Most Important Story of the Week – 13 September 2019: Debunking Some Apple Myths

This is my third try writing this week’s column. Apple TV+ is clearly the “most important story” this week since it’s Apple’s entry into the streaming wars. That’s like the United States entering World War II. What did my first two takes look like?

Attempt 1: An article about “ecosystems”, since that was the explanation du jour of the week. I wrote too much for this column.

Attempt 2: Really calling folks out for not digging into Apple’s financials. But that required me to do them too, which took too long for this week’s column. That’s an analysis article.

Still, I had so many thoughts on Apple that we’ll have enough for thoughts on Apple TV+/Channels today and in the future. Don’t worry.

(Programming note: I’m traveling for a music festival—Kaaboo 2019, the film festival for the middle-aged. Seriously, that’s how the bill it—so if I make any mistakes, I was rushed. And I’ll have my newsletter next week! Sign up now!)

Most Important Story of the Week – Debunking Some Apple TV+ Myths

Reading the coverage of Apple TV+’s pricing announcement, the media ecosystem swung from “$10 is way too expensive” to “$5 wins the content wars” immediately. That sort of surprised me. Bit of an overreaction, wouldn’t you say? Along the way, too, I noticed a lot of observers leveraging a lot of the same explanations and even numbers to explain the news. 

Let’s debunk a couple of those. Plus, I’ll add in the strategic risks for Apple implied by these mistakes. First, though, a new product that actually does make sense.

Apple Arcade Solves a Customer Problem: No in-app purchases

I play a few more iPad games then I probably want to admit. I loath pay-to-play, though. Just not how I was brought up to play games and the best games don’t feature this mechanic, in my opinion. Apple Arcade, their subscription video game service, solves this problem. Potentially. Right now, they probably don’t have enough games to warrant a subscription, but like all new businesses it will grow. And I hate subscription biz models anyways (for customers). So we’ll see. 

However, compared to Apple TV+, at least Arcade solves a customer need. Now how many customers are like me–which is market sizing–is a future question. But at least it solves a problem; it isn’t clear that folks were clamoring for more TV to subscribe to.

Debunking One: Apple TV+ is free. 

This is kind of true, in that yes, if you buy an Apple device, the service is free. But I saw tons of folks saying this free first year meant that Apple made it essentially free. That’s too far.

After a year, customers will need to start paying. I assume some others assumed that if customers buy multiple devices, they can keep stacking on year long free trials, but that doesn’t sound like any free trial I’ve ever seen. Most likely, after a year, the device that logged the free 12 months will have to start paying. And that, my friends, is where the true test of a business starts.

Strategic Risk for Apple: The Promotional Carousel Is Hard to Get Off.

Ask DirecTV or Hulu how offering ridiculously low prices worked for customer churn. Even if Apple doesn’t report subscriber numbers—they probably won’t—we’ll be able to tell by the discounts Apple does or doesn’t offer whether or not churn is happening.

Debunking Two: Apple will have 250 million potential customers.

This number is in fact true. It’s roughly how many iOS devices Apple sells per year. Roughly. The implications are not.

But is number of devices really the potential market? Consider two things. First, many families are on Apple’ plans. Which means even if the family owns four devices, or bought four, they’re still only subscribing once. More critically, look at this chart from Business Insider on iPhone sales.

58d04a02112f701f008b57db-750-563

Huh. So the US portion is really 70 million phones per year, with another chunk of iPad and laptops, which I didn’t see reported anywhere. Everyone breathlessly went with the 250 million. Sure, Apple TV+ is launching in 100 countries, does that include China? It’s notoriously hard to launch content in China, and Netflix and Amazon aren’t there. So I’m skeptical. Overall, if you’re discussing Apple’s plans, be very careful about mixing up US-focused strategies and global numbers.

(Bonus chart. During research, I found this amazing chart at Asymco. It should look familiar.)

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The Bass Diffusion Model…Explained! The Most Important Shape of the Streaming Wars

(Before we start, I launched a newsletter! It’s weekly and it’s short, and I explain my logic here. In today’s social media age, it can be hard to keep up with independent writers like myself so my newsletter will link to all my writings at every outlet and the best stories I read on entertainment strategy each week. Sign up here.)

