Let’s start by what question I’m NOT answering today: Should Disney keep releasing films to “premiere access”? Ultimately, yeah, I want to answer that question. It’s really important. (For those who don’t know, Premier Access is the movies released at ...
If you’ve been reading my “Steaming Ratings Report” for the last few weeks, you might have noticed it has been fairly Netflix-centric. Netflix is the 600 pound gorilla in the streaming wars. Heck, it is more like a Mighty Joe ...
Last week, the Nielsen Top Ten lists broke new ground when Hulu had its first title earn a spot on one of the three lists. This week, Hulu doubled its performance, earning two spots! As always, caveats abound. In particular, ...
When I sit down each week to pull data for the “Streaming Ratings Report”, it honestly feels like Easter. (Why Easter? Well, we’re closer to that than Christmas and my eldest child is excited for candy delivered in plastic eggs.) ...
Let’s start by what question I’m NOT answering today:
Should Disney keep releasing films to “premiere access”?
Ultimately, yeah, I want to answer that question. It’s really important. (For those who don’t know, Premier Access is the movies released at the same time as theaters that cost $30. I’ll call this PVOD, or premium video-on-demand for the rest of the article.) Presumably, if we know how much money Raya and the Last Dragon made in PVOD, we’ll have an idea if Disney should release its future films on PVOD.
in addition to PVOD, we need to factor in different release styles, Covid-19 and the quality of the films that were released. There are so many variables to these release strategy equations, along with so few examples, that evaluating success would be more about justifying our prior beliefs than finding truth.
What can I tell you?
That I think Raya and the Last Dragon sold about 1.18 million units on its opening weekend, with a low end of 840K and a high of 1.48 million. Ultimately, that means I think it will make about $150 million PVOD sales globally, in addition to $94 million in box office, with $32 million domestic.
That took a lot of math. Which I’ll explain. But before we can go forward, let’s go backwards.
Given that the release of Mulan was so unique, multiple analytics/streaming measurement firms jumped into the fray to provide data about how many folks watched it. I summarized this in three articles last fall, ultimately landing (initially) on about 1.2 million folks ordering Mulan during its opening weekend. Here was a table that acted as a “poll of polls” on Mulan:
(Really, you should read all three articles on Mulan to understand how I work though a data problem like and to learn about film economics.)
A few weeks later, Nielsen came out with their estimate, and it was notably higher. Using some calculations, like the number of people in the household and the completion rate, I came up with a range from 1.4 to 1.8 million people watching it according to Nielsen. Combining the two, I’d say 1.2-1.8 million folks purchased Mulan on its opening weekend in the US.
That led to this projected revenue from Disney Premier Access window for Mulan. This estimate includes the decay for the next two months, along with global purchases:
Because Mulan was so unique, lots of folks tried to figure out how many units it sold. And they told us publicly. Which meant I could make that kick butt analysis chart with several estimates.
Raya is no longer the shiny new release strategy on the block. Heck, Warner Bros. decided to release ALL their films to HBO Max. That’s the big headline now. And it meant way fewer people were paying attention to Disney’s PVOD ambitions. Also, each week new films are releasing in theaters. When Mulan released on Disney+, it almost had the theatrical calendar to itself.
Which meant that fewer firms leapt into the “How did Mulan do?” sweepstakes this time around. But not everyone, so we can take some stabs at the data.
– First, Nielsen provides their weekly three top ten lists, which has been the most consistent and reliable data set I use. (In fact, I don’t mention data websites that don’t release regular data anymore to bias towards regular data releases.)
– Second, Antenna also released an estimates of purchases by Raya. They have released a few charts of PVOD and TVOD sales since 2020, so we can use this to make estimates.
– Third, Google Trends is available.
Meanwhile, I scoured the interwebs for anyone else making estimates, and couldn’t find any. Reelgood released a top opening weekends in film in Q1 2020, but Raya didn’t make the cut. As far as I can tell, Samba TV and 7Park didn’t provide updates either.
Luckily, three data sources is enough to make some estimates.
Um, middle of the road. As I wrote in my streaming ratings report yesterday, a good rule of thumb to determine if something is popular is whether it makes Nielsen’s combined “top ten” list for Nielsen. (Nielsen provides three separate top ten lists, sorted by Originals, Acquired and Films. I then combine them by total hours viewed into a refined top 30.) In terms of hours, Mulan was watched for 8.8 million hours during its opening weekend, but only 5.9 million hours for Raya and the Last Dragon.
You can see this in the Antenna data as well, which gives a good clue that both Nielsen and Antenna are measuring the same impact:
Finally, we can put these films into Google Trends as well. Again, similar story:
So Raya was a fine film. It was definitely not a blockbuster, but did just well enough that it probably isn’t a total flop. (Notably, for Disney an “average” film is probably a flop for their expectations. But that’s because they are so far ahead in feature films.)
To figure this out, first, I made a table comparing the estimates by their various different measurements:
For a simpler look, here are those numbers in percentage terms:
Google Trends is the outlier, and Antenna and Nielsen are extremely close in their estimates, which makes me trust them both more. If you take nothing else away from this, you can say,
“Raya was about 80% as popular as Mulan on PVOD.”
Lastly, using some math, I estimated the different potential units sold:
There is a lot of math on this, so some quick notes on my assumptions:
– I used both my 1.2 million and 1.8 million units sold for Mulan to estimate the sales for Raya. I used both because both are reasonable estimates. I trust Nielsen most as a data source, but I also trust the poll of polls.
– For Google Trends and Antenna, I multiplied their percentages by both those numbers. That gets numbers 1, 2, 3 and 5 above.
– For Nielsen, I did the same analysis as Mulan, dividing viewership by the length of the film, which helped Raya in this case. However, I think Raya as a kids film has a higher completion percentage than Mulan. Actually, it could be dramatically higher, given that kids watch films over and over. My completion percentage is 125% for the low case. It is 100% for the regular case. This gave numbers 4 and 5 above.
– For both Nielsen numbers, I used 2.25 as the number of viewers per household.
With that math in hand, it gave me these numbers for the potential revenue in PVOD for Raya and the Last Dragon, which you can compare to Mulan above.
Lastly, Raya also came out in theaters. While Mulan made nothing at the domestic box office, Raya did okay, and netted $93 million it its global run so far and $32 million at home. Here’s how that compares to other pandemic released titles, according to The Numbers:
Those are the numbers. Again, what do they all mean? I’ll be honest, the initial draft of this article had, oh, a thousand extra words and I still didn’t answer that question as well as I wanted. So I’ll have more to say in the future. But for now we can say Disney again sold about a million units (plus or minus several hundred thousand) for its latest Premier Access title.
If you’ve been reading my “Steaming Ratings Report” for the last few weeks, you might have noticed it has been fairly Netflix-centric. Netflix is the 600 pound gorilla in the streaming wars. Heck, it is more like a Mighty Joe Young or Rampage-sized super gorilla, marauding over the globe, buying sequel rights for half a billion at a pop.
But if the movies have taught us anything about super gorillas, it is that nature always finds a way…to give them a worthy foe. In King Kong’s case, Godzilla. In Netflix’s case, that’s HBO Max, Disney+ and, this week, Prime Video, dropping formerly intended-for-theaters now straight-to-streaming blockbusters. Like Coming 2 America and Raya and the Last Dragon, which was Disney+’s latest “Premier Access” video.
Today, we’ll look at Coming 2 America in depth, and tomorrow I’ll do a special article on Raya over at my website. In addition to Coming 2 America, I have some unique insights on WandaVision now that it has finished its run.
(Reminder: The streaming ratings report primarily covers data from Nielsen’s latest report, which covers the week of March 1st to 7th and is United States-focused. However, we also consider Netflix datecdotes, daily top ten lists, Google Trends and IMDb data in evaluating content. Also, to get this report in your inbox, sign up for my newsletter.)
Let’s start with the good news for Prime Video, which was that their film did really, really well. It broke the “20 million hours” of total viewing threshold, which only three other films have done on their opening weekend going back to March of 2020.
Here’s the first week numbers for all films on Nielsen, going back to March 2020:
What’s the biggest takeaway from this? That Disney+, HBO Max and Prime Video can compete for viewership as high as anything Netflix can deliver for a single film. Impressively, Coming 2 America joins this list as a film released on a “Friday” meaning it only had 3 days of viewership in the Nielsen ranking.
Of course, blockbusters aren’t made just by opening weekends, but staying power. What can we expect from Coming 2 America in its first full week of release?
According to the Nielsen data, the average film loses 63% viewership per day from week one to week two. Meaning, if Coming 2 America performs to the average, it will have 15.1 million hours of total viewership next week. Anything over that means its decay rate is beating expectations; anything lower means it is decaying faster than streaming films on average. You could convince me either way: on the one hand, Prime Video doesn’t release nearly as much content as Netflix, so folks may keep watching it; on the other, folks don’t watch Prime Video as regularly. In our one Prime Video data point, One Night in Miami decayed by 70% week over week.
All of which leads to the question, “Was this a good investment for Prime Video?” Industry reports put the price tag for Coming 2 America at $125 million for Amazon. In general, you’d have to say it is pretty good to get nearly as much viewership on an adult comedy like this compared to what Disney and HBO spent on their top two titles in December. (Both of which run into the hundreds of millions of dollars, versus the merely $125 million price tag of Coming 2 America, a film which cost $60 million to make.)
Or think of it like this: Prime Video spent about 33% more, reportedly, on Coming 2 America ($125 vs $80 million) than Borat, but got more than twice as much viewership.
Tentatively, yeah I’d say this deal worked out for Amazon, though I still think that Coming 2 America would have done pretty well at theaters, a counter-factual we’ll never find the answer to.
Other Quick Notes on Film
– Fare thee well to Nomadland and The United States versus Billie Holiday on the film list. I was hoping this could be the week that we feature four different colors on the same top ten, but we’ll have to wait, maybe until Nielsen adds HBO Max viewing to their tracking.
– What about Raya and the Last Dragon? Well, it was in the 17th spot on the top 30 list, which has to be a disappointment for Disney. (Mulan, for context, was 10th.) But not a huge disappointment, because getting folks to buy a movie for $30 is fundamentally more valuable than just watching it! But this is a complicated topic, so I wrote an entire article on it for tomorrow.
– Bigfoot Family is a good example for why looking at both “total hours” and “viewership per day” is instructive. (The latter is also a metric you’ll only find here!) It actually rose in total viewership week-over-week (going from 5.6 million hours to 6.1) but still decreased in per day viewership by 52%.
– Netflix had some other new films make the list, including Moxie from Amy Poehler and Biggie: I Got a Story to Tell, a documentary, at 4.3 million and 3.4 million hours, respectively.
(Spoiler warning: I intend to make some jokes about WandaVision’s plot.)
We spent a lot of time on film today, since it was pretty fun, but you know what? We have a fun story with TV to tell too. Specifically, today is the day that WandaVision gets its turn in the spotlight (or should I say “reality altering bubble”).
