Netflix global TV effects international producers shift priority - The Netflix effect on global TV: 8 international producers talk about shifting priorities, rising budgets and the talent war in the face of growing streaming competition.

The detective series SOKO München was one of the longest scripted programs on German TELEVISION when it ended in 2020 after 40 years on the air. It dealt with the cases of a major crimes unit of the Munich police, a format similar to the American series Law and Order.

The ZDF series, a German public channel, was the epitome of German television until Netflix appeared.

When Netflix first entered the market in 2016, it didn't want to buy or commission the same old formats that were successful in DTT. Netflix wanted something new and had a lot of money to get it. This was a creative help for local producers who ushered in a new era of television production in the country.

Netflix global TV effects international producers shift priority

Since then, German companies have produced series on Netflix such as Babylon Berlin, a dark crime drama in the style of HBO; the twisted science fiction series Dark; and the historical epic Barbarians.

Barbarians describes the battle of the Teutoburg Forest, a turning point in German history when Germanic tribes united against an expanding Roman Empire. Before Netflix, it seemed impossible to dramatize effectively.

"This iconic battle has been tried by many producers, but they never found the funding," Sabine de Mardt, president of series production company Gaumont Germany, told. "With Netflix that's suddenly possible."

The Netflix effect has even caused German TELEVISION to look for new formats. Competition from global streamers is expanding the appetite of national actors, such as broadcaster ZDF, which has been commissioning situation comedies along with spinoffs from its former German criminal hit.

"For a long time there were no comedies in Germany," sums up Lasse Scharpen of Studio Zentral, adding that, as a result, the audience flocked to American comedies like How I met your Mother or The Big Bang Theory. "Everyone is very excited to see the Germans... Right now, everything works."

Netflix global TV effects international producers shift priority

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Germany is not the only country that has experienced major changes in television production in recent years. Global streaming platforms like Netflix and Amazon kicked off local-language film and television production, helping niche shows become global hits and familiarizing voracious American audiences with subtitles and dubbing.

"The number of programs, their quality and competition in those local markets have increased tremendously," says a talent agent who works with international creators.

The source has interviewed 8 producers from Brazil, Germany, India, Israel, Italy and Mexico, as well as a talent agent, about the rise of local language productions and how productions are changing.

Netflix didn't want to comment on this article.

Intensifying competition from streaming services, from Netflix to new actors like Apple TV+, is increasing the budgets of local-language productions, even doubling the budgets of some shows from season to season, and opening creative doors that had been closed for a long time, as was the case in Germany. But in some markets, demand for content is also creating a talent shortage that is driving up costs and limiting deadlines for producers.

Netflix global TV effects international producers shift priority

In Mexico, producer Alexis Fridman Díaz, of Perro Azul, says the industry went from producing seasons of 80 episodes of telenovelas and getting funding thanks to government incentives to make independent films, to producing high quality television. The necessary infrastructure is still under construction.

For example, a few years ago, Mexico did not have showrunners or screenwriter rooms, according to Fridman Díaz. The industry now has to set guidelines for pay scales and series credits for those roles, as the United States Writers ' Union performs in that country.

"We're really starting to get used to writing great television," says Fridman Diaz, whose studio did " Who killed Sara?"for Netflix. "It's a great opportunity, but it's overwhelming, to do all this in such a short time."

Netflix tastes have also begun to change.

Experts say that Netflix, with its advantage over the competition, is not only looking for international shows with global appeal (what it calls "travelability"). It has increasingly focused on programs that are highly successful in its local markets.

Netflix global TV effects international producers shift priority

Today, producers in major and emerging markets may have six or seven studios to target, rather than a handful of local buyers.

In India, a key region for Netflix, Amazon, and Disney, there are 40 different platforms competing for content, according to a study executive's estimate.

Netflix has a "five-year lead," says Nicola De Angelis, co-CEO of Italian production company Fabula Pictures (Netflix commissioned the series Zero this year). He claims that the gap will be difficult for other operators to close, although he is also in talks with Disney and Amazon to produce programs for their streaming businesses.

That competition, and the widespread success of local-language series, from Netflix's Lupin to Apple's Tehran, are driving up TV budgets.

