Editorial: For Media Investors, Total Universes Hold Value

The contest for the rights to bring The Vampire Chronicles to TV had the ferocity of a late 1980s spec script war

What do vice media impresario Shane Smith and septuagenarian author of The Vampire Chronicles series Anne Rice have in common? I’ll give you a hint, it’s not sharing GIFs. Rather, in their own way each craves something more prosaic and valuable: to control a Total Universe.

What’s relevant to media entrepreneurs is that Smith and Rice are going about it very differently, and one has a brighter path to success. Two recent deals highlight their divergent strategies and serve as case studies for anyone trying to navigate a constantly shifting media landscape.

At first glance, the announcement that private equity firm TPG invested $450 million in Vice Media for original content development looks like a big win. Vice is valued at a reported $5.7 billion.

Presumably, TPG’s investment builds on Vice’s already strong content story. Through company-owned and affiliated sites, Vice recorded about 69 million monthly unique visitors so far in 2017, placing it among the top 50 most visited sites in the United States. Even better, its web traffic is comprised mostly of coveted young male demographic.

Moreover, Vice has access to content through strategic investor relationships: Disney and 21st Century Fox each have ownership stakes, and Vice has partnerships with A+E Networks and HBO.

So why would Vice take a 10% dilution and give notoriously tough private equity protections if it already has plenty of content? What does $450 million buy that Vice doesn’t already have? Vice says it will use the money to launch Vice Studios, which will produce scripted fare for various screens.

In other words, it isn’t how much content Vice already has, but what kind. And Rice has the answer.

There wasn’t much fanfare when The Vampire Chronicles author announced that she had optioned the series’ 11 books to Anonymous Content and Paramount Television.

But the quietude of Rice’s announcement obscures the pitched battle to control the Total Universe her material represents and the kind of intellectual property the market covets.

According to industry insiders, the contest for the rights to bring The Vampire Chronicles to TV had the ferocity of a late 1980s spec script war. Producers prostrating themselves in pitch meetings, torturing financial models under tight deadlines, coercing and warehousing talent into exclusive packages, upsizing their bids, and ultimately surrendering far greater creative control than they would have considered before the process began.

To any digitally focused industry maven, it’s not obvious why the major studios and all the OTT platforms clamored to control another vampire story. Particularly one first published 41 years ago.

So why were so many producers willing to stake their careers on a genre that has been thoroughly fatigued across film, TV and books? The answer is clear: Bidders for The Vampire Chronicles craved a Total Universe: an established, independent, globally relatable, multilayered world full of complex characters designed to generate frequent conflict.

Creating a complete content universe takes years or even decades to develop, and is extremely scarce. This realization haunts even the most ambitious IP craftsman, and at least partially explains why a successful digital media platform such as Vice needs a fresh $450 million.

Consider the alternatives if they can’t attract “great storytellers.” Superheroes: gone. Spies: gone. Dystopia (Hunger Games, Divergent, The Maze Runner): gone. Magical mystery worlds (Harry Potter, Lord of the Rings): gone. Outer space: gone. Fairy tales (Disney’s juggernaut): gone (or at least dominated by a single studio). And finally, vampires: presumably gone, or it seemed that way.

Content companies will battle for the few remaining macrocosms because the stakes are so high. The aforementioned universes account for more than $50 billion in worldwide ticket sales. That doesn’t include revenue from merchandise, TV shows, music, novelizations, amusement park rides and gaming.

If you’re fortunate enough to own one of these worlds outright, you have access to consumers when they’re online, in theaters, sitting in front of the TV, at the mall, on vacation or clutching a game console. With that much exposure and clever marketing, a savvy world-owner can surround a consumer and choreograph numerous offers to monetize their property. No independent content format approaches that level of comprehensive contact.

So, if you’re a media entrepreneur looking for clear space in the IP mosh pit, you’re forced to choose one of two approaches. You can pursue a high volume, low cost “unbranded” content strategy, betting that massive supply will create its own demand, as Vice has done in linear and digital formats.

The other strategy is more expensive, but essential to build value in media. Create or acquire established IP with a pre-existing fan base, and with luck those fans will be loyal and curious enough to try familiar content in an unfamiliar channel.

Comparing the frenzy for Rice’s The Vampire Chronicles and her 100 million worldwide readers against Vice’s decision to raise more PE capital 19 years after its founding (and on top of $1.4 billion that’s already been invested) it’s clear which strategy the market believes will win.

Todd Klein is a partner at investment firm Revolution Growth. Prior to Revolution, Klein was interim COO for L.A.-based Anonymous Content.