Here’s three articles. See if you can spot the underlying mistake. An implicit prediction about the future given the facts…

From Variety about CBS All-Access:

IMAGE 1 - CBSAA 50 percent

From Fierce Video about Roku:

IMAGE 2 - Fierce Video Roku

From Decider about Hulu:

IMAGE 3 - Hulu Decider

In each case, a new company is growing wildly. Not just wildly, but 40-50% growth. Which is excellent growth if you can get it.

Implicit, though, is optimism about this growth. This high growth will continue. And the growth is specifically compared to Netflix—entertainment’s boogey man—usually to (again) imply that these companies will overtake or match the streaming giant because of the double digit growth.

This is wrong!

But it isn’t unusual. Frankly, as humans, we tend to believe that patterns continue at their current rate. We like our trend lines to be linear. Stated in layman’s terms, we like straight lines on graphs. Unfortunately, reality is often curved.

Fortunately, though, we know what the curve should look like. One key shape shows not how unique those three companies mentioned above are, but how very, very ordinary that type of growth is. That shape, though, isn’t linear. It’s a double curve and it is one of the most well studied models in marketing and business.

It’s called the Bass Diffusion Model. Today, I’m going to explain what it is, how it works and show a few examples. My goals isn’t to teach you how to use it (we don’t have that type of time), but to recognize it when you see it. Then, over the next week or so, on other outlets and social, I’m going to release some examples. 

To start, though, let’s dig deeper into the problem above.

The Problem – Growth Doesn’t Work This Way

A few years back, I sat in a company-wide “all hands” meeting, and I saw the head of our entertainment group roll out a slide. Our streaming venture was pretty new overall. But we’d had fairly strong growth in the last year, building off growth the year before. Our growth was growing! Here’s a version of the graph he showed, and the numbers have been changed to protect the innocent. 

Image 4 - The Hypothetical

The key numbers are the growth rates between periods 4 & 5, and 5 & 6. Initially, customers are growing slowing. But then the numbers double in year 5. That’s great. And then they increase by 15 units in period six. Again, sixty percent growth, which is even better. The next part stunned me. The executive literally added a dashed line into the future which looked like this.

IMAGE 5 - Exec Projection

That’s pretty incredible, isn’t it? Your growth isn’t just growing, but accelerating as your business matures. To emphasize—because as I type this I shake my head so hard in disbelief I may throw my neck out—this was an executive setting expectations for his entire company/business division, and he expected his subscriber base to double and then triple in the next few years.

As soon as I saw his graph, though, I drew my own chart mentally in my head. I’d seen that sort of growth before in text books and business case studies and in the press, and far from watching growth accelerate further, I thought it would slow down…

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Introducing the Entertainment Strategy Guy Newsletter

Wait, do you REALLY need another newsletter. Probably not. Peak newsletter baby!

Let me defend why you should add just one more email to your already considerable deluge. Then I’ll give you the details.

In My Defense – Why You Need Another Newsletter

Here’s my guess as to how 95% of my readers start their work day. They come into the office, go to their desk, and turn on their computer. Then they open their email program of choice.

Then they read and answer emails. All damn day.

Am I wrong? Maybe. I’d love to imagine a small sub-segment who says, “Nope, I review my to do list, then complete my most important work task before turning on email.” But that’s not happening. If I’m wrong, it’s more likely that a lot of people woke up and the first thing they did was open their phone to see if they had any emails from work to read. (Then, Twitter.) 

That’s why newsletters have taken off among a certain psychographic set. They deliver news via the (dark) social media platform of necessity and convenience. This is especially true with the professionals—across entertainment, media, tech, academia—that I consider my core target audience.

Without a newsletter, I have to rely on folks 1. Stumbling across articles in their never-ending Twitter or Linked-In scroll, or 2. Remembering that good website they read once and hopefully bookmarked. (Do people even still bookmark websites?)

Even if you remember to return back to my website regularly, did you know I published at Decider or Linked-In or The Ankler? Probably not. Instead, let’s just be sure you can find all my stuff every week. And a very short newsletter is the best way to deliver on that promise. I’ve also heard from a few readers who want this service.

