Basketball, in my opinion, is a great testing ground for theories on strategy, valuing assets and data analysis. That’s why I developed my own “Value Over Replacement Executive” theory last fall. Or why I used the NBA to explain the ...
The only downside of my NBA-to-Entertainment translator was that I only had 30 NBA teams to unleash my snark. In entertainment, we have many more companies that just couldn’t make the cut. So I had to expand the world of the NBA just a little bit to fit in a few remaining “just too perfect to exclude” translations.
Here you go: the Rest.
The G-League – Discovery (Scripps) and A&E Networks
I’m a hard core basketball fan like many people. But if you asked me to tell you how many teams are in the G-League, I couldn’t do it. (It turns out there are 27.)
I follow entertainment pretty closely. I couldn’t tell you how many channels Discovery (with Scripps post acquisition) and A&E Networks have either. So I looked it up:
19! For just Discovery (with Scripps).
10! For A&E.
That’s more than I would have guessed for both, and you know what, that gives these two a lot in common. Sure, they have a lot of channels/teams you can’t name, but they keep doing their thing. (The difference is a lot of Americans still watch a lot of these channels, which can’t be said for the G-League.)
LeBron James – Marvel Studios
Not the whole enterprise, just the part run by Kevin Feige. Consider these fun connections:
Both LeBron and Marvel started making waves in the early 2000s. Spider-man and X-Men made a lot of news, and you could tell something was brewing, just as LeBron was being called the greatest high school prospect in the world. Marvel Studios released the mammoth hit Iron Man in 2009, the first year LeBron won the MVP. Marvel Studios released the mammoth world building Avengers in 2012, the first year LeBrown won a championship. In 2014, nobody thought LeBron would leave Miami, but he did, and no one thought Guardians of the Galaxy would be a smash hit, but it was. Either way, both LeBrown and his 14 straight All NBA appearances is the equivalent of Marvel Studios launching all successful films since 2009.
In the present times, LeBron coming to the Lakers was the event of the season, like Black Panther or Avengers: Infinity War, take your pick.
Yet, the questions remain for the future. Can LeBron’s health last? Will Kevin Feige keep churning out the hits? So enjoy the ride of Marvel Studios and LeBron while it lasts.
The ABA – 21st Century Fox
Their spirits live on! The ABA brought us the Brooklyn Nets, Denver Nuggets, Indiana Pacers and San Antonio Spurs. And 21st Century Fox will live on in Avatar and Spider-Man.
(This is Part VII of a multi-part series answering the question: “How Much Money Did Disney Make on the Lucasfilm deal?” Previous sections are here:
Part I: Introduction & “The Time Value of Money Explained”
Appendix: Feature Film Finances Explained!
Part II: Star Wars Movie Revenue So Far
Part III: The Economics of Blockbusters
Part IV: Movie Revenue – Modeling the Scenarios
Part V: The Analysis! Implications, Takeaways and Cautions about Projected Revenue
Part VI: Disney-Lucasfilm Deal – Television
Part VII: Licensing (Merchandise, Like Books and Comics and Video Games and Stuff))
If you’ve been reading along after 47 pages and six months of writing, you know that Disney more than made its money back on its purchase of Lucasfilm through releasing wildly successful Star Wars sequels, and then making another $1.7 billion in licensing revenue. So they made their money back.
But to truly get a great return on investment—as I wrote in the introduction in my “gut” section and again when referring the licensing & merchandise—theme parks are the whipped cream and cherry on top. In 2019, if it stays on track, in Disneyland and in Disney’s Hollywood Studios, Disney will open Star Wars: Galaxy’s Edge, which have been under construction since 2016.
And they could be huge money makers.
Theme parks allow The Walt Disney Company to make more off its IP than any other studio. (That’s its competitive advantage.) So let’s figure out how to quantify that benefit. Then, we’ll figure out the costs.
The Challenge: Disentangling the Marginal Benefit of new Theme Parks
With movies, calculating the revenue is messy, but we have lots of data. With toys, forecasting the revenue is easy, but we have way less data. What about for theme parks? In this case, the toughest part of the process is assigning the value.
Think of it like this. We know that putting in a Star Wars: Galaxy’s Edge at Disneyland will drive attendance and revenue. The problem with theme parks is untangling how much revenue they will drive.
