ZDF Studios’ Markus Schäfer Talks Distribution Shifts

From rolling out a suite of FAST channels to driving innovative multi-country co-production models, ZDF Studios is deploying various strategies to navigate the realities of the post-streaming-wars content economy. As Markus Schäfer, president and CEO of ZDF Studios, tells World Screen Weekly, the landscape is still challenging amid an uncertain economic climate, but there are signs of optimism for the remainder of 2025 and 2026.

WS: How do you assess the state of the content distribution business at present?
SCHÄFER: We are still navigating a recessive market environment, primarily driven by an oversupply of completed productions and development projects initiated during the boom years leading up to 2024. These legacy projects need to cycle out of the market to create space for new content, which will likely be produced at a reduced pace as part of the ongoing market correction. At the same time, buyers are reassessing their spending habits and reevaluating the volume of content required to remain competitive. While 2024 was characterized by considerable ambiguity around budgets, there are signs of improvement in the distribution outlook as we move [through] 2025.

WS: We heard a lot about AVOD and FAST last year; what opportunities are you exploring in that space?
SCHÄFER: Both segments represent promising business models with significant growth potential, and we are actively involved in them. However, our view is that FAST has established itself as a surprisingly strong and viable new pillar of media consumption. We believe that AVOD will likely outperform it in the long run.

We now have 16 FAST channels in different territories, and the offer continues to grow. Later this year, we will launch an H2O & Friends channel on Samsung in five territories. We take pride in our substantial position in this quickly growing market. However, when looking at more mature territories like the U.S., we need to be aware that this market might face saturation in the midterm.

Nevertheless, we maintain a comprehensive, tiered distribution strategy and aim to remain active in all segments as long as they are consistent with and enhance our overall strategy.

WS: What trends are you seeing in licensing fees?
SCHÄFER: Due to market circumstances, linear customers want to spend less money on content and, at the same time, want more rights and holdbacks to protect themselves from the competition from streamers, YouTube, FAST, etc. Taking the latter into account and given the general cost situation on the production side, fees should be increased. Thus, negotiations will be tough, but we take pride in the fact that due to our long-standing and trustful relationships with our customers, we have always been able to find satisfying solutions for both sides.

Overall, we anticipate linear revenues to remain more or less stable in the short term, but a long-term decline is likely as the market continues to shift toward nonlinear consumption. In the VOD sector, we expect significant growth in AVOD, which will drive our revenues in this business segment. In the SVOD sector, we think that the platforms have underspent recently and will have to make up for this. Thus, we also expect to see some growth.

WS: Are you seeing a rise in co-production and co-financing opportunities?
SCHÄFER: Yes, it is a trend. Just think of initiatives like the European Alliance, New8 or Global Doc. We now have streamers working with broadcasters, sometimes in the same territory, as well as production hubs in the entertainment sector to share costs and new financing models through sponsorship.

Co-production opportunities are a natural market response in times of shrinking budgets, as they allow investment risk to be mitigated. In the linear space, we expect an increased openness to co-productions as a practical solution. The same goes for streamers, which theoretically benefit from adding exclusive programming to their platforms. Co-productions could be a good fit for this goal, providing innovative splits of rights, windows and costs.

However, many streamers are now focusing on “local for local” strategies, prioritizing hyper-local content. This approach poses a challenge for co-productions, as such projects require an organic link that unites different countries or cultures and ensures relevance to the local audiences of all co-production partners if they come from different territories. If local broadcasters and streamers enter co-production talks on local projects, the questions of exclusivity and windowing quickly become pivotal. But we have already seen and been involved in smart solutions when the co-production partners believe in co-opetition.

In summary, while the demand for co-productions will likely grow, identifying viable and relevant approaches for successful collaborations will become more complex.

WS: There was much talk about AI last year; what impact is it having on your business now, and how do you see it affecting your business throughout 2025?
SCHÄFER: We see AI primarily impacting production processes rather than fundamentally changing the end product. While models such as Sora promise the potential to create synthetic filmed entertainment, we do not yet see a significant disruption to the traditional business model. However, we must be aware of the exponential growth of AI’s capabilities; thus, there is a very strong need to stay in close touch with its development.

WS: On the heels of a disruptive and challenging year, what’s your forecast for the international distribution business in 2025?
SCHÄFER: We expect 2025 to bring more growth opportunities and improvements compared to recent years, but the market will remain challenging. Macroeconomic and political factors continue to pose significant hurdles and contribute to a high level of uncertainty. Nevertheless, we are optimistic that 2025 will be a positive year.