Big Media is having its “Napster moment,” says Sherrese Clarke Soares, founder and CEO of Newark, N.J.-based investment firm HarbourView Equity, to explain why she’s motivated to invest in media at a time when the industry’s largest companies are struggling mightily with the transition to streaming.
“In the industrialized revolution, we’re going from horse and buggy into motorized cars,” Clarke Soares says on the latest episode of Variety‘s “Strictly Business” podcast.
Clarke Soares explains why she sees a right-sizing of the business underway as well as a dawning appreciation for the value of engagement versus mass appeal in entertainment. The business models and business structures that have defined Hollywood have to change in the coming years. That’s why she made an investment last year in Charles D. King’s Macro entertainment group. In April, HarbourView took an undisclosed stake in Los Angeles-based Mucho Mas Media, producer of the indie inspirational golf drama “The Long Game” starring Jay Hernandez and Dennis Quaid.
“There’s a lot of good people with great skill sets and those organizations, but a lot of that has to probably be rationalized to meet the moment,” says the Harvard Business School and Morgan Stanley alumuna who launched HarbourView in 2021. “We have got to figure out how to get the creator to the audience more efficiently in a way that optimizes for the exact moment. We also as a community around the [TV and film] space have to start thinking about how we do more with less. As technology has advanced, you would think that content costs will come down, but they haven’t.”
Listen to the podcast here:
Clarke Soares points to the cost-plus license fee model ushered in by the subscription streamers as something that incentivized producers to spend as much as possible on their shows. Cost-plus deals on movie and TV shows typically guarantee the producer a percentage of the overall production budget as profit margin. The higher the budget, the more that percentage is worth.
“We had an incentive structure that really actually optimized costs to a higher rate,” Clarke Soares says. “We need to be thinking about how to get to audience faster and cheaper, but also get to audience in a more cost effective way. The cost per hour of programming cannot cost the same as it has cost in the last 10 to 15 years.”
Clarke Soares expands her views on how the “fundamental economic infrastructure and scaffolding” of the entertainment business isn’t going away. TV viewership is strong; movies at their best can still connect with audiences. The system of marketing content, however, is something that needs to change along with the movie and TV delivery systems. The traditional firehose approach to raising awareness about new titles needs to become more surgical. Otherwise, “you’re going a mile wide and an inch deep versus going a mile deep and an inch wide,” she says.
“Strictly Business” is Variety’s weekly podcast featuring conversations with industry leaders about the business of media and entertainment. (Please click here to subscribe to our free newsletter.) New episodes debut every Wednesday and can be downloaded at Apple Podcasts, Amazon Music, Spotify, Google Play, SoundCloud and more.
Source Agencies