The Newsletter – What It Is

Here are the details on the newsletter:

Distribution – Substack

I looked at a few options and liked their combination of features, volume and pricing the best. 

Content

The newsletter will have links to all my writing of the last week. This is across all the outlets I’m writing for, including my website, guest articles, Linked-In articles and really good Twitter Threads. 

Plus, it will have the “media” related recommendations from my weekly column. So my “long read of the week”, “listen of the week” and “newsletter of the week” will end up here. This should hopefully make my weekly column a bit shorter.

As a result, the “Most Important Story of the Week and Other Good Reads” will drop the “good reads” portion to focus on news and opinions including, “Most Important Story of the Week”, “Other Candidates”, “Data of the Week”, “Entertainment Strategy Guy Updates” and “Lots of News with No News”. 

Timing?

Once per week, weekly. No more. It will go out Monday in the AM covering the previous week’s stories. 

Price

Free. 

Is this locked in stone?

No. I wish I could say that my newsletter will be free for always. I debated making that bold claim.

But I need to make a living writing. With my guest articles for certain outlets, I’m getting there and I hope to add advertising in the future (FYC related), but if my weekly column is getting enough traction, I can’t rule out monetizing it. In the near future, though, this is the plan.

How do I subscribe?

Go here, and sign up. Hit me up if you run into any trouble. There is currently one sample draft from this week to review. I plan to keep about 4 to five emails up in the archives at Substack.

How do I help out?

Tell your friends. When the newsletter comes out, since it is free, forward it to everyone you think will find it interesting. Reply to a company wide email chain with the link and say, “Hey you should all read this.” (Kidding. Don’t do that. And never reply “Unsubscribe” to an email chain.)

I do appreciate everyone who has spread the word so far and will keep doing so.

Most Important Story of the Week – 6 September 2019: Quibi, Quibi, Quibi

Welcome to September. The kids are back in school, football is starting, and award season is bearing down on us like the Huns invading Rome. Meanwhile, the streaming wars will have their first battles, “The Invasion of Netflix-Land” by Disney’s 4th Army across the land will be joined Apple’s Airborne Channel Brigades. 

Meanwhile, one of the most talked about companies isn’t launching until…I still don’t know? And since I haven’t mentioned them, they get the top spot.

The Most Important Story of the Week – Quibi, Quibi, Quibi

Let’s take the Quibi story and change the name.

“Starting next year, NBC-Universal is launching MeeshMosh, a subscription short-form video on demand service designed for mobile. They have signed deals with top tier talent like JJ Abrams, Jordan Peele, and Greg Daniels. This will cost $5 a month with ads and $8 without. NBC-Universal plans to spend billions on this content in just the first year.”

To be clear, that is NOT true. I made it up. But if I presented that business model to you a year ago, would you have been ready to declare it the next champion of the streaming wars? No, right?

But that’s just the Quibi pitch with a different company. I can’t prove it but I don’t think that the current crop of Quibi fans would be as supportive of the NBC-Universal version of Quibi as the Quibi version of Quibi. What does Quibi have that NBC-Universal doesn’t? 

I can think of two things. First, NBC-Universal is legacy media and entertainment. And some observers just disdain anything that reeks of old Hollywood. The future is new and tech and disruptive, which is hard when you’re run by a cable company.

Second, is the “who”. You can’t read an article about Quibi without the inevitable mentions of Jeffrey Katzenberg. He is Quibi. Followed closely by Meg Whitman (of eBay, Hewlett-Packard and gubernatorial campaigns fame). Clearly a lot of the fandom of Quibi doesn’t reflect optimism over the product or content, but a bet on the founders being able to make good content and release a good product.

That’s why the news of the week is just a tad concerning. Over the last two weeks, the head of partnerships (Tim Connolly) and the head of news (Janice Min) left Quibi before it even launched. Listen, I don’t value any individual employee, even CEOs, super highly. Usually, the data is too noisy to draw judgements. But I don’t like “exoduses”. Two isn’t an exodus, but any more and we’ll start to wonder if Quibi is going HBO on us. 

