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Is Sony the Smartest Media Company? Streaming ‘Arms Dealer’ Avoids Platform Battles

Ben Bowman

When we think of the streaming wars, we get caught up in Netflix vs. Disney+ and Prime Video vs. HBO Max. Those services send their parent companies’ stock soaring or crashing with every release of subscriber numbers. But there’s another entertainment company out there that makes money, no matter who is winning the subscriber war: Sony.

In an interview with CNBC, Chairman and CEO, Sony Pictures Entertainment Tony Vinciquerra said, “We didn’t jump into the general entertainment subscription video business, and we became, for lack of a better term, the ‘arms dealer’ for the industry. And it’s paid off really, really well. Our fiscal year, which ended in March, we were up 75% in operating profit; we started out this year, the first quarter up 70%. We’re on a good track.”

The vast majority of streaming companies have to make tough choices with their content. Disney, Warner Bros. Discovery, Paramount Global, and NBCUniversal have a lot of mouths to feed. Should a TV show go on the linear channel or direct to streaming? Should a movie get a run in theaters or debut as a streaming original? How long should the movie be a theatrical exclusive? These companies need to keep linear and theatrical pipelines alive without upsetting their streaming subscribers. A company like Disney runs the risk of exhausting its Marvel fanbase with so many weekly TV shows in addition to its theatrical blockbusters.

Netflix, Apple, and Amazon lose out on the linear TV and theatrical revenue streams, but their only measure of success is subscribers.

Then you have Sony. Sony doesn’t care who’s winning the streaming wars. It just wants to sell its movies and shows to the highest bidder. As streamers fight for every little edge, a great show like Sony’s “Breaking Bad” might be the deciding factor in which service a subscriber might choose. Legacy titles like “The Facts of Life” or “Party of Five” might be right at home on a FAST or AVOD service. Game shows like “Jeopardy” and “Wheel of Fortune” prove popular as rerun entertainment on streaming services. Sony gets passive income from all of those shows.

Sony is also able to pit streamers against each other. Shortly after the company signed a blockbuster deal with Netflix last year, it also inked an agreement with Disney. After a Sony film plays in theaters, Netflix gets an 18-month window, followed by an exclusive run on Disney+ or any Disney-owned TV stations. Variety reports that with Netflix and Disney deals combined, Sony is expected to rake in about $3 billion in movie licensing over the life of the deals.

That’s an incredible value for Sony. It merely focuses on making films and TV, then it can turn its back and let streamers battle for the content. Sony will get paid, no matter what happens.

Contrast this to a situation like Netflix faces today. The streamer spent $200 million on “The Gray Man.” It’s a hit for the service, but will it really get much rewatch value? In all likelihood, it was a one-time splurge for a one-time audience boost. Sony spent an estimated $83 million on the stinkbomb that was “Morbius,” and it made $163 million at the box office. That film will also get its run on Netflix and Disney+/Hulu and possibly other platforms down the road. All the money from here on out is pure profit. Netflix won’t syndicate “The Gray Man.” Disney+ won’t let “Hamilton” appear on another platform. That money is sealed behind the streaming wall, and additional subscriptions are the only way to unlock it.

“While the streaming services have all said they’re going to be more fiscally conservative, they’re still going to have to put product on their services in order to address subscribers,” Vinciquerra said. “They are still at battle every day trying to get subscribers for those services.”

You can’t win a battle without bullets, and Sony is cranking them out for anyone with a big enough wallet.

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