Before I log off for the year, wanted to say thank you to everyone who subscribes! We just passed a big milestone on Substack and are so appreciative of all our followers, subscribers, and supporters.
Were you told for years that films could go "straight-to-streaming" and make as much money (or more even!) than theatrical films?
Today begins an epic odyssey debunking that very notion. With all the data.
Just read a newsletter saying that Netflix proved it could spend it's way to profitability, as the subscriber count of 200 million enables it to breakeven.
It totally ignores the reason the company broke even was because it's production completely halted in 2020.
Wow.
Boom!
I solved a problem we didn't know we had. Everyone compares the streamers, but not apples-to-apples. Well here is the DEFINITIVE look at US, paid, streaming subscribers.
You're welcome.
Can we just say one other obvious thing?
Netflix could get hundreds of millions just by putting their "blockbuster" films in theaters for a few weeks...
1/ As I mentioned earlier, when I first quickly skimmed the Netflix numbers, I thought I was misreading them. As bearish as I am on this stock, I never thought I’d see a “-“ symbol in front of a global subscriber number in the next few years.
#Netflix
$NFLX
@netflix
1/ Suppose I should put out a thread about the WB-Discovery rumors. Everything from HBO Max disappears to, from the tweets, every development exec is fired and tossed into a pit with dragon in a GoT-esque spin off.
My goal is to explain the business of entertainment (film, TV, toys, you name it) in terms we can all understand. And I often use pretty geeky topics to do so.
Read my deep dive articles and weekly column (the most important story of the week) here:
The answer is actually half-right. Yes on the splits. Then, split Apple films from Apple TV+, and Apple TV+ from Apple.
The key to fixing Hollywood is to stop vertical integration that will allow talent/producers more places to sell their goods. We need a more functioning market
The reality is
@AppleFilms
and
@AppleTV
don't know what they are doing and need leadership, a library and film distribution.
@warnerbros
and
@HBO
need to be split off from Discovery and the networks. Both need each other and
@Apple
could buy them without a second thought.
1/ I finished the Prof Galloway streaming wars lecture(?) or talk.
I don't listen to his podcast(s), and read his stuff occasionally, so here are my thoughts. Real quick like.
My favorite topic is weekly versus binge releases. I can't help myself because I fell on my sword on this at a major streamer.
The story of The Boys versus everything at Netflix from Aug/Sep is incredible:
In the last few days, seen two different examples where folks said, straight faced "nobody watches broadcast TV".
Industry experts. So reminder, if someone uses "nobody" or "everyone" to describe customer behavior, they're likely way off.
Every conversation about box office needs to start with this chart. Admittedly, it's the 2021 data, but I honestly doubt if the MPA updated it would have changed:
The narratives I hear just do NOT match the data on this. Young people go to the movies MORE than older.
Assume you saw this
@matthewstoller
but have to love how federal courts now interpret classical economics.
"Will fewer companies mean higher prices for customers?"
Classical Economics: "Yes! Because of pricing power"
Judge: "I don't think so because...I just don't."
11/ Again, one wants to ask, “Why can’t Zaslav see the ***value*** in straight-to-streaming that Netflix, Prime Video, Disney+ and other see?"
Maybe because that value doesn't exist?
Netflix will become TV" has become...
"Netflix and Disney+/Hulu" will become TV.
Could it evolve too...
"NFLX, Disney, Hulu, Prime, Peacock, HBO Max will be TV". Which could become...
"A bundle of streamers are offered for one price will be TV"
I feel like some of us have been pointing this out for literally years. And I mean my entire website.
Basically, you can't take multiple revenue streams down to one, make it easier for customers to cancel and raise costs and expect a better business.
"What Netflix’s results have shown us recently is something more fundamentally scary for Hollywood: streaming television is going to make less money — maybe a lot less money — for entertainment companies than cable did."
via
@annaknicolaou
When could theaters reopen in the US?