As you can see above, WandaVision is unique compared to most streaming shows because it actually grew viewership week-over-week. It debuted a new episode weekly and grew the audience along with it. Now that the series has ended, we can compare viewership during its entire run to the entire run of some other Netflix series. The total viewership of WandaVision actually compares favorably to other shows on Netflix. Over 8 weeks of time, as opposed to one weekend, WandaVision was the twelfth most watched show in my data set:
(This chart was made by sorting all “first run original” series on their respective streamer, through the first 8 weeks of viewing.)
But let’s not stop there. It isn’t very fair to compare WandaVision with only 9 episodes released over 8 weeks to some of these shows, like The Crown, Ozark or Cobra Kai which have 40, 30 or 30 episodes released to date. So let’s trot out our “viewership per episode” metric I’ve been using. And we get this…
Suddenly, WandaVision and The Mandalorian are now up to the fourth and fifth most popular shows according to this bespoke measurement. And these would probably hold up even if we had more data from 2020. (The Queen’s Gambit likely would have added additional viewership during its weeks seven and eight, if we had the current reporting system of three top ten lists.)
Admittedly, this metric biases for series that have recently launched, since they tend to have many fewer episodes. Still, among that class of show, WandaVision and The Mandalorian likely outperformed most Netflix Originals.
But can we go one step further? As long as we’ve taken over an entire town via mind control, we may as well bring back our dead robot-husband, right?
Let’s magic into existence one more metric. Unlike the other shows on this list, WnadaVision episodes were short. The first episode was only 30 minutes. Half an hour! And a lot of the run time is just dubbing credits. (Literally, like five minutes worth.)
So could we account for that? A “viewership per available hour” metric, meaning it accounts for the total viewership for the total amount of content folks could watch? Why yes we could!
There you have it. An analysis of the Nielsen data you won’t find anywhere else. And yes, in this metric, WandaVision leaps to the top spot. The meaning? I believe that more unique viewers likely tuned into this show than any other Netflix Original released this year, except for maybe Bridgerton. Or The Mandalorian and maybe The Queen’s Gambit in Q4 of 2020.
By the way, this shouldn’t be too surprising! The two most popular franchises in America—after Knives Out of course—are Marvel and Star Wars. And when you look at Google Trends, yep, these are our two highest ranked shows for longest. First, without The Mandalorian, and then with it:
So I just dropped three different, totally valid, metrics to judge TV show performances. (Technically four with Google Trends.) Which metric is “best” to judge a show? Well, that depends! Entertainment isn’t like sports, which have clear winners and losers. Instead, it depends on what your business metrics are how the various shows support those metrics.
For Disney, these numbers are fantastic. It means using their weekly release model, they really can drive as much subscriber tune in as the top Netflix series. Of course, Netflix in some cases is launching four or five series at this level every quarter. Really it is a question of tradeoffs: is it better for one series each quarter to keep people subscribed, or multiple series every month that drive higher usage? That’s a business strategy question we’ll see play out this year.
Other Quick Notes on TV
-As I speculated last week, Ginny & Georgia went on to grab the top spot in the streaming ratings. If the weekly top ten list is to be believed, it could hold onto that spot for a few weeks.
– The latest crime documentary is Murder Among the Mormons, which launched to 9.8 million hours viewed. Which is good, but behind some other recent launches.
– Since Nielsen separates out “originals” into their own top ten list, we’ve seen some older Netflix originals finally show up in the top ten viewing. The latest is Orange is the New Black, with 4 million hours of viewing.
The most popular piece of non-streaming content during the week of March 1st was fairly clearly the Meghan Markle-Oprah interview that aired on Sunday March 7th. Unfortunately, Paramount+ isn’t tracked by Nielsen, so we don’t have streaming ratings. But 17.1 million people tuned in live for this one show, which shows you how much room some the streamers still have to grow.
– The big story of the week, to continue the gorilla theme, is that HBO Max is out touting that Godzilla vs Kong did very well for them. Which is notably more than they said about Snyder Cut. (Others said that the new Justice League did well, but not HBO PR.) Fingers crossed we’ll get more data on this in a few weeks, though so far Nielsen hasn’t released any HBO data since Wonder Woman 1984.
Much like Benoit Blanc, the title character of a film series I’m about to write about, every week I find myself hunting for clues. Tidbits. Hints. Insights to answer one, yearning question: What was the most important story this week? This week required a bit more searching than usual. (I don’t interview suspects, I read news stories.) To pound the detective analogy to death, the most likely suspect was not the most important. So what is?
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Most Important Story of the Week – T-Mobile Shuts Down “TVision”
Let’s say you’re driving around Los Angeles. You see a gas station selling gas for $1 per gallon. What do you think?
You think something is going horribly, horribly wrong.
Why? Because gas is a commodity, meaning mostly it sells for the going rate because there is no competitive advantage to any one gas station’s prices. (Is Chevron with Techron a lie? Not really, but it’s also not really different from most gas.) Since Los Angeles has some of the highest gas prices in the US, if someone is selling you $1 gasoline, they’re either scamming you, selling stolen gas, or they’re trying to corner the gasoline market by selling goods under cost.
This hypothetical–with all attendant alarm bells–should be in everyone’s head whenever a new bundler is out there touting some bundle with remarkably low costs for cable TV. Youtube TV and Hulu Live TV both started this trend. AT&T then doubled wayyyyy down on it. Others followed suit. But inevitably, they all had to raise prices over time. In some cases nearly doubling the initial offered price.
The logic is sort of clear and inescapable: cable channels have set prices negotiated over years by cable and satellite providers (MVPDs) and the cable channel owners. Virtual MVPDs (like Youtube TV and Hulu TV) pay lower prices per channel, but not that much lower. Otherwise MVPDs would demand much lower prices too. There is basically a floor for how much it costs to run an MVPD or vMVPD.
Just how did Youtube, Hulu and AT&T manage to offer lower prices? By losing money on each given sale to gain market share. They sold gas at $1 per gallon, in other words. The old fashioned, if-we-lose-$1-on every-unit-we’ll-make-it-up-in-volume-thinking. But in this case, losing sometimes $20-30 per month. Once customers were hopefully locked in, they would raise prices and keep the customers.
The problem, especially for DirecTV/AT&T’s offering, was they couldn’t keep the customers. Unlike MVPDs, which tend to have very high switching costs and/or local monopolies, digital is very easy to switch. As soon as costs go up, customers switch providers.
Which made the T-Mobile announcement last year of a new skinny bundle called “TVision” all the more surprising. The skinny bundle had come and been found wanting. At the time of the announcement, I was skeptical that this time would be any different. Indeed, last week we found out that T-Mobile was ending TVision, and instead partnering with Youtube TV (who is likely still losing money per subscriber, but funding it via an advertising duopoly and search monopoly) and Philo TV. And now customers get a whole $10 off each respective service.
Why is this the most important story? Because it shows that customers do want these services, just nowhere near the prices demanded by the current cable bundle. This story both shows the lingering customer demand, but also the inevitable pricing challenges. My guess is this won’t be the last time we see a skinny bundle, but they’ll face the same challenges. The bundle is dead, but it won’t stay that way.
Covid-19 Tracker – Godzilla Big Weekend
Listen, if this article is supposed to cover the news of the last week, then arguably this “news” didn’t happen last week; it took place over the weekend. To defend myself, we had good indications by Friday that Gozilla vs Kong would have a strong opening weekend, and beat box office expectations. And it delivered, along with a very strong performance in China.
This feels meaningful for at least a few trends. First, the death of cinema and theatrical attendance is far from certain. Every weekend the box office outperforms expectations is a step closer to the new normal for theaters in America, especially as more theaters reopen, increase capacity, and feature bigger films. It could take months to get back to where theaters were pre-pandemic–if they ever even get there–but all the available data says we’ll be much closer to $11 billion per year spent on theater tickets than “$0”, which some analysts forecast last March.
(To channel Debbi Downer, though, the recovery will take months. So lots of pain still to come.)
As for the simultaneous HBO Max release…hoo boy that’s a big topic. And one I won’t answer today. Because we can’t. We only have one piece of data so far–box office–so we’re really missing one side of the equation, the streaming ratings. I’ll reiterate what I said last week: I think shortened windows are here to stay, but tend to think day-and-date streaming and theatrical is not. But numbers like these help the streamers’ case that day-and-date streaming may not hurt theatrical. But in today’s Covid disrupted world, Im’ not ready to make that case yet.
Other Contender for Most Important Story – Netflix Buys Knives Out Sequels for $450 Million
I subscribe to so many newsletters on entertainment that I can’t keep count. (I probably could count them, but I won’t.) This allows me to see the story that tends to capture “conversation”, especially among the influencers, aspiring influencers, journalists and Celebrity Wall Street Media Futurists (trademark Patrick Crakes). This week, that story was pretty clearly Netflix shelling out $450 million to Rian Johnson and team (that part is important) for the sequels to Knives Out.
I was as fascinated as anyone by this story. Though it clearly isn’t the most important of the week, it is the most “thought provoking”. So here are some odds and ends thoughts on it.
– I read all three trade articles on the deal and the biggest unknown is still all the unknowns. This goes from what exactly Netflix purchased (Sequel rights? Franchise rights? Fees to previous distributors? Distribution for the first film?) to how much they are actually paying. I’d break it down into three big areas: the rights for the sequels, the production/marketing costs for the films (with backend), and the rights for the franchise. If I could know anything, I’d love to know what those pieces are expected to cost and how long Netflix will own those rights.
– The best framework for looking at this deal is via risk. Yes, online we want to categorize things into “good or bad” deals. That’s easy. (And it fits the social media antagonistic mindset.) But in a probabilistic world–and if you don’t think we live in a probabilistic world, I’m probably not the website for you–no deal is all good or all bad. Instead, the better way to think about investments is how risky they are for the return. Likely, Netflix built a model. In that model, in some cases, they only make $200 million in revenue off this deal. That’s the bad case. But in some, very rare scenarios, they make a billion. That’s great! In some, they just make $400 million. In other words, you run all those scenarios, and the “expected value” of this rights deal could be, say, $470 million. (Again, a made up number.) If Netflix paid $450, then they expect to make about $20 million on average in this deal. (Again, made up numbers for explanation purposes.)
– The deal is risky precisely because of that $20 million. (My guess, remember.) Whenever the price is sooooooo close to the expected value, the deal is by nature risky. And we know it is close because Apple and Amazon were aggressively bidding on it too. And since Rian Johnson and team likely chose the highest bidder, they probably got the deal closest to the “expected value” of this bundle of rights (remember, it could go from literally just the two sequels up to owning the entire series now). This is called, in economics, the “winner’s curse”. If you have a lot of bidders on something, the odds increase that the winner of the auction likely overpaid. To return it to the “risk” framing, the more bidders, with the more deep pockets, the riskier the deal will be.
