All posts by EntertainmentStrategyGuy

Former strategy and business development guy at a major streaming company. But I like writing more than sending email, so I launched this website to share what I know.

How Big Were Firefly Lane and Crime Scene for Netflix? – The Streaming Ratings Report for 17-March-21

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

IMAGE 1 - Nielsen TV Ratings Last Six

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:

IMAGE 2 - total by day week dayPretty 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:

IMAGE 3 - Table by DayYep, 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:

IMAGE 4 - Chart Viewership by DayTakeaways? 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:

IMAGE 5 - Drop Off TableOf 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.

IMAGE 6 - Weekly Top Ten 2 SeriesAs 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

IMAGE 7 - Film First and Second Run

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:

IMAGE 8 - Nielsen Top 30

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:

IMAGE 9 - Film Trends

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).

ESPN Grabs NHL Rights, Setting the Sports Media Rights Template – Most Important Story of the Week – 12 Mar 21

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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:

Screen Shot 2021-03-15 at 3.07.04 PM

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:

Screen Shot 2021-03-15 at 11.51.14 AM

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.

Did the Super Bowl Take a Bite Out of Streaming Ratings? The Streaming Ratings Report for 7-Feb-21

If you read my “Who Won the Month” articles over at Deciderhere, 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.)

TelevisionIMAGE 1 - TV Last Six UPDATED v02The 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:

IMAGE 2 - Three Looks at Genre

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:

IMAGE 3 - G Trends Jan Shows v02

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.

IMAGE 4 - GTrends - Mando v WandaVision

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.

FilmIMAGE 5 - FIlm First RunAs 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.)

IMAGE 6 - Film DecayLet’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:

IMAGE 7 - Film Trends

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:

IMAGE 8 - Weekly Total ratingsLikely 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:

IMAGE 9 - Super Bowl Trends

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.

IMAGE 10 - Film with C2A

– 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.

Cresting the Covid Hill – As Many Films are Moving Earlier in the Year for the First Time in This Pandemic – The Most Important Story of the Week – 5 Mar 21

When the biggest story of the week is essentially the same story as the previous week–Paramount+ launched to customers this week after they announced specifics at the previous week’s investor’s day–then you know it is a quiet week for news. Despite this, dare I say this week had some stories that could be described as “fun”? Not hugely important, but fun. 

But one story was important. This week may mark the week when the bleeding was stanched for theaters: as many films moved earlier in the release calendar as moved backwards. Since we haven’t written about movies in a pinch, with all the latest shuffling, it is the “story of the week”. 

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Most Important Story of the Week & Covid-19 Tracker – Fast 9 Moves From May to June

If I have a crutch, it is quoting my second favorite author too often. Several times in the life of this website, I’ve slipped in a Tale of Two Cities reference to explain a current strategy or trend. You know the quote–”the best of times and the worst of times”–but it’s such a terrific opening to a book, it’s worth quoting the first paragraph in full:

It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way—in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.”

Dickens, writing in Victorian England about England and France of seventy years before, is basically saying that all time periods have this universal feeling that things are the worst and best at the same time. And guess what?

That quote perfectly describes how we feel right now!

Many Americans will tell you that because of the pandemic, lockdowns, racial injustice, economic inequality, culture wars, and countless other issues, we are living in the worst of times. Both sides of the aisle will say this. The numerically inclined among us, though, would point out that, despite the pandemic, more folks around the world live longer, safer, richer and better lives than ever before. Even the pandemic, for all its tragedy, could be hopeful: a deadly new virus was cured in less than a year with a revolutionary vaccine process, which force a medical breakthrough that could lead to curing future diseases, like malaria.

(Also, how apt is the phrase, the “epoch of believe and the epoch of incredulity”, for our current media consumption/landscape?)

Enough English literature tangents. Theaters went through their own version of the “best of times/the worst of times” this week. After describing the latest movement in theatrical dates, I’ll update the latest Covid-19 vaccination rates data to update my “reopening hypothesis”. 

Part 1: For the first time, films are moving earlier in the calendar.

Here is that quick summary of the news:

– Sony’s Peter Rabbit sequel moved up to May 14th.
A Quiet Place 2 moved up to Memorial Day weekend, a date it now shares with Disney’s Cruella

These offset the big headline, which is that Fast 9 moved back to June, and that pushed the next Minions film even further backwards in the timeline.

Overall, if you’re a theater or theater chain, you have to feel more and more confident that distribution will be almost entirely back by May. President Biden recently announced enough vaccine doses for every American adult by the end of May and that likely means theaters will show films to almost fully-vaccinated audiences. 

Of course, folks read a column like this for hot takes predicting the future. Reading the trade leaves, my gut is that more shuffling is due to come, but don’t ask me when or how. Black Widow could still move, although more likely they’ll add Premiere Access to the distribution if they don’t think there are enough open theaters at full capacity. Some smaller films could still move up, but most films will likely stay where they are. In all, I don’t feel confident predicting specific moves because there are too many variables.

But I am confident that the vaccine roll out will change things.

Part 2: The vaccine roll out continues to reinforce my “reopening hypothesis”

In case you haven’t read my very, very long article forecasting reopening of society, here’s my core thesis on reopening in America:

If current lockdowns can drive down cases…
Which will drive down hospitalizations/deaths…
While the United States is vaccinating the highest-risk groups…
And if the pace of vaccination is increasing…
Since vaccines prevent deaths and hospitalization…

Then once we get the current hospitalization rate down, it will stay down until the next flu season (next November or December). If hospitalizations are down, deaths will stay down as well.

This will allow states to reopen, including theaters.

Let’s go part by part, rating each part of the thesis with a “more confident”, “less confident” or “neutral” status.

Current lockdowns are driving down cases → Neutral

This was trending towards strengthening until a few states ended mask and indoor mandates this week. Through February and into March, cases have continued to drop in Los Angeles and America broadly. Most experts believe we should avoid indoor activities with unvaccinated people, especially at full capacity, for a few more weeks to fully drive the number of cases downward. (This does not apply to outdoor activity.) But ending mandates could reverse the progress so far. Thus, it’s tough to predict that cases will continue declining as fast as they have. (We are also seeing a decline in testing, which we need to stay flat to catch as many cases of community spread as possible.)

Hospitalizations and deaths are declining → Strengthened.

Deaths have always lagged cases and hospitalizations. Both of which are still higher than our previous lows, but declining week-over-week. Crucially, where the initial and summer waves were concentrated by regions, the winter wave was a national event, so each region is arguably doing better than the previous waves. Also, while some visualizations showed spikes in death’s last week, this was actually bittersweet news. Deaths have declined so much that big states can review and update their mortality figures, like Texas, Virginia, Los Angeles, for example. In other words, the peak in fatalities in December and January was even higher than we realized at the time, but that means the current death toll is lower than the figures indicate.

Vaccinating the highest risk groups → Strengthened

The CDC tracks vaccinations by age, and the most vulnerable groups are the most vaccinated. There are hurdles, especially in underserved communities, but we are vaccinating older populations who are most at risk:

Screen Shot 2021-03-05 at 12.36.18 PM

Continue to increase vaccine distributions → Strengthened.

A week ago, a winter storm essentially slowed down all US vaccinations. That would have kept this rating at neutral last week.

But we’ve rebounded. We’ve almost returned to the linear growth we were at before the winter freeze. With Johnson & Johnson being approved and essentially a double dose of vaccines coming last week, America could, tentatively, pass the 3 million vaccinations per day threshold next week or the week after, having passed the 2 million threshold this week. 

Screen Shot 2021-03-05 at 12.38.01 PM

Vaccinations prevent deaths and hospitalizations –> Strengthened. 

All the data–which is becoming voluminous–indicates that vaccinations prevent deaths in high risk age groups, vaccine efficacy begins within 2 weeks of the first dose, and that vaccines prevent transmission. I can’t undersell just how well the vaccines work and how being vaccinated will allow people to return to normal life. This isn’t a selective reading of the data: there are mountains of evidence now that the vaccines are incredibly effective.

Add It Up: We’re on track to “return to normal” in the springtime

There are too many variables to put a specific month or week date on it, but the trendlines are growing. As I mentioned before, the main driver or reopenings will likely be the decline in the death rate.  If deaths go down, and stay down, even if cases rise later, society won’t return to lockdowns. 

Consider it like this: even if cases peaked at the same height as they did in the winter, the peak in deaths will likely be 44% lower, because 55% of the population who are age 65 and older are now vaccinated. 