In other words, the “marginal benefits”.
Some day I’m going to write “Marginal Benefits Explained!” because it’s a core economic principle—the core principle?—and I’ve seen 7-figure-earning business execs screw it up. Marginal benefits are the additional revenue a business generates by changing an input. So if you’re making a million dollars a year and raise prices, and it goes up to $1.2 million, your “marginal benefit” for the price raise is $200K, the additional revenue you generated.
(You want to know my biggest frustration/pleasure with this website? Every time I write a new article, I think of two more posts to write inspired by it. The “hydra problem” of the Entertainment Strategy Guy.)
This idea is what stymies the analysis with theme parks. Let’s visualize it with an example.
Next year, I’ll walk into Disneyland in the off-season (probably September-ish). I’ll be wearing a Star Wars shirt. My brother will probably rock a Marvel shirt. That said, I’ll also have a three year old wearing, if current trends hold, either an Elsa (Frozen) or Belle (Beauty and the Beast) dress.
So how much of that trip do you allocate to the opening of Galaxy’s Edge? (Punctuation side note: do you italicize theme park lands? I did, but should I?) My family already averages one trip to Disneyland every year, and my daughter knows that Mickey lives at Disneyland. So she’d go anyways. But what about me? I’ll definitely go to see the new park at some point. We could make an analogy of a theme park to a content library on a streaming platform. People pay for the whole thing, not the parts. With content libraries—which is essentially what a theme park is—untangling and clarifying the value offered by each piece can be tough.
The Economics for Theme Parks
When in doubt, I like to boil things down to a simple formula. So let’s do the rough “business model” for a theme park. I came up with this:
Over the last few weeks, there were big stories (elections), tragic stories (devastating forest fires in the southland), and heart-breaking stories (the shooting in Thousand Oaks). So many stories that it gets hard to stay focused on the business of media and entertainment. So a few days/weeks late, here is my round up of stories I’ve been following. I won’t touch the personal tragedies as they’ve been covered better by other news outlets.
I struggled to call out a “most important” story, with the election gobbling up media coverage. So you know what…
Most Important Story of the Weeks – How the Election Could Change Regulation
As everyone knows, Democrats took control of the House of Representatives while Republicans held onto the Senate in the American elections of last week. (Then came a bunch of other political news. If you follow most entertainment journalists on Twitter, you don’t need me to repeat it for you.)
The key is the ramifications for business. First, what I don’t think will happen. I don’t think there will be a sudden wave of anti-trust regulation. I don’t think there will be a wave of pro-consumer legislation like finally addressing the United States unwieldy IP/patent/copyright law. The Democrats only control one branch of the Federal government, and will still battle a hostile Senate and hostile President Trump to pass any new legislation. Betting on the status quo is always a good bet in our current political climate.
What could happen? Well, caution in rolling back some regulations. The chairman of the FCC, Ajit Pai may be just a little be more worried than before the election about his agenda of wholesale deregulation of media & entertainment. (In fact, he’d already blocked one merger in the broadcast space.) Under threat of testifying on the hill multiple times, he may dial back a few of his more controversial proposals. With their newfound agency, Democrats could tie some consumer-protection measures to budget bills, such as support of municipal broadband or, gasp, net neutrality. Again, I’m skeptical but they could try. Also, as Variety noted here, Hollywood could pressure Democrats to put pressure on tech giants to fight piracy. Again, could, but likely no bills will result.
Then you have the wildcards. Not saying they will happen–I mean, is a wildcard a 10% or less probability?–but I’m thinking about them. My first wildcard is President Trump going crazy with antitrust legislation on his enemies: AT&T/Warner (cause CNN), Comcast (cause MSNBC) and Amazon (cause Jeff Bezos). I think he isn’t focused enough to follow through, but wouldn’t bet against him, especially if his new Attorney General sticks in the role. At the local level, I’d look at “municipal broadband”. Since everyone hates their cable providers, with lots of new Democratic gains in state houses, more states and cities could try their hands at alternatives to traditional cable companies.
The final wildcard would be legislation that finally addresses robocalls. Any politician who stopped all the annoying phone calls would become a hero to consumers. (That’s a hint for politicians already thinking about 2020.)
