As The Stranger told The Dude, sometimes you eat the bear and sometimes the bear eats you.
Such was last week’s weekly column for me. (By the way, check out this great article on the origins of the quote above.) I had a lot of thoughts percolating about the most popular topic in streaming–rightly Netflix–so I went long trying to tamp down expectations just a pinch on what Netflix’s big 2020 means in context. But Netflix wasn’t the only news story of the week. So here’s my quick run through of what else happened in entertainment last week.
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Other Contender for Most Important Story – HBO Max and Apple TV+ Extend Discounts/Free Trials
The news: Apple TV+ is extending their one-year free subscription, which started in November of 2019, to July of 2021. HBO Max, meanwhile, is extending their price discount of 22% ($11.50 per month) until “mid-2021” as well.
If you want to know why Netflix is the king of streaming, it’s these contrasting pricing decisions. In late 2020, Netflix raised prices. Its competitors, HBO Max and Apple TV+ , are going the opposite route. They are still in all-out growth mode, whereas Netflix has locked in a huge chunk of customers. So it can increase prices and still see a growth in the U.S./Canada region of 800K customers.
The fun question is, “Who is this a worse sign for?” and I’d have to opine Apple TV+. HBO Max’s price discount is actually just explained as the easiest way to avoid the Roku/Fire TV/Apple TV 10-30% deal tax on streamers that devices/operating systems charge when you sign up through their application. The industry leader (again) is Netflix, who doesn’t let you sign up via your TV and basically forces you to their website. But they have 67+ million subscribers in the U.S., so they can get away with that.
HBO Max needs subscribers, but it also doesn’t want valuable, multi-year subscribers forever locked into the Roku or Apple or Amazon payments, so they offer a discount for folks signing up at their site for 6 months or more. That makes sense.
Apple, on the other hand, just may not be able to get people to pay for their TV offering. Frankly, at $5 per month for only originals, it’s clearly the most expensive service in terms of content for price. At this point, it’s more likely that Apple extends the free price point until the end of 2021 than that they finally start charging customers.
Other Contenders for Most Important Story – The Latest Round of Theatrical Delays
Coming to a theater near you…not new films in Q1.
The news started dropping at the end of last week that the latest round of films due for 2021 are moving. The biggest casualty was probably A Quiet Place 2. Frankly, the studios are not optimistic about theaters being open through March. This isn’t unexpected, and the biggest wildcard for theatrical exhibition is when the pandemic finally abates. Personally, the five numbers I’m watching are these, from the Covid-19 Tracking Project and Our World in Data.
You could be optimistic or pessimistic on these numbers, depending on your constitution. On the negative side, we have a long way to go before deaths drop to zero. And that will take weeks and weeks.
On the positive side, the drop in cases is the fastest yet of the pandemic in the U.S. Further, I think we’re going to see the impact of mass vaccinations on the U.S./EU accelerate faster than the general consensus thinks. (Most public health officials are providing what seems to be very cautionary/conservative estimates of vaccination rates.) The U.S. is now giving out 1 million shots per day, and the rate of growth is doubling about every 10-13 days. For example, the U.S. has already tripled the amount of shots it can give per day in January, and the month isn’t done. If we can see the same growth in February, the U.S. could be vaccinating 3-4 million per day. At which point, vaccine production becomes the next bottleneck to smash.
The current date to watch is May 7th for Black Widow. Disney could stand to gain by being the first film to “reopen” theaters, and theaters would be hungry for a known commodity, like an MCU film. But will they be open? Remains to be seen.
In other theatrical news, as expected, the global cinema industry lost 32 billion dollars due to theatrical closures, down from around $45 billion in 2019:
That’s a good number to keep in mind: if streaming ends all theaters long term, that’s a lot of revenue that streaming may never make up. As Omdia itself points out:
In other words, theaters declined by 71% and lost $32 billion, but streaming only made up for a fraction of that, increasing by 30% with $8 billion in gained revenue. So that leaves studios/producers down $8-12 billion (minus 35-50% roughly for the split with theaters).
Entertainment Strategy Guy Update – The Pac-12 Fires Larry Scott
It turns out that the presidency wasn’t the only office changing hands last week. The Pac-12 fired its long-time commissioner Larry Scott. Normally, conference hirings and firings don’t rate a spot in my column, but this gets an exception for two reasons. First, as a fan of a team in the “Conference of Champions” this could help the Pac-12 return to glory. Second, I wrote about whether the Pac-12 made the right call in not signing a strategic partnership for Athletic Director U last year. This is a super mathy, but fun look at opportunity costs, valuing strategic options and decision-making.
Patrick Crakes on Twitter laid this out more succinctly here:
Opportunity cost of not scaling Pac-12 Nets via partnerships with established media was very high as media distribution landscape remains firmly in hands of established players. Problems with Pac-12 Nets cost him time & goodwill needed to fulfill DTC digital exclusive strategy.
— Patrick Crakes (@Aquinas82nd) January 21, 2021
Other Contenders for Most Important Story
And now for the quick hit stories that caught my eye…
Disney Leads in Indonesia
One of my more controversial positions in the streaming wars is that we should analyze the war battlefield by battlefield. While global numbers are easy, they often obscure smaller trends that matter. To change a famous political aphorism, all streaming is local.
Take Disney+. They’ve already taken a lead in India and, according to a new report, Indonesia. How the smaller countries and regions fare going forward is a fascinating, and undercovered, element of the streaming wars.
The CW New Shows Headed to HBO Max
A few years back, The CW signed a big deal that delivered all their current shows in the “Pay 2” window to Netflix. (Pay 2 is after a one year holdback.) This deal was mostly a win-win, with The CW getting a billion dollars per year and Netflix getting a lot of content that repeatedly made their top ten list in America (and likely around the world), including Supernatural, Riverdale and the Arrow-verse shows. Last year, we noted that the CW was ending this arrangement, because in the steaming wars, you can’t arm your competitors, and the question was where does the content go, Paramount+ or HBO Max? The answer is the latter. (Read my story of the week on this here.)
Assuming the price makes sense, this is another good content decision by HBO Max. Pairing more CW shows, HBO, and Warner Bros. content will increasingly make the HBO Max library one to envy. It’s deep. Few customers will switch to HBO Max for these shows on their own, but it could help HBO Max keep folks in the ecosystem. And that’s the name of the game: keep folks on the platform to reduce churn.
Caveat: Batwoman had already gone to HBO Max last year, but this announcement confirms all new CW shows will end up on HBO Max through 2021.
Last caveat: Netflix will continue to air shows that started under their old deal, which could incentivize The CW to end shows sooner than they would have otherwise. That will be a subplot to watch.
Paramount+ Launches on March 4th
The name change officially starts on March 4th, with a new product rollout announced the week before. Expect that to be the story of the week when it happens.