Screen Shot 2021-03-05 at 1.27.01 PM

If we continue to vaccinate the 65+ group–and those aged 50-65–then the peak in deaths will be even lower. This is where we are as of this moment…in two weeks the deaths prevented will be even higher.

The other reopening criteria concerns the state and local guidelines. The news this week was that New York had lowered its case level to a point where theaters could reopen. San Francisco as well. This leaves Los Angeles as the holdout. According to California’s metrics, Los Angeles was at a “7.2 adjusted case load” and it needs to be below 7 for two weeks to reopen theaters at 25% capacity. If cases continue on their current trends in Los Angeles–a huge if–they’ll join SF and NY soon. 

Other Theatrical Stories – Tenet Finally Premieres in New York

Frankly, I wasn’t looking forward to my first film in theaters being Godzilla vs King Kong. But Tenet? Oh yeah, I’m down for that! Theaters in Los Angeles, San Francisco, New York and other big cities may have a surprising amount of inventory, which wouldn’t have been the case back in the fall, and this could help both theaters and studios confidently reopen.

Other Theatrical Stories – Alamo Drafthouse Bankruptcy

To finish on another depressing note, a theater chain has been claimed by the pandemic. Alamo Drafthouse declared bankruptcy, while expressing optimism for the rebound in customer demand. This filing may be more of a legal maneuver, as the chain says they will be able to continue operations, just with new financing/ownership. Still, they did have to declare bankruptcy.

Other Contenders for Most Important Story

Kevin Mayer Joins DAZN Sports Streamer

It didn’t take long for Kevin Mayer to end up at another streamer. After leaving Disney for Tiktok, then leaving in a political brouhaha, Mayer has ended up as chairman of DAZN, the sports streamer trying to vie with ESPN and FuboTV for future sports streaming glory. This is a fine move, but I would note that Mayer is known for deal-making–that was his key role at Disney–and this likely increases the odds that DAZN is involved in future deals, either acquiring or being acquired. (Given its size, I’d guess the latter.)

BBC/ITV/Channel Four May Team Up..and That’s Smart

A few weeks back, I stumbled on this fun look at European TV revenue from one of my favorite analyst groups, Ampere Analysis:

tvgroup-e1610617522572

The size of Netflix’s revenue growth is impressive, though in context it’s smaller than I would have guessed. (And I’d guess many others think it’s higher, given huge headlines like the one above.) But those revenue numbers can explain this fun story that British broadcasters are merging their free to view applications. Something along the lines of the enemy of my enemy is my friend, but it could be a compelling offering for customers. 

Ion TV/Scripps is a Masterclass in Strategy

I respect great strategy, and Scripps (with some private equity help) show us how it’s done. (Not that there is a lot to love with PE, but they can make sharp business moves.) In this case, Scripps sold it’s channels to Discovery at nearly the height of their value. Now, Scripps is going to launch new cable channels through Ion TV because American rules state that cable providers must carry broadcast channels, with certain restrictions. Toss in the ability to sell linear channels to the FASTs in their boom, and this just smart strategy. 

Twitter’s Publishing Moves

I write long threads on Twitter, and now Twitter is constantly letting me know that they have a newsletter product. That and everyone is worked up that folks may start charging for access to tweets. Frankly, everyone is charging for content nowadays so this isn’t surprising. But will it work? I’m less sure. For as influential as Twitter is, most Americans don’t consume their news through it and those who do usually soon feel like it’s bad for them. (I certainly do.) But given that their advertising revenue just isn’t cutting it, this move makes sense.

Apple TV Comes to Google Chromecast

Another round in the “distribution” wars, this time with Apple TV coming to Google’s Chromecast, which is a phrase that would have made no sense ten years ago. It makes crucial sense for Apple. Most folks have Apple devices of some sort, but they don’t necessarily watch TV through Apple. So getting more distribution for their app make will help justify the content investments.

A Down Week Makes for Some Strange Ratings: The EntStrategyGuy US Streaming Ratings Report for 3-March-21

[Editor’s Note: This is the second edition of a new website feature, a weekly report on streaming ratings. One of the quirks of the streaming wars is that no one knows what shows or movies are doing well, what are doing poorly and what failed to launch. If you have any questions or data you’d like to see, let me know!]

This week’s ratings are frankly one of the weirder weeks since Nielsen started releasing their top ten lists. Since ratings were down overall, smaller and odder titles got a chance to make the list.

Television

IMAGE 1 - TV LineAs with most weeks, Netflix was the dominant performer. What makes this week strange is how it got there. 

Only two originals made the top ten in overall viewing. One of them was Bridgerton, which testifies to the incredible staying power of that show. Bridgerton is likely an “elite” series for Netflix in the United States now, along with Stranger Things, Orange is the New Black, Ozark and The Crown. Fortunately, Netflix owns Bridgerton outright, unlike OITNB, Ozark or The Crown. 

Though a hit series (without new episodes) can only drive viewing for so long, and Netflix’s end of January launches didn’t seem to hit. Season two of reality series Blown Away only had 7.3 million hours viewed, which in 2020 would not have been enough viewership to make the top ten lists most weeks. Bling Empire didn’t make the top ten originals list for a second week either. Fate: The Winx Saga did gain week over week, but it will likely fall off the list in the next week or two, judging by its top ten list performance. (It is also the latest in a line of teen dramas produced by Netflix. At some point, all Netflix series may take place in high school/boarding schools.)

The other big series were library or second run titles, including the latest season of Outlander. Here’s the top ten list if you only highlighted wholly-owned or originals:

IMAGE 3 - Nielsen 30 Originals Wholly

Which brings us to the studio/streamer dominating the film list, Disney. Many third party analytics firms continue to estimate that WandaVision is one of the most watched series in the US. (See Parrot Analytics or TVision for two examples.) So why doesn’t WandaVision perform higher in Nielsen’s ranking? The explanation is simply that series with more episodes do better in total hours viewed, as I showed last week. This trend only continued this week. WandaVision added only a single episode, but its total hours went from 6.3 million to 7.2 million.

Other Quick Notes on TV

– US viewers continue to avoid international originals, except for shows from other English speaking countries. Indeed, the most exotic series come from Canada (Schitt’s Creek, Blown Away), the UK (The Dig) or joint US/UK series (Outlander, The Crown). Notably, all English speaking series. Technically, Fate: The Winx Saga is partly from Italy, but that series is also based on a show that aired on Viacom’s Nickelodeon and is in English. The hypothesis that Netflix is able to take advantage of global scale to launch series may be true, but that’s happening despite the US, which continues to watch English language programming.
Disenchantment by Simpson’s creator Matt Groening is likely a disappointment. Premiering on January 15th, it has already dropped off the total hours list.
Longmire is the latest Netflix original to make an appearance on the bottom of the “Originals” top ten list well after its latest season dropped. Other examples from January include Designated Survivor appearing the week of December 28th and Great British Baking Show throughout January.
– As expected, Lupin with only four episodes dropped off the US top ten lists after only two weeks in the top ten.

FilmIMAGE 4 - Feature Films

Film may be even weirder than TV. The biggest film on Netflix was Lionsgate’s The Next Three Days, which was originally released 11 years ago and only grossed $67 million at the US box office. It was added on January 22nd, so what a “Netflix bump”.

Even stranger, it wasn’t like Netflix didn’t try to launch some own original films of their own. Netflix released at least three potentially big films, The Dig and Finding ‘Ohana. The Dig and Finding ‘Ohana both made the top ten list for film. All three were released on a Friday (January 29th) so they could gain steam. However, as we’ve seen repeatedly, most films usually lose viewers in their second and third weeks, especially when measuring by day.

The Netflix daily top ten lists to get an idea of where this is trending. Using FlixPatrol’s collection of this data, here’s February’s list. Finding ‘Ohana will likely gain the most:

IMAGE 2 - Weekly Releases

Other quick notes on Film

– The expanded look provided by Nielsen (three top ten lists instead of one consolidated) continues to provide additional insights as we get more data. For example, the importance of recently released films is even more important than I had thought. Of the seven new pieces of content to make one of the top ten lists for the week of January 25th, six premiered in January. And four were released in the week of January 25th, including Below Zero, Finding Ohana and The Dig.
Soul has decayed down to Mulan/Frozen II levels. I suspect that Onward likely dominated the film lists in the spring, though I don’t have data to prove it. If this is true and Soul performs similarly, then Soul will likely stay at this level until Disney has a new kids film to launch on the platform, meaning Raya and the Last Dragon after its “Premiere Access” window.
– Netflix’s library titles that are action or thrillers seem to over-perform. Of the January titles on the film list, many fit this bill, some with obscure origins like The Next Three Days, Killers, 30 Minutes or Less, The Vanished and Homefront.