– That is assuming the expected value is even positive. If you’ve bought a lottery ticket or gambled in Vegas, those are negative expected value propositions. Could Netflix and other suitors paid have been prepared to pay $450 for $400 million of expected value? Definitely. Because that happens in entertainment all the time. Especially when certain suitors can “afford” to lose money. (Though I hate that phrase.)
– It is also fascinating that it was three big tech companies that were the final three rumored bidders. If I could, I’d love a machine that would allow me to send news stories to analysts/opinion makers stripped of key details. (The dream would be for film criticism. Like you could send a film to a critic and say, “What do you think?” but they’d have no idea who directed it, do you think that would change some opinions?) In this case, I’m convinced that some analysts who praised this deal would have excoriated it, if they first were told it was done by Warner Bros or Disney. In other words, the same deal becomes a genius deal if a Big Tech firm does it, but disastrous if a legacy media firm does it. Obviously, I can’t prove this hypothetical, but in many cases I think it’s true. And bad analysis.
– Lastly, the main upside for Netflix seems to be the hoped for “franchise” play. Meaning that Netflix isn’t just buying two films, but a whole series of films, with potentially TV show spinoffs and international versions. Three quick thoughts on this. First, again after reading the trade coverage like a sleuth, I’m not convinced that’s the case. Given how enormous the paychecks were for keeping rights to the franchise, wouldn’t Rian Johnson and producing partner Ram Bergman have been smarter to keep those rights? I’d say so. That includes controlling international versions and TV rights. Is it really crazy to think that Netflix would pay $225 per film given that they paid that much for The Irishman? I don’t think so.
– Second, I saw some folks using franchise rights as a hand waive to say, “Well, it was worth it because you can’t put a price tag on owning a franchise.” Yes you can! I spent thousands of words explaining how Disney did that for Star Wars. And frankly, franchise rights are lower than most folks would guess. Basically, every film in a series is a chance to fail. And once a franchise fails, well, the sequels after it are much harder to justify. If you don’t believe me, look up The Hangover or Hobbit franchises. Or read my article on franchises here. It’s hard to make one good film. It’s even harder to make three in a row. (But the basic equation is the value of all potential franchise properties multiplied by the success rate of the franchise multiplied by the probability that you can make each one.)
– What about international adaptations? Well, sure, Netflix could make those, and distribute them to their platform. But, wait what? Isn’t the whole power of Netflix that they can make a film in India and make it popular globally? Why would a local audience want to watch a Knives Out remake if Netflix is already offering them the original? If you need to make local adaptations, that would seem to negate that advantage? Maybe the power of global distribution doesn’t actually work out as well as touted. (Indeed, Netflix is making Money Heist for South Korea.)
Other Contenders for Most Important Story
Let’s do some quick hits and wrap this thing up.
NBCU Is Considering Another Streamer?
To use my recent classification, is this “actual” news or potential? Well, the next three stories are all “potential” stories. In this case, there are rumors from a well connected reporter that NBCU is considering launching another streamer, maybe Universal branded, to pair with Peacock. If this happens–and it is a big if–we’ll have lots of strategy thoughts to roll out. But let’s wait until it happens.
Comcast Weights Pulling Universal Films From Rival Streamers
Same for this story. If Comcast, via Universal, keeps selling box office blockbuster juggernauts–like The Minions films or Fast and Furious series–to streamers like Netflix, Hulu or HBO Max, they really need to reconsider their strategy.
NCAA Case at Supreme Court
Lastly, we spend way too much time in political reporting guessing what the Supreme Court will do ahead of time. But it is fair to point out that the NCAA court case on amateurism could have huge ramifications on college athletics in America.
Last week, the Nielsen Top Ten lists broke new ground when Hulu had its first title earn a spot on one of the three lists. This week, Hulu doubled its performance, earning two spots!
As always, caveats abound. In particular, the top films have much less “total viewership” than TV series, since they simply aren’t as long, almost by definition. (A film is 2 hours, whereas most drama series are at least 4 hours, often 10 hours long.) This point is worth keeping in mind as the theme of this week, especially as we check in on how “competitive” the streaming wars are in top content.
(Reminder: The streaming ratings report primarily covers data from Nielsen’s latest report, which covers the week of February 22nd to 28th and is United States-focused. However, we also consider Netflix datecdotes, daily top ten lists, Google Trends and IMDb data in evaluating content.)
As usual, the top spot on our weekly top 30 list is from Netflix, but close on its heels is the indefatigable WandaVision, whose penultimate episode powered its way to the second place spot on the “Top Ten Originals” list by Nielsen. (Along with a new record in viewing.) Based on Google Trends interest, we can rightly bet that the finale will go even higher. We’ll have to wait to see if it takes the top spot next week.
The show vying to keep it off the list is Netflix’s new drama Ginny & Georgia. At first glance, its opening weekend was a bit soft, below stronger debuts from both Firefly Lane and Crime Scene: The Vanishing at the Cecil Hotel. To put this in context, here’s the first two weeks of Netflix’s first run TV series since November:
I’d call a show with 30 million viewers in one week “great”, and 20-30 million “good”, and 10-20 million “meh”. (Yes, “meh” is a technical term.) Staying below is 10 million is a dud. Ginny & Georgia is currently in our “meh” tier through week one. The bad news for Ginny & Georgia is that most shows don’t increase viewership over time. Here’s a sample of first run shows that premiered since December:
In this admittedly small sample size, 7 shows had smaller audiences and only two had bigger second weeks. But there is some good news for G&G. Some shows can take time find their footing, as both The Queen’s Gambit and Bridgerton showed last year. As the Google Trends chart showed, unlike most Netflix shows, Ginny & Georgia had a slower rise than most new releases. But it looks like that rise will hold; G&G nabbed the top spot in the Netflix TV like it daily top ten list, which is a good forecaster of Nielsen ratings. (More to come on this in future articles.)
The one limit to top ten data is that a show can take the top spot, but that could be more of a reflection of a light TV slate than a strong individual show. Given that it looks like G&G sticks around for a few week, I’d say it has a good chance for a strong second week. We’ll see.
Other Quick Notes on TV
– I’m working on classifying everything into “kids” versus “adult” (but not adult meaning “pornography”, I mean like older folks). This week felt light on true kids content in the TV space, with only Cocomelon holding down the younger kids fort. Cocomelon is clearly the biggest beneficiary of kids watching and rewatching the same limited number of episodes.
– The Crew had a fairly steep drop off from a weak start, so we can officially say it bombed. Yes, that’s a bit harsh, but hey, you’re not tuning in to a ratings report for me to pull my punches, are you? Overall, sitcoms do seem to struggle in the metrics (including, datecdotes, Nielsen and weekly top ten). Either 1. Streaming doesn’t work for sitcoms or 2. Netflix doesn’t have nearly as good a track record with sitcoms as hour dramas. (Before you ask, yes I’ve considered that sitcoms have shorter episodes, but the success of some of the Netflix crime documentaries, which can be shorter than sitcom seasons, refutes that. Moreover, that should’t impact subscriber households. More to come!)
Let’s start with the content geared towards adults first. I Care A Lot had a bigger second week than its premiere week, which has been the trend for popular films launched on a Friday. Being able to hold onto the third spot in the weekly top ten is great for a feature film, though also some evidence that the week was lighter in content overall.
Meanwhile, Nomadland stayed on the list and The United States versus Billie Holiday made it onto the top ten. For Hulu, this is good news. But they still have quite a ways to go.
Consider this: we know Hulu has about half as many subscribers as Netflix in the US. (About 40 million for Hulu; about 65 million for Netflix.) Assuming these three films were all about the same length (they were), and everyone watched about the same amount, then roughly 1 out of every 38 Hulu subscribers watched Billie Holiday and 1 in every 20 watched Nomadland, but 1 in every 5 Netflix subscribers tuned into I Care A Lot.
Maybe I Care A Lot is simply a better film with more inherent interest. More likely, Netflix is still the biggest player in the streaming game. That means it can drive extra viewing to its titles, which is the biggest challenge for the upstart streamers to battle.
Moving onto kids, the big player is still Disney, which placed four kids films into the top 10, including the second week of Flora & Ulysses. (Using the percentage of viewership, about 1 in 10 Disney+ subscribers watched that in its first two weeks.) Meanwhile, Disney as a whole grabbed 7 of the top ten film slots, though Netflix’s animated Bigfoot Family came in second to I Care A Lot. In other words, Disney claims the library title slots, but Netflix claims the “new release” spots.
Other Quick Notes on Film
– The Conjuring 2, a licensed title from 2016, is the latest library title to take the top spot after being a new release on Netflix. This title is owned long term by Warner Bros, so it joins the list of titles that one wonders when it will permanently move to HBO Max.
– Another good international title launch. Bigfoot Family is a Belgian-French production and it debuted to the second spot in the film top ten list. Some other foreign animated titles have done well as well, most notably the Spanish-produced Klaus. My working (and not very original) theory is that dubbing is simply easier in animation.
Competition
The theme of this week may be “let’s not get carried away” with Hulu catching up to Netflix. (And the rest of the streamers as well.) As notable as it is that Disney dominates the film list, the film list, that is frankly an easier list to dominate as a smaller service. The rule of thumb at the streamers is that “films bring customers; TV keeps them”.
Hulu, of all the streamers, should be great at the TV side of the house, given how much day-after-air TV they have. Yet, they still haven’t really cracked these lists in TV. But they did in film. Looking at the percentage of viewing by the major streamers this year, clearly Netflix’s size is still dominant:
Last point: This was the lowest week in total viewing measured in the top 30 list since Nielsen began releasing it this year, with 207 million total hours compared to 290 during the Christmas break.
Coming Soon!
– We’re starting to get hints that the Snyder cut of the Justice League really is doing the business for HBO Max. Both Antenna and Samba TV have speculated on the growth it drove. I’ll opine on this after I’ve collected all the datecdotes and, hopefully, we get Nielsen data on it. (Same for Raya and the Last Dragon, which should come next week.)
– Netflix has released a stream of datecdotes recently, but the most interesting was announcing that in addition to 33 million viewers at launch, Our Planet has had 100 million viewers over its lifetime. This number begs for context, so I’ll work on it. (That’s the third “more to come” of this column.)
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The big story of last week is fairly obvious: Disney moved Black Widow to July, along with changing the distribution strategies for Luca (now straight-to-streaming) and Black Widow (now going to theaters and premium VOD).
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Most Important Story of the Week – Theatrical Return So Far
In the past, I’ve used Uno games, climbing a hill, and going into bankruptcy as analogies for theaters and Covid-19. But this might be the most esoteric analogy I’ve used yet:The best analogy for the return of blockbuster movies in theaters may be calling for artillery fire.
