(Welcome to the Entertainment Strategy Guy, a newsletter on the entertainment industry and business strategy. I write a weekly Streaming Ratings Report and a bi-weekly strategy column, along with occasional deep dives into other topics, like today’s article. Please subscribe.
Today’s article is free for all to read. If you’d like to cross-post it to your newsletter, feel free!)
As my tagline says, I try to explain the “entertainment industry and business strategy”, but often that means trying to both explain what’s happening now (especially streaming ratings data) and to some extent, trying to “predict” the future, or at least list off potential futures and their likelihoods.
This often means pushing back against conventional wisdom and trying to inject nuance and detail into what “everyone knows”, especially since it seems like the moment “everyone knows” something in Hollywood these days that thing then becomes untrue a few months or years later.
Yes, things are changing, but at what rate and how fast? Here’s an analogy I’ve been thinking in terms of my own writing. Say in the past, a given thing was a “two” in importance or value out of ten. Now—with “disruption”—it’s a five. Usually, the news reports it as if it’s a “10”. Then say I come along and I say, “Actually, that’s a four.” Well yes, I’m off by one, but that’s much closer than reading articles arguing that “This new trend is a ten!!!”
This isn’t just idle media criticism; it actually matters. If you don’t know what’s actually happening, you can make some really bad mistakes. (I point out one half a billion potential mistake later.)
To close out 2023, I want to share a bunch of “myths” about Hollywood that keep getting repeated, which also serves as a semi-recap of my writing over the last year. It’s free to all, so please share. Share it far and wide if you like. Finally, if you support me or my work, please subscribe! Or give a gift subscription…
Myth 1: Films Should Go Straight-to-Streaming
Reality: Films that Go to Theaters are More Popular
Perhaps my favorite thing I got to write this year was the start to my big ‘ol series “The Data Is In: Theatrical Films Massively Outperform Straight-To-Streaming Films” which I even conveniently subtitled “That’s Right…I’m Debunking One of the Biggest Myths of the Streaming Wars”.
In short, every entertainment company, even massive tech conglomerates, should be sending their movies to theaters before they go to streaming, not just to make more money (and help keep theaters alive) but because it makes the movies more popular. And yes, I’m taking marketing costs into account.
For years, a ton of people argued the exact opposite, mainly because Netflix became the dominant player in streaming without sending their films to theaters. (As if this choice, and not a whole bunch of other, way important factors, led to their rise.) Just this month, in one week, six streamers released seven straight-to-streaming films, at least three of which could and should have gone to theaters.
Yes, some of you are asking, “Hey ESG, didn’t you promise us part four of that series?” I did! And there will be a 2023 data update in the new year, along with some strategy thoughts.
Myth 2: There’s No Ratings! No One Knows What a Hit Is Anymore!
Reality: We Have Streaming Ratings Now!
After “The Data Is In: Theatrical Films Massively Outperform Straight-To-Streaming Films” my most popular article of the year (and actually, all time) was “No, That’s Not a Hit Show: And Other Thoughts on Why So Many People in Hollywood Don’t Realize That We Have Streaming Ratings Now” which I think reflects a very common source of frustration among a lot of news consumers:
We know which shows are hits! We know which shows people like!
But there’s still a disconnect between these very basic facts (which I describe each week in the Streaming Ratings Report and in other columns like my bi-annual articles on the flops, bombs and misses, or the updates on renewals nd cancellations) and the news coverage. At this point, (almost) every entertainment journalist acknowledges that ratings exist, but…
- Many writers (especially for pop culture websites) still want to argue that the unpopular shows that they personally like are actually popular.
- Many analysts still pretend like it’s impossible to figure out what TV shows are hits or claim that it’s impossible to figure out why streamers like Netflix cancel or renew shows.
For 90% of renewal or cancellation decisions, it’s fairly obvious why decisions get made. Sure, there’s always been edge cases or hard decisions (especially when you take into account budgets) but many people’s borderline epistemological nihilism (“We don’t/can’t know anything!”) just doesn’t square with reality.
Related, it’s probably too extreme to say that “no one” has ever canceled a popular show, but as I wrote in my third renewals and cancellations update, popular shows don’t get cancelled.
Myth 3: All Content is Global Now
Reality: Foreign Content Still Isn’t Popular in the US, Most Countries Prefer Content in Their Native Language/From Their Region, But the Global Market Place Still Matters
Ever since Squid Game, many, many, many pundits and reporters proudly proclaimed, “All content is global now !” when…no, it’s not. I’ve written about this for years (six times actually since Squid Game first came out)
In this case, reality is nuanced and complicated. Two things are true:
- Due to technology changes, media companies can compete across the globe now, which means that they’re competing for a bigger potential market.
- But content doesn’t scale globally nearly as easily as everyone was led to believe.
Again, go back to what I wrote in the introduction: things changed from a 1 (foreign content never played in America) to a 3 (foreign shows make up 1-3% of streaming viewing), but the media pretended like it was now a “ten” (“All content is global now!”). And nearly every media company followed the hype and invested globally…and now a bunch are pulling back.
Myth 4: Netflix’s Formula 1: Drive to Survive Made F1 Popular in the US
Reality: Actually, It Was ESPN But Also, F1 Still Isn’t That Popular
For years, I’ve been pointing out that Netflix’s sports docu-series, F1: Drive to Survive didn’t make F1 popular in the US. (It helped, but if anything airing races on ESPN drove the most gains.) But people are still saying this all the time. (I could cite half a dozen examples since Netflix’s big PR push at the end of November to publicize Swing to Survive, which I just wrote about flopping this week in the Streaming Ratings Report.)