Competition

Netflix dominated streaming in January. Of the forty films or series in the consolidated top ten in January, only one was not on Netflix, Soul during the week of 4-January.

Nielsen Top Ten Last 4 weeks

[Editor’s Note. I hope you enjoyed this quick look at the ratings data of the week. And trust me I know this is very “Nielsen”-heavy analysis. It won’t stay that way. I’m working on adding weekly top ten rankings, IMDb, Google Trends and other data slices to make this as comprehensive, while readable as possible. The key, though, is that I don’t want to add any data source piecemeal or anecdotally. I have to analyze, vet and understand the data before incorporating it.

By the way, if you’re an analytics firm who would like to partner or provide data, please don’t hesitate to reach out.]

Covid-19 Tracker: What Should Disney and Universal Do with Black Widow and Fast 9?

Week to week, other stories may be the “most important”, but that doesn’t mean that Covid-19 isn’t still the biggest story. As I wrote in a very long article on February 19th, we’re moving away from “lockdowns” as the story to “the reopening of society”. However, that article was limited in that I mostly focused on theaters, not movie studios. The trends that may allow for theaters to reopen are different from the business rationale for studios to release their tentpoles in theaters. They’re related (correlated even), but not causal.

But that still leaves the open questions: will Disney release Black Widow in theaters? what about Universal and Fast 9?

Let’s first review the upcoming theatrical slate, then get to the specifics for those two studios.

The upcoming theatrical calendar could help theaters reopen.

Notably, I didn’t put any specific timelines for when and at what levels theaters could reopen. The variables are too many. States have different criteria and regions have different rates of outbreaks. However, the models do show that a clear majority of folks will have access to vaccinations by the launch of Black Widow on May 7th. Other models back this up. Here’s data scientist Youyang Gu’s look:

Screen Shot 2021-03-02 at 11.20.25 AM

Why wait so long? We’re vaccinating folks so quickly and cases are still generally dropping. Could the reopening take place even faster? Especially with news out last week that New York is reopening theaters at 25% capacity? Could both New York and Los Angeles be open by March? And what would that mean? 

For context, here’s The-Numbers upcoming theatrical calendar:

Screen Shot 2021-03-02 at 11.23.50 AM

Interestingly, these are films that are locked into the calendar. Raya and the Last Dragon will be in theaters and available on Disney’s Premiere Access program. Warner Bros is releasing all their films both on HBO Max and in theaters, including Tom and Jerry last weekend, King Kong vs Godzilla on March 26th and Mortal Kombat in April. In other words, for the big films in March, they aren’t going anywhere, because of the dual release strategy.

Ironically, for as much as theaters hate losing exclusivity in the long run, in the short term this could give them some confidence they will have movies to play if theaters are open at either 25-50% capacity by the end of March. In the fall, there was a chicken and egg problem with theaters: they didn’t want to reopen without big movies to play, but studios didn’t want to give them big movies to play until they were open. The Warners and Universal films being released anyways may solve that problem. Or take this fun quirk: Tenet will premiere in New York this weekend since it never was officially released in theaters in New York. Same will happen in California eventually.

For a few months now, I’ve been focused on Black Widow as the tentpole that was needed to bring theaters back. It’s Disney and, even better, it’s Marvel, so that’s as close to a sure thing a studio could have. But my focus on Black Widow may be too late. If Los Angeles and New York are open for business by March 26th, Godzilla vs King Kong may claim the title as first “blockbuster” of the post-pandemic era.

(And if I were at a studio? I’d be looking to move films up into April. If you get rid of the (largely artificial) constraint of needing a full six to eight week marketing campaign, something like James Bond could slot into April 23rd and have two weeks by itself in theaters. But this is risky/aggressive, which isn’t usually how you’d describe movie studios.)

Despite this, Disney may not open Black Widow on May 7th

As bullish as I am on the “return to normal”, I am not confident Disney will open Black Widow on May 7th, as it is currently slated. There are as many good reasons as bad ones for Disney to keep or move the date. Some of them are qualitative and some are (or could be) quantitative.

Reasons to Move:

– The “expected value” of moving the film may still be positive. Here’s that quick math. The total domestic box office haul of Black Widow (or Fast 9) is in the hundreds of millions. Call it $500 million. (Above the other top individual hero films, but below everything with the Avengers or Black Panther.) Right now, with theaters at 50% capacity or closed altogether, the worry is that Black Widow will only get some percentage of that. Say 75%. If Disney could move the film back just a few weeks to get 100% of that domestic box office, then you’re talking about making an extra $125 million. If you want to quibble with these assumptions, go for it. This is why modeling is tough! But the basic shape of the problem–moving back guarantees higher returns–is in studio executives’ heads, and why they moved all the 2020 films to 2021 in the first place.
– Culturally, especially the progressive/liberal side of the culture, it is seen as irresponsible to be associated with anything that involves leaving the home. Every late night host I saw equated opening theaters to killing folks. The studios can/do worry that they will get lots of negative PR for helping theaters reopen.
– Disney has to make the call soon. Related to the expected value decision, Disney has said they’ll make their decision in the next couple of weeks. Even if the numbers continue in the right direction, there will be plenty of uncertainty about how the situation will look in May. There is lots of speculation about variants and a spring surge. Cases could easily spike in a “spring surge” that shuts down society again. (Though deaths won’t spike with them.) 

Reasons to Keep the Date:

– The entire Disney MCU calendar needs to starting hitting theaters to tie in with the Disney+ TV series. At some point, even Disney can only wait so long. Moreover, the “expected value” of moving the entire calendar back may not be worth it. In other words, say you think Black Widow will still get 90% of the potential domestic box office, that could be worth airing so that Disney can still release Shang-Chi in July and Eternals in November. Getting ninety percent return is much better than getting 0-25%, which was what would have happened if Black Widow premiered last November.
– Disney and Comcast could both try dual release strategies, allowing their films in both theaters and Premium VOD windows simultaneously. That would allow Disney to keep their MCU schedule intact. (This is actually the best argument for keeping the date.)
– The sooner Disney gets MCU films in theaters, the sooner they come to Disney+. Since theatrical films are great at attracting new customers, this would really help Disney+ drive subscriber growth.
– PR-wise, there is also the story to sell that Disney was the film that brought folks back to theaters. That could be a story as positive as it has risks. Especially if the mood of the country shifts and the narratives about getting vaccinated to return to normal are seen as positive.

Add it up? And I have no idea (nor inside info) on what Disney plans to do.

Neither keeping the date, nor moving it would surprise me at this point. While there seems like enough evidence that going to the theater has much less risk than indoor dining, the latter will likely restart soon, but theaters remain in reduced limbo. And so will big tent pole films.

Is Paramount Plus “Focused” on Winning? – The Most Important Story of the Week: 26-Feb-21

Sometimes, I can only fight it so much. As much as I want to pivot and pick a unique story from every other analyst, sometimes I just can’t. The top story is what it is. Yes, every columnist wrote about Paramount Plus investor presentation this week. But it really was the story of the week.

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Most Important Story of the Week – Paramount Plus Is a Focused Strategy, But Is It Focused Enough?

Part of me is sympathetic to ViacomCBS. Their executives read the news coverage as much as anyone else and all they see is analysts calling them out for not going all in on streaming. Then, when they try to go all in on streaming, as they did this week, those same analysts call them out for being too late or not doing it right.

They just can’t win.

Of course, if you get that much criticism, some of it is likely warranted. ViacomCBS has been far from perfect, starting with that merged name. But they’ve been undervalued for so long they’re probably overvalued now. First, CBS is dismissed by observers because, frankly, they make shows for the part of the country that isn’t online. Second, I think their brands have more value than they’re given credit for. Third, between Showtime, CBS and Viacom, their library assets are strong. Fourth, Pluto really does seem to be killing it.

I can synthesize these two differing viewpoints down to this one word:

“FOCUS”

A good strategy, as strategy guru/UCLA Anderson professor Richard Rumelt describes it, is “focused strategy”. If you want to know the genius of Netflix over the last twelve years, it is that they were insanely focused on streaming.

