September 5, 2024
Sony Pictures Entertainment, unlike other major studios, has long eschewed operating a branded streaming video service, opting instead to license original movies and TV shows as a “strategic supplier” to third-party direct-to-consumer platforms such as Netflix, Apple and Prime Video.
The media giant’s lone streaming outlier, the anime-based Crunchyroll, which Sony acquired from AT&T in 2021 for $1.18 billion, continues to cater to a specific audience with positive bottom-line results, according to Tony Vinciquerra, CEO, and of Sony Pictures Entertainment.
Speaking Sept. 5 at the BofA Securities 2024 Media, Communications and Entertainment Conference in New York, Vinciquerra said Crunchyroll is the only profitable subscription streaming service in the business other than Netflix. As a result, he says Sony is eyeing expanding into other genre-specific streaming ventures.
“We’re pretty bullish on that side and would love to do more genre-based targeted, passionate-audience centered streaming services,” the CEO said. “And we’re working on that right now. But it’s going to take some time for the market to shake out. Eventually, [streaming] is going to be a profitable business.”
The executive contends the streaming business is in a state of consolidation with the consumer market able to support about three-to-four general entertainment streaming “winners” going forward.
“You can pick who you think are going to be the winners,” Vinciquerra said, adding that the market for genre-based streaming services remains wide open.
“There will be very passionate audiences that gravitate toward genre-based streaming services as well,” Vinciquerra said. “History does repeat itself, and it’s really pretty much going the same way as the cable business did 25 years ago.”
The executive says that content production at the studio has returned to normal after Covid and last summer’s industry strikes. He says the business has transformed from a high margin enterprise to a volume business.
“Ten years ago, we would do 10 or 12 TV shows, now we’re doing 30 in the U.S. Shorter series, eight or 10 episodes, maybe fewer seasons as opposed to five or eight,” Vinciquerra said. “You only produce a show once you have an agreement.”
“There’s no ‘Friends,’ you’re not going to ‘Seinfeld’ or those kinds of [long-running series] going the future,” he said.
The executive said Sony has proposed shorter licensing periods down to four or five years from the current longer rights periods, with little agreement from distributors.
“It is just a very different business,” Vinciquerra said. “Our main customers are Amazon, Netflix and Apple. And they have [not shortened their rights timelines], or flattened their [content] spend. The [distributors] who have cut back are the ones that are not as buoyant at this point.”
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