Other Contender for Most Important Story – BlumHouse Does it Again
Another horror film by Jason Blum, another box office smash. (Current numbers are $76 million opening weekend and $151 domestic box office to date.) That said, this one feels a bit more expensive production-wise (Jamie Lee Curtis, Halloween franchise owners) than past BlumHouse super hits. Still, he’ll definitely make his money back. Again. (Blum was rightfully feted in THR in a good read.)
The last two weeks have featured key new moves in the multi-dimensional chess match that is the future of TV viewing. (For some of my thoughts in general, check out my NBA-to-entertainment translator where I throw a lot of fun analogies out about old and new media.)
Most Important Story of the Week – AT&T/WarnerMedia Enters the Streaming Fray
Well, AT&T had already entered the fray. They just have a new plan.
Warner Media and AT&T both had their own “OTT” options for the consumers of the world. AT&T owns DirecTV Now, a “skinny bundle” of TV channels, and had a stake in Otter Media, which owns SVOD channels such as Crunchy Roll, Full Screen, and Hello Sunshine. These rolled up into VRV, a larger subscription bundle.
WarnerMedia had its own “digital networks” group that offered subscriptions to Boomerang–featuring cartoons owned by Turner such as Looney Tunes and Hanna Barbera cartoons–DramaFever–Korean dramas–and a soon-to-be-launched DC Universe streaming service. And HBO owns HBO Now. So both companies had played in the “SVOD” or “OTT” universe.
Just not very well.
The announcement–like the “DisneyFlix” announcement before it–was pretty sparse on details. Here’s what we know: in Q4 of 2019 AT&T/WarnerMedia will launch something. The assumption from many people is that AT&T/WarnerMedia’s offering will ultimately be more like a much larger OTT: there is a base bundle, but then multiple options to add on top. This would be similar to Amazon Prime/Video/Studios approach with its “Amazon Channels” business.
Let’s do good and bad of this vague announcement:
The good: The content offering could be compelling…
I mean, it’s basically a cable package, if Turner gets brought in. TNT for drama, TBS for comedies, Cartoon Network for kids, HBO for prestige viewing, CNN for news and Warner Bros. for movies. Make that as the base with other channels as OTT add-ons, and you may have something.
The good: with a much more coherent price offering.
When I first heard about Boomerang, I could never quite believe what I read. “So you’re offering me a lot of cartoons for $4.99 a month? But Netflix is just $10 a month. Are those cartoons worth 50% of that price?”
Not really. If anyone can get away with that, well it’s Disney. Given that they have the top, in demand movies, they can charge a premium when they launch their platform (and will hurt Netflix in the process). Everyone else needs to offer a large bundle that mimics Netflix prices (and cash losses). The reason Warner Media didn’t offer that before is simple: they couldn’t afford it. Netflix can’t really “afford” it either, from a cash perspective (they just took on $2 billion more in debt). But they can lose money and watch their stock go up; formerly Time Warner couldn’t.
The bad: Do consumers want one bundle, or do they want four different bundles?
Do you buy the whole AT&T bundle, or buy that and Disney and Netflix and CBS Now? And if the prices go up on all of those, do you end up paying $100 for internet, and now $80 for OTT, meaning you’re paying more than you do now for internet and cable, just with way less viewing options? That’s bad for customers. (And a prediction I want to look into. I’m not bullish on customer benefit in a future of greater industry consolidation.)
The unknown: Will AT&T/Warner Media stop selling bad OTT services?
From what I understand, the DC streaming platform–that I guess will launch with a per month price of 20-40% of a Netflix subscription–will still launch. That just seems like a bad business model. At the same time, since acquisition, AT&T shuttered other digital platforms like DramaFever and Super Deluxe. So we’ll see. Maybe they’ve learned their lesson, but I’m skeptical.
Other Contender for Most Important Story – SnapChat Launches Originals
I don’t think that social platforms are good for video.
Phew, glad to get that off my chest.
Let’s explain. I’m a big believer in understanding the problem your company is trying to solve, and delivering solutions to that problem. I haven’t written about the “Marketing Framework” (3Cs-STP-4Ps) yet, but I love to use it to analyze business problems. The key insight of the framework is to align all parts of the product with the solution to the problem.