Focus is also usually how disruptors beat incumbents. The incumbent has legacy businesses to protect. Sometimes–like with cable channels–those legacy businesses make lots and lots of money. Getting rid of that cash flow usually isn’t wise. So the legacy business will half-heartedly start a second business unit to mimic the disruptor. That means a company will have two different businesses competing with each other. By definition, that strategy isn’t focused. The genius of Disney under Iger was how swiftly he executed the pivot to streaming once he decided to do it. That was a focused strategy.

ViacomCBS has not been focused, even since the merger. While the announced a renewed focus on streaming, by planning to put all their Viacom assets onto CBS All-Access, they turned around and sold many of their current top series to other streamers. Like Yellowstone or Spongebob Squarepants. And Showtime is still lingering out there as it’s own streamer. Add to that Shari Redstone’s comments that they aren’t focused only on streaming and it’s not crazy to conclude that, yeah, they still don’t have a focused strategy.

But–and this is key–isn’t Paramount Plus their most focused strategy decision to date? They’ll be putting nearly all their best content into that streamer. Sure, they’ll still have two or three different streamers–Paramount Plus for subscription, maybe Showtime still, and Pluto TV for AVOD viewing–but the whole company is mostly behind them. In other words, they’re more focused than they ever have been. True, they aren’t winding down their cable and broadcast channels, hence Redstone’s comments about being a content company, but those businesses make billions each year. It’s one thing to be disrupted; it’s another to destroy legitimate cash flows too soon.

So that’s the “focus” part, but is this a “strategy”? Simply getting into streaming isn’t enough. Streaming is just a technology. Strategy is having a business plan to win.

Streamers need focus, but importantly they need to focus on a strategy. The successful streamers have had focused strategies leveraging their strengths. Disney is a house of uber popular brands, and Disney+ reflects that. Discovery Plus is the type of reality shows that, again, Hollywood chattering classes don’t watch. (Or do, but won’t say so on Twitter.) Peacock’s focus is on every part of TV that isn’t scripted. Those are all strategies I like.

My gut is that Viacom CBS is realizing that their streamer needs to be the scripted version of Discovery Plus. The home for the type of shows that made CBS the most watched network in the 2000s. Whether they have enough content or whether they can avoid the shiny objects of prestige TV, but at least they could have a strategy. And if that doesn’t work, just having the NFL could be enough. (Seriously, if ESPN+, Peacock and Paramount Plus end up as the future homes of the NFL, that’s a lot of guaranteed subscribers in the US.)

Overall, Viacom CBS is far from Disney or NBC Universal when it comes to showmanship in an investor day presentation. But that doesn’t matter for customers. (And an investor presentation is notably not for customers.) What matters is whether a company has a unique value proposition they can market to customers. I’d argue ViacomCBS is more focused on their strategy than they ever have been with the Paramount+ rebrand. I still wouldn’t put it in the same tier as the other streamers I just mentioned, but it’s better than it has been.

(Last point: the dunking on the choice of a name just needs to stop. Paramount is a much bigger brand outside the US than any option Viacom CBS had. Clearly they have global aspirations–which most of the dunking analysts also claim to want–and want a brand name that can deliver that. Meanwhile, the Paramount logo is still recognized in the US. Lastly, it doesn’t matter. 20 years ago, Netflix and Amazon weren’t brands. Now they are. Brands and name changes can come and go easily.)

Data of the Week – Discovery+ Gets To 11 Million Subscribers Worldwide

I’ve avoided setting projections for each streamer’s launch, because the error bars in those projections are huge. (Indeed, those who did project subscriber estimates for Disney+–especially the Disney bears–were off by tens of millions. That should dissuade any of us from making estimates!) However, I doubt I would have predicted that Discovery+ would get to 11 million subscribers in less than two months. 

When I update my “estimates of US subscribers” for the end of 2020 (coming soon!) Discovery Plus will be on the borderline between the tier 2 streamers (20-50 million subscribers) and the bottom tier. If they can double this number in their first year, they will be well on their way to establishing a foothold in the streaming wars. Notably, this is a worldwide figure, so parsing out the US totals will still require some guess work.

Other Contenders for Most Important Story

Direct TV spin off

AT&T is spinning off DirecTV to raise money to both pay down debt and buy wireless spectrum. The new venture will be 30% owned by private equity firm TPG. AT&T has long been looking to offset the disastrous DirecTV acquisition, so this isn’t a huge surprise and AT&T will still have a majority stake in the new venture. Long term, I don’t see this changing their priorities in streaming or cellular much.

The FCC’s Wireless Spectrum Auctions

I won’t pretend to be an expert on wireless spectrum, but the other big news from the week was that the FCC held an auction for additional “spectrum” that is needed for 5G. Verizon bought the most licenses in the new “c-band”, which is crucial for 5G. Overall, the spectrum set records for the FCC, indicating the high value of 5G for the cellular companies.

Disney+ Acquiring Licensed Series Globally

In the kids front–read my take on that from last week–Disney+ has acquired the streaming rights for two different series. Even Disney can’t produce everything they need for streaming. (Hat tip Emily Horgan.)

M&A – Vivendi Plans an IPO for Universal Music

With the fierce competition in music streaming from all the big tech companies and Spotify, music catalogues have seen their values rise considerably. As such, Vivendi is actually spinning out Universal Music Group into its own company. I’ll be curious how long it lasts as its own entity before getting purchased by some other player.

Lots of News with No News – NFL’s Next Round of Contracts

There have been lots of headlines about potential prices for the next round of NFL media rights deals. But very little facts. Let’s wait until this story finishes, then we can write about the implications. 

Nothing Compares to Bridgerton in January: The EntStrategyGuy Streaming Ratings Report for 24-Feb-21

[Editor’s Note: Today, I am testing a new website feature, a weekly report on streaming ratings. One of the biggest pain points of the coverage of the streaming wars seems to be that no one knows what is doing well, what is doing poorly and, frankly, what customers want. For example, folks saying that here, here or here for just three examples. 

As this website enters its fourth calendar year, I’ve been looking for ways to expand my coverage. Solving the ratings problem seems like a pretty good way to do it. I’ll be explaining more in the future, but for now, I hope you enjoy and let me know what you think.]

One of the challenges in reporting on ratings is the lag time from when a show premieres to when we get actual data on it. If we rely only on Netflix, for example, we can get results sometimes after the first weekend, but sometimes delayed up to nearly eight weeks. Nielsen is the most reliable and regular reporter on streaming ratings, but they delay ratings by four weeks to double check their data.

So yes, this is a ratings report for the week of “February 24th”, but it covers mostly the data through January 24th. Confused? Yeah, welcome to the streaming wars. 

[Another Editor’s Note: My analysis will be only of the United States to start. We have the best data in the US so far. As data expands, so will my coverage.]

(Sign up for my newsletter to get all my writings and my favorite entertainment business picks from the last 2 weeks or so. Next issue goes out early next week.)

Television

IMAGE 1 - TV Ratings Last Six Weeks

The biggest winner of January is Bridgerton, which continued its dominance of the Netflix top ratings charts. Notably, new releases such as Cobra Kai, Disenchanted, and Lupin all failed to knock Bridgerton from the top spot in the US. This type of performance is really what separates truly “elite” TV series from simply “good” series.

As for competition, Disney+ remains the best competitor to Netlfix in streaming. (Since the fall, Disney has had two original series on the list, and the last non-Disney was Prime Video’s The Boys.) And the total viewing hours might actually undersell how popular the Disney shows are. For example, here’s the January release chart by “Hours viewed per episode”. 

IMAGE 2 - Hours Viewed per Episode

Hours viewed per episode is a temporary metric I’ve been using to gauge how well new series are launching. It isn’t perfect—for example, WandaVision is half as long as some of these other series, so arguably this even undercounts WandaVision viewers—but for now it works as a proxy for demand per episode. The takeaway continues to be, like The Mandalorian, Disney has high “bang for the buck” when it comes to viewers per series.

[Another Editor Note: Yes, this first edition is Nielsen heavy. Going forward, I will add additional data sources to my analysis, including top ten ratings, Google Trends, and new metrics/scores for how well content is doing. It will be a process.]

