1. The explosion of capital in the content creation space isn’t slowing down any time soon.
Major studios and streaming giants spent over $100 billion on original content in 2020, up two and a half times from five years ago. This meteoric growth has sharpened Blackstone’s conviction in content creation as an investment theme, as evidenced by the nearly $2 billion we’ve committed in the area firmwide over the last 18 months.
“This is really the beginning of another wave of investment in entertainment, streaming and live performances,” said Coleman.
2. Content creators must be at the forefront of how consumers interact with their media, which is evolving at a rapid pace.
Media consumption has increasingly shifted from passive, linear broadcast to on-demand digital distribution, and the future is turning to virtual and augmented reality. Production companies must consider the various ways their content will be consumed from the very beginning of the creative process. Their decisions have implications for subscriber retention, a new measure of success in the digital streaming age.
“Even 10 years ago you didn’t have to think too hard about the content creation process, because content was either going to be consumed on a movie theater screen or on a television set,” said Harden. “Today’s landscape is so much more complex and dynamic. Not only are we thinking about the creative process differently, but also the distribution and streaming model.”
3. Consumers are expecting more from their streaming services and entertainment offerings.
The streaming marketplace is incredibly competitive, evidenced by the litany of services consumers have to choose from. Therefore, innovative and differentiated content is in high demand. Hello Sunshine sets itself apart by choosing to share female narratives and support women both in front of and behind the camera.
“We saw a white space in the industry. Our mission has always been to put women in the narrative and at the center of content, and to bring voices that have been structurally excluded from Hollywood for many decades into the conversation,” said Harden. “If we succeed, we can have direct relationships with our audience, which is in turn good for business.”
4. Being a “one-stop-shop” can create new opportunities.
For investors, this space lends itself to opportunities that are “one derivative removed” from content creation itself – in other words, sectors that benefit indirectly from the distribution platforms. Hudson Pacific Properties is also taking advantage of adjacent revenue streams by offering associated services that a production team might need, like lighting and sound tech. Blackstone has been involved in the space by acquiring and building physical sound stages where TV and movies are filmed.
“We can help the content creation process by being a one-stop-shop. That kind of mentality is taking us out of being just a brick-and-mortar facility and into the services space,” said Coleman. “We’re evolving into having about 30% of our revenue stream coming from ancillary revenue.”
5. Leveraging technology partnerships is essential to remaining competitive.
Forming strong partnerships with technological innovators, such as streaming and e-commerce platforms, is crucial to remaining relevant and competitive in the content creation industry.
“For example, there’s a new Amazon fashion competition show where the minute the episode finishes all of the winning designs are available for purchase on Amazon,” said Harden. “It’s a good business model, but it’s a better consumer engagement model. We focus on the creative elements, but we absolutely rely on our studio partners and platforms. We can benefit from their scale advantages.”