With social platforms, producing “original video” fundamentally misunderstands the core problem these social networks set out ot solve. Twitter connects normal people to the thoughts of other famous people and their friends. Facebook connects social networks online. Instagram is flashy fun images of famous people and your friends.
Video can help that. Hypothetically, people want to see Instagram videos from celebrities. They want to see videos of kids (they know) blowing out candles on a birthday cake. Those reinforce the core solution to the initial problem.
Notice, I never said those platforms were about sitting back and watching entertaining TV shows and movies. Yes, video from famous people or friends is a part of those social networks, but the problem being solved isn’t wanting to watch long-form (or even short form) video. Specific other apps are optimized to do that and do it better. (And even with the rise of mobile viewing, mobile viewing, phone or tablet, is inferior to the living room experience.)
So welcome to the originals game SnapChat. I think you are trying to inject original video production to solve a problem your customers don’t want solved.
Other Contender for Most Important Story – Annapurna Films Struggles
I considered the news that Megan Ellison’s Annapurna films is (allegedly) in chaos, then (allegedly) not in chaos as my most important story, but there wasn’t enough there there to write it out. But still…
A few months back, I wrote about the fall of Global Road, comparing its performance to STX Entertainment, which felt really similar to me. Well, I could have thrown in Annapurna Films, which I didn’t. In a lot of ways, they’re suffering from the same fate as their predecessor: launching a standalone studio in the age of monopolistic super-conglomerates is tough. In my defense for ignoring Annapurna, until recently they weren’t in the distribution business, sticking to producing films.
I’d add one other point I haven’t really emphasized enough: streaming is my theory for why so many new studios popped up since the financial crisis. (My count? Relativity, Global Road, STX Entertainment, Annapurna Films, and A24, at least.) What fueled this mini-boom was the rise of licensing of movies. Basically, if Amazon or Netflix will pay your production costs in a film output deal–which they may do on a global basis in some cases–then you can make money if you have just one hit at the box office.
I’ll also add that Annapurna plays (mainly) in an even trickier world: prestige films. If you don’t deliver your Best Picture Oscar film each year, then you can lose a lot of money. Initially, Annapurna didn’t have a problem there. Recently, though, they have. That’s also basically the life story of Miramax and The Weinstein Company, that always struggled financially year to year.
This is a good summary of the streaming landscape now that AT&T has entered the fray, but I’d really point out they make the same point I do: at some point having a cable bundle may offer more content then all the OTT services put together. I’d add this is doubly so if: 1. SVODs raise their prices or 2. SVOD’s restrict sharing of passwords.
In the heyday of Grantland, they featured a piece from the good people at Men in Blazers to develop an “NBA to English Premiere League” translator. It helped novices to soccer pick a team in the most popular sports league in the world. It worked so well, I adopted Chelsea as my premiere league squad based off this little comparison to the Lakers:
“Your winning tradition has been soiled by an arrogance which, real or imagined, has caused you to be roundly despised across the league. You have a young coach attempting to gain the respect of a veteran squad, led by a soft Spanish big man and an aging Kobe, who could be any one of Chelsea’s graying superstars — John Terry, Frank Lampard, or Didier Drogba — attempting to substitute experience for pace.”
In 2011, that made a lot of sense. So if you want to pick an NBA team based off where you work, or want to invest based off your favorite NBA team, well I have you covered.
On to the Western Conference. The one with all the stars, all the hits, all the buzz. The “Bestern” Conference. Of course, they still have some teams near the bottom, just not as many.
Sacramento Kings – Spectrum
Let’s just pull the band aid off this wound: the Sacramento Kings are the worst team in the NBA (and have been since the Lakers beat them fair and square in the early 2000s) and Spectrum is just the worst. Honestly, if someone loves “Spectrum” (previously Time-Warner Cable) send me a message.
I’ll wait. Just like a Spectrum customer on hold trying to cancel.
So to “rebrand” Time-Warner became Spectrum a few years back. They said it was because of a merger, but mainly it was to hide from their past. The Kings changed from the Royals because they moved cities, and wanted to hide from their past.
Also, like T-Mobile failing to merge with AT&T, Time-Warner Cable was almost purchased by Comcast, and instead was purchased by Charter Communications. Those set of moves are the NBA equivalent of drafting Boogie Cousins and Willie Cauley-Stein because they were “buddies”, while trading a lot of future draft picks to Boston.