In case you haven’t ever actually directed artillery fire, here’s how it works. First, you call the position in to the guns. They aim their artillery pieces, load in the right amount of charge, and fire a shell. But the thing about artillery is that it isn’t very accurate. Usually your first round is pretty far off. So you call the artillery battery back, and you “adjust” the fire, left and right, and up and down to get the guns firing where you want. Usually you cut the distances in half, then in half again, until you are right on target. At which point you “fire for effect”, or launch all the shells.
That’s like the return of theaters. At first, films were delayed for a year or more. Then they were delayed by a matter of months. Now, we’re down to moving films back by weeks. Eventually, we’ll stop moving them entirely. If I had to guess, we’re now locked in to the schedule–with simultaneous streaming launches as needed–for the rest of the year. In other words, by Q2 of 2021, big blockbuster films will “fire for effect” and start releasing week after week to finish the year.
Good analogy, right?
Still, there’s more to explain. Today I’ll cover four areas: the latest Covid news that matters, the impact on theatrical distribution, the impact on home entertainment, and what I think could happen next.
Covid 19 Updates
The biggest driver of all these moves is still Covid-19. So let’s check in on the most important Covid-19 news since I wrote about it three weeks ago. This is sort of a “higher level than daily headlines”, which, due to the need to drive clicks, can sometimes be more misleading than accurate:
– First, more and more vaccines are being approved, and increasingly they all show benefits after one shot. For instance, for all its failed public messaging, AstraZeneca’s latest test results show it is nearly 100% effective at preventing serious illness. It will still likely be approved too late for use in the US, but this should provide further proof that it will work as a vaccine. The more vaccines we have, the faster we can vaccinate the entire world.
– Second, another study provided more evidence that the Pfizer and Moderna shots are nearly 80% effective after just one shot.
– Third, the US is accelerating its vaccine roll out. This is almost exactly on the “linear” model line I had modeled out in February. That model forecast that we’d be distributing about 2.7 million shots per day (using the seven day average) and as of today, that’s right where we are.
Now, this is slower than I had hoped–I hoped we’d be at about 3.5 million per day by now–but even at this rate the US is on track to have 60% of the 16+ population vaccinated by the end of April. Including folks who have already had Covid-19, then the total protected could be as high as 75% by early May.
– Third, the increase in vaccinations is just starting to show signs that it is really driving down cases in the US, especially in the most vulnerable populations. This can be seen in the case rates and hospitalizations in older populations.
– Fourth, this distribution, though, isn’t equal. As this map from Covid Act Now clearly shows, states with warmer weather have seen cases drop much faster than in the northeast, just like last spring.
– Fifth, this is all about the United States. Internationally, many fewer people are vaccinated than in the US, UK and Israel. As a result, some countries are seeing spring surges as they did last year. There are also signs of surges in the northeast states like New York, Connecticut and Michigan.
This last point likely influenced Disney the most.
The Impact on Theaters
As I wrote back in February, my model about theaters reopening was not about when blockbuster films would return to theaters. When I tackled blockbusters, one thing mattered above all:
Disney wants to maximize the revenue for potential blockbusters. It is one thing for films destined for $100 million in US box office to lose some revenue straight to streaming; it is another order of magnitude for a potential $1 billion dollar film to only collect 80-90% of its potential revenue.
Call this the “expected value” problem. When Disney had to make the call for how to distribute Black Widow–a call they had to make about six weeks early–two things likely scared them for how many theaters would be open by May of 2020:
1a. Europe is very likely going to be locked down.
1b. New York and other northeast states may return to lockdown, or their theaters won’t be at 50%+ capacity.
Above I talked about $1 billion in revenue, but that’s a global number; meaning Europe, America, China and the rest of the world. Disney needs the entire world to maximize revenue, and May just has too much uncertainty. Listen, forecasting vaccine distribution for one country is tough, so I didn’t bother building a model for Europe as well as the US. Same for predicting the course of the pandemic across the world. And looking just six weeks out, it is reasonable for Disney to think Europe will still be locked down. By July, likely even the slow rollouts of vaccines will have accelerated to the point to protect everyone.
I’d add that piracy makes this all worse. Once a film is released somewhere, it’s de facto released everywhere. So it made sense that Black Widow moved back dates. But then why did Disney also decide to release it on “Premier Access” at the same time?
The Impact on Home Entertainment
On the surface, this is an even bigger change. It is one thing to offer Raya and the Last Dragon on PVOD at the same time it went to theaters. Most theaters were closed. But Black Widow is the giant tentpole of the Disney franchise system. What are they thinking?
Well, probably that the pandemic could still be going on, and at some point Black Widow has to come out lest the entire movie calendar get stalled out. And if some places may still be on lockdown, then a PVOD offering can help those customers who can’t go to theaters.
I’d call this the “Covid exception” at work. If the world has mostly reopened by September, I could see theaters pushing back on Disney on PVOD. For Black Widow, though? They’ll hold their fire. They need that giant tentpole.
The Future?
While I don’t like predicting the future, I think we can make a few guesses about what happens next. First off, I wouldn’t be surprised if more smaller films move around on the calendar. And by move, I mean move up into May. Again, Disney had billions (potentially) riding on Black Widow; if you have a smaller horror film, action flick or comedy, moving up into may get the best of both worlds: a mostly reopened American hungry to leave the house and a wide open release calendar. Indeed, I wasn’t tracking Wrath of Man, a Jason Statham action film, but it’s now coming out May 7th and released its trailer today.
These smaller films will get us through June. We can officially say that Q2 of 2020 will be bad for theaters…but starting in Q3 the revenue should be back. (Fast 9 opens June 25th.) Also, almost all the major theaters chains are fully capitalized through the end of the year. They probably can’t survive until 2022 with no tentpoles, but they can make it through the quarter.
As for home entertainment, I think that story will have to stabilize somewhere. Right now, each streamer/studio has their own plan. Netflix skips all extra windows; Comcast has a three week hold back until PVOD, and Disney keeps switching their plans. Meanwhile, even Warner Bros will likely be back to “normal” next year.
I don’t think this will last. Business likes to settle into routines. It just makes life easier for everyone. So after this Covid disruption, I’d expect a new standard to emerge. The 90 day window is gone, but day-and-date streaming and wide theatrical feels unlikely too. Something along the lines of Comcast’s 3-week PVOD feels like the best bet for what all studios eventually commit to. But don’t hold me to that: the studios will settle on one standard, but precisely what is too hard to predict.
Other Contenders for Most Important Story
Viacom’s Stock Rise…and Fall?
A few weeks back, I noticed that ViacomCBS had been having a really good year. Their stock was actually up since the merger, which many folks doubted would ever happen. Then last week, as they planned to issue stock to take advantage of the price, a few Wall Street investors downgraded the stock and it went tumbling. In other words, over two years, Viacom’s stock went as low as $14 and as high as $97, and ended up in the exact same spot as the merger price in December 2019:
To make things crazier, now it turns out the stock dropped so quickly because of a highly leveraged hedge fund that had borrowed from multiple places. The story is still evolving, but the rise and fall could be because of this hedge fund, meme stocks and multiple other factors.
The lesson? Don’t pay attention to stock price, and especially not the day to day and even month to month movements. And especially don’t use stock price to tease out larger strategic lessons. If a stock can go as high as $97 and as low as $14, clearly it’s not a very precise signal to use!
Jason Kilar’s $52 million Salary
I wasn’t going to talk about this, but you know what? It is somewhat news. The top man at Warner Media–the man leading the turnaround–is getting paid a tremendous sum to make HBO Max a thing. Is it “worth” it for AT&T?
That’s the crazy part, because honestly I don’t think so. Frankly, I don’t think any top flight executives are worth these salaries.
Think of it like this: who was competing with AT&T to pay Kilar $50 million dollars to run HBO Max? It’s not like Kilar would have that many other opportunities to run a huge multibillion dollar streamer. (Disney wasn’t hiring him, Netflix has Reed and Ted, Amazon had just hired another ex-Hulu manager and CBS seems satisfied with their Pluto team.) Why not offer him just $10 million dollars and the opportunity to run HBO? Did he have better offers? Who was AT&T bidding against?
Or look at it from this angle: how many other folks would want this job? That’s the craziest part of this. There are hundreds of executives who would want and are qualified to have his job. And desperate to have it too.
In short, I don’t understand executive compensation. The ROI seems atrocious.
M&A Updates – Cable Companies Merge in Canada
In a sign that–despite what I’ve written–renewed antitrust enforcement isn’t on the table, up in Canada, the biggest cable companies are merging. Read about it here.
When I sit down each week to pull data for the “Streaming Ratings Report”, it honestly feels like Easter. (Why Easter? Well, we’re closer to that than Christmas and my eldest child is excited for candy delivered in plastic eggs.) This week, my chocolate-filled egg was a new color on the Nielsen rankings. That’s right, a new color!
Check it out yourself:
For the last few weeks, the top ten has only been Netflix and Disney+. The other two big players, Hulu and Prime Video, haven’t had any shows or films make the list. Prime Video’s last entrant was One Night in Miami in January. Hulu has never made a Nielsen top ten list. Until now! Since I color code each streamer, seeing a new color in the chart made me irrationally happy.
(Reminder: The streaming ratings report primarily covers data from Nielsen’s latest report, which covers the week of February 15th to 22nd and is United States-focused. And due to an unscheduled childcare issue, this report is a day late.)
This week was a down week for Netflix on the TV side. The two big series we covered last time had their expected week 2 and week 3 drop-offs, which the weekly top ten data indicated. Moreover, the two new releases of the week would have failed to chart in Nielsen’s “top ten”, if it still combined originals, acquired and film in the same list. (That’s my current back of the envelope for whether something launched well.)
Let’s dig into one of those to put a little bit of context on Netflix’s overall viewing. Specifically, The Crew, a Kevin James helmed, NASCAR themed sitcom of 10 episodes, averaging about 27 minutes per episode. For the week, it netted 9.3 million hours in total. Which, in context, is about half of what Firefly Lane and Crime Scene did last week. Even worse, it was launched on a Monday, so it doesn’t have the “we only had three days of data” excuse.
What fascinates me, and should fascinate you, is that this is a “Kevin James” series. Sure, many reading that will be like, “Yeah, I don’t get what the deal with him is.” Fair enough but he did helm this:
That’s right, he was one of the building blocks of CBS’ monster sitcom and procedural lineup of the last two decades. (Also, I ride and die for the underrated Hitch.) That said, his last outing on CBS only lasted two seasons, Kevin Can Wait:
Let’s venture a comparison. With the tremendously huge caveat that streaming is fundamentally different than linear viewership, it is notable that The Crew had fewer than 10 million total hours viewed. We don’t have an apples-to-apples way to compare a full-season of live viewership to one week of binge viewing in a precise way, but no matter how you do it, this show likely stalled out in the middle of the streaming race.
Think of it like this, if 10 million Kevin James fans tuned in, then they watched about two episodes each. Or only 2 million tuned in and watched all ten episodes. In other words, the show either had a small initial audience or low completion rate. Or middling for both. And since this is streaming, the show will rapidly decay in viewership. This was its only shot, short of a second season, to get viewership.
