INTRODUCTION
Whether we speak of Millennials or of Gen Zs books, music, films and TV Shows remain a constant. From cassettes and DVDs to mobile phones, our screens may have become smaller, but content has found its way to reach us in many ways. The easier it becomes for a consumer to view content, the more complex agreements and deals become. With each innovation, a new boilerplate clause gets added to the post-production stage in order to secure as many rights as possible in this dog-eat-dog world!
Licensing and Co-Production are not juvenile terms, but they definitely have gone through a makeover in the last two decades.
With increasing demand for content, streaming platforms have gained a good market-share in terms of distribution of content locally and globally. Earlier, we would wait for a movie for grand television premier, and now we know that in less than two months, the movie will be available on either Netflix or Amazon Prime Video. How times have changed.
Now it may seem like a normal thing for a viewer, but its complexities are only understood in the way these movies and shows are either licensed or co-produced by the streaming platforms to make the content available and optimize revenue. And this is exactly what the article aims to analyze.
UNDERSTANDING LICENSING AGREEMENTS
Licensing deals entail obtaining the rights of a film, music recording, or television show, for its distribution by a third party. This stage occurs in the post-production phase when the audiovisual project is to be distributed and monetized, and it is different from assignment of rights. An assignment occurs when a owner of an IP transfers their exclusive right(s) of the IP to another person or party. Whereas license is a mere permission to use the IP in exchange of royalties or a payment decided upon by the contracting parties.
The parties, namely licensor or the IP owner and the licensee, the one who seeks the use of the IP define the scope of the rights so granted, primarily covering factors like exclusivity, territory & duration. These rights can either be exclusive or non-exclusive. This finally determines the financial obligation attached to the permissible use of the IP.
To understand this better, let’s take the Harry Potter movie series as an example. Produced by Warner Bros., the films have been licensed to various streaming platforms over the years, and at different points, they were available to different streaming platforms. Amazon Prime Video had the streaming rights as part of their subscription model in certain regions, an example of territory based exclusive license. Subsequently, Warner Bros. launched HBO Max to strategically shift its key content to its own streaming service in markets where HBO Max operated. This eventually led to the shift in the license model as well, where the content shifted from SVOD (subscription-based video-on-demand) to a TVOD (transactional video-on-demand) model which required users to rent or purchase the film. In India, meanwhile, HBO shows and Warner Bros. content were initially available on Disney+ Hotstar, until the deal ended in March 2023, giving Viacom 18’s Jio Cinema an opportunity to secure the exclusive rights to stream HBO content, including Harry Potter. Amazingly, Jio Cinema and Disney Hotstar became one entity as a result of the Disney India and Viacom 18 merger, which opens the question of availability of content, and depends on future licensing agreements, showcasing how licensing agreements can shape and mold the distribution and exploitation of a film or copyrighted work.
UNDERSTANDING CO-PRODUCTION AGREEMENTS
Co-Production deals are valuable in securing financing and production infrastructure, when a single distributor or platform is unable to finance the film or a television show on its own. Different parties can use this model differently but the basic structure remains the same – terms are laid down by the parties who then work to develop, produce, finance, and distribute the project. It basically refers to the pooling of finances by two or more parties to produce a film, television/web show. Co-productions are proving to be attractive options to many producers, with its numerous potential benefits, such as technical and creative resource sharing.
The co-production model involves collaborations where two networks (for example) invest in and co-create television series, sharing creative control and financial risks. It almost like how a partnership firm works, equal right, equal risks. We all know about the Money Heist show which became an overnight sensation across the globe. The Emmy winning drama series, was on the verge of cancellation, when Netflix stepped in to co-produce the show and bring it from the Spanish scripts to the global screens. The show La Casa de Papel was originally created by Alex Pina and produced by Spanish network Antena 3, it aired as two-part show in 2017. Despite a strong start, when its viewership started to decline, the show semmed like it would end after its initial run. Enters the picture Netlfix, who first acquired global streaming rights in the later months of 2017, and then went on to do some restricting and rebranding the show as a “Netflix Original”. This brough the show to a worldwide audience and gained popularity and mass fan following. Netflix took over official production from season 3 onwards with an increased budget, which made the show the most-watched non-english series in the history of online streaming shows, and Netflix has seen followed its own steps in bringing the viewers more collaborative shows like, The Crown and many more such projects.