Would folks have a reason to leave? These quotes from Dylan Byer’s scoop in his newsletter worry me:

Min had frustrations with Katzenberg’s management style, the sources said. The Hollywood mogul, though widely respected, is also known for being headstrong and relentlessly opinionated…

So if the strength of Quibi was its team, but that team isn’t actually functioning, what is its strength? Short form content? Do we not remember Vessel? Or Go90? YoutubeRed? Sure, a subscription for Hulu, Disney+ or Netflix at $8 makes sense–that’s long-form video–but do people want to pay for short form content they can mostly get for free?

Of course, Vessel, Luminary and Youtube all had/have different content strategies and pricing. Maybe Quibi will be the right mix of price and content to drive subscribers. But I’m skeptical.

(Josef Adalian has a good long read on Quibi’s plans here.)

Entertainment Strategy Guy Retraction Watch – Disney+ Vault Edition

Since I’ve called out others for potentially bad data, I should do the same self-reflection. Last week I heavily speculated that when Disney+ launches, it may be missing a few of its classic films and quite a few Pixar films. I did this based on a list of confirmed films at the LA Times and Bob Iger’s statements in the last earnings report. 

A few readers pointed out some other sources of information contradicting this assessment. In particular, at Disney’s Investor Day, they said the 13 “signature” films would make it on the service. I updated my Part II last week this data. Then, as the week went on, I discovered a few new data sources…

The New Data

On last week’s TV Top Five, Lesley Goldberg said that Disney said at D23 that the 13 signature films would be available on Disney+. If they repeated the 13 films at launch at D23, that’s pretty definitive, though it still leaves the newer Pixar and newer Disney films in the air.

Then, I read this great article from The Verge’s Julia Alexander reviewing Disney’s UX and platform from a D23 demo (which is worth a read). It doesn’t have any screenshots of films that weren’t in the LA Times announcement. Which could mean nothing, or could mean some of those films won’t be available at launch, as I initially speculated. 

The Chasm of Silence

The other data is the “dogs not barking” scenario. Which is I put up an article–and though my readership is small–I haven’t heard anything from Disney’s communications people. If they know I’m wrong, why leave out bad information? To further the silence piece, if Bob Iger knew that Disney’s 13 most important animated films will be available at launch, why not mention that along with the 8 Star Wars and 4 Marvel films? It seems like an obvious point to make.

My Explanation

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If “Content is King”, who is everyone else?

As soon as you start learning about the business of entertainment, you learn this aphorism.

“Content is King”.

I yell this from the rooftops too. I learned it so early that I can’t even credit one specific class or book or article with it. Searching my articles, I found that I wrote it on 5 different occasions in just the last year. It feels so true for me, that I won’t ever bother to quantify it or prove it analytically. Principally, I don’t think it’s something you can “prove”, but more importantly, it doesn’t matter. 

However, it makes a great question: if content is king, what the heck is everything else? 

That’s what I’m going to try to do today. To explain which different business functions are who on the entertainment chess board. Chess is a game of war, and these are the streaming wars, right?

King – Content

The obvious first choice. Or is it?

If the chess analogy is true, the King on his own can’t win you the game. In fact, he does hardly anything in a typical chess match. He runs from his problems, just hoping to avoid getting trapped in a corner.

Yet, content is fundamentally an offensive tool. It’s on the attack, conquering viewership in box office, ratings points or whatever streamers feel like telling us. That sounds a lot like the Queen, the unstoppable killing machine moving any direction she damn well feels like on the board. As I thought about it, in terms of power/influence, the Queen is best analogue to content’s ability to shape the competitive landscape.

Let’s use the King for something else then. The endgame for a chess match is check mate. If the King dies, you lose the game. You’re out of business. What’s the one thing if you don’t have, you go out of business? Cash. Money. Financing. So…

King – Content Finance

Finance shouldn’t run any company—that’s the player moving the pieces in this super-extended analogy—but they are the rulers, usually, at the end of the day. And lots of great companies have succeeded simply through clever financing. Even if the finance folks don’t run the business, they’re usually second or third in charge. So the King is finance.

Queen – Content

Content is what enables everything else. If you don’t have great content, no matter how well you leverage the other pieces, you’ll be at a disadvantage, just like losing your queen in an unequal trade. And if you ever doubt if content is powerful, well, look at Disney’s movie slate. So the Queen is content.

