Fox lays out Holywater deal rationale

Fox Entertainment chief exec Rob Wade has explained why his company made its recent investment in vertical video firm Holywater and added that more creator-focused deals are in the works.

Fox took what Broadcast International understands to be a minority stake in Holywater last week, marking the first major deal from a US studio into the surging microdrama market.

Holywater, which counts 55 million users across apps that include MyDrama and My Muse, is working with Fox Entertaiment Studios (FES) on 200 new projects, with the first shows set to be unveiled within months.

Financial details of the deal have not been revealed but Wade told Broadcast International that Holywater was “one of the few targets” in the vertical video space that was “really appealing”.

“They are a passionate, very smart outfit. I liked the structure of what they were doing and their ambitions for growth and it helps that they’re based out of Portugal with a mainly US market.” 

Wade added that the amount of English-language content available was also a factor.

‘Significant investment’

While declining to provide specifics, the Fox chief described the investment as a “significant sum” that had ultimately been enabled by the company’s decision to sell off its cable assets six years ago.

“We had the luxury of selling those things at the right time and rebuilding, which has left us with enough capital to redeploy and make these bets.

“This wasn’t something that we were going to jump into with a nine-figure sum, it’s not there yet, but there is a really exciting opportunity in this market even if it is still to be totally figured out in the US.

“There’s a high customer acquisition cost, and you have to weigh that out, we need to work out how can we make this business grow and improve the margins and make it less lumpy, so there are still questions to ask.

“But what we can do – between our business know-how, our discipline around growth, our storytelling capabilities and our access to financing, marketing and talent – is be the perfect partner for Holywater as they build on microdramas and move into other genres.”

Unscripted expansion

Wade, who was speaking to Broadcast International in Cannes on day one of Mipcom, added he was “100%” sure that the boom in vertical scripted content would be replicated in unscripted, providing an opportunity for talents and brands to expand their reach with younger demos.

FES is also looking to integrate Hollywood talent into some of the dramas it is producing with Holywater, and Bogdan Nesvit, co-chief exec at Holywater, said he wanted to explore taking microdramas “to the next level”.

He said the Fox partnership will allow his company to test out the potential of creating higher cost microdramas, which average at around $150,000 per 80-episodes.

Fellow co-founder and co-chief exec, Anatolii Kasianov, added that the company is exploring whether shows “at two or three times” a microdrama’s average cost could create an equivalent uptick in revenue from subscribers.

Wade said he expects other US majors to make moves into the sector but added that his company was in a unique position to capitalise on vertical video growth.

“You need the bandwidth to do something like this, to focus on it, and to have a strategy to go with it. We’re family-owned, we can move quickly and that’s not the case in a lot of other businesses. Some [other US studios] have their own challenges at the moment, such as being in the middle of huge M&A.”

Wade also alluded to other deals in the works, adding that having “right-sized” the business following the sale of its entertainment assets to Disney, the company is “nimble and has the time to look at these opportunities.”

The Brit continued: “Between this and some other announcements that are coming up, you’ll see a lot things that point to the future. Now, we’re not saying they will all be the next billion-dollar idea but we are certainly in the market of skating where the puck is going,” referencing the creator economy. 

And while some in the more traditional side of the business have dismissed microdramas as a bubble, Wade said a more broad-minded approach should be adopted by some in Hollywood.

“Coming from unscripted, sometimes it’s easy to create a narrative to look down at certain types of content. It is usually from a place of fear, it’s that this new thing might take on what I’m doing already.

“That is very easy to do that looking at microdramas, or an unscripted show. The truth is that all content has value, and whether you like it or not is neither here nor there.

“For the amount of money these shows are being made for I would challenge anybody else in Hollywood to try to do it better. This is a medium that if you want to be creative you can do great things.”