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Date:
August 2, 2022

How is the Economy Impacting Content Creation?

What should content creators make of platform subscribers and revenue numbers?

If you listen to media pundits, analysts don’t expect Q2 of 2022 to bode well for linear or streaming platforms. Several said the industry was “ slowing down ” due to the state of the global economy. Market contractions are likely to lower ad revenue and impact subscriber totals. To some degree, the companies that have reported so far (more are coming this week) indicate the experts may have a point, but will it impact content development or market expansion?

Among earnings announcements so far:

  • Netflix posted a loss of 970K subscribers
  • Peacock netted no new paid subscribers in the quarter
  • Apple service subscriber growth slowed compared to previous quarters

Other prominent players in the streaming space are expected to report subscriber losses, slower subscriber growth rates, and revenues or earnings below projections. Fortunately, the state of the industry isn’t as bad as some like to paint it. In fact, none of the companies reporting earnings so far have announced a reduction in their content spending this year despite these challenging economic times.

Netflix

Netflix CFO Spence Neumann said in their Q2 earnings call , “…if you zoom out a bit and look at past economic cycles, at least in the US, most forms of entertainment have been fairly resilient to downturns.” People tend to keep streaming subscriptions as they optimize their entertainment spending. Neumann cited that operating income and Earnings Per Share (EPS) were higher than expected, and the company saw a 7.7% growth in screen time during the quarter. This growth included countries where the company increased prices. Bottom line: Netflix will not change its content strategy or curb spending.

Comcast

Comcast CEO Brian Roberts said during their Q2 earnings call that despite flat subscriber growth in the NBCU Media group, their investment in content was paying off. He cited upfronts generating “more than $7 billion in commitments, including $1 billion at Peacock” for the 2022/2023 season. Roberts touted the success of theatrical releases including “Jurassic World,” “Minions: The Rise of Gru,” and “Black Phone,” emphasizing that “great content attracts massive audiences.” Comcast indicated no intent to cut back on content development.

Apple

Apple’s commitment to content continues, with CEO Tim Cook saying during their earnings call that the company grew to over 860M paid members of Apple TV+, Apple Music, and Apple Arcade platforms in the quarter, generating $19.6B in revenue. Cook highlighted that in 2.5 years, Apple TV+ has “earned 250 wins and 1,100 award nominations,” including 52 Emmy nominations across 13 titles.

What this means for content creators is that, given the current global economy, there is no planned change in the amount of money invested in new content. Every major company that has reported quarterly earnings remains committed to its announced investment levels in new content development for 2022. That doesn’t mean they won’t adjust how or what they buy in the future. It means their focus remains on creating engaging content consumers want to watch. This is good news for companies that cultivate and localize content. It is a testament to their effectiveness in producing titles welcomed in over 200+ countries and territories worldwide.


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The Albanese Government has updated the Spherex Classification Tool approval to include ratings for theatrical releases, home entertainment, and streaming content in Australia. Spherex was previously approved to classify online films.

The update underscores the Australian Classification Board’s confidence in Spherex as a tool to help Australian viewers make informed choices about the content they consume. This means Australians can now access a range of new films sooner than they might across all formats and windows.

Spherex has a longstanding relationship with the Australian Classification Board. Since 2020, Spherex has collaborated closely with the Australian Government to ensure its technology reliably generates classification decisions that meet Australian standards and viewers' expectations.

As the world’s only commercial provider of local age ratings, Spherex has successfully produced classification decisions for high volumes of online content in over 100 countries. Since 2018, Spherex has issued over one million age ratings for digital content, including films, TV shows, and trailers, distributed by its clients worldwide.

Spherex customers, including Umbrella Entertainment, Madman Entertainment, and Sugoi Co., rely on its AI-based platform to obtain local age ratings in Australia and significantly improve efficiency, cost reduction, and market reach.

Discover how Spherex's cutting-edge AI-based platform can streamline your content classification process and enhance your market reach while reducing costs.

Visit spherex.com today and see how we can support your content distribution needs.

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Today, global media companies are acutely aware of the importance of their content’s cultural fit. Moreover, they have a company like Spherex to help them prepare their content to ensure it fits with any country of interest. I interviewed Teresa Phillips, the Co-Founder and CEO of Spherex, at the recent OTT.X Summit in Los Angeles. She explained how the company is leveraging AI and its massive cultural profiling database to help companies prepare content for target markets. She also explained how, in the near future, AI would aid the company in measuring a movie or show’s cultural distance from a regional market and help it avoid falling into the failure zone between cultural fit and novelty interest.

Listen to the full interview here.

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Spherex was featured in the DPP’s IBC 2024: Demand versus Supply Report, a comprehensive look at how the M&E industry is meeting key customer demands. The report focuses on the topics of empowering creators, understanding audiences, engaging users, and innovating the newsroom. It also highlights many of the technical innovations seen at the recent IBC Show.

An article by Spherex’s CEO Teresa Phillips titled "Navigating Cultural Resonance in Global Media: The Art and Science of Culture Mixing" was featured in the report, exploring how Spherex is pioneering the future of culturally informed content.

Teresa shares how cultural mixing has become a critical strategy for creating content that appeals to diverse audiences in today's global media landscape. This phenomenon involves blending elements from different cultures to craft films and television shows that resonate globally while adhering to local regulations.

However, the process of culture mixing is fraught with risks. Superficial or stereotypical representations can lead to accusations of cultural appropriation or insensitivity, alienating audiences and damaging a company's reputation. For example, imposing Western concepts on Eastern content without proper context can feel inauthentic and jarring to local viewers. These missteps highlight the need for a nuanced understanding of cultural elements to ensure that content is respectful and engaging.

To address these challenges, M&E companies are increasingly turning to data-driven solutions. Platforms like SpherexAI utilize artificial intelligence to analyze visual, audio, and textual elements, providing insights into how well content aligns with cultural and regulatory standards across over 200 countries and territories. This approach helps media companies understand the "cultural distance" between a title's origin and its target market, enabling them to make informed decisions about global distribution.

By leveraging these advanced tools, M&E companies can go beyond traditional content localization. They can create media that actively engages and resonates with diverse audiences. As the industry continues to evolve, those companies that embrace culturally informed, data-driven approaches will be better positioned to succeed, fostering cross-cultural understanding and trust while delivering globally appealing content.

Download the report here.

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