Hollywood Torrent: Netflix’s rivals say they aren’t competing with it. They are
Good afternoon from Los Angeles, wherever you may be. I just got back from my friend Adam’s bachelor party in Lake Tahoe, and am pleased to report that everyone emerged in one piece. The weekend provided a welcome reprieve from the one topic that I can’t escape lately (other than Donald Trump): the streaming race of 2019.
I must admit that at times I struggle to get excited about this story. A half-dozen media and technology giants are all creating more or less the same product — a streaming service with thousands of titles, some original and some licensed. They are all using the same name generator: HBO Max, Disney+, Apple TV+, ESPN+.
But the race to copy Netflix is going to be the dominant entertainment story for at least the next couple years as media companies invest billions of dollars in new shows, movies and technology.
Just this week we got another important update. On the heels of a disappointing earnings report, Disney CEO Bob Iger disclosed the price of a forthcoming Disney streaming bundle: he will sell Hulu, Disney+ and ESPN+ for $12.99 a month.
Customers are paying the base price for Hulu (with advertisements) and Disney+, and getting ESPN+ for free. That should boost ESPN+, which hasn’t exactly set the world on fire since its debut last year. It turns out there is a finite number of people who want to pay for the ultimate fighting championship and second-tier college sports.
The bundle’s price is the same price as Netflix, and thus set off the inevitable freakout about the incipient war between Reed Hastings’ technocrats from the north and Iger’s Mickey Mouse Club. Chris Palmeri’s story had the headline: “Disney Goes After Netflix With $13-a-Month Streaming Bundle.”
Iger dismissed this framing, insisting his company isn’t just creating another Netflix. “I know there’s a lot that’s been speculated about us going after them. We’re not,” Iger told Julia Boorstin. He is not alone. AT&T, Apple and Comcast all stress they aren’t trying to compete with Netflix. Why? Because they then get compared directly to its customer base and programming budget. Netflix is spending way more money on programming than they are, they claim.
But let’s get real here. They are all creating streaming services because of Netflix’s success, and they are all increasing their programming budgets so they have enough fresh material to entice customers every day. Netflix has created the default for watching TV on the internet, and that’s bad news for other media companies.
No current streaming service offers an experience that is fundamentally different from Netflix. If anything, most of them offer a slightly worse experience. (Comcast’s will have ads, as Hulu already does).
One potential point of differentiation is price, but Disney’s announcement underscores that Disney+ on its own is not a direct competitor to Netflix. It is a service for families, and will not offer something for everyone. Disney+ and Hulu combined should offer the full range of what anyone can get from Netflix, from documentaries and adult animation to adult drama and blockbuster movies. HBO Max is going to be more expensive than Netflix, but in the same ballpark. Apple hasn’t said much about pricing.
That leaves one way in which Disney and its peers will differ from Netflix: programming. Disney and AT&T will lean on their libraries — a huge advantage — while everyone will try to program new hit original series. Some will succeed and some will fail, but they are all aiming for the same target. — Lucas Shaw
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Ed Sheeran owns the biggest tour in music history
Ed Sheeran broke U2’s record for the highest-grossing tour in history. The record is a bit of a stretch since Sheeran went back on the road after the tour’s planned conclusion just to break the record. That being said, this is as good a time as any to reflect on Sheeran’s status as the №1 touring act in the world.
Forget Beyonce. Forget Taylor Swift. Forget U2. Sheeran booked the best-selling tour of last year by a huge margin. Sheeran sold 2 million more tickets than any other artist last year. He grossed $87 million more than anyone despite having one of the cheaper tours (relative to other big tours). His music also keeps selling and selling and selling.
Now his show is *easier* than those other pop stars. Swift and Beyonce orchestrate massive productions. Beyonce dances. Swift prances. And P!nk trapezes. But there is nobody who sells tickets like Sheeran, at least for now.
The №1 movie in the world is… “Hobbs & Shaw.” The spin-off from the “Fast and Furious” franchise grossed $85 million worldwide this past weekend, and has now eclipsed $330 million during its first couple weeks. “Dora and the Lost City of Gold,” a live-action movie based on TV’s “Dora the Explorer” cartoons, grossed just $17 million in North America.
The №1 album in the U.S. is NF’s “The Search.” That’s a surprise since Chance the Rapper also released a new album. But critical appraisals of Chance’s new record range from outright damning to faint praise.
CBS, Viacom inch toward merger
After three years, two stalled negotiations and one big sexual harassment scandal, CBS and Viacom are finally going to tie the knot.