In comparison, CBS can still get 7 plus million viewers to watch Young Sheldon. And that’s just one day of viewing:
What tentative—and very cautiously tentative—conclusions can we draw here? The Crew likely didn’t launch due to some combination of 1. It didn’t work creatively 2. Netflix still doesn’t index well with the typical “CBS demo” and 3. Kevin James on his own isn’t enough of a draw. If I had to pick, I’d go with one, especially since Netflix released it on a Monday, which is as close as they get to “burying” a show, though explanation two intrigues me.
Other Quick Notes on TV
– Good Girls—the NBC Universal owned, NBC aired—release on Netflix drove it to the top spot in TV. Want to know why Comcast/NBCU are so heavily invested in Peacock? It’s seeing viewership like this on other platforms. Shows clearly do have a second life on Netflix, and traditional channels now want to own that second life.
– WandaVision had its highest week of viewership yet, breaking 12 million total hours viewed, up from around 10 million the week before. A sign of a “great” to “elite” TV series is that it can grow its audience in season 1. (Elite series then grow the audience season over season.) WandaVision is doing that, and all evidence is that it will peak with the season finale. (It is unclear if WandaVision will have a second season.)
The big winner this week was Netflix’s I Care A Lot. Until I build my “historical” film comps—a trickier task than you’d think—I recommend this rule of thumb: “Did a film make into the top ten?” Even better, did a film make the top ten after launching on a Friday (Extraction, Spenser Confidential, The Old Guard, The Christmas Chronicles 2)? This week, I Care A Lot joins that crew, which means it had a good launch in the US.
From there, take a gander at the film in the second spot on Nielsen’s “Top Ten Films”. (As a reminder, Nielsen releases three top ten lists each week, with their definitions of “original TV”, acquired TV and film.)
Flora & Ulysses beat my expectation and made it onto the top ten list, but only with 4 million hours viewed. Back in 2019, I predicted that Disney could cut into Netflix’s then dominant streaming position with kids. The performance of Flora & Ulysses, along with the library titles like Frozen and Moana is what I meant. Though let’s not get too crazy. At only 4 million total hours viewed, F&U is clearly a kids title, not a four quadrant blockbuster.
What about Nomadland, the other new entry? Well, it was pretty far from making the top ten list. For an Oscar nominated film—not at the time, but now—this isn’t terrible. Most “prestige/critically-acclaimed/awards-contending” dramas simply have limited upside. Still, at least Hulu finally had a piece of content make the “top 30” list. It will be fascinating to see if The Handmaid’s tale fourth season will crack the TV list this April.
Other quick notes on Film
– Want some back of the envelope logic? Well, we know that Hulu’s Run opened Friday November 20th, and Hulu touted it as their “most watched” film of all time. They didn’t make the same claim for Nomadland. Thus, Nomadland is Run’s total viewership “floor” at 2.3 million hours and 7.6 million (the lowest total on Nielsen’s top ten from the week of November 16th by NCIS) is its “ceiling” in total minutes viewed. In other words, between 2.3 and 7.6 million people watched Run in its opening weekend.
– War Dogs had the second week decay we expected and will likely drop off the top ten next week.
– The presence of Avengers: Endgame is not an accident. It is Marvel’s highest grossing box office title of all time, and it is the first MCU film to make the Nielsen top ten list. As for what’s driving this? Who knows. It could be WandaVision motivating some fans or just the general weakness in the film slates across the streamers. But as for a point I will often make: box office predicts popularity in the long term. Thus, if you were to guess the most popular Marvel film on Disney+, guessing the highest US box office grosser of all time would be the correct guess.
– Oh fine, is there a Netflix point with the Avengers: Endgame performance? Sure, this is 2 million hours of viewing that previously would have lived on Netflix. Moreover, I remain convinced that the top library titles on Netflix were Disney films of some sort or another. Avengers: Infinity War, likely, was a huge title on Netflix in 2019 when Endgame was first released in theaters.
– At the end of each quarter, after their earnings report, I’ll dig deep into Netflix’s “datecdotes”, when they provide the number of subscribers (“households”) who watched two minutes or more of a given show or film. They’ve released a few this quarter so far, but the most notable American example is Yes Day starring Jennifer Garner, which was seen by 53 million households globally in its first 28 days.
Coming Soon!
– Battle of the Superheroes! Last weekend, The Falcon and Winter Soldier went head to head with The Snyder Cut remix of 2017’s Justice League. Given the buzz, both will likely make the Nielsen top ten when it is released in four weeks, if Nielsen is tracking HBO Max by then. The caveat is that the buzz was definitely for Justice League, so it may have over-indexed in buzz that didn’t translate to viewership:
– Speaking of Nomadland, the Oscars announced their candidates for “the year without films, the 2020 Academy Awards”. Closer to the show, we’ll review the available data to figure out how popular these films were. (Another reason we need a “streaming box office” report.)
Last week the NFL media rights story went from “potential” to “actual” news. (The latter happens, the former is rumors.) Not to toot my own horn, but I wrote last week that the Disney-NHL deal would set the template for the NFL deal (and all future rights deals). And I was right.
That’s our story of the week. Which is a bit delayed because, frankly, March Madness basketball slowed me down.
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Most Important Story of the Week – The NFL Media Rights Grow 5.9% Per Year and Go Digital
Editorially, the NFL didn’t help me out. I had hoped the NFL would take a few more weeks to finish these deals, so my weekly column wouldn’t cover sports two weeks in a row. Last week’s column explored the strategic issues for all parts of the digital video value chain. This week, I’d like to provide a bit of context to the specific numbers for the NFL, speculate about the two remaining wild cards in the NFL media rights package, and give my overall thesis. In short, a bit of an “odds and ends” column.
Bottom Line: This Deal Isn’t “Earth Shattering”, But “Evolutionary”.
The NFL signed a big rights deal that we all knew was coming, and most observers assumed that all the major linear channels (Viacom, Fox and Disney) would insist on digital rights as well. Which is the deal we got. Did this stop some outlets from hyperventilating that this deal would “end the bundle as we know it”?
Of course not.
Will it? Not really. If “earth shattering” means to figuratively have the Earth break apart like Alderaan in Star Wars, then this deal is not that. Unfortunately for narratives, most business trends resemble the slow but steady movement of the continents rather than earth-destroying super lasers.
For the vast majority of customers, they can (and will) watch TV mostly how they have before. Amidst this, TV consumption is slowly changing, as more Americans cut the cord. More but not all. As I often remind readers, though, this rate is still in the single digits percentage-wise. In 2021, cable “only” lost 6 million subscribers. Yes, this is a shrinking business, but the majority of TV viewers use cable or satellite to access TV.
This deal matches that slow evolution, not the online narrative. Since many customers are digital only, the NFL needs to reach them and ESPN+, Paramount, Prime video and Tubi provide that reach. But there are still so many traditional customers that the NFL can’t blow up the linear bundle entirely. Again, think “tectonic shifts” not “earth shattering”.
(This is the “aggressively moderate” take versus the “headline grabbing soundbite” take.)
Whither Sunday Ticket?
Partly, I’m a bit disappointed that Sunday Ticket, the subscription service that lets DirecTV customers watch every NFL game, hasn’t been awarded to a suitor. Given the sorry state of DirecTV’s finances–they were just spun off from AT&T–it is unlikely they will renew this extremely expensive and exclusive contract.
So who grabs it? Amazon is often rumored, but likely the NFL has concerns that Amazon alone doesn’t have the reach to justify a deal. Neither would any one cable company, since no one cable company covers all of America. (That’s why the deal made so much sense for DirecTV, since every house was a potential customer.)
Hence Sunday Ticket is a “wildcard”. I think that the NFL could actually generate more revenue by letting multiple MVPDs and OTTs sell it as an add-on, for a given up front fee and splitting per customer revenue. (Say ESPN+, Apple TV+, Peacock, and Prime Video, plus any cable provider.) But that is much riskier for the NFL overall. The NFL prefers a big upfront paycheck, which may lend itself to one big (likely tech) player going all in. We’ll see which way they go.
Whither NFL Network?
One of the rumored sticking points in Thursday Night Football to Amazon was whether the deal was totally “exclusive”, meaning on every platform, or “digital exclusive”, meaning the only digital provider, as it was the last few years. The answer is the former, as TNF will leave its sometime home on the NFL Network. Losing an actual live sporting event will hurt the NFL Network’s negotiating position in the future, so conceding the point likely means the NFL knows the smaller linear sports channels days are numbered. Plus Amazon doubled the price tag, which likely makes up for the loss.
That said, there is the caveat that in their Press Release, the NFL said the NFL Network will carry some games. Hmmm. It will be fascinating to see what and how often these games show up on the calendar:
Amazon Will Syndicate Airings to Local Broadcasters
That said, here’s a fun point: Amazon must syndicate rights to local markets for Thursday Night Football. That’s a footnote with big implications I didn’t see highlighted in the coverage!
In other words, if hypothetically the Los Angeles Rams play the Kansas City Chiefs, a local broadcaster like KTLA could buy the rights for Los Angeles. In fact, Amazon must sell the rights to someone. Same for Kansas City. Everywhere else? They have to go to Prime Video to watch that week’s games.
How much does this decrease the overall value? Somewhat. Diehard NFL fans will tune in to Prime Video. But the casual fans who only follow their team will have a non-Amazon option, which does decrease the upside for Prime Video. Does this make it a bad deal for Prime Video? Probably not. They still need to convince people to use Prime Video on a regular basis, and sports offer that opportunity.
This isn’t a “108%” increase, but a “5.9%” per year increase.
Whenever a big sports deal is announced, the league loves to celebrate the huge increase in price. Often announcing it “doubled” the previous deal. What they fail to mention is that the previous deal took place ten years before, so it doubled over ten years, which is less impressive. Since 2010, the S&P 500, for example, has gone up 249%, so if a sports right deal doubled in value, that’s less impressive than the just basic growth of the stock market!
I wrote about this before, here or here. How does this apply to the NFL? Well the previous deals were signed in 2014, roughly, meaning 9 years. Using the prices per year–from this great Sportico article–the actual per year increase is from $5.67 billion to $9.46 billion. That’s a combined annual growth rate (CAGR) of 5.9%, or an average growth rate of 7%. Still really, really good to grow revenue by 5.9% per year! But not nearly as eye popping as 108% growth sounds.
For new readers, here’s the picture of what I call the Video Value Chain in all its glory.
The last two weeks, I’ve written about the Digital Video value chain. Here is that laid out in all its glory for those who don’t know:
What did the Twitterati have to say?