I think by May is very very certain. Will
#BlackWidow
be there? That I don't know.
But if you want a very optimistic take on vaccines, deaths, cases, all wrapped up in a nice model, I got you covered.
Breaking: Samba TV says
@HBO
#HouseoftheDragon
was the biggest debut "on streaming and pay cable" in 2022 so far.
Since everyone is gonna run with this, let me provide some context that only comes because I hoard
@SambaTV
data points.
Starting a thread. Going long.
I should probably write something about the big story of the week, Disney firing Peter Rice, former head of Disney General Entertainmnet. (TV) Every newsletter/podcast/trade covered this story, so the town thinks its big news. And it is!
With Luca's HUGE second week--28.6 million hours--it is the HIGHEST 2 week total of any original film in my database going back to March 2020.
Only film in the top ten to grow from week 1 to 2 as well.
More details tomorrow!
For that data head's, first week where Netflix missed the TV Time TV charts...
Yes, this metric isn't perfect (Netflix is ubiquitous), but still the first time that's happened...
Netflix will never release films in theaters...
(Seriously, biggest blow to theaters the last few years was internet giants bidding up projects, but keeping supply from theaters.)
God only knows what counts as a “win” for Netflix, but these numbers feel … soft. At least, soft at a $450M price point for the rights to make two such movies.
This is basically confirming my theory "The Argylle Treatment".
Apple would rather lose money--which could be construed as predatory pricing--than take bad headlines.
I'm hearing Apple is abandoning its theatrical wide-release strategy outside of F1... and it's less about the money than it is about the bad PR. Apple HATES negative headlines...
So
@HedgeyeComm
is obviously one of the sharpest minds out there, and he spotted probably the most "un-customer" friendly thing I've seen them do.
Basically, they're hiding their fourth plan on their sign-up page:
Been thinking a lot about Box Office. Post Sonic/The Bad Guys, I think we can say that Disney skipping theaters with Turning Red probably cost them what $200 million in the U.S.? Not sure the marketing spend would have been much different.
Seeing a lot of pretty bad takes on why Olympic viewership is up. Lots of folks want to focus on technology. Is it AI? Is it social media videos?
Or is it that it's just in a much better time zone than Japan?
That's not nearly as sexy of an answer, but likely much more likely.
So the general consensus on
#MGM
and
#Amazon
has arrived:
Amazon will buy this IP to make tons of spin offs, remakes, reboots and prequels.
Which begs the question: Why wasn't MGM already doing this!?!?!?
Quiet story with big strategy implications:
Avatar: The Way of Water out on TVOD, not Disney+.
Someone should go tell 2019 Bob Iger about what 2023 Bog Iger will think about streaming.
Will add: the single worst UX in all of tech right now is when google search shows you an ad for the company whose website you just searched for.
2 results that are the same thing. But why not just delete the ad then?
Because then it's completely obvious that it's pay to play.
And yes, supermarket shelves are entirely pay-to-play and driven by kickbacks, which is why you get the same shitty corporate snack food everywhere.
(And no, this shouldn't be legal, and it wouldn't be if the gov't enforced the Robinson-Patman Act.)
Well, it’s the moment you’ve all been waiting for. (Or dreading). The EntStrategyGuy has FINALLY put up a paywall
@substack
. I think it’s one of the best deals in entertainment journalism. So here’s why:
Soon, we’re going to get word about the new NBA national media rights deal. You’ll see some headlines and let me level with you:
They’re wrong.
It isn’t quite “misinformation”. It isn’t an outright lie. It will be true. But it’s deeply, deeply misleading.
I seriously don't understand the industry coverage sometimes.
IATSE and the AMPTP made a deal, averting a strike--a STRIKE!!!--and it's not front page news on two of the 3 trades?
I was told Netflix would never do advertising, and they will. I was told they'd never not-binge release series, so now they just break them into smaller and smaller chunks.
I was told Netflix films will never go to theaters for 45 days...