Bishop – Distribution

After you learn that “content is king”, you learn that it is locked in a war with distribution. The battle gets phrased as the question, “What’s more important, content or distribution?”

In a classroom, both sides can be right trying to answer that question. Even if you end up deciding content is more important, you can’t deny that distribution can make or break your strategy. Right from the start. That’s why I made distribution “the Bishop”, the piece who is the most valuable at the start of a chess match.

Distribution isn’t the most powerful piece remaining—that’s the Rooks—but it sits next to the Queen of content and King of finance in the middle of the board. If you get down to just a one Bishop at the end of the game, you’ll have a damn hard time trying to checkmate your opponent. The way you can have great distribution, and bad content, and hence no viewership.

I also like it because Bishop’s are incredibly useful, in a misdirection sort of way. The Bishop never comes at you straight on, but from the side. Distribution is the same way. Most consumers don’t think about the deals a major studio signs to distribute their content, but happen to stumble upon it on their streamer of choice. Netflix convincing the studios to give it library content or the Pac 12 failing to get DirecTV distribution are examples of how distribution can make or break business models. Consumers may be aware of these squabbles, but often times they are oblivious to these conflicts.

I also like the historical symbolism of the chess board. For much of human history, power was a battle between rulers and religion, monarchs and bishops, like content versus distribution.

Knight – UX [Technology]

Before we go too much further, I should admit I’m not very good at chess. If you’re a former military officer, this is like admitting you don’t like running or short haircuts. But there, I said it.

I’m not a good programmer either, but I know good user experience (UX) when I see it. In fact, everyone does, if a current survey by PwC is true (and yeah, just one survey). But despite that survey and the blaring headline, UX isn’t more powerful than the money or the content or the distribution of said content. 

But once you have a platform—especially in the internet age—understanding how consumers engage with your technology is key. If that experience sucks—fine, is “suboptimal”—than customers don’t want to come back. Sometimes even the best content can overcome this, but only so much. 

Knights are thus the UX or technology of the chess match. They can really screw up your strategy by taking the queen off the board. But they can only hop two spaces forward and one to the side, so they aren’t the most flexible weapon. And they are slow to escape from a battle, like how UX is hard to update once you’ve screwed it up.

Rook – Marketing

You can’t watch a show you’ve never heard of. That seems simple enough. Usually, the best way to overcome this is brute force spending of marketing dollars. Marketing is a blunt tool. It fires straight at consumers, despite the dreams of targeted addressable marketing, it is still usually one trailer for everyone. 

Which is as blunt as a rook marching straight ahead or to the side. Moreover, Rooks get most of the action at the end of the game, the same way that marketing only starts once the content is finished and ready to roll out of the gate. 

And yet, the power! A great marketing campaign will ensure a TV show or movie gets launched. (Check out the buzz around The Mandalorian–in my opinion a well-made trailer–to see how good trailers can make a show or film.) And that trailer will make or break the content it is supporting. Good marketing can build buzz and bad marketing can end it. Losing your rooks recklessly can end your game too. Marketing is the Rooks.

Pawns – Research, Business Affairs, Business Development/Sales

It takes a village to be a studio, but I only had five major pieces to work with. (I guess I could have split the board in half, but eh.) 

Everyone else is a Pawn. Which sounds bad in our nomenclature—being someone’s Pawn means being manipulated—but yeah most of the other groups are manipulated for content’s ends.

Most Important Story of the Week and Other Good Reads – 30 August 2019: The Rain in Spain is Streaming

My weekly column this week was initially about Disney+ library content. And surely, you saw how that turned into 5,000+ words of speculation. As a result, I’m going to go a bit quicker of an update this week. I kept returning to one article that inspired several ideas, so let’s make that the story of the week. (And since that came off, run a bit shorter today.)

Most Important Story of the Week (and Long Read) – The Rain in Spain is Streaming

The long read is this THR article by Jennifer Green, “How Spain Became a Case Study for the Global Streaming Wars.”

Well, you had me at “Case Study”! In seriousness, the “streaming wars” may be a true world war, fought territory by territory, country by country. Meaning this Spain case study is a pretty good stand-in for many countries to come. Here are some other insights or random thoughts I had.