(Yes, I know Spectrum co-owns the Lakers channel. They still are awful.)
Phoenix Suns – AMC Networks
The Phoenix Suns in the 2000s were the flashiest thing in basketball. The “7 seconds or less” teams featured passing & shooting, running & gunning, and won the hearts of NBA pundits, the equivalent of critics. They set the template for pace & space all that would come in contemporary basketball.
AMC Networks won the hearts of critics repeatedly over the same time frame. Breaking Bad, Mad Men, Better Call Saul and even more obscure shows (Halt and Catch Fire; everything on Sundance TV) were the cultural equivalent of Steve Nash, Joe Johnson and Andre Stoudemire. (Nash is Breaking Bad; Shawn Marion is Mad Men; Amare Stoudamire is the rest of the obscure shows, cause he’s career ended too soon and so do they.)
Basketball is back!
And the town of glitz and glamour, the home of showtime—Hollywood—is back!
The stars aligned this off-season and the Lakers lured the biggest star in basketball, possibly the world (if you’re an American and ignore soccer), to the greatest franchise in sports history, the Los Angeles Lakers!
If you can’t tell, I’m a Lakers fan. At one point, celebrating the arrival of LeBron, I even compared LeBron joining the Lakers to The Walt Disney Company being able to acquire not just Marvel, but Pixar and Lucasfilm too.
That would make the Lakers “The Walt Disney Company” of NBA franchises. That sounds like an analogy. And a gimmick to write 6,000 words mashing together my love of NBA basketball with media & entertainment. That’s right, thousands of words over the next 3 articles celebrating the return of the NBA, giving every NBA team its partner in the world of entertainment (and occasionally media, tech and communications).
Ground Rules & Explanations
Like all things I do, this is a scientific and data-heavy enterprise. Supremely scientific. Yep, I used mounds of data from customer viewing behavior to financial performance to textual analysis of social media posts, Wikipedia pages and financial reports to develop a multi-variable complex regression that fed into a neural network that provided a clustered, nearest neighbor, that I modified via a random forest tree to make the optimal NBA-to-Entertainment analogies.
(Or I just made it up.)
Okay, an actual rule: I allowed myself to use both the conglomerates (Viacom, Disney, Comcast-NBC Universal, AT&T-Warner and others) and their subsidiaries, if the subsidiaries were significantly famous. So ESPN and Lucasfilm are a part of Disney, but they get their own teams, in addition to Disney getting its own team.
Second rule, I tried to use all the “entertainment” companies including conglomerates, studios, broadcast and cable groups before moving on to tech, print media and social media.
Fourth rule, have fun!
We’re starting with the Eastern Conference, that in days of yore we called the “Leastern Conference” since it’s talent paled so much in comparison to the West.
(Actually, it still pales in comparison.)
So we’ll start with the worst-er conference which means the bad movie studios (Paramount, Sony) and providers (cable companies, cellular and satellite companies). Speaking of which, our first translation:
Atlanta Hawks – Sprint
Orlando Magic – T-Mobile
Sprint and T-Mobile are trying to merge together to make a competitive cellular company. If you combined the Hawks and Magic, you (might) have a competitive NBA team. On their own? Sprint and T-Mobile would remain in 3rd and 4th place in cellular and The Hawks and Magic will be lucky to make it to 30 wins.
These analogies work individually too. Like Sprint, the Hawks have a long legacy with a lot of name changes. They started out as one of the original 8 NBA teams, were originally called the “Tri-City Blackhawks”, and possess a tradition that has been good, but never really great. (The Hawks last championship was in the 1950s.) I mean the best “move” Sprint made in the last two decades was luring Paul “Can you hear me now?” from Verizon, which is the cellular equivalent of the Trae Young trade last summer.
T-Mobile is the closest thing to an “expansion team” in the cellular game, like Orlando which was an expansion team in 1989. T-Mobile is also a Germany company trying to merge with a Japanese owned cellular company, which is geographically as confused as putting a basketball team in Orlando. (While Seattle still has approximately zero NBA teams.) Recently, T-Mobile has tried to sell itself, while failing and settling for merging with Sprint. The Magic had an all-NBA guard in Victor Oladipo, but traded him for nothing (basically), and now have a team of all power forwards. That matches.