Every so often I collect your thoughts on Twitter. Here are the best hot takes I found:
Context Update – Antitrust Heats Up as Biden Appoints Lina Khan to FTC
Mergers & acquisitions are fun to write about. You get to imagine two companies putting together their combined business heft and dominating a new industry, or presenting a unique new value proposition. Ignore how often the mergers fail to deliver the expected value in real life; on paper they’re fun! (Especially compared to building a real strategy, which is often much harder.)
This game was especially fun over the last four decades, as US and global regulators mostly allowed every deal to pass through. (There are a few exceptions, like Comcast and Time-Warner Cable and AT&T and Sprint, but they are vastly the exception.) But has the tide turned on antitrust? And does the business community have an accurate gauge on that yet?
Maybe not. That’s my outlier hypothesis right now. As I wrote last November, whether or not Democrats will fundamentally change antitrust enforcement (from lax to aggressive) depends on President Biden’s appointments. On this front, he has been mixed. Some appointments are traditional (meaning lax) corporate lawyers. Others are strong advocates for renewed antitrust enforcement. Some advocates for stronger antitrust enforcement were disappointed when Biden nominated Rohit Chopra for head of the Consumer Financial Protection Bureau, since he was very aggressive on antitrust as a member of the Federal Trade Commission. Then Biden nominated Lina Khan to the FTC. She’s just as fierce of a critic, and a protege to Chopra, . Khan helped write the House Subcommittee on Antitrust report on Big Tech last year, and is a rising star. She’ll likely be a strong advocate for increased scrutiny on future mergers and acquisitions.
Toss in economist Tim Wu joining the White House Council of Economic Advisors, Chopra’s commitment to enforcing rules at the CFPB, and the Senate weighing new antitrust bills that may–but likely won’t–have bipartisan support, and I see a changing landscape. Heck, when a Republican Senator writes an op-ed in favor of unions, anything is possible!
Yet the business community isn’t ready for this outcome. After a down year in deal-making due to Covid 19, they’re ready to get back on the merger train. (Speaking of, two big train companies want to merge.) Writing in his newsletter, Matt Stoller noted:
So what is the most likely outcome? Well, deal making won’t slow down until the Biden Administration sends even clearer signals that it will stop deals from happening. I expect this will start first with increased scrutiny on “megadeals”, those over $5 billion in value.
As for entertainment, this biggest potential impact is that Big Tech will be a pinch more worried. (Big Tech being at least Apple, Google, Facebook and Amazon, maybe Microsoft, maybe Netflix.) Sure, maybe increased antitrust scrutiny won’t come for train companies, but clearly Big Tech is in the crossfire. This could hamper the long hoped for M&A spree of Big Tech on smaller media companies. That would change a lot of potential strategy.
Other Contenders for Most Important Story
Netflix May (Huge May) Crack Down on Password Sharing
To continue the game of the last two weeks, is this “actual or potential” news? Every few months something about password sharing and Netflix circulates on the Twitter (and then news websites) rumor mill.
Is this one different? Maybe. On the actual side, Netflix is genuinely running test messages telling customers to not share passwords. On the potential side, Netflix hasn’t actually limited password sharing to one household yet either.
Tubi May Produce Original Programming
Because of course they will. Everyone is making originals. However, paired with the news that Tubi will carry Fox NFL games, clearly the remaining pieces of Fox post-merger with Disney (Fox broadcast, Fox Sports and Fox News) see Tubi as the future.
Alibaba May Have to Sell Media Businesses
For a perfect example of a “potential” news story, see this Alibaba news out of China. Sources say that Alibaba may have to spin off media businesses to stay on the Chinese government’s good side. Let’s wait until this actually happens, but China seems to be cracking down on media consolidation by Big Tech in their backyard.
Walmart Considering a Smart TV Device
Walmart has a confusing approach to the Digital Video/Big Tech “dust up”, as The Economist recently described it. (Tech is having a dust up whereas entertainment is having a war.) A year after buying Vudu and then selling it to Comcast, Walmart is back exploring if they should manufacture/brand a streaming stick under their brand.
The WME IPO is Back!
Buried in the news coverage was the return of the WME IPO, derailed by Covid-19 and a weak economy last year. Will it stick this time?
Lots of News with No News – March Madness
I’m sure I’ll stumble across articles either bemoaning, celebrating, worrying or any other emotion over the ratings for March Madness this year. Whatever they are, folks will likely use them to justify their preexisting beliefs on the future of TV, digital videos and the streaming wars. (Apply this to awards shows too if you’d like.)
I, meanwhile, will enjoy the tournament and how well the Pac-12 is dominating, especially my Bruins. Let’s hope they don’t delay any more columns!
As often happens in scientific/data endeavors, sometimes you work for hours/days on a project with no results, then, all of a sudden, it comes together and you make tons of progress rapidly. And usually the “tons of progress” doesn’t happen without the days of drudgery.
That’s what happened to me over the last week or so. After a few days of struggle, yesterday morning I had a breakthrough. Which delayed publishing this article. Unfortunately, most of the benefits won’t be immediately obvious, as they’re updates to my backend system to help me analyze more data better and faster. (Don’t worry, a few juicy tidbits make sneak in this week.)
(Reminder: The streaming ratings report primarily covers data from Nielsen’s latest report, which covers the week of February 8th to 14th and is US viewing only.)
Television
If three words define my goal for this report, they are “Context, Context, Context”. You can go to the trades to find a summary of Nielsen’s data. This week you would have learned that the top two series (again for the week of February 8th to 14th) on Netflix were Firefly Lane and Crime Scene: The Vanishing at the Cecil Hotel with nearly identical 21.4 and 21.5 million total hours viewed.
So the question is: are those good or bad numbers?
Well, thanks to the data work of the last week or so, I think we can start to provide some answers. Context!
Let’s start with the new launch. Using my Nielsen database, I collected all Netflix “first run”—meaning Netflix Originals—series in my database going back to March 2020. Why season one/limited series only? Because it just isn’t “apples-to-apples” to compare The Crown, which has 40 episodes as of this writing, to a show with only four. (This was only one of the data projects of the last week.)
According to Nielsen’s data, 23 TV series netted a spot on a weekly top ten (in 2020) or top ten “originals” spot (in 2021). Of those, Crime Scene did phenomenal. It had the third strongest opening in total hours viewed and the second strongest opening for series in the “viewership per episode” metric I also calculate. Here’s the total viewership of those 23 series:
Pretty good!
But there’s a catch. (With data, there always is.) In addition to the “season” launched, I added the day of the week. Thus, I can cut the data in quite a few different ways. In this case, see if you can spot my thesis:
Yep, I arranged the new series by release day of the week.
Why does this matter? Nielsen’s data covers a week worth of viewing, but that means that shows released earlier in the week have, by dint of time period measured, more of a chance to succeed in the rankings. Thus, we need a new metric, one I’ve used before called “average viewership per day”. Here’s that look in chart form:
Takeaways? Well, yeah Crime Scene is one of Netflix’s bigger hits. More impressively, it did that with a very small number of episodes. But the extra few days of viewing definitely helped. Toss in the small number of episodes, and it will likely decay quickly. (As have past true crime documentaries.) We’ll watch for that. That said, Netflix does have a true crime niche that clearly is working. And it is likely much cheaper to make true crime docs than big budget scripted TV.
What about our second big series, Firefly Lane? It had a big second week. Again, the question is, how good is 21.4 million viewers in the second weekend?
To answer this, I pulled the second week of data for the 30 first run Netflix series with Nielsen data in their first or second week of release. That gave me this table:
Of the 15 new series (season 1 or limited) launched since March 2020, Firefly Lane had the eighth best second weekend. However, unlike many other series which grow their audience into the second weekend, Firefly Lane was essentially flat. Using “viewership per day”, it declined 30%, when the average series drops only 23%. Bottom line? It is a good show, and maybe a great one. But it isn’t “elite”, like Bridgerton.
(For those who are curious, I have data for 33 first-run TV series. 7 series in the data set had an opening weekend in the top ten, but then dropped off week 2 and 8 series didn’t make the list in their first week, but did for the second. Two didn’t have numbers until week 3 and one series I don’t have data for its second weekend, Tiger King.)
Also, using the weekly top ten data, do we think these two shows will hold on? For Firefly Lane, yes; for Crime Scene, no. Crime Scene could, though, outperform Firefly Lane during the week of February 15th.
As I said above, we’re just scratching the surface here. As Nielsen continues to publish three weekly top ten lists, our ability to judge successful launches (and bombs/busts) will only grow.
Other Quick Notes on TV
– WandaVision added it’s sixth episode, and grew its total viewership to 9.9 million hours from 9.8 million the week before. That’s impressive, and it will be fascinating to see if Falcon and Winter Soldier mimics that growth. In other words, part of my thinks that something like 7-9 million folks are watching just one episode on Disney+, which would make it one of the most watched series by unique viewers.
– In the sign of a down week besides the top of the charts, Lucifer made its first appearance on a top ten since new episodes came in August, showing up as the tenth series in the “Originals” top ten list, with 3.2 million hours viewed.
– Looking at the releases by weekday, you can see above that Wednesday really is “true crime” documentary day on Netflix, with releases like Fear City, Jeffrey Epstein: Filthy Rich, Night Stalkers and Crime Scene.
– Regret the Error 1: When new episodes of Cobra Kai premiered, I changed the label from “second run”, meaning episodes premiered on Youtube TV first, to “first run”, because new episodes premiered on Netflix first. But I didn’t update weeks three to five, so my data table made it look like it dropped to zero. That’s been fixed this week.
Film
The big Netflix original launch for this week was the third part of To All The Boys I Loved Before. I’m not ready to deliver as much context for film as TV this week—trust me, we’re getting close—but since Netflix released it on a Friday, To All The Boys will likely take the top spot in next week’s Nielsen rankings. (For this week, I cut all films released in 2020 to focus on new releases in 2021 so far.)
As for the third weekends of the two films we monitored last week—The Dig and Finding ‘Ohana—both are still on the list, but decaying week over week as expected.
As for films we didn’t expect, the top film on streaming wars…checks notes…looks it up on Wikipedia…squints eyes in confusion…checks notes again…War Dogs. Yes, the Miles Teller and Jonah Hill helmed, Todd Phillips directed, drama from 2016. It was new to the platform and got the “new to Netflix” bump.
Here’s the consolidated top 30, which shows how light film was compared to TV this week:
Other Quick Notes on Film:
– We had another international film to make the top ten film list, Space Sweepers from South Korea with 2.3 million hours viewed. According to my data, this is the first South Korean film to make the Nielsen rankings.
– Oh, and we have one of the first non-kids Disney+ films to make the list, Avengers: Endgame, also with 2.3 minion hours viewed. This reinforces one of my working theories that, when they were on Netflix as part of that huge output deal, the Disney films drove tons of repeat viewership.