Insight 1: The Value of Local Content/Employees

One of the aspects of the streaming wars I’m really curious about is how local streamers fare against their global rivals. In the Spanish case, it’s Movistar. Honestly, what is more American than an American company (or four) believing that they can launch global media companies that can simultaneously reflect the value of every local country?

As a result, studios need to rely on local content, but existing networks and streamers may understand the market dynamics better, putting the new streamers at a disadvantage. This is a tension I’m curious to see how it plays out. (This also pairs well with this article also in THR about European Networks from July.)

Insight 2: Everyone is coming simultaneously.

Sure, Netflix beat all the streamers to market. But they’re all coming simultaneously from Disney to Amazon to Viacom even. And again this will be replicated country-by-country around the world. 

This makes me more optimistic for local streamers. Instead of fighting a global battle for dominance, they can focus on winning in their region with their unique understanding of the market. Of course, there is the counter about global size, but wait two insights for my thoughts on that.

Insight 3: It isn’t “hits”, it’s portfolio performance.

Let’s say I’m running your mutual fund. (Wait, those are out now? Then, let’s say I’m running your hedge fund.) Back in 2007, I put a bunch of money into Disney and Apple. (True story.) Guess what? We made lots of money together.

Wait, you want to know how the rest of the fund did? Why? I had two hits. That’s all that matters.

“No, it’s not!” You say. “How were the rest of your picks?” Well, I put money into Chipotle a few years back…guess that wasn’t smart? The point is when it comes to investing, you analyze the entire portfolio.

The exact same thing applies to content portfolios. So congratulations to Netflix on having a hit in Money Heist (La Casa de Papel) as foreign-language, specifically Spanish-language series. The key question for all analysts and business types is: What was the hit rate? Without the denominator (total produced/acquired) the numerator (the hits) doesn’t matter. The article says Netflix has 20 Spanish originals in production, how many have they bought to date?

Take this article from WAY back I’ve been holding onto. Netflix is making 50 (50!) productions is Mexico. I guarantee when one becomes a moderate hit in the US, it’ll get hyped as “proving” Netflix is making money in Mexico. But without repeating the hit rate, we really don’t know. (And go here for my controversial take on Netflix’s hit rate.)

Insight 4: We do NOT know if Netflix overpaying for international originals is paying off.

Besides hit rate, it also depends how Netflix allocates content. Right now, Netflix and Amazon overpay in every market to get global rights. Which is strange: it isn’t often you can pay the most for eveyrthing and generate a good return. The key is how Netflix both allocates costs and then that pesky hit rate I just mentioned. If they assume a Spanish-language original generates half its money from North America, and it isn’t popular here, that may not be a good call. If they keep allocating most of the cost to the country of origin, then how can they possible make the money back?

All to say that the streaming wars will have multiple battlefields and it will be fun to see how they play out. To conclude, two random thoughts.

Random Thought 1: A new datecdote!

I missed that Money Heist had 34 million viewers during its first week. A new datecdote for the tracker. It doesn’t really change the distribution of hits for Netflix.

Random Thought 2: Bundle by Rich Greenfield

This isn’t an insight from me, but this Rich Greenfield tweet gets at how competitive it is in Spain too. And how the bundle always makes a come back.

Listen of the Week – NPR’s Planet Money on the “Modal American”

I love a good walkthrough on how to do data analysis well. So thank you Planet Money team for providing it! In their quest to find the “average American”, they turn to the mode to find the most “common” American you are likely to run into.

Of particular interest to long time readers is the mention of distributions as an example for why averages can be so misleading. Take age: America has two humps in our age distribution, the Boomers and Echo Boomers (nee Millennials). Thus, the median average that is somewhere between those two group (in the Gen Xers) is wildly misleading.

How can you use this? Well, do you use advertising to target your entertainment customers? Do you use overly broad groups like “ages 18-50”. Why? Some smaller demographics may be much easier to target.

More relevant is how you use data in the first place.  I’ve seen so many presentations, reports, analyses but especially news articles that give you the average. It’s always the average. But the average tells you nothing! The distribution is everything. If you run a business–and some of my readers do–don’t accept averages from your teams. Demand distributions. (My writings on distributions here.)