New York Knicks – MGM
I come across the flaw of averages in reporting quite a bit. Take my article on MoviePass. The CEO said in an interview with The Indicator that the “average MoviePass customer sees 1.7 movies per month”.
If you read my articles from a few weeks back explaining distributions—and I know you read all 3,000 words—that average of “1.7” is virtually meaningless. He could have told us what the distribution looked like, but didn’t. And probably for good reason. (Impending bankruptcy.)
Since he won’t tell us, here are my guesses:
I would call this a “Log-ish” distribution. First, it’s not a continuous range. With MoviePass, they had discrete scenarios. You see one movie or two movies, but not 2.5. Also, my guess is more people use the service in a given month then let it sit idle, which keeps this from being a true log distribution. I also put an artificial cap at 10 films. That said, the behavior in general will have power-law results. (Some very small number of people will see an order of magnitude more movies over a year, literally 100 in some reported cases.)
(If these numbers were true—and I have no reason to expect them to be—then MoviePass would lose, on average, $5 per month per customer, on average. Given they had 3 million customers when I got my 1.7 number, this would put losses at 15 million per month. Since their CEO said that they were losing 21 million per month, my gut says that tickets were more expensive than my model, mainly because they were over-indexing on coastal users. Also, if the subscribers went up to 4 million, I’d be about perfect.)
Still, I found a Logarithmic Distribution in a random place. (Said in the voice of Rhianna to the tune of “found love in a hopeless place”.) When I started this three part series, I called the Logarithmic Distribution of Returns the “most important shape” in entertainment. I said it applied EVERYWHERE, not just to movies.
Well today, I’ll show you the everywhere. I’ll be blunt with you, I want to convince you of two things:
1. This is the reality of returns in every field of entertainment.
2. The average sucks (or is “sub-optimal”) at describing this reality.
Data Notes and Cautions
Some cautions on data, as always. Why do I always talk about the data itself? Like why provide this critique of my data? Because NO ONE else does on the internet. You should always be as informed, especially when coming with numbers, so when I use data I want you to know what I do and don’t have, what I can and can’t prove.
Caution 1: I’ve seen this in more places than I can share.
I worked at a streaming company, but that data is confidential so I can’t share it. In addition, I’ve done deep dives into other parts of entertainment, but sometimes I can’t find the charts I’d made, or they were on other computers. So that’s a bummer.
Caution 2: I’m limited by available data.
In many cases, I don’t have access to the database that has all the information. To really show a log-distribution, you need all the data, not just slivers. Instead, I have to rely on what I can find—the good graces of the internet—which is usually top ten, top 25 or top 50 lists, which isn’t good enough. We can still extrapolate using some logic, but if I had access to the database itself, it would all look more logarithmic.
Caution 3: I plan to update this over time.
This post has taken a lot of research, which takes time. At the same time, I promised this three weeks ago. So to manage both priorities, my goal is to post this today, then update it over time as I find more examples and/or think of more.
On to the examples.
Or “filmed entertainment”. Any marriage of visual recording with audio usually performs like our logarithmic returns. But let’s start with our example from last time.
As a reminder of a perfect logarithmic distribution, here’s box office returns in 2017.
In my second article, I showed how this distribution applied to multiple genres of films. Well, I recently looked at this for another genre of films. And guess what? We got the same distribution. In this case, I looked at war films.
Source: Box Office MoJo
TV Ratings by Series
Of course, you could argue that maybe theatrical box office skews the performance of video. So let’s turn to the other primary form of video, TV. Let’s start with traditional broadcast TV. Deadline had a summary of the ratings for broadcast channels in 2017 with the top ratings by series. Unfortunately, it doesn’t look as great as I wanted:
Source: Nielsen, via Deadline
What went wrong? Well that’s “broadcast” TV. In fact, that’s broadcast “prime time” TV. People with cable (or broadcast) can watch a lot of other types of shows: daytime programming, syndicated shows and cable. Oh, all the cable.