Other Quick Notes on TV

– Library TV series continue to do well on Netflix, but the departure of The Office provided an opening for other series. For example, Jenni Rivera: Mariposa del Barrio made the top ten list, and that’s a licensed show (originally from Telemundo, produced by NBC Universal) that has been on Netlfix since 2017. New Girl also seems to be a regular feature on the acquired TV list.
– New content still drives Netflix viewership, showing that even more than library, customers flock to what’s recently premiered. Henry Danger for kids and L.A.’s Finest are examples of library or second run content doing well in January.
Lupin is the first French title to make a Nielsen list, but it wouldn’t have made the top ten in either week. Given that Netflix announced it will have an estimated 70 million global viewers in the first four weeks, this is another data point that international titles just don’t perform as well in the US as they do abroad, despite narratives otherwise.

Film

IMAGE 3 - Film first and second

Outside the Wire is Netflix’s latest big action film and it bucked the trend of big declines from the first opening weekend to the second. However, it also launched much smaller than Extraction (18.5 million hours) or The Old Guard (16 million). We’ll see if it can sustain this into a third weekend. 

Otherwise, the story is similar to the one I described in my last “visual of the week” in that the film list is the home from kids content. Frozen 2, Moana and Soul look set to stay well streamed going forward. A fun question will be if We Can Be Heroes drops down like other Netflix titles or acts more like the Disney stalwarts.

Other quick notes on Film

– Amazon Prime Video’s Oscar candidate One Night in Miami didn’t have a big opening, but it did have minimal week-over-week decay. The question going forward is whether all Amazon titles act like this (due to a smaller catalogue, hence more promotion on the home page) or if this represents some genuine growth via word of mouth praise.
Pieces of a Woman on Netflix did experience the likely expected big decay from its opening weekend, dropping off the list after it’s opening weekend.
The White Tiger actually got a Netflix datecdote with an estimated 27 million global viewers in the first four weeks. With presumably 1-2 million or so viewers in the US—dividing the two hour run time with a 70% watch rate—this likely shows that the film under-indexed in US viewing, as most intentional titles do.

[Yet Another Editor Note: My goal with this weekly report is to keep it to 800-1,200 words, which is short for me.]

Competition

My big question for the streaming wars this year is simple: will this fight be competitive?

Looking at the last year, you’d say it isn’t a fair fight. Netflix is far and away the biggest streamer in America, whether you measure by subscriber or by total usage. That’s why I’ll be tracking a few metrics to determine whether Netflix is pulling away from the pack, or whether the pack is catching up to Netflix.

Here are the top ten pieces of content in film or TV series by streamer going back through the last six weeks:

IMAGE 4 - Streamrs Share Top Ten

The good news if you’re not Netflix? Well, when the traditional studios went all in, they took quite a bit of market share from Netflix. Christmas was the Soul/Wonder Woman 1984 deluge, and frankly it got a lot of eyeballs to Disney+ and HBO Max.

The good news if you are Netflix? As soon as the studios stopped releasing their big guns, Netflix went back to owning the entire list. For example, in the past a show like WandaVision, with only 3 episodes generating 6.3 million hours watched, would have dropped off our radar. 

IMAGE 5 - Top 30 List

The goal for the Amazons and Disneys of the world is to move up from owning the “film” portion of this list to owning more spots on the top ten and fifteen. We’ll see if they can do it.

[Last editor note: I hope you enjoyed the first installment of the EntStrategyGuy ratings report. I’d love to hear from you on what you liked, what you didn’t and what you want more of. Thanks in advance!]

Kids Programming is “Easy Strategy” – Most Important Story of the Week – 19-Feb-21

Last week got away from me. Fine, I got away from it by diving down a data hole. Specifically, a Covid-19 data problem. For all the forecasting being done, few people are answering the query, “Hey, when will all this end?” I’ve seen answers ranging from “Never” to “2022” to “maybe a few weeks”. Hence I dove deep into the data to make my own guess, especially as it relates to theaters. Check it out here.

It was a good week to be distracted, since the week felt light on big news. (Unlike this week, which is already trending upwards in big stories.) The most consequential story was actually spread out between a few different streamers, who all announced new forays into producing kids programming.

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Most Important Story of the Week – Why Every Streamer is Investing in Kids Programming

Take a gander at these headlines:

“Apple/Skydance Animation Set Multi-Year Feature & TV Deal”
“Warner Media Kids Debut Cartoonito Preschool Programming Block”
“Youtube Announces 2021 Slate of More than 30 Kids Originals”
“Netflix Plans Six Animated Feature Films Per Year”

That’s a lot of kids content. And with it a lot of hyperbolic headlines and coverage. Kids content is a key part of the streaming wars, but it deserves more nuance than most coverage provides.

Consider an actual war. Many battles are important, but they aren’t all equally important. In the Civil War–since I use too many World War II analogies–the main event was the Army of the Potomac fighting the Confederate Army of Northern Virginia. That’s the adult content battlefield. The main event. The showdown that truly decided the war. But the campaigns to retake the Mississippi River, Sherman’s March through Georgia and the naval blockade of the South were all crucial to winning the war as well. All were important, but none were the main event.

Why Kids Content is a Pinch Overrated

Often, explanations for why a company gets into kids programming is treated as obvious. As if it’s a no-brainer decision that every streamer is right to pursue it. I don’t buy that for a few reasons that don’t get nearly as much press:

– First, there are way less kids than adults. This seems obvious, and yet it’s worth pointing out to make it explicit. Given that I just pulled a bunch of demographic data, it’s worth reminding everyone that these are the number of kids in America. In other words, if the “total addressable market” for adult TV in the United States is 130 million households, by definition the market for kids is a fraction of that. If you target preschoolers–5 and under–then your market is, by definition, 6% as large as the entire US viewing market.

IMAGE Kids

– Second, licensed consumer products (toys, shirts, what not) aren’t as lucrative as some casual observations make it seem. In the past, I’ve said that on average they make up 5-10% of a film’s total revenue. Further, it’s not like licensed products are a growth industry. If anything it’s the opposite. There are a few factors driving this, from Disney’s dominance on one end to consolidation in sellers (Amazon, Walmart and Target) on the other to disruption by digital in the middle. In all, yes, if you have a Spongebob, Mickey Mouse or Peppa Pig, you can generate billions in retail sales, of which you keep 5%. But if you aren’t in that top tier, you make much, much less. Toy sales alone cannot justify kids programming.

– Third, competition is fierce, as the headlines suggest. There are a lot of folks competing for a limited number of kids eyeballs.

– Fourth, replacements for TV are legion, from video games to social media, which makes it even harder to compete.

Add those four variables up, and it doesn’t scream out that kids content is a business you want to be in. It seems as competitive as adult competition, with only marginally better upside. Using Porter’s Five Forces analysis, arguably every variable is against you. It’s easy for competitors to enter, the competition is fierce within the field, sellers of toys offer poor margins, and there are lots of replacements to kids TV competing with you as well!

As a result, we probably have too many firms competing for kids’ attention right now. There is an old saw that there are always six major film studios. They may change names, but there are always six. (I’ve been meaning to write an article on this since I launched.) Well, given the smaller market size, then I’d say there are only 3-4 major kids content producers. In the 1980s, this was Disney with the three broadcast channels. By the 1990s to 2000s, this shifted to Disney/Dreamworks in movies and Disney Channel, Nickelodeon and Cartoon Network. (PBS also has had a place for preschoolers. Again, it’s complicated.) As streaming took kids attention, this has shifted to Disney, Universal (Dreamworks/Illumination), Netflix and Youtube.

Can HBO Max, Viacom CBS, Prime Video and Apple all break/rebreak into that and succeed? Probably not.

Why Kids Content is Valuable

Still, I’ve presented a bit of a conundrum. Clearly kids content is a tough biz to be in, yet everyone wants in! What do they see that I don’t?

Going back to the Five Forces, it’s not an insurmountably tough business to be in. In technical terms, the barriers to entry are low, especially once you’ve set up a streamer. The marginal costs of adding kids programming to general entertainment is fairly low, once you’ve set up a streamer in the first place. Animation tends to be much cheaper than producing full-episodes of live-action television. Moreover, kids, especially preschoolers, don’t know what legacy brands are. Except for Mickey Mouse, new preschool brands can and do break it. Just look at Peppa Pig.

And if it works, it’s sticky. Sure, kids are a small population, but they’re influential to their parent’s decision-making process. If kids want the content, and the content passes the parental approval test, it can be very sticky. The kids who watched Frozen every week weren’t going to just stop watching it when it left Netflix.