– Regret the Error 2: I jumped the gun on Malcolm & Marie (M&M), but luckily I wasn’t too wrong. During Super Bowl weekend, I made a note to myself that M&M was going up against that big sporting event. But then, researching for my database, I saw on Wikipedia that M&M had a limited release in theaters on January 29th, and somehow recorded that as its release. In reality, Netflix released it on February 5th, the Friday before the Super Bowl. Thus the Nielsen ratings from February 8th-14th cover M&M’s second weekend of release and I previously wrote that Super Bowl weekend was its second weekend of release.
To compound the mistakes, my article last week was confusing in that I transitioned from a bullet point on M&M into a bullet point on The Little Things, without clarifying that I had switched films. For clarity: Malcolm & Marie was a Netflix film, but starred the talent from HBO’s Euphoria (lead actor and director). Meanwhile, The Little Things was Warner Bros’ second release on HBO Max and theaters simultaneously. With that context, here’s the Google Trends chart I showed last week:
The unfortunate thing is that we don’t have data on either film—Malcolm & Marie on Netflix and The Little Things on HBO Max. Nielsen doesn’t track HBO Max yet and M&M likely didn’t have enough viewership. We can extrapolate that for M&M its interest/buzz (as shown by Google Trends) clearly exceeded its actual performance (as shown by the lack of Nielsen data).
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I love when a weekly column like this ends up having a “theme”. This week, that’s the difference between “actual” and “potential” news stories. The former are things that happen: a movie opens, a company launches a new product, or a studio head steps down. “Potential” news stories are all the things in the news that may happen: a company may be putting itself up for sale, a studio head is considering leaving or, most commonly and consequently, two companies are negotiating and are close to announcing a deal.
In the last few weeks, we’ve seen the difference between actual and potential stories play out with sports rights in particular. The NFL had quite a few “potential” stories, from a potential deal with Amazon (still not finalized) to potentially poor negotiations with Disney for Monday Night Football (also not finalized as of this Monday morning the 15th of March). Then, in the middle of last week, with no forewarning–that I saw–Disney and associated sports entities (ESPN, ABC, Hulu and ESPN+) and the NHL announced a 7 year, 2.8 billion sports rights deal with the NHL. That’s actual news! And it’s our…
Most Important Story of the Week – ESPN Grabs NHL Rights for Pay TV and Digital
Gosh I love this story. It combines sports with almost every part of the “digital video value chain”. First, I’ll go over the basics–if you missed them–and then the ramifications, from the most disrupting digital to the most disrupted linear.
First, Andrew Marchand delivered the basic facts in a tweet:
Marchand later adds that Disney is going to raise the price of their bundle from $13 per month to $14 upcoming, partially my guess is to pay for this deal. As John Ourand points out, this deal only covers some of the NHL’s content output. Potentially up for grabs are the NHL Network, NHL.TV, their digital OTT service, more national games for broadcast (about 20) and whatever happens to regional sports networks (RSNs).
The remarkable thing, overall, is how close this deal is to what I expected for the next round of sports rights. The rights are shared between linear and digital. And the deal is with a partner who can offer both linear and digital distribution, Disney. Some games will air exclusively on digital, but the crown jewel playoffs will air on ABC (and maybe simulcast ESPN+). Moreover, the rights aren’t on a league-owned platform, but part of the Disney bundle.
I can imagine that some of you won’t think the NHL is that big of a deal. But frankly, it is one of the four major sports leagues in the US, even if it is clearly fourth. Or fifth if you put college football ahead of it. Which is barely amateurism anyways. (Commentary!)
Let’s review the impact on each part of the value chain and speculate about what this deal may say about the future of sports rights.
Digital Streamers – ESPN+ is the first third-party streamer to grab sports rights for a major professional sports league.
The non-NFL professional sports leagues had dabbled with owning their own streaming sports applications and channels “over the top”. Indeed, an MLB subsidiary, MLBAM, created the application for baseball. The MLB then spun off this into BAMTech, which Disney bought to become the backbone for Disney’s streaming business. However, most of those league-owned applications are niche streamers at best. Because the true power of sports is in a bundle of sports in a bundle of content.
Clearly, ESPN wants to deliver that sports bundle in the 21st century, the way they delivered that content for linear cable in the 2000s. I expect this trend to continue and most league-owned streamers will eventually fold or get purchased by larger sports streamers, as ESPN and Peacock have already done.
Traditional Broadcast – Still Not Dead…Yet.
I thought the sports leagues would avoid going “digital only” because the risk is that you lose quite a bit of eyeballs in the process of collecting extra revenue. As I wrote when Peacock secured the WWE streaming network, the risk of any league is that if only the hardcore fans follow you to a very small channel, your brand suffers as casual fans drop out.
Hence, most leagues are looking for a partner who can offer both digital natives and traditional viewers content. As big as cord cutting is–a point I’ll make repeatedly–more folks have traditional cable than do not have cable in America. (See below) As a result, the traditional players still seem best positioned to secure sports rights for this round of negotiations.
A traditional player and Big Tech company could partner to offer both digital and linear rights. But given that Comcast, CBS, AT&T and Disney all own streaming platforms, they won’t partner with a tech platform. That leaves Fox. The challenge then is “exclusivity”. Since having exclusive content drives so much of the value, splitting rights doesn’t traditionally work. Even then, it would make more sense for DAZN or Amazon to buy a linear channel than vice versa.
By the end of the decade, this could change. For now? I’d keep betting on most major sports deals to happen with the traditional players, but with digital rights included.
Traditional Cable – ESPN is still the behemoth.
ESPN was a must carry channel in the cable ecosystem. As such, it commanded the highest prices for customers in the traditional bundle. When it added the SEC Network and Longhorns network, it only entrenched this position further.
Traditionally, the focus is on the value of games. What is more fascinating is how ESPN did and does drive coverage outside of games. Frankly, with the NHL owned fully by NBC, ESPN downplayed its coverage of hockey. It covered Stanley Cups and the playoffs, but highlights took a backseat to the other sports. Some have speculated that this hurt the NHL’s brand and I agree. Will ESPN’s coverage of hockey increase after his deal? Probably.
As a result, any league, professional or amateur, needs to have some presence on ESPN. To have that share of voice. That said, I like having a second partner as well to keep prices honest. Take the NHL on NBC. That still gets a ton of publicity from NBC to drive the coverage. If I were advising sports leagues, I’d say your best bet is to be on ESPN in some capacity, but have a back up partner who is incentivized to drive your product, like either NBC/Peacock or TNT/HBO Max.
The NHL Network – At risk.
John Ourand covered this best, so I don’t want to steal his point and will just quote him:
“…if you read between the lines, the future of that network does not look so rosy, especially since Disney’s high-respected affiliate team no longer will be handling its carriage deals.”
Meaning it could go away. Speaking of disappearing cable channels…
Regional Sports Networks – Unclear, but potentially very bad.
A big wild card for me is what happens to the regional sports networks now. Most NHL, NBA and MLB teams own their local viewership rights. (The NFL controls national broadcasts since their supply is much more limited.) Regional sports networks first disrupted local broadcast channels by buying these rights, with some college rights throughout the 2000s. Ultimately, several teams disrupted the RSN disruptors and launched their own channels. (The Yankees and Lakers being arguably the two biggest.) As the bundle starts to collapse, RSNs will likely be one of the first casualties. (Though don’t guess when. Predicting the future can be easy, predicting when is very, very hard.)
My question about this deal is how many of these ESPN+ games are inventory previously dedicated to RSNs. If the answer is “all of them”, that’s a lot of lost content for RSNs to lose. My guess is that ESPN+ will have out-of-market rights. That obviously dampens a lot of the value for customers, since most fans still care about their local team first and foremost.
Was this a good price?
Uh, I don’t know? It was definitely a jump in price, the way all multi-year deals are. Specifically, the deal from 2013 with NBC was for about $200 million per year for seven years. This price alone doubles that price, and the NHL still has more games to sell. Overall, though, I’d say this is inline with past price increases. As for whether ESPN+ can make that back for Disney, maybe, but not by itself. Meaning this is a stepping stone deal in some ways.
What’s Next?
First, ESPN+ has a head start on everyone, including DAZN. They’ve managed to leverage their power position as ESPN to start securing OTT rights. That’s a big deal. But they can’t and likely won’t stop here.
Second, all eyes turn back to the NFL. Seriously guys, make a deal for something! My best guess is Disney and the NFL do a similar deal for Monday Night Football, and it likely mimics the key components of this deal, with digital and linear rights. Though don’t put it past Disney and friends to do something crazy with NFL Sunday Ticket.
Third, Amazon still wants NFL rights. The most likely outcome is they get more Thursday Night Football, but they could be the first digital only deal. But I doubt it. The NFL Network is more valuable than the NHL Network, and the NFL doesn’t want to hurt that value prematurely. Likely, a split-deal (not exclusive to digital) is still the likeliest outcome.
Fourth, since most biz executives are naturally conservative–in temperament, not political leaning–I expect most leagues will copy the NHL and ultimate NFL deals in their rights deals. However, between Disney, Comcast, AT&T, ViacomCBS, DAZN, Amazon and any wildcards I may have missed, the leagues should all drive higher prices for their content.
Lastly, customers will see all this in their digital streaming bills. As Andrew Marchand pointed out, the Disney bundle will be up to $14 after this deal is done, for Hulu with ads. In other words, as Disney bundles sports, some of that cost will be passed along to customers.
Entertainment Strategy Guy Update – Should Netflix License Its Content?
If you want a perfect example for why I wait to call a story news until it actually happens, here’s a headline from this very website last May I stumbled upon this week as I was updating my website:
But you’ll notice, since that headline, Apple hasn’t actually bought a library. I jumped the gun. The premise was so sexy, I wrote an entire column on it. But I was wrong! (The strategic logic though is still spot on.)
I feel the same way for the huge headline dropped by The Information this week:
First, The Information is definitely filling the void by the general move of the trades away from breaking stories. Since The Information is subscription-driven, not FYC advertising driven, they can drop a few bigger tidbits every so often. Credit to them for this scoop in a series of scoops.
That said, I don’t want to go too far in calling this actual news, since, notably, we haven’t actually seen the goods. Netflix may ultimately license their wholly-owned series into second windows, or they may not. Or this story may be something less groundbreaking, but still interesting. Until we see a big series arrive on another streamer and/or linear channel, this is just a “potential” story.
But I had some quick thoughts.
– This may be cover to explain why some “Netflix Originals” will end up on other services/channels. For example, Orange is the New Black. That’s a show owned by Lionsgate. Essentially, Netflix has to pay to keep it streaming after a certain number of years pass. (We don’t know specifically.) Earlier shows like OiTNB had shorter hold back than some recent series, so it’s a show I’m keeping my eye on. Netflix could have leaked this story to help explain why more and more licensed shows end up elsewhere.
– The math here is pretty simple. If a show is worth more to someone else than it is to you, you sell it to them. Netflix benefitted from this for years; it was worth more to Netflix to license big movies to its service than it was for movie studios to keep them in the vault or on cable/home entertainment.
