As new media platforms continue to emerge, traditional media companies are constantly being challenged by adversity. To stay in business, companies must be innovative in order to adapt to the technological changes brought about by new consumer behavior. Some businesses struggle to stay afloat, while others thrive off of the new trends like a surfer riding a wave. Several media systems have been disrupted by the invention of the internet, and many broadcast networks were forced to create new viewing experiences such as DVR and On Demand. Traditional studios and production companies were also affected by online media, having to find new distribution channels for their content. One of these independent film and television studios is called Media Rights Capital. By working with larger studios and networks to distribute its content, Media Rights Capital produces films and TV series. The difference between it and most production companies is that it produces content for online streaming services like Netflix, as well as traditional TV networks. Media Rights Capital has a working business model for now, but the diversification of online video gives independent networks, like Netflix, the opportunity to create their own content for a smaller cost. If this trend continues, companies like Media Rights Capital will need to innovate once more if it is to stay in business.
The Company
Media Rights Capital, also known as MRC Studios, was founded in 2004 by Asif Satchu and Modi Wiczyk as a film studio (mrcstudios.com, 2016). MRC went on to produce and finance original TV series in 2007. It created content for premium networks and studios such as HBO and Universal, respectively. And according to the company’s LinkedIn profile, it is backed by investments from the likes of Goldman Sachs, WPP Group PLC, and AT&T. It also lists itself in the broad category of 11-50 employees (linkedin.com, 2016). Headquartered in Beverly Hills, CA, MRC is at the cultural center for media production. Although MRC was originally controlled by its investors, it is not wholly owned by any of them. In 2014, another minority stake was transferred into the hands of Guggenheim Partners for around $240 million, valuing MRC “at more than $1 billion” (Shaw & Waxman, 2014). Possibly contributing to this valuation is the fact that Media Rights Capital owns the rights to all of its content, including “House of Cards,” “Ted,” and “Furious 7.”
Ted 2
Business Model
Companies are aware of the ever-changing environment around them, but that doesn’t mean they are always ready to adapt. This wasn’t the case for Media Rights Capital. Before Netflix became a popular distribution channel, and thus prior to “House of Cards,” MRC had a head start in producing content compatible with digital platforms (Patel, 2014). It produced an animated series with actor Seth MacFarlane, titled “Seth MacFarlane’s Cavalcade of Cartoon Comedy.” The experience was no doubt a differentiator from MRC and similar companies, but Patel believes the knowledge from that experience is what pushed it over the top. Simply put, online video caters more to long-form content rather than short-form animations. “House of Cards” as a show is Netflix’s business model in itself, but MRC has bigger and broader aspirations.
House of Cards
MRC wasn’t always successful, however. One of its biggest blunders occurred in 2008, when The CW network was receiving terrible Sunday ratings. The network figured that by outsourcing content control to Media Rights Capital, it would help CW improve (Collins, 2008). This was a learning experience in realizing that among competitors, the audience gravitates toward established product (Hibberd, 2008). With the creation of Netflix and other online video services, viewers can watch their favorite shows anytime they want to. In effect, MRC no longer has to compete with live shows airing at the same time as its shows do, and that is part of its business model. As mentioned before, among several premium TV networks, MRC started by producing and financing films with studios like Universal Pictures. The two companies agreed that Universal would distribute 20 movies for Media Rights Capital. In the past, those two have co-produced films such as “Bruno” and “The Invention of Lying” (White, 2010). By producing the films by itself, MRC is in command of creative control. Its only burden is finding studios or networks to distribute the content for them, and for the right price.
Revenue Model
On the traditional TV networks, MRC sold ad time for shows it was broadcasting. Along with that, “MRC has secured distribution outlets that give it a steady revenue stream” (Grover, 2008). The revenue model for Netflix is very different from traditional TV, as it is based on a monthly subscription fee, rather than selling advertisement slots. MRC and other producers still receive a fair cut, but the model is very different.
What makes Media Rights Capital so diversified, though, is the amount of different distribution channels it has. For films which go to theaters, MRC makes its money from box office sales. Its movie “Ted” cost $50 million to make, yet it generated $549.4 million from ticket sales worldwide. The investors are unique in their own right, and experts believe that MRC has a healthy line of credit, possibly preventing it from starting a product that can’t be financed (Grover, 2008).
Moving Forward
As the internet has changed the film and television industries both to great extents, companies have become more creative and innovative. Media Rights Capital is one of those companies who found a way to constantly succeed in an ever-changing industry. As we look ahead into the future of online video, TV networks are more likely to drop their production companies and move to in-house producing to cut costs. Some companies like Amazon and Hulu are doing just that, which threatens companies like MRC (Bishop, 2015). Netflix may be in the process of this also, but MRC owns the rights to “House of Cards,” so it couldn’t take that show away. MRC also secured the rights to make films based off of Stephen King’s “The Dark Tower” series (Fleming, 2012). MRC got in the game at the right time, and excelled in what was uncharted territory.
References
Bishop, B. (2015, September 25). Netflix isn’t going to rely on Hollywood to make its TV shows. Retrieved February 10, 2016, from http://www.theverge.com/2015/9/25/9398465/netflix-original-series-new-production-company
Collins, S. (2008, November 21). CW will abandon Sunday lineup. Retrieved February 10, 2016, from http://articles.latimes.com/2008/nov/21/business/fi-cw21
Erlichman, J., & Palazzo, A. (2014, February 5). Guggenheim Said to Invest in ‘House of Cards’ Maker MRC. Retrieved February 10, 2016, from http://www.bloomberg.com/news/articles/2014-02-04/guggenheim-said-to-invest-in-house-of-cards-maker-mrc
Fleming, M., Jr. (2012, August 20). ‘Ted’ Backer MRC In Talks To Finance Stephen King’s ‘The Dark Tower’ Retrieved February 10, 2016, from http://deadline.com/2012/08/did-warner-bros-just-bypass-gold-on-the-ground-by-dropping-the-dark-tower-321889/
Grover, R. (2008, October 1). Media Rights Capital Gets Credit. Retrieved February 10, 2016, from http://www.bloomberg.com/news/articles/2008-10-01/media-rights-capital-gets-creditbusinessweek-business-news-stock-market-and-financial-advice
Hibberd, J. (2008, November 21). CW deletes MRC Sunday block. Retrieved February 10, 2016, from http://www.hollywoodreporter.com/news/cw-deletes-mrc-sunday-block-123374
MRC Studios: Overview | LinkedIn. (n.d.). Retrieved February 10, 2016, from https://www.linkedin.com/company/media-rights-capital
Media Rights Capital. (n.d.). Retrieved February 10, 2016, from http://www.mrcstudios.com/about/index
Patel, S. (2014, February 14). How Media Rights Capital Built Its ‘House of Cards’ – VideoInk. Retrieved February 10, 2016, from http://www.thevideoink.com/features/media-rights-capital-built-house-cards/#.VrslIpMrKRt
Shaw, L., & Waxman, S. (n.d.). Guggenheim Invests $240 Million in ‘House of Cards’ Producer Media Rights Capital (Exclusive). Retrieved February 10, 2016, from http://www.thewrap.com/guggenheim-capital-invests-200-million-house-cards-producer-media-rights-capital/
White, M. (2010, May 27). Universal Agrees to Distribute Movies for Media Rights Capital. Retrieved February 10, 2016, from http://www.bloomberg.com/news/articles/2010-05-27/universal-pictures-agrees-to-distribute-movies-for-media-rights-capital