However, if I’m being cynical–and if you’ve read me for any length of time you know I am–then partly it’s an easy strategy. Which isn’t “good strategy”. Easy strategy is when there is an opportunity in front of a company and they take it simply because they can. It can sometimes allow business leaders to “empire build” as well. Going into kids programming lets you hire a brand new direct report and team of people. That’s easy strategy, like mergers & acquisitions or getting into original content.

Who Will Win The Kids Space?

Not everyone can win in kids programming. There are only so many preschoolers and elementary schoolers to bring into your ecosystem to justify the costs. Some folks will quietly dial back their investment. Indeed, some streamers seem to have realized there is already so much kids programming out there–and again kids don’t need new content to be satisfied–that you can rent all the programming you need, instead of making originals.

Still, if you do want to win, I have two (fairly obvious) recommendations. First, building a defined brand really is a differentiator. Disney has this. Netflix does too. Quietly PBS also has one of the stronger brands (and fairly high viewership on mobile devices). Even those brands need constant renewal to stay fresh. Nickelodeon lost brand equity rapidly in the last decade. But a brand is valuable.

The second way is to make hits. It seems obvious, but sometimes the best strategy is obvious. Disney is “Disney” because of three immensely lucrative time periods, driven by three innovative development executives: Walt Disney in the 1930s and 1960s, Frank G. Wells in the 1980s and John Lasseter from the 2000s. John Lasseter, the creative force behind Pixar before he was fired and then hired by Skydance, just signed the big deal with Apple. Indeed, of all the headlines above, the Apple/Skydance partnership interest me the most.

If I had one overwhelming recommendation for everyone except Disney, really, it would be to not just produce kids content or have kids content, but to have a kids strategy. This battlefield will be fierce coming up, and simply dabbling in it won’t be enough.

Entertainment Strategy Guy Update/Lots of News with No News – Roku’s Push Into Originals?

Based on one job opening, the speculation mill was unleashed last week that Roku may be starting a big push into “Originals”. Like I said, originals are an “easy strategy”.

When they announced earnings, Roku splashed cold water on this idea. Likely they are evaluating originals as a space to be in. There is a great reason to make original content, but just as good of a reason to skip it altogether. Let’s explain each:

The Best Reason for Roku to Make Originals: To Sell Targeted Advertising

One of the profit drivers over at Roku has been The Roku Channel, which is their version of an advertising streamer. (Either AVOD or FAST, whichever acronym you prefer.) Unlike other FASTs, the genius of Roku’s platform is that they can sell advertising targeted to any streaming service’s customers. Think of it like this, you’re an advertiser. You want to sell ads to folks who watch The Queen’s Gambit. With Roku, you can do that, since Roku knows everything a customer watches.

This is why Roku is so insistent that they get advertising share for any ad-supported service on their platform. Because they can charge higher CPMs (cost per thousand) to advertisers with this unique targeting. (This demand notably held up Peacock and HBO Max launches. Amazon demands something similar.)

Of course, this genius system only works if customers aren’t watching Netflix. Which is where the free Roku Channel comes in. It’s basically a vehicle for Roku to sell extra, highly targeted ads. But it only works if folks are watching it. Hence, the need for programming. Mostly, this has been library programming.

This is where original programming could (big tentative could) come in. If the higher CPMs provide a true edge, Roku can outbid for AVOD programming since it will have higher margins. Hypothetically this could even include original content. Except…

The Best Reason for Roku NOT to Make Originals: They are limited by distribution.

Every so often some cable, satellite, cellular or device maker contemplates getting into the originals game. The logic goes: if originals work at driving customer acquisition, and since our customers are really valuable, maybe we should make originals. Think AT&T Originals, Spectrum Originals, Verizon’s Go 90 and Microsoft Studios. In the end, they all get shut down.

Why? Because unlike a streamer, who is available in at least 90% of connected households, devices and MVPDs are not as widely available. A simple thought exercise shows why. If someone wants to watch The Mandalorian, they can find a way to download Disney+ to their iPad, iPhone or connected TV. Then they can watch. Literally, almost anyone in America with broadband. On the contrary: if you didn’t live in an area with Spectrum cable, you couldn’t watch the Mad About You reboot. (Yes, they rebooted that.)

In other words, a device-based original has an upside directly tied to the market share of its device. As big as Roku is in connected devices, it’s far from a monopoly. Roku is only 30% of connected device sales in the US. If you factor in the folks not watching streaming at all, those on mobile devices, and those with connected TV sets not using Roku’s operating system, then the vast majority of TV viewing is not on Roku. That’s always going to limit Roku’s upside in producing originals, since their distribution footprint is that much smaller.

That will be the key element in whether or not Roku does get into originals: The trade off between reduced distribution (which will constrain costs) and higher CPMs with targeted ads (which could boost revenue). We’ll see which side wins out.

Other Contenders for Most Important Story

Theaters: China’s Big Theater Weekend

An Avengers: Endgame milestone–albeit a slightly obscure one–was taken down last weekend. Detective Chinatown 3 launched in China and surpassed Endgame as the biggest single country opening weekend of all time. In other words, theaters are back! (in China)

By the way, if you missed it Soul as well did really well in China too.

Streaming: Disney+ Launching First European Originals

Given that all the major streamers are US-owned (mainly), there was a concern in Europe that local productions would begin to be overtaken by foreing content. So the EU passed a law mandating that streamers would need to have a minimum amount of locally produced content available. Thus Disney+ is staying in line with this law by releasing European produced originals.

I do love the one potential ramification of this law, which is that if every country around the world passed a similar law, it would basically end global originals. If 30% of your content has to be European in Europe, and 30% has to be Brazilian in Brazil, and 30% has to be Indonesian in Indonesia (the last two are hypothetical), then Netflix would only have 10% of their content left to make for global originals! Obviously, they wouldn’t do that, but by definition a market quota will inhibit truly global footprints.

Why I Think Theaters Will Return in May: Forecasting When Society Can Reopen

A character in The Sun Also Rises described going into bankruptcy as happening “gradually and then all at once.” This apt description has been applied to everything from debt insolvency to failed democracies. 

The US recovery from Covid-19 will likely feel the same way.

Right now, most of the coverage I read is fairly pessimistic and cynical. On one hand, I get it. The US just had an awful winter. Covid-19 will claim 500,000 deaths in the US alone, and that number is growing. Even positive coverage is framed with caution:

IMAGE 1 - Calm Variant Storm

IMAGE 2 - Experts Still Worried

IMAGE 3 - Reopening v03

On the other hand, doesn’t the US have a lot of good news on the Covid front? Is this pessimism still warranted? Forecasting doom and gloom could be as inaccurate as forecasting sunshine and roses. Where are we really headed as a society? Given the huge implications for the economy, this is a tremendously important question that very, very few people are answering:

When will society reopen after the vaccine rollout?

For my purposes, a lack of forecasting about the future is particularly painful. While lots of entertainment is consumed at home (TV, streaming, video games) lots more is experience live and outdoors (theaters, concerts, sporting events, theme parks). As I usually do when I can’t find an answer to a question I need to know, I tried to answer it myself. 

So here’s a report on what I found. The outline of this (long) article is roughly:

– Bottom Line, Up Front
– The Problem: the legal/regulatory thresholds for society to reopen
– The Assumptions/Inputs: the key assumptions/inputs to build a reopening model
– My Hypothesis: Effective vaccines widely distributed will crush the death toll
– The Model: My results!
– The Key Metrics To Track Going Forward

Let’s get to the results.

Bottom Line Up Front

I’m optimistic that theaters will be open by May 7th across the US, including New York and Los Angeles, the day Black Widow is set to premiere in the US. Black Widow itself may not premiere on that date, though whether or not it moves dates in the next few weeks will be driven by uncertainty, since Disney will have to make the call in about four weeks.

After building a vaccine distribution model (with three scenarios), I’m confident that by early May, between 33%-44% of the population will be fully vaccinated, and up to 61% will have had a first dose. Given the initial data that even one dose provides nearly full efficacy, this level of vaccination will likely decrease deaths and hospitalizations by 76% or more.

It is much more uncertain what the volume of cases will look like by May 7th. The key metrics to focus on, for studios and other entertainment companies, will be the pace of vaccinations, the current case loads, and the rate of death.