1/ Starting last week I began unpacking all the data related to the content battlefield in the
#streamingwars
in 2020. This meant everything from Netflix datecdotes to Nielsen data to Google trends to countless other analytics firms.
BTW, if you want to know who's killing theaters, it's Netflix for having mid-tier films like Knives Out 2 skip theaters and lower the overall box office.
Quote from
@Caseybloys
to The Ankler is just "chef's kiss" brilliant:
“The same people who are concerned today about taking HBO out of the name, in a lot of cases are the same people who were outraged that HBO was put in the name in the first place.” ”
Don't want to step on my column later today, but honestly this chart terrifies me.
Yes, the last few years have seen growth. That's the bull case.
The bear case? In 10 years of growth, median income is just approaching 2009 levels.
If
#coronavirus
causes a deep recession?
"The 21st century economy sucks and wage growth is a dumpster fire" was a statistically sound story for a long time.
But a lot of ppl's strongly negative narratives are frozen in 2014.
The labor market's changed a lot in the last 5 years.
Don't let data get in the way of a good narrative, but actually the impact is about equal between
#squidgame
and
#venom
. Though likely Squid Game will decay rapidly, whereas Venom has multiple windows to go through.
Main diff is Sony makes TONS more than Netflix on Squid Game...
A lot is written about movies/tv entering the zeitgeist -- with meaningful cultural impact
Venom 2 crushed at the box office with ~9 million US tickets sold...ultimately should reach 20+ mm tickets
Meanwhile, a Korean TV show is dwarfing it
#SquidGame
is EVERYWHERE in culture
As a die-hard NBA fan, I adore the NBA. As an entertainment strategy guy, I can’t get enough about media rights deals. The NBA managing to sign a $76 billion deal, then, really interested me. Especially its impact on the NBA’s salary cap
Just a reminder, there are still only four business models in entertainment:
- Transactions
- Advertising
- Subscriptions
- Selling stuff related to the films/movies/shorts/content.
So
@profgalloway
has been on a TikTok trend the last few issues. He makes some good points, but there's one GLARING issue that I really wish he'd address:
Is any of TikTok real?
Or better said, how much is real?
BTW here's some actual data from the Quorom backing up
@SonnyBunch
suspicions that yeah the delays aren't working.
The studios need to cut the losses and release the films. Covid's damage is done.
As Paramount abandons 2021, and other studios wait for SHANG CHI box office returns to make their next moves, some wise words from
@SonnyBunch
this morning:
Here's a big one...another update to my U.S. paid streaming subscriber totals, for 2021 Q4. (Just in time to start all over again with Netflix next week!)
Better late that never! The streaming ratings report is out!
In which I compare Netflix Bulls/Bears to the vampires/werewolves in Twilight.
(Plus
#MastersOfNone
is the new biggest flop of the year for Netlfix.)
It's so interesting that Apple and Amazon can outspend everyone in entertainment, but they also don't show us audited financial statements of those divisions. And everyone assumes they make money.
Interesting...
🤔🤔🤔
🤷♂️🤷♂️🤷♂️
Based on recent articles, I'm seeing a lot of speculation that personnel moves hurt Netflix. But let me ask, what really was bigger:
Cindy Holland leaving in 2020
or
The MCU films, Disney films, Friends and The Office leaving since 2020/2021?
🤔🤔🤔
Logging off for the day, and leaving with this:
It turns out that to win in any content war--from box office to broadcast to streaming--is actually fairly simple:
Better content leads to better results.
So make great content, win the streaming wars.
It's hard to get data about Netflix. But when we do, I hoard it like a preppier with toilet paper.
All to bring you the best estimate of Netflix's primetime viewing you'll find.
Have to pick my jaw up off the floor on this one. We always knew this was happening...but so soon?
The
#Marvel
series headed to either D+ or Hulu?
I've called this the "co-production cliff" facing
@Netflix
before, but never wrote that analysis.
Wow.