ICYMI – Entertainment Strategy Guy at The Ankler

If somehow you don’t subscribe to it, I was fortunate to be featured in last week’s Ankler newsletter by Richard Rushfield. I write about the “coming” M&A tsunami, which I’ve been harping on for a year. If you are an Ankler fan, I can say that we’ve been talking about combining our talents for a few projects so stay tuned.

Other Contenders for Most Important Story

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Is Disney+ Too Kids Focused? Part II on My Thoughts on Disney+’s Catalogue

One of the goals of my website is to try to hold myself to a process. A process means I let the data guide my opinions, not fit new data or anecdotes into preconceived narratives. A good example of this comes from last weekend’s D23 Expo. This picture circulated widely of lines at kiosks to sign up for 3 years of Disney+:

I saw a ton of positive cases. Look at all the sign ups! Look at people forking over their credit cards! This doesn’t even launch for 3 months!

Then I saw some skeptics on that. If it’s so popular, why aren’t there lines? Are we really that excited about the most super-fan of super-fans signing up for a service? Why give a discount for three years for something these fans MUST own?

Even these critiques could have critiques: No lines? Sure, it’s Disney. They are great at making lines short. And three years is a great long time to lock in customers. So in all, did the kiosks sign ups at D23 mean anything?

Who knows? Like all things, the best way to keep yourself honest is to put your predictions down ahead of time. Which is hard to do for a thing like “sign-up kiosks at D23” because you couldn’t have predicted that would happen ahead of time. At the end of the day, sign-ups at kiosks probably don’t predict future customer behavior nearly as well as something like Disney’s box office takeover. This is a minor data point, yet it functions as a Rorschach test, really just telling us if you’re bearish or bullish on Disney+. (Or Netflix, for those data points that come out.)

I’ve been thinking about this as I review Disney+’s content catalogue. I’m trying to approach this fresh. I’m worried about my decidedly positive positions about Disney’s strength will cloud my judgement. 

This would be so much easier too, if I just gave in to the easy push for content. I could just pull a couple slides and confirm my own believes. Because if you take the Disney story from their Investor Day presentation, a slide like this…

IMAGE 9 - Five Brands

Then how can you not come away impressed? Or they drop these next two slides about Marvel and Pixar dominance…

IMAGE 10 - Box office slides

Then just write, “Look at that content!!! How can they fail!”

The problem? As I laid out yesterday, most of those Marvel movies (meaning more than 80%) won’t be on the platform at launch. Many Pixar films won’t be either. And quite a few live action films. So yes, Disney is doing well at theaters, but that won’t help Disney+ launch necessarily. And right now expectations for launch are going through the roof. Maybe we should temper them.

Which brings me to today. The TV side. TV on most streamers is say 60-70% of the value. (Really talking about Amazon and Netflix here.) For HBO, it’s probably 50-50. (Those Warner Bros, Universal and Oscar films matter to renewals.) For Disney, it’s probably 25-30% of the importance, considering how big/valuable the movies are. But if I look at the Disney+ TV library slate objectively—meaning not as a super-excited Star Wars fan; did you see that The Mandalorian trailer?—well, I have some concerns. (Again, this today is all about library content, since the new series are still mostly unknowns.)

Before we get to those, an update/equivocation on yesterday’s article.

An Update to Disney Princesses and Disney Animation

Most of the data I used yesterday came from two places: this LA Times article with confirmed Disney+ films and Bob Iger’s description of the content. An eagle eyed reader pointed me to the Disney Investor Day presentations and it had this quote from Jennifer Lee (head of creative for Disney Animation):

Classics like Snow White and the Seven Dwarfs, Pinocchio, Cinderella, The Jungle Book, The Little Mermaid and The Lion King – the entire 13 film signature collection – will all be available on Day 1 of the U.S. launch of Disney+. Previously kept in the vault, they will now be available to everyone to watch anytime you want as a part of your permanent Disney+ subscription. 

Those 13 signature films really are money. Those are the drivers of lots of the product, home entertainment and theme park revenue Disney was built on. Here’s their image:

IMAGE 11 - 13 Signature Films

Moreover, Lee specifically said they were pulling these movies out of the vault. That’s a pretty definitive statement that Disney is blowing up the vault. This would change my two tables from yesterday, meaning we go up to 9 of the 14 princesses:

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