(Initially, I had a series of caveats to this controversial article. I can hear the skeptics, “You’re not an epidemiologist so why should we listen to you?” To save space, I’m moving those to their own future article. To address the key caveat, yes, I’m not an epidemiologist. 

Frankly, most companies cannot afford to hire epidemiologists to forecast disease outbreaks. And even if they could, as we’ll see, their models have their own uncertainty. Instead, many companies will likely have their strategy teams doing this analysis themselves and/or rely on models from companies like McKinsey/Goldman Sachs, which are, you guessed it, put together by people like myself. The difference is I make my models/methodology public.)

The Problem: When Will Theaters Open Specifically?

Today, I’m focused on the movie theater problem. (Hopefully, I’ll get to sports and concerts in future updates.) The problem for big studios is distribution: when they release a big tentpole film, they want it widely available. Specifically, this means Los Angeles and New York, and other big cities. They’d ideally want theaters at 100% capacity, but would likely accept 50% capacity constraints.

Thus, the question is whether those specific cities (and America broadly) will be mostly reopen by May 7th, which is when Black Widow premieres. (Or Memorial Day weekend, 28-May-2021 when Fast 9 is set to premiere.) The studios will need to make this call about eight weeks prior, so that they can schedule promotional advertising campaigns. Disney has said they’ll likely make the decision on Black Widow in the middle of March.

To reopen theaters, local counties will need to have Covid outbreaks under control, using whatever guidelines local states have established. In California, for example, this is a series of “tiers”, of which Los Angeles is firmly in the first, most restrictive tier. From the Los Angeles Times:

IMAGE 4 - Reopening v01

And our status under those definitions:

IMAGE 5 - CA Status LA Times

(Though, like all things Covid-19, there is actually a more restrictive tier of “stay-at-home orders”. California’s stay-at-home order was lifted in January.) 

Tying this to theaters, in California, “red/tier 2” counties can have theaters at 25% capacity or under 100 people, whichever is lower. “Orange/tier 3” counties can have 50% capacity or 200 people, whichever is lower. “Yellow/tier 4″ presumably would be fully open.

Covid Act Now, uses a different set of guidelines, and you can see how various metro areas stack up:

IMAGE 6 - Covid Act Now Metro

No matter which numbers you use, the same basic correlation is the same: The lower the number of cases, the more indoor businesses which can be open, which includes theaters.

As cases decline, so do deaths, after about a three week lag. Crucially, as vaccines are widely distributed, deaths may decline even further and faster than cases. If deaths drop and stay low, even if cases come back, some folks could argue that the values of reopening society outweigh the risks of disease spread. (In short, if a pandemic is raging, but no one is dying, is it a pandemic?)

So really there are two scenarios for reopening. One is the “public health” requirements, which means eradicating cases. The second is the “demand side” requirement, which is that deaths and hospitalizations are low enough that society wants to reopen.

The Key Assumptions/Inputs

The reason I couldn’t build a model before 2021 on Covid-19 was that forecasting the pace of the disease was nearly impossible. With so much uncertainty and unknown variables, most models have failed to effectively forecast what will happen in the next two to three months. 

Vaccines, on the other hand, are an easier modeling challenge. We have fairly reliable data sets on distribution and fairly robust (and growing) knowledge about how effective they are. Let’s explain those inputs/assumptions.

Input 1: The pace of vaccination is increasing in the US, and could accelerate further.

No matter how you slice the data, the rate of vaccinations is growing in the US, and it’s a story that most outlets mention, but with the pessimistic caveat that everyone wishes they were even higher. (Yes, we do.) But they’re getting higher every week. In a few weeks, they will be shockingly high. Here’s Our World in Data’s look:

IMAGE 7 - OWiD Vaccine Rate

Or take Kevin Drum’s take, looking at peaks:

IMAGE 8 - K Drum Update

The US was able to double vaccination capacity in ten days starting in January 4th (350K per day, seven day average) to January 14th (700K). I start with January 4th, since that’s when most healthcare workers returned from Christmas break, and all state and local governments focused full-time on the vaccination program. Then, it took 26 days to double again (from January 14th to February 9th). Depending on when we get to 2 million doses, it may have taken only 30 days to have doubled from 1 million doses to 2 million. (We’re currently at about 1.7 million per day.)

We will likely be delivering two million doses per day, as this week the Biden administration committed to delivering 13.5 million doses to states at a minimum. On top of this, the Biden administration is delivering two million doses directly to pharmacies and one million doses to community health centers. If all those doses are used next week, we’ll exceed 2 million doses administered per day. Further, the CDC expects 200 million total doses distributed to states by the end of March, which implies a daily rate of 3.5 million doses per day in March.

Input 2: One Vaccine Dose Begins Providing Protection

The initial data from the UK and Israel shows that even one vaccine dose provides a high level of protection. This does not mean individuals shouldn’t get a second booster shot. They clearly should. Very likely, though, the first dose provides immediate impacts on infections, hospitalizations, deaths and even transmission. More and more data is coming out which supports this conclusion.

Input 3: The Covid-19 vaccines work. Extremely well.

It seems crazy to have to repeat this, but it should be noted that the vaccines work really, really well. You probably saw this tweet from Brown epidemiologist Dr. Ashish Jha, but it’s worth repeating:

Moreover, studies conducted in the United Kingdom and Israel on vaccine roll outs confirm the efficacy of these vaccines. In addition to preventing symptomatic illness, the vaccines also drastically reduce hospitalization and death. Finally, initial data also suggests that in addition to preventing death, it looks likely that the vaccines prevent transmission to other individuals.

Input 4: Covid-19 is most severe for older individuals, who the US is prioritizing in the vaccine rollout.

While the coronavirus can and does kill all ages, one of the more clear trends is that the virus disproportionately kills older individuals. Here are a few looks at this:

IMAGE 9 - Deaths by Age

IMAGE 10 - Deaths by Age v02

Fortunately, in January, after vaccinating healthcare workers, the CDC changed guidance to focus on high-risk (meaning older) populations. This means the impact of effective vaccines will be even greater than general distribution because it will decrease hospitalizations and deaths of those most likely to be hospitalized and die. 

If we can achieve high levels of vaccinations in those groups (say 80% of a given age population vaccinated) then the results will be dramatic. Vaccinating 80% of individuals over 75 will lower total deaths by 48%, individuals over 65 will lower deaths by 65% and vaccinating individuals over the age of 50 will lower total deaths by 76%. (And if we can achieve 100% vaccination in the most at risk groups? We’d lower total potential deaths 95%!)

Input 5: The current lockdowns are having a dramatic effect.

Meanwhile, as the Covid Tracking Project’s data show, the number of cases are plummeting in America. The declines are dramatic:

IMAGE 11 - Covid Tracking

Whatever the cause—lock downs, seasonality, growing natural immunity, some vaccine prevention—this is very good news for the United States. It means cases are trending down, right when vaccine distribution is ramping up.

Input 6: Case rates by population

To understand the impact on cases, beyond deaths, it is important to know how cases are distributed in the population. Unlike deaths, cases are fairly well aligned with the population. Meaning, folks will test positive for Covid-19 roughly correlated with their percent of the population. 

IMAGE 12 - Case and death and population

This is important because it could mean that as vaccines are rolling out to younger populations, the case rate could flatten or even increase, but deaths will not. There is already evidence that case loads are dropping in certain age groups in the UK, Israel and US, but as you can see that may not impact the overall case load significantly.

My Working Hypothesis

Add these inputs together, and this is my working hypothesis:

If current lockdowns can drive down cases…
Which will drive down hospitalizations/deaths…
And if the United States can vaccinate the highest-risk groups…
And if we can continue to increase the vaccines distributed per day/week…
Since vaccines prevent deaths and hospitalization…

Then once we get the current hospitalization rate down, it will stay down until the next flu season (next November or December). If hospitalizations are down, deaths will stay down as well.

This will allow states to reopen, including theaters.

The Model

So that’s the working theory. Let’s turn this into a model.

Step 1: Vaccine Distribution

To start, I sketched out some vaccine distribution scenarios. To start, I drew a linear model in vaccine distribution to see how it was growing. Then, I made a simpler second model based on potential vaccine supply. This weekly model uses big round numbers, but is more aggressive than the linear model and based on CDC guidance about distributing 200 million doses by the end of March. Lastly, I made a very conservative model based on plateauing vaccine supply at 2 million per week starting in February. 