I mean, Formula 1: Drive to Survive didn’t even make the Nielsen charts earlier this year. It’s just not that popular.
This matters. Liberty Media reportedly spent a half billion dollars on the race on the Las Vegas strip. And how were local business owners rewarded for this? With half-empty hotels, during a week that’s normally really busy, and the tickets for the event got marked down by 60%.
Myth 5: The “Algorithm” Picks Which Shows Netflix Makes
Reality: Humans Pick the Shows
I’ve written about this twice, in both “The Algorithm is Still a Lie” earlier this year and in “The Algorithm Is A Lie” from last year. In short, despite tons of people complaining about the “almighty algorithm”, there’s no algorithm that picks and chooses shows; humans do. (Netflix has a recommendation engine, but that’s a totally different thing.) Read both articles for all the details—I think the case is pretty iron tight—and it’s pretty obvious that many people (especially creatives) don’t really understand the data limits at play here; there’s just not enough data to make the conclusions that many people think.
In reality, a lot of development execs pretend to have data that they don’t so creatives don’t get mad at them. Yeah, data can help identify certain genres to invest in, but that’s been the case since the advent of cinema.
Indeed, as I cited last fall, in June, Bela Bajaria told a conference, “Algorithms don’t decide what we make…There’s not an algorithm that would probably say, you know what’s a great idea? A period show about a woman playing chess.”
Myth 6: Celebrity Production Companies Are Valuable
Reality: Celebrity Productions Companies Are Overvalued
In another one of my favorite articles of the year, both here and at The Ankler, I wrote about how celebrity production companies (like Reese Witherspoon’s Hello Sunshine, the Obama’s Higher Ground, and LeBron’s The SpringHill Co) are really, really overvalued right now, especially with tons of high profile investments from a ton of private equity firms like Candle Media and RedBird Capital. Towards the end of the year, there were a few news stories about cash flow troubles at celebrity production companies for their private equity owners, bearing out my concerns.
Myth 7: Most Viewers Binge Watch TV Shows.
Reality: Some (probably 30% to 50%) of Viewers Binge Watch TV Shows
The “binge versus weekly” release battles aren’t as fierce as they once were, but you still see folks arguing that customers “love binge releasing”. I’ve pushed back on this for a while.
Samba TV regularly publishes charts on binge-watching and the most interesting part of their charts is that the most binge-watched shows usually are only binge-watched by about 30% of customers.
But don’t take their word for it. There’s a reason Netflix is releasing some many of their most popular shows in batches now. Over time, I suspect those batches will get smaller and smaller and more and more spread out.
Myth 8: Social Media is Represents What People Think
Reality: Most Americans Don’t Regularly Use Social Media
This especially applies to TikTok and Twitter/X. Just check out this graph…
Most people don’t use social media all day. It’s not real life. It’s just more accurate to say that the conversation on social media represents what people on social media think. Studio heads, take note.
Myths 9 to 16: The Following Genres Are Overrated:
Okay, there’s a bunch of myths here, so let’s knock them out in one list. The following genres are overrated or overvalued, which isn’t to say that you should never make them, but you should know that the hype doesn’t match the reality and spend/invest accordingly:
- Prestige TV shows. Elaine Low, at the Ankler, just reported that “No one wants any ‘homework’ projects,” says the first TV agent. “Esoteric pieces that were awards bait aren’t popular right now.” I agree, as I’ve been writing for years now.
- Anime. There’s some very loyal anime fans out there in America, but it doesn’t match the hype or constant prediction that anime is the future. Plus, this is a really competitive marketplace. If I were an executive, I wouldn’t recommend competing in it.
- Horror. Horror films can have a tremendous ROI, but they’re not nearly as popular as other blockbusters/franchises. This is especially true on streaming. Frankly, a lot of people don’t like scary movies, but they can definitely put butts in seats for an affordable budget! Two things can be true: young people like seeing horror films in theaters and grandmothers never watch horror films.
- Adult Animation TV Shows. One of my favorite shows on TV is an adult animated comedy. But this genre is stillperpetually overrated by the Hollywood entertainment press.
- The Kardashians. I’m not saying the Kardashians aren’t popular, they’re just not as popular as a lot of people think.
- Concert films. Post-Beyonce, I think it’s clear that Taylor Swifts: The Eras tour concert film was a one-off event, despite many think pieces arguing otherwise. It’s hard to see any other musician pulling off the same feat.
- Sports Docu-Series. The sports documentary and docu-series genre is really, really overrated right now. Outside incredibly popular sports (think Quarterback) and stars (think Beckham), very few break out.
- Basketball TV Shows and Films. I’m a diehard basketball fan saying this. I can separate my personal opinion from the trends I’m seeing in the data. And basketball movies and TV shows just aren’t that popular.
Myths 17 to 20: The Following Genres Are Under-Rated:
Similarly, the following genres are pretty underrated right now, at least according the the apocalyptic headlines or the streamer’s lack of interest in them:
- Superhero films. Listen, I just wrote two articles on the MCU/Marvels struggles, but five of Marvels’ last seven films made over $700 million globally. Two of the top four and three of the top eight films in North America this year were superhero movies. Again, this genre is dipping, but it’s not dead.
- Sitcoms/Comedies that are actually funny. Even though its ratings dipped later in the season, the Night Courtreboot was the breakout hit of the year. Meanwhile, as Elaine low reported in the Ankler, people in town want funny comedies now. I couldn’t agree more.
- Procedurals. Thanks Suits! Now everyone realizes (again?) that many, many viewers like procedural dramas.
- Animated Movies. I think a lot of people are burying this genre, when it’s still really popular and, really, it’s just Netflix and Disney who are struggling.