The two sides have agreed on most of the terms that are a prerequisite to a deal. Viacom CEO Bob Bakish will lead the combined company. CBS CFO Christina Spade will be the CFO, and interim CEO Joe Ianniello will have a role. CBS will have six board members, and Viacom will have four. The Redstone family will retain control of the whole shebang.
Most sources expect the two sides to reach a final deal as soon as this week, and by the end of the month at the latest. That deal could just be the start for the two companies. A combined CBS-Viacom is still a minnow compared to Disney, Comcast and AT&T, and a slew of smaller companies, such as MGM and Lions Gate, could be the Redstone family’s next target.
But merging CBS and Viacom is a good start if the long-term plan is to create a streaming service that has as much firepower as those discussed above. All Access and Showtime already have a combined 8 million subscribers, and would benefit mightily from Paramount’s large library and the output of youth-focused programming from Viacom’s cable networks.
TV Networks Stuff in More Commercials Despite Vows to Cut Back
That’s the headline of the latest piece from Gerry Smith.
Last quarter, commercial time rose 1%, according to analyst Michael Nathanson. After declining in 2017, the volume of ads increased every quarter last year and expanded again in the first half of 2019. Fox was the only major cable network group to lower its ads last quarter, cutting the amount of air time by 2%.
As TV viewership declines and more consumers jump to streaming services like Netflix, media companies have only a couple of options to generate the advertising revenue that Wall Street expects: They can raise prices, run more commercials or do a little of both.
“Look at the decline in ratings,” Nathanson said. “Everyone’s got pressure to make their quarterly numbers. Long-term, it’s a very bad decision, but you don’t want to miss your numbers and have your stock go down.”
But… TV networks had a good upfront sales season because of how bad ratings are. The less supply of advertising inventory, the more they can charge. Marketers are happy to pay higher premiums because they still see TV as an effective, and essential, part of their spend.
The week that was
- Netflix has ordered at least four new choose-your-own-adventure series, bringing its overall interactive slate to a dozen. Netflix is investing more in this new genre, a hybrid of TV and video games, than any other major media company.
- Netflix lured the creators of ``Game of Thrones’’ away from HBO with a deal worth about $200 million. It outbid Amazon and Disney.
- Movie theater chain iPic filed for bankruptcy. The company’s CEO blamed “increased competition in the luxury theater space,” per Variety’s Brent Lang.
- James Murdoch led an investment group that acquired a controlling stake in the owner of the Tribeca Film Festival.
- D.A. Pennebaker, one of the great documentarians of the 20th century, died at the age of 94. Pennebaker made “Don’t Look Back,” a film that chronicled Bob Dylan’s embrace of the electric guitar (and his fans’ horrified reaction), and “The War Room,” about Bill Clinton’s first presidential campaign.
A multi-billion dollar sale
Vivendi has been shopping a piece of UMG for a long time now, and many industry observers thought this day would never come. But Tencent has always made the most sense.
All the big music companies are looking to increase the audience for their artists in China, and Tencent-affiliated companies operate the dominant music streaming services in the country.
It remains to be seen whether Tencent will give UMG artists any advantages. That wouldn’t sit well with the other major labels, Sony and Warner, both of whom have distribution deals with Tencent.
Our podcasting moment
Lots of big news in podcasting land this week, all of which points to the same conclusion: more and more companies are taking podcasting seriously.
International flavor: iHeartMedia, the largest radio station owner in the U.S., will start translating some of its big podcasts into other languages. Podcast listenership has exploded in some foreign markets, per Spotify.
More $$ coming in: Entercom, the second largest station owner, acquired two podcasting companies in deals worth more than $70 million.
Easier to find: Google will start showing individual podcast episodes in search results. That should increase listenership.
Discoveries
Universal Pictures canceled the release of “The Hunt,” a movie in which liberals hunt down conservatives. The studio had already halted marketing after the recent mass shootings.
YouTube moderators told Elizabeth Dwoskin that the video site holds its biggest stars to a different standard than regular creators. They are allowed to break the rules.
China banned its movie stars and filmmakers from attending the Golden Horse Awards, Taiwan’s version of the Oscars. At last year’s awards, a filmmaker advocated for Taiwan’s continued independence from China, a sore point for Chinese Premier Xi Jinping.
Tech companies have long shielded themselves from legal scrutiny using a small section in a federal law from 1996. Now lawmakers and regulators want to make some changes.
Weekly playlist
A little behind on my playlisting this week, but I’m digging new music from HAIM and Alessia Cara.