First, here’s the linear model to show the logic:

IMAGE 13 - Scatter Plot

Here’s the table of doses by week:

IMAGE 14 - Table per Day

And a chart of that…

IMAGE 14 - Chart

That’s a lot of number, so here is a summary by month of the “reasonable” model.

IMAGE 15 - Chart

The monthly model confirms that vaccine makers could indeed hit the aggressive targets. I built the conservative model based on misreading the director of the CDC Rochelle Walensky estimating that we’ll have 200 million doses by the end of March. (I thought she had said 200 million by the end of April.) At a rate of 200 million doses by the end of March, the CDC is basically forecasting that we’ll be vaccinating 3.5 million people per day at some point in March. That’s my “reasonable” but aggressive model.

Step 2: The number of vaccinated individuals

So that’s the first step. We can reasonably forecast how many doses we’ll have distributed by future dates. Yet, some folks will insist on distinguishing between shots and those who’ve been fully-vaccinated. I went further and also calculated those who will be two weeks from their first dose, since data shows this too provides quite a bit of protection. Specifically, we need to know these dates by the start of May, our presumed launch of Black Widow, 

Here is my rough counts for those, and to put them into context, the percent of the population over the age of 18 who would be covered:

IMAGE 16 - Numebr Vaccinated

IMAGE 16 - Chart

(Why over 18? Because the vaccine is only approved for those 16 and over, and Covid-19 has very little impact on ages younger than that. Plus, frankly, it is about 250 million individuals which is a nice round number.)

In the worst case scenario, by the time Black Widow premieres, only 30% of the population will be fully-vaccinated. 

However, in the best case scenario, if you include natural immunity, one dose vaccines and count folks who are two weeks from their first shot, then up to 69% of the population will have immunity to Covid-19. So we’ll be on the verge of herd immunity by the end of April!

Let’s be clear on these assumptions:

– Some portion of Americans have already had and recovered from Covid-19 acquiring natural immunity to it. This floor is at least 27 million confirmed cases. (About 10% of the population.) The high end is unknown, but Harvard epidemiologist Michael Mina’s forecast is 40%. Let’s split the difference and call it 20%.

– I used the date five weeks prior since Moderna is three weeks, then two weeks to be fully effective. Yes, Pfizer is four weeks, but again this difference is minimal overall.

Step 3: The number of deaths prevented. 

Again, the impact of Covid-19 is not equal across the population. It is very much tilted towards older individuals. Meaning, when they are vaccinated, the odds of dying from Covid-19 decease by 92% or more.

To figure out how to vaccinate the right folks, I simply took the CDC data and 2019 census information, and assumed an 80% vaccination rate:

IMAGE 17 - Deaths and Cumulative Distribution

In other words, to prevent 76% of deaths, we need to vaccinate 80% of everyone over the age of 50. The key assumption is that we can achieve 80% full vaccination by group. Most surveys put vaccine hesitancy at 70% of the population, but only about 10% is hard core obstinacy to any vaccine. So I took a number in the middle.

So how many people do we actually need to vaccinate to get to that 3/4th decrease in total deaths going forward? Well, here you go:

IMAGE 18 - % Needed to Vaccinate

Of course, not all doses will go to healthcare workers and individuals over the age of 65, especially as counties and states begin vaccinating more essential workers. (Like Los Angeles, who is moving onto food workers, teachers and remaining public safety officials after those older than 65.)

Given the vaccination rates above, we can see that it is very, very likely we’ll have fully vaccinated 40% of the population with either one or two doses, including most healthcare workers and folks over 65. A big portion will also likely be those 50 to 65. If we include people getting only 1 dose of Johnson & Johnson, then we’ll almost certainly have vaccinated all high risk groups.

My model forecasts that by May 7th, we’ll have lowered the ceiling of potential deaths by 76%. If this widespread vaccination results in decreased case loads and transmissions, the actual death rate could be much, much lower. This is essentially the “ceiling” of deaths.

Step 4: The Los Angeles Specific Model

This model, so far, has only addressed vaccinations and deaths. What about cases?

As I set up in the problem, the primary criteria to release Black Widow (and other big studio films) in theaters is whether or not the coastal cities are reopened. To answer this, ideally, I’d build a model forecasting cases in both of those cities. Given that I live in Los Angeles, I pulled the numbers there to see how far LA is from reopening. I’m assuming that Los Angeles and New York are roughly correlated with each other, and their outbreaks are also roughly correlated with national outbreaks.

(This assumption is both fine and could be horribly wrong. The “summer surge” mainly took place in “Sun belt” states, whereas the first surge took place in north Eastern states. However the last surge took place in every state simultaneously.)

I showed Los Angeles’ current performance on state re-openings, but it’s worth noting that most metrics are tied to case loads. If it goes down, ICU capacity, case positivity rate and the equity will trend downward as well. Here’s the current case trend line:

IMAGE 19 - Case Trend Line

Now the question is can we model how vaccine distribution could impact case levels going forward?

And no, I don’t think we can. 

I’ve done a lot of forecasting so far, but every number is from a fairly reliable source. The vaccine distribution plan is fairly well reported, and its growth is easy to forecast. (Again, look at that straight line!) The impact of the vaccinations is also fairly well known. Thus, we can confidently predict a coming drop in deaths that will stay low, if we vaccinate the most at risk groups.

Cases, though, are a different ball game. 

Just look at US trendiness in the past. If you started in the middle of October, and just extrapolated forward, you’d have missed the December spike. Or if you started in the middle of January, you’d have forecast cases to stay high. This actually happened with the CDC forecast. In the middle of January, their model of models forecast 1.5 million cases by the middle of February, with a floor over a million.

IMAGE 20 - Forecast

Instead? Cases are currently at 600K and falling.

IMAGE 21 - Cases Feb

I don’t blame the CDC. Modeling seasonality, societal behavior and mostly a brand new virus is incredibly tricky, and these epidemiological models have trouble with it. Again, no blame here from a fellow modeler. I’m just acknowledging the limitations of modeling.

Add it up, and I won’t forecast the case rate/total cases in Los Angeles by the beginning of May. There are too many unknown variables. Indeed, I think both the best case (cases stay very low, due to natural immunity and expanding vaccinations) and the worst case (case rates rebound after widespread reopening, potentially driven by more transmissible variants) are both possible by May. The only thing I am fairly confident (as steps one though three show) is that deaths will stay down. 

At best, what we can say is that as vaccinated rates go up, the peaks of the worst metrics will be limited. Think of it like this: the infection rate is the number of people an individual with symptomatic Covid transmits it too. If it is 2.5, that means one individual gives it to 2.5 individuals. If half of all the people someone meets are protected from Covid-19, then the max number would now be half of that, or 1.25. 

The Key Metrics Going Forward

Notably, I haven’t provided any probabilities thus far. If I apply probabilities to events two months out, my error bars would need to be very, very wide. Those probabilities wouldn’t be worth much more than guesses. 

Instead, I’m going to provide a scorecard of key metrics. The higher the scorecard, the more confident we can be that society will returning to normal. You can apply your own probabilities based on the numbers. These metrics will have three parts: vaccinations, deaths and case loads. 

Screen Shot 2021-02-18 at 5.02.44 PM

I plan to think on these metrics a bit before I do an update, hopefully next week. As I said, I won’t provide predictions, except for the vaccine roll out, but will color code which metrics are moving in the right directions.

As I said at the start, if you read all the way down here, as vaccine distribution picks up, the Covid-19 pandemic will end gradually, then all of a sudden.

In the meantime…

Please do whatever you can to prevent the spread of Covid-19, focusing on the best practices at preventing spread. 

1. Wear a mask. In fact two, or the highest quality you can afford.
2. Avoiding indoor gatherings until you are fully-vaccinated.
3. By all means, get vaccinated as soon as you are able to.
4. Help older relatives get their vaccinations by whatever means necessary.
5. Spread positive news about the efficacy and safety of vaccines and that they will enable our society to reopen. Vaccine hesitancy is driven by vaccine skepticism, a large amount of which is coming from the media. This includes skepticism about how vaccines prevent hospitalizations and death. Do your part to spread the good news and not Covid-19 hysteria.

Sources

I linked to most data I used to put this together. However, a few websites provide regular updates. I recommend…

Our Wold in Data
Covid Act Now
The Covid Tracking Project
The Los Angeles Time
Bloomberg Vaccine Tracker
Nate Silver’s Twitter feed, who close followers will recognize a few tweets from.