In this week's Movie Math: We know that Kevin Feige threatened to leave Marvel in 2015 and we know he's reportedly 'angry and embarrassed' with Disney over the ScarJo situation. Hypothetically, what would happen if ever left Marvel?
1/ A non-coronavirus topic I’ve meant to address via thread.
It’s hard to launch a new streamer because operations are hard.
And that has lessons for every player in the streaming wars.
The defenders of Ticketmaster/Live Nation out there--and they exist--really do have some heavy lifting to do to explain how a firm with 70% market share isn't a monopoly. I'm with
@taylorswift13
on this one.
As always, read
@matthewstoller
A quick Thread on Mario’s big weekend, and how it relates to my huge story last week. As most outlets noted, we saw the birth of a franchise with this one.
We need a six month moratorium on all articles using current box office to predict the doom/demise of theaters.
We knew this was coming! We predicted it last October! Everyone! In town!!!
Sans the strikes, box office is likely at $10B+ in America this year. Therefore...
The main case was brought by one of the writers of Bird Box, which was budgeted at $71 mil - a figure I found surprising given publicity at the time of its release - Netflix set the license fee for the film at only $6 mil, thereby screwing over talent. (2)
Why is it so important for AT&T to hold the ground with Amazon? I explain in my latest column.
That plus Quibi, Apple's big purchase(s), Disney World reopening and more.
Just realized five years ago today I launched The Entertainment Strategy Guy.
Sincere thanks to everyone who has supported me along the way and made writing full-time a reality.
Seeing thoughts out there that Warner Bros Discovery killing off the Batgirl movie is a bad strategic move because of the bad PR.
So it's worth quoting this from my latest strategy column.
Wow. This point is probably very accurate.
Also, congrats to the too clever by half "Amazon can acquire MGM and there are no antitrust issues at all!"
Um, Amazon uses one business (AWS, Fire) to extract rents in another. Classic monopoly/oligopoly behavior.
It's time for the article EVERYONE has been waiting for:
The Dog Not Barking of the Year.
Meaning the flop! The miss! The dare I say bomb in streaming you've all missed.
But what was it?
What are...
"Unique Streaming Days per Month"
"The TV Habit"
"The Broadcast Streamer"
and
"the distribution of fandom"?
Plus, why I think Peacock can win the streaming wars explained in my latest...
#peacock
#Netflix
$CMSCA $NFLX
This is a fascinating story and one I legitimately don't have an answer for: how how Tubi grown so fast compared to Roku Channel or Pluto? What are the drivers here? Programming? Distribution?
I honestly don't know and haven't read a strong explanation.
Tubi’s viewership is my favorite “nobody knows anything” data point in media.
I would conservatively guess that 1000x more articles and podcasts have been done about Dis+/Peacock/Max/Par+ than about Tubi…..but here we are.
Hey, a number! In an Amazon earnings report!
There you go!
Then no more numbers about entertainment anywhere else. They're doing so well it's not even worth mentioning.
(sarcasm)
CRAZY that Lord of the Rings/Hobbit rights are up for sale.
Variety says at least $2B, and sorry but I think this costs way more than that.
WB, Disney, Netflix? Who won't bid on this?
So one of my favorite cuts of meat to cook is a pork shoulder. Pulled pork, carnitas, pork ragu, pork chili, you name it I love slow cooking it.
This week's column has slow cooked in my head for months now.
Essentially this quad chart:
13/ But that’s silly. As I’ve written for years, you can’t make nearly as much in one, almost free window (streaming) as you can in multiple windows (film to home ent to streaming). Zaslav--and team of course--see the film models the way I do.
Also, for the tiny group who cares, podcast equipment has been ordered. (I know, passive voice.)
After some testing, targeting September for a grand podcast tour...
BTW, for the record...
I'd love to see anywhere I said Netflix was doomed or dead. Ever.
In fact, I'm going to repeat that I think Netflix is very likely the top streamer globally over the next 3 to 5 years.