Diversification
for Motion picture, video and television programme production activities (ISIC 5911)
The motion picture and television industry is inherently hit-driven, facing significant market obsolescence risk (MD01) and revenue volatility (MD03). Diversification is a natural and necessary strategy to spread risk, leverage valuable IP, and secure new revenue streams in a rapidly evolving media...
Strategic Overview
In the Motion Picture, Video, and Television Programme Production industry (ISIC 5911), diversification is a critical strategy for mitigating inherent risks associated with high production costs, unpredictable audience demand (MD01), intense competition, and revenue volatility (MD03). Relying on a single content type or distribution channel exposes production companies to significant market and financial risks. Diversification allows entities to explore new product categories, tap into different markets, and leverage existing intellectual property (IP) beyond its initial format, thereby creating more stable and diverse revenue streams.
This strategy is particularly relevant for an industry facing rapid technological shifts (IN02), evolving consumer habits, and structural market saturation (MD08) in traditional segments. By strategically expanding into adjacent or new areas, such as video games, immersive experiences, direct-to-consumer platforms, or specialized production services, companies can reduce their dependence on single 'hit' productions, spread investment risk, and capture new growth opportunities. It requires careful consideration of IP management (MD03), market entry barriers, and the capability to adapt creative and operational processes to new ventures.
4 strategic insights for this industry
IP as the Core Engine for Cross-Media Diversification
The true value in this industry often lies in the intellectual property (IP) — the characters, stories, and universes. Diversification frequently involves extending successful film/TV franchises into video games (e.g., 'Star Wars', 'Marvel' IP games), theme park attractions, merchandise, podcasts, or even live theatrical events. This leverages existing brand equity, diversifies revenue streams (MD03), and mitigates talent/IP valuation erosion (MD01) by creating multiple monetization avenues from a single creative asset.
Platform and Format Diversification Driven by Evolving Consumption
Audience consumption habits are increasingly fragmented across numerous platforms (streaming, social media, interactive apps) and formats (short-form, long-form, episodic, immersive). Diversification means producing content specifically for these new channels, such as short-form series for TikTok/YouTube, interactive narratives, podcasts, or VR/AR experiences. This addresses market obsolescence (MD01) and enables wider audience engagement beyond traditional cinema and linear TV.
Geographic Diversification through Localized Production and Co-productions
Expanding into new international markets by producing localized content or engaging in co-productions is a key diversification strategy. For instance, Netflix has heavily invested in local content in India, Korea, and Latin America. This mitigates risks from saturated domestic markets (MD08), taps into new audience segments, and can leverage international incentives and lower production costs, navigating the global value chain (MD02).
Business Model Diversification into Production Services or Direct-to-Consumer
Beyond creating original content, producers can diversify by offering specialized production services (e.g., studio facilities, VFX work, post-production for third parties) or by moving 'downstream' into distribution via owned or controlled direct-to-consumer (DTC) platforms. This vertical or horizontal expansion mitigates reliance on external distributors (MD06) and provides more control over the value chain (MD05), reducing revenue volatility (MD03).
Prioritized actions for this industry
Establish an Integrated Cross-Media IP Strategy Office
Create a dedicated unit responsible for identifying, developing, and monetizing IP across multiple formats (film, TV, gaming, digital, merchandise). This ensures a holistic approach to IP management, maximizes value extraction (MD03), and fosters consistent brand experiences, mitigating market obsolescence (MD01).
Invest in Digital-First Content & Interactive Experiences
Allocate R&D (IN05) and production resources to develop content specifically tailored for digital platforms, including short-form video, interactive narratives, podcasts, and VR/AR. This captures younger demographics, adapts to evolving consumption habits (MD01), and diversifies distribution channels (MD06) beyond traditional linear models.
Form Strategic International Co-production Partnerships
Actively seek and engage in co-production agreements with international studios and broadcasters. This strategy allows access to new geographical markets (MD02), shares production costs and risks, leverages local talent and cultural insights, and can benefit from international tax incentives, addressing market saturation (MD08).
Explore Niche Direct-to-Consumer (DTC) Platform Development or Acquisition
For companies with a strong content library or specialized genre focus, consider launching or acquiring a niche DTC streaming service. This allows for direct audience relationships, granular data collection, reduced reliance on third-party distributors (MD06), and potentially higher revenue share, addressing platform algorithm dependency.
From quick wins to long-term transformation
- Conduct an internal IP audit to identify under-monetized assets suitable for licensing (e.g., merchandise, mobile games).
- Pilot a short-form content series for social media platforms using existing creative teams.
- Research and identify 2-3 key international markets for potential co-production opportunities.
- Develop a specific video game or interactive experience based on a popular existing franchise.
- Launch a dedicated podcast division or channel for complementary content.
- Enter into 1-2 strategic co-production deals in emerging markets, leveraging local talent.
- Acquire a smaller post-production house to bring services in-house or offer to third parties.
- Establish an independent digital content studio focused on new formats (VR/AR, metaverse experiences).
- Develop or acquire a niche-specific DTC streaming platform.
- Build international production hubs to localize content efficiently across multiple regions.
- Integrate AI/ML tools into content development for new story exploration and character generation.
- Spreading resources too thin across too many new ventures without sufficient focus.
- Lack of expertise in new markets or formats, leading to poor execution and financial losses.
- Diluting core brand identity by diversifying into unrelated or low-quality areas.
- Underestimating the capital investment and marketing required for successful market entry into new segments.
Measuring strategic progress
| Metric | Description | Target Benchmark |
|---|---|---|
| Revenue Contribution from Diversified Segments | Percentage of total revenue generated from new product lines, markets, or business models. | Achieve 20-30% of total revenue from diversified segments within 5 years. |
| Cross-Platform Audience Engagement Rate | Metrics such as views, watch time, active users, and conversions across different content formats and distribution channels. | Increase cross-platform engagement by 15% year-over-year for key IP. |
| IP Monetization Index | A composite score reflecting the number of distinct revenue streams derived from core IP, and the revenue generated per IP asset. | Increase the index by adding 2 new revenue streams per major IP every 3 years. |
| New Market Entry Success Rate | Percentage of new market entries (geographic or content type) that achieve predefined revenue or audience targets within 2-3 years. | 70% success rate for new market entries. |
Other strategy analyses for Motion picture, video and television programme production activities
Also see: Diversification Framework