Danna Stern of the Israeli studio Yes Studios says that the studio used to produce drama series for 600,000 to 800,000 shekels (between 150,000 and 200,000 euros) per episode. Now, the conversations start from 800,000 and reach 1.2 million (309,000 euros), depending on the number of episodes per season. The budget for the upcoming fourth season of the Hebrew-language series Fauda, which Yes Studios licenses to Netflix, cost approximately 30% more than the first season, he says.

Netflix global TV effects international producers shift priority

In India, Shibasish Sarkar, CEO of Reliance Entertainment, explains that scripted series are produced for only one million dollars (840,000 euros) for each season of eight episodes on a small platform compared to the 20 million dollars (16,800,000 euros) that can reach if there is a large platform involved. The budget for Sacred Games, Netflix's first Indian original content, nearly doubled in 2019 to $ 11.5 million (9.6 million euros) for its second season, from roughly $ 6 million (about 5 million euros) for the first, says Sarkar.

Even so, the budgets are not up to those of the United States, where the one-hour production of a highly successful TV show like Disney+ 's The Mandalorian can cost $ 15 million (around € 12 million).

Outside of Hollywood, producers play a role similar to that of American studios and often retain their intellectual property rights, which they can use to create merchandising products or spinoffs when a series succeeds.

But that is also changing.

Netflix and other global streaming companies increasingly want to own the intellectual property of their original products so they can turn them into global franchises.

Netflix global TV effects international producers shift priority

Some local producers try more skilfully to negotiate higher fees for them or retain some of the rights.

"That's the biggest challenge for all creators in the world," says Rita Moraes of LB Entertainment, who made the Brazilian teen drama Sintonia. "How is intellectual property valued over time, in the long term?".

Other smaller companies are not as interested in rights. Although the rights are interesting to own, these producers assure that they probably would not have been able to afford certain projects without the financial support of a large distributor such as Netflix.

Producers usually charge the cost of production plus a percentage of it, which is called a "production fee" or "incremental cost". In the US, distributors can pay between 60% and 70% in production fees, according to a talent agent. Internationally, fees start at 10%, but may be higher in more mature markets.

Netflix global TV effects international producers shift priority

Streaming platforms try not to spend too much on their international bets. But, since many platforms don't offer profit sharing like film studios do, there's also no direct mechanism in this model to pay for talent when a series delivers unexpectedly large results.

"Netflix did a good thing by creating this platform, but it's not paying anyone for the benefits when it works," says the agent, who has negotiated with major platforms on behalf of its clients. "If a series breaks audience levels around the world there is no additional compensation for the people behind those series and I think that's a mistake."

Some of the producers assure that new entrants, such as HBO Max and Amazon, have lately been more willing to negotiate aspects such as production rights and tariffs.

But one of them claims that those services have to cooperate, because Netflix is a more attractive platform for international producers.

"There is no more attractive distribution contract in the world than Netflix," says Moisés Chiver, producer of Club de Cuervos, Netflix's first original Spanish-language content. "That's appealing to producers to see their name all over the world.

Netflix global TV effects international producers shift priority

Some parts of the world, such as the European Union, have production quotas designed to push streaming platforms in their regions to invest in the local economy. But for the most part, streaming services invest internationally where it suits their corporate agenda.

The producer has spoken to say that there is no recipe for what every streaming company wants. Interests change, they add.

According to three of the producers, Netflix used to look for "travelability," that is, a local show that would also work in global audiences. It is a difficult concept to define, but it could broadly define a local agenda with universal themes.

Now, the streamer is more interested in the local impact, or in a show that is authentic to the local culture and that has an exceptional success in their country of origin, assure these people consulted.

"This is the most exciting thing of the year," says Stern of Yes Studios, who says he recently sold a documentary to Netflix that was popular in Israel and had ramifications that went beyond the screen. If I had submitted it a few months earlier in the framework of "travelability", it would have been a"no"".

That doesn't mean that "travelability" isn't still important. It is also a matter of costs in some cases, according to De Angelis.

"You have to have series or films that can work in other places, but at the same time they have to be important in terms of impact for the local market," he says. "The more Netflix spends, the more that content has to be able to work in a global marketplace. The less they spend, the more they invest in the general perception of something that can become global, starting from the local."

Note: Mathias Döpfner, CEO of parent company Axel Springer, is a member of Netflix's board of directors.

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