. 2017 might not be the year that started the arms race, but it could be the year that solidifies it. In theory, this means more opportunities for filmmakers, as the traditional broadcast model of filling time with reruns seems to be disappearing in the streaming age. More Netflix content is a net-plus, as it isn’t replacing old content in time-slot formats.

One of the biggest tricks up Netflix’s sleeve for 2017 is unscripted programming, which is cheaper to produce and, according to Chief Content Officer Ted Serandos, can be more accessible to overseas audiences. Look for the Sylvester Stallone competition show “Ultimate Beastmaster” next year for an example. This big push to foreign markets is indicative of a more global progamming landscape, and nowhere is that more apparent than in China.

China’s Box Office Might Overtake North America’s

Film studios are factoring foreign sales so promenently that it’s changing the content of Hollywood blockbusters.
Warcraft

Netflix might not be available in China (yet) but American blockbusters are. In fact, with a new U.S.-China contract being negotiated and the actual strength of current Chinese output being debated, 2017 could be the biggest year for U.S. films in the region yet. 

These changes are important. You might have noticed that this year’s “Warcraft” was a domestic box office bomb ($46.61 million to a $160 million budget) yet, thanks to $220.8 million in China, the film’s total budget broke about even. Film studios are factoring foreign sales so promenently that it’s changing the content of Hollywood blockbusters. Want to see how? Check out this Vox video below.

 

Per Vox, China only imports 34 films a year, and most of those films are distributed with a revenue-sharing contract that allows studios to get 25% of the box-office sales. To become one of the 34 films, studios will change their content to be more friendly to Chinese audiences (more importantly, the Chinese government). Action has no language barrier, and pro-Chinese messaging doesn’t hurt. As China’s middle class grows and its movie appetite increases, so does its influence over American movies and our dependence on foreign box office returns.

2017 will be a year of shifting powers in the content marketplace, from West to East and from Cable companies to streaming services. Netflix isn’t the only video streaming service and China isn’t the only foreign market, but their continued growth will not only change what we watch, but how we make it as well.

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Brent L Zaffino

I am a filmmaker out of Atlanta, Georgia currently working as a freelance director and videographer for music videos, short films, and corporate videos.

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