In a future update, my goal is to expand this table. (Trust me I’ve google the internet for a while and this is the biggest hold up to me posting today.) If I had access to Nielsen, I could do make the table pretty quickly. Instead, they only provide “Top 10s” and I can only find prime time broadcast on publicly available sites. (I made this chart for work before with Nielsen data.)
So I’m not off to a great start (though trust me, if you add cable above it looks logarithmic), but I have two other TV options to show.
TV Channels Viewership
Of course, we could also look at “TV Channels” as their own distinct entities. Do we get the same type of performance? I hadn’t initially thought of this, but stumbled across ratings by network when I was looking for data in my “CBS Myths Debunked” article. Here you go:
TV Subscriber Fees
Thinking of channels got me to think of another way to measure the value of TV channels, by the amount cable companies have to pay in “subscriber fees”. I don’t have time to explain sub fees now, but just know they were the straw that stirred the drink for the last few decades in cable. I had some old data from 2012 listing cable sub fees and here you go:
You could look for logarithmic distribution in “total subscribers” in cable, but you won’t find it. There is a cap on the number of households that can subscribe to a cable channel, which nears the total number of households at 100 million-ish. As a result, when cable channels hit that upper limit, they used fees to capture the extra value.
So Netflix, Amazon, Hulu and the rest don’t share ratings data. So no charts here. But I’ve seen the data for one of the streamers, made the charts, and let me assure you this: this law absolutely applies. The most popular shows on a streaming platform are multiples bigger than the vast majority that come, go and are forgotten. If anything, given the larger sizes of the platforms, the effects of the log-distribution are more pronounced.
Speaking of size of libraries, let’s head to the largest library of video on the internet.
Know this: if you search for information on the number of views by video, you find a lot of articles on “Gangnam Style”. Which I’m not saying to be negative, just pointing out.
Search hard enough, and I did, and I found the key insight here. This long, information article on a website called the The Art of Troubleshooting, where he used some scraping and R to pull the data on the video views. I took a screenshot of his “log-normal distribution” of video views. (In other words, he converted the logarithmic distribution into “logs” to show the normal distribution. It’s the same thing, it just looks different because the scale is in log.)
Here’s the picture and another link to his site.
Source: Art of Troubleshooting
The insight with Youtube makes sense: “Despacito” and previously “Gangnam Style” have literally billions of views. Yet, since anyone can make a video, the vast, vast majority have 0-100 views. This effect continues with channels as well, as measured via subscribers, sort of like how I measured both by show and channel above. This article on Vox has some of the statistics showing how big the biggest stars are. For example, PewDiePie is way out front, but most people don’t have any subscribers to their channel.
Youtube is definitely winner-take-all and the distribution holds. Here’s a chart showing the top 250 channels by sub. Look at the trend:
If we turned this into a histogram and expanded it out, we’d get our log distribution.
Social Media & The Internet
As the Youtube example shows, as the sample size grows, the effects of the power-law get amplified. Moreover, with the internet, the data is a bit easier to come across. And it makes the power-law distribution even starker.
Let’s start with Twitter. Do the number of followers someone has follow a power law?
According to this website, yep. And again this makes sense: Rinaldo has tens of millions of followers while most people are in the hundreds and bots have hardly any. This other article says that over 90% of people have less than 100 followers, which makes sense. Let’s head to Facebook. In this case, the number of friends someone has is NOT power-law, since it isn’t really consumer facing. But, the number of likes something has does follow this law:
Source: A ScribD article via Quora
In the future, I could look at both measurements of fandom (subscribers, followers, etc) or popularity of individual posts (likes, shares, etc) on multiple other social platforms and you get the same effect each time. That’s what going viral is.
One last part of this which is how the internet started: old fashioned webpages. Do certain cites have multiples more viewers? Of course.
Source: Top News Sites via Statista
That comes from Statista, who only covered news websites. You can go to Alexa and see another list of top websites, all in the hundreds of millions of monthly visitors. Yet, according to this one website, there are 1.89 billion websites. That’s definitely power law distribution. This random paper online backs this up.
So that’s five pages, 12 charts, and 7 or 8 different categories of entertainment (film, war films, TV shows, TV channels, Twitter, Facebook and the internet).
But I’m not done, just done for today. In my next update, I’ll try to tackle music—there are two more databases I don’t have access to—and other more unique/weird subsets like toys, comic books, sports and theme parks.