NETFLIX’S STRATEGY AND HOW IT IS WORKING FOR THE INDIAN MARKET: A COMPARISON OF THE TWO MODELS
The Indian cinematic landscape has proven tumultuous for Netflix ever since its arrival. It chooses a combination of licensing and co-producing originals. Although licensing has proved itself strong for viewership, Netflix made considerable investments in co-productions. Licensed projects like Maharaja which drew 22.6 million views, prove that the platform successfully takes local stories under the wings of its audience without incurring the investment of original production. Licensed titles like Laapataa Ladies and Shaitaan also add layers of value to its subscriber number increment in India. This gives -Netflix the opportunity to continue building its catalogue with pliantly of content flavor for the regions without taking too much risk with its audience.
A good example of co-produced work by Netflix is that of Heeramandi: The Diamond Bazaar, in collaboration with the Bhansali Productions, which created the biggest space as the greatest Indian drama series on Netflix. Such co-productions help in creating exclusive, high-quality content tailored for the Indian market while also enhancing subscriber retention.
In 2023, the Indian-Australian co-production treaty was signed to improve creative collaboration between the two countries. This would enable filmmakers to seek government incentives such as grants, loans, and tax offsets in both countries. This will create more distribution and investment opportunities for Australian and Indian producers.
WHY DIFFERENT MODELS WORK FOR DIFFERENT MARKETS
In markets that are cost-intensive, licensing is often the most desirable option. Platforms may co-produce such works with local studios to share financial risk, as it creates high-quality, localized content while lowering the financial burden.
Original productions help differentiate platforms in such mature markets like that of the USA and UK, where streaming competition is fierce. Stranger Things is one such example, where Netflix invested heavily in order to retain subscribers. In emerging markets like India licensing content helps to build an audience before experimenting with original productions.
The European Union directive mandates streaming platforms to place upto 30% of their content from European content. This “30 quota” derives it roots from the longstanding struggle of protecting European films against encroachment of Hollywood. hence we see, most European markets ???use the model of co-production with streaming platforms like Netflix.
The entertainment industry in the US follow a studio system, where big players like Disney, Warner Bros. and Universal fund and control productions, whereas, platforms still prefer the licensing approach for TV shows and streaming content without seeking to have ownership.
WARNER BROS. DISCOVERY V. PARAMOUNT 2023: WHEN CO-PRODUCTION LEAD TO A STREAMING RIGHTS WAR
Warner Bros. Discovery had alleged that Paramount acted in collusion with South Park Digital Studios for what amounted to doubling on content it allegedly contemplated in the agreement by moving specials to Paramount+ to support the then-emerging streaming services.
This is a highlighted co-production case, where the streaming rights of South Park were in question. WBD claimed exclusive streaming rights for the series on HBO max but alleged Paramount diverted content-including specials and new episodes to its own network, Paramount+. Paramount countered that WBD failed to pay licensing fees while continuing to stream the show. This case is continuing to show legal tensions about exclusive streaming rights as the value of content is sought to be maximized by studios under changing platform strategies.
CONCLUSION
While the Indian market still heavily relies on licensing global content, it strives to produce its own content through collaborative efforts to better amalgamize the linear content in the new OTT space. Moving ahead in the second half of the twenties decade, we see many changes in the way content is made, produced, distributed and exploited, and with these growing changes its safe to say that licensing models have also evolved with them and are still evolving. We will see more fusions of licensed and co-production deals. In the end it’s not a war between the two models, but an understanding of the market dynamics and applying each as needed.
Authored by: Ms. Tuhina Deb
A third-year law student of Batch of 2022-27 at Symbiosis Law School, Noida, pursuing Bachelor of Business Administration and Bachelor of Laws. Her continued fascination of the cinema and the world around it, has deeply influenced her interest in Media and Entertainment Law. As a law student, her academic profile so far, includes two publication, namely Deb T and Chattopadhyay D, “Cinema & Censorship: The Formula From The Past And The Legitimacy Of The Present” (2023) Volume 1 Issue 1, Beyond Briefs Law Review 243-252, and Deb T: The Web Series Balancing Act : The Messy Interaction between showbiz and law, (2024) Khurana and Khurana.
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