– The converse could also be true now. Some linear channels or streamers could benefit more than Netflix by leveraging the buzz/awareness Netflix built for a show like Grace and Frankie or OiTNB to get some subscribers. Given the volume of new releases on Netflix and how most shows seem to disappear into their morass of library content, I could see content being more valuable off Netflix.
– The Marvel angle. Does everything revolve around Marvel? Maybe. The story to monitor here is when all these series with “Marvel” in front of them return to Disney, who owns them outright. Do they end up in the Marvel tab in Disney+? That’d help flesh out the Disney+ offering. I’d have said DIsney wouldn’t do this, since they could want a coherent MCU offering, but then they put the X-Men films onto Disney+, and even a Fox X-Men character–spoiler alert–in WandaVision. Given the commanding negotiating position of Disney in all negotiations, these Marvel shows could leave Netflix sooner than you’d guess.
– This article only referenced selling subsequent windows of content, but you have to wonder how far a revamped theatrical window is. Given that all the streamers have different windows, something could be worked out with one of the theater chains for some content.
If this happens, I’d call it both a big deal and the right strategy by Netflix. Clearly, this is a firm focused on cash flow positivity from here on out. Nothing is more cash flow generating than joining the content licensing biz. We’ll see if it happens.
Other Contenders for Most Important Story
Disney Investor Day: Disney Passes 100+ Million Subscribers; Will Close Some Retail Stores
The Disney streaming business chugs along, and they announced that they passed 100 million subscribers. I don’t have a lot of strategic takes on that big news, but Disney is also shutting some of their Disney stores across America. Likely, the explanation is what you think: Covid-19 crushed retail stores, especially malls. Lastly, Disney is planning to reopen Disneyland in California in April as California emerges from lock downs. Taking the balance of these two stories, theme parks have a higher upside than merchandise going forward.
Peacock Joins Hulu and Netflix in Losing Money
What if no one can actually make money in streaming? We know that Netflix lost money for a decade plus, that Hulu lost money for all its owners and all streaming is losing money for Disney. Now we know that Peacock has joined the money losing streaming crowd.
Listen: all new businesses lose money at the start as they gain customers. But the key to valuations is accurately estimating how much money a business will make at full-strength. There is still the chance that streaming video is just much less lucrative than traditional cable. The sooner everyone can make money–and for Netflix go beyond just breaking even–the better for industry valuations.
Pay TV continues Its Losses According to Moffett Nathanson
Every year, Moffett Nathanson produced one of the definitive estimates of cable subscribers in the US, and recently it has highlighted the trend in cord cutting. 2020 was no different, though I will note that the potential acceleration of cord cutting presaged by Covid-19 didn’t really come to pass, as customer losses was about the same as 2019, a non-pandemic year.
AT&T Investor Day
AT&T announced they are expecting 120-150 million subscribers by 2025 and HBO Max’s AVOD option will come in the summer. The AVOD news interests me more, as it really seems like it will complicate their offering for customers. Previously, HBO Max had an easy value proposition to communicate. Well, actually they didn’t. Customers didn’t know if they had it, or if they had to pay and how. Now, customers may end up seeing a bunch of ads. So I’m hesitant to call this a good idea.
M&A Updates – Roku Acquiring Nielsen TV Advertising Biz
This is a small, but fascinating deal. Roku is acquiring Nielsen’s smallish smart advertising business. But in the acquisition, they’re also incorporating Nielsen into their TV measurement, which should make Nielsen numbers more accurate in the future. Axios has the details.
If you read my “Who Won the Month” articles over at Decider—here, here, here, here, here or here—you’re probably wondering where one of my favorite data tools has been. That’s right, I’m talking about Google Trends data. It’s not perfect but when it works, it works wonders. And this week we have just such a job.
The focus of these reports is “streaming”, but streaming ratings don’t occur in a vacuum. Even as cord cutting has accelerated, more folks subscribe to cable TV in America than don’t. Those who don’t usually still steal borrow their parents log-ins when needed. Meaning a big TV event on broadcast could still, potentially, impact streaming ratings.
Was there an event during the first week of February? For sure: the Super Bowl.
(As a reminder, since Nielsen’s ratings have a four week lag, the Nielsen data is from the week of February 1st to February 7th, which includes the Super Bowl on February 7th. At the end, I’m testing a new feature for the series/films premiering between then and now.)
Television
The winner of the week of February 7th was Netflix’s season 1 of Firefly Lane, which sure seemed like a bit of counter-programming to the Super Bowl, at 21.8 million hours viewed in its opening week. It also premiered on a Wednesday, likely to help find an audience before the weekend.
Meanwhile, Disney’s WandaVision is gaining strength week-over-week, rising to a season high of 9.8 million hours viewed, up from 7.2 the week before. (Though Bridgerton still had more total viewership.) How does this compare to some other weekly-released genre series? Glad you asked. Here’s the ratings data per week, along with the “per episode” viewership:
I gave three data cuts, because I can’t decide if factoring in season one episodes or only season two is a better look for an approximation of “viewers per episode”. Either way, the ability for WandaVision to grow its audience and potentially pass The Boys in viewers per episodes is impressive.
Even more impressive? WandaVision is about half the length of The Boys and 3/4th of The Mandalorian. I’m dabbling with a “ratings” score for TV series, which factors in the number of episodes and their length. When it’s ready—tentatively April—you’ll see that analysis.
Will WandaVision’s ratings hold up through the season finale? Probably. Here’s the Google Trends look for the big shows of January:
Tons to unpack here. First, Cobra Kai had a buzzier peak, but you can see that Bridgerton passed it in staying power. This aligns with the Nielsen data, which is why I trust both these sources. Meanwhile, if the Google Trends hold, WandaVision will keep adding viewership just like Disney’s previous tentpole series, The Mandalorian.
At first, I was going to type, “Disney’s hit rate on TV seasons is now 3 for 3 which is incredible”, but that would be wrong. One of the themes of this report will be to look for “dogs that aren’t barking” to quoth Sherlock Holmes. In this case, we forget that Disney has indeed launched other series, even scripted ones like Muppet’s Now. The majority of these have been smaller reality series. The better way to describe it is that Disney has successfully launched every “tentpole” series to date. If The Falcon and Winter Soldier can continue that trend, that’s a tremendous competitive advantage for Disney: Once per quarter Disney+ has a new series that makes it must tune-in for millions of households.
Other Quick Notes on TV
– Kids TV has a bit of a “dogs not barking” situation too. Specifically, whereas Netflix can routinely put kids series into the originals or licensed top ten—Cocomelon, Jurassic World Camp Cretaceous—Disney hasn’t yet. Explanations could be: 1. Disney has many more kids series, so viewing is more dispersed. 2. Kids watching Disney tend to rewatch movies or 3. More kids watch Netflix overall. We’ll need more data to figure it out. (In the meantime, check out Emily Horgan, writing at What’s On Netflix, for deeper look at kids data on Netflix.)
– Blown Away stayed on the top ten originals list of this week, which surprised me. Still its on the downward trend cycle like most other originals.
– Fate: The Winx Saga had a big drop off into its third weekend. It would have dropped off the “combined top ten” list this week.
Film
As I opined last week, The Dig and Finding ‘Ohana did well for Netflix, rising to the first and second spots in the film list. However, the numbers are a pinch misleading. If you look just at the above chart, you’d conclude that there wasn’t much decay week-over-week in the ratings. Au contraire, as I’ve written, “The decay is real.” In this case, if you factor in the number of days the film is available, you see the decline. (In other words, total viewing per day.)
Let’s make a call: were The Dig and Finding ‘Ohana hits? I don’t think so. Truly popular films don’t just top out on the film list, but earn a sport on the combined Nielsen Top Ten list. Neither of these films did that, in the weakest week of 2021 so far.
Other Quick Notes on Film
– Is it just me, or is it genuinely shocking that Malcolm & Marie didn’t make this list? Talk about a “dog not barking”! It’s by the creator of Euphoria, with the lead star of Euphoria. That is about the buzziest show in the world—it won an Emmy!—and their film didn’t crack the top ten on its opening weekend for Netflix.
(Update: After hitting publish, I updated these two sections. Previously, I put that Malcolm & Marie was in its second weekend, when it premiered the Friday before the Super Bowl. Also, the next bullet point was supposed about Denzel Washington’s The Little Things, which was poorly written and unclear. We–meaning I–regret the error.)
– Fine, let’s just call this week the “dogs not barking” edition. The other film with a big January release was The Little Things on HBO Max and theaters simultaneously. But Nielsen didn’t report numbers for it either. In this case, it’s because Nielsen wasn’t measuring it. To get an accurate result, Nielsen needs a statistically significant amount of viewership on a given streamer to make the top ten lists. Right now that only includes Netflix, Prime Video, Hulu and Disney+. They made an exception for Wonder Woman 1984. Instead of Nielsen, Google Trends can give an idea how well The Little Things and Malcolm & Marie did:
In other words, The Little Things did pretty well! HBO Max has kept marketing these films like tentpoles, and awareness is doing really well.
Did the Super Bowl Impact Total Streaming Viewing?
Did the Super Bowl suck the oxygen out of the streaming room? Maybe. Here’s the total viewership of the Nielsen Top ratings charts for 2021, including all numbers, the top 13 (which is we know for certain) and the top five pieces of content:
Likely the Super Bowl caused a down week, but the numbers had been trending down since December’s big finish. Still, the lack of new releases by most of the major studios reinforced the decline. It’s a chicken and egg situation: did the Super Bowl cause down ratings, or did streamers avoid Super Bowl weekend, which caused down ratings
Either way, they were smart to do so. Here’s the Google Trends for the TV series, with the Super Bowl:
Coming Soon!
I’ve started to get some questions—and please send me more! Twitter or email—about some recent releases and my thoughts. Unfortunately, Nielsen has a four week publishing lag, and since I trust it the most, it delays this report. Here’s a sneak preview of major releases I’m monitoring for February to March:
– Raya and the Last Dragon. Last fall, one of my most read articles was this analysis determining how many folks watched Mulan on PVOD for Disney+. Will I replicate that analysis for Raya? Probably. Most likely, I’ll wait until we have the Nielsen data in four weeks.
– Coming 2 America. According to Google Trends, it’s as popular as Amazon and Screen Engine claim. Though I’d love to have concrete data.
– The Snyder Cut “Mistake”. HBO Max “accidentally” replaced Tom and Jerry with The Snyder Cut over the weekend. Which feels almost impossible from a project management work flow perspective. Both Tom and Jerry and The Snyder Cut are on my radar.
– Oprah’s interview with Meghan Markle (and that guy who was with her.) This was hugely popular. Interestingly, while it streamed on Paramount+, ViacomCBS doesn’t own it, Oprah’s Harpo Productions does. Where could it end up on streaming next?
– Apple TV+’s Billy Eilish’s documentary was huge. For them. For whatever that means. Julia Alexander at the Verge splashes cold water on this for us.
