Tag: Box Office

Most Important Story of the Week – 25 Sep 20: We’re Heading for the (Almost) Worst Case Scenario For Theaters

Last week was a big one for me as I tore through a lot of Mulan data to produce my soon-to-be-biggest article of all time, “1.2 million Folks Bought Mulan on Disney+”. (It looks like it will dethrone the previous champion, “Netflix is a Broadcast Channel”.)

It’s been four weeks since I checked in on the health of theaters, let’s make that the most important story of the week.

Most Important Story of the Week – We’re Heading for the (Almost) Worst Case Scenario For Theaters

I try to think about things probabilistically. As Nate Silver would recommend. The world has lots of randomness, so events and different outcomes have different probabilities.

When I made my forecast of Coronavirus’s impact on theaters for a consulting client, I had a median case of theaters reopening in August. And it almost happened, but for a summer surge in cases. The worst case was that theaters would stay closed through 2020. We’re not quite to that worst case, but we’re close.

We’re partially opened in America as 70% of theaters are allowed to be open, but the studios are pulling their tent poles until the biggest markets reopen. Given that the US still accounts for 30-50% of a film’s total box office, America’s uncertain situation is scaring off all the big studio releases.

Which is a shame, because the rest of the world is doing much better. They’ve opened and after a few weeks most customers returned. Yet the US uncertainty (combined with global piracy, which is another shame) has held all the big studios from releasing their true tentpoles. The news of the last few weeks is that studios waited to see what Tenet would do, and found it wanting. 

Thus, Wonder Woman: 1984 moved to the end of the year (Christmas Day) and Black Widow moved to 2021. Though not all of Disney’s slate, as Soul is still holding onto Thanksgiving. And Universal moved up a few kids films to try their new PVOD strategy.

So I wouldn’t say we’re in the darkest timeline for theaters, but we’re closing in on it. November and December will have a lot of weight to pull to bring studios and theaters through.

Other Contender for Story of the Week – The Tik Tok Deal and Global Entertainment

Every newsletter I follow has been tracking the ins-and-outs of this story. But I waited. Would it be Microsoft? Or Oracle? Or Walmart? Or none of the above?Twists, turns and…we’ve ended up in almost the exact same place?

It’s like that quote from the Red Queen: you can run all day and end up in the exact same place. (Hat tip to the The Lost World novel for writing about that and logging it in my head from (is this right?) 25 years ago.)

All that has really changed is that Byte Dance has a new 20% owner of Tik Tok (Oracle) and it gets to keep operating in the United States. But it keeps its algorithm and presumably spy software in China.

Does this have implications from global entertainment? Assuredly, though let’s not go too far.

Clearly, China and America are headed for a new “Cold War” or “Bipolar” economic landscape. I’m not breaking news telling you that. President Trump has also escalated the situation with his proposed bans on TikTok and WeChat.

Not that this economic nationalism is unprecedented. China has banned US apps and companies for years. The biggest challenge for both EU and US companies and their nation-state champions is that there really is an unfairness in the global business situation. Netflix, Amazon, Google and others can’t operate in China due to protection laws. Yet, the EU and USA (and most OECD nations) pride themselves on allowing free and open markets. Which lets in Chinese champions.

This makes a seemingly unfair balance of power. (Though I could defend why China does it, and that reason is because US firms have definitely exploited smaller economies over the years. China has now largely avoided that fate. But this isn’t a politics website, I’m merely trying to explain why China is doing what they do.)

Where do we go from here? It’s unclear. Both presidential candidates seem concerned about China, so presumably restrictive measures could remain in place, with a Biden administration administering them a little more fairly/objectively. Long term, this could really hurt global business strategies with prominent Chinese ties.

That’s Disney, primarily, but really all the studios. One of the changes to my film model I’ve been thinking of making is to update the box office to: US, China and Rest of World. Since China is so protective, it keeps an outsized amount of profits in that country. (Only 25 cents of every box office dollar goes back to the studios. And even those can be hard to pull out.) If companies need to increasingly make “non-China included” strategic plans, that has lower global upside everywhere.

Entertainment Strategy Guy Update – The MLB-Turner Extend Their Deal with a 7% Year-Over-Year Increase

What? 7%? You saw the 65% jump in value reported in the press, didn’t you? 

Well, the key is context and the Entertainment Strategy Guy is nothing but context. When I see big splashy deals, my first question is the time period. In this case, a seven year extension. Then I take the two numbers and plot the CAGR. I put the average deal value in the middle of the deal (since leagues like to have revenue increase on a flat rate). Then I make my chart:

Screen Shot 2020-09-25 at 9.30.17 AM

As for the strategy, the next deal that shows a decrease in prices will be the first deal to show a decrease. Sports continue to be the source of programming keeping the linear channels alive, and the remaining linear players are paying a lot for them. And the bubble with 5-10% average increases in price each year has stayed on track.

Data of the Week – A Few Data Points on Subscribers (Peacock, NY Times The Daily and Shudder)

If “apples-to-apples” is the theme of the week, then I need to put the context right up front for these numbers. One of the numbers is “US only”. One is “US plus”. And two are global. Do not confuse them, since it really does change the denominator. (330 million versus 7 billion!)

First, Peacock, while explaining the increasing centralization of all NBC-Universal decisions under Peacock, Comcast let slip to the Wall Street Journal that they have gotten up to “15 million sign-ups” from the 10 million they announced in their July earnings report.

Next, Shudder, which is available in the United States, UK and some other territories, has reached the 1 million subscriber milestone.

Third, the New York Times “The Daily” podcast now reaches 4 million folks. Which is a huge number, but again don’t assume they’re all Americans.

The Athletic has also purportedly reached 1 million subscribers. While this is technically a global number, odds are it is driven much more by US customers. The caveat is that The Athletic has so aggressively discounted its business model that we don’t know what a subscriber’s actual ARPU is.

Other Contenders for Most Important Story

Disneyland (and Friends in California) Wants to Reopen

If you’ve been reading the EntStrategyGuy for any length of time, you’ll know that theme parks are a big part of Disney’s revenue stream. (Even more so than toys, which often get the credit.)

Hence, each week and month that Covid-19 keeps theme parks shuttered in California is a significant hit do Disney’s top and bottom lines. This week Disneyland, Knott’s Berry Farm and others publicly called on Governor Gavin Newsom to allow them to reopen. They noted that the reopenings in Florida and Europe haven’t seen accompanying surges in transmission, which surprised me. (Disneyland Hong Kong, however, was shut after reopening for having an outbreak.) 

Notably, some theme park-adjacent businesses are opening, like the Los Angeles Zoo. So curious to see when Newsom changes on this. 

DC Comics/DC Universe Staff Sees Layoffs

This is a few weeks old, but it is important enough news that I didn’t want to skip it. Warner Media is cutting staff at DC. If comic books can be the “R&D” department of a movie studio–and look at Disney, they are–then why would you cut the staff?

Of course, layoffs are complicated. Sometimes organizations really do have bloat. Sometimes they really do have redundant capabilities. But this seems like some creative executives were swept up in this part of the Warner Media reorganization. Meaning long term the cost cutting now could hurt the creative output of the future. Comic books will never be the cash cow that turns around AT&T’s fortunes, but having a strong DC could help grow HBO Max.

M&A Updates – Ion Networks is Acquired by EW Scripps

Some more merger action! This time Ion Networks is getting acquired by EW Scripps. I’ve long appreciated Ion Network’s business model. Ion Networks realized that if they owned a broadcast channel, cable and satellite providers must carry their programming. They bought up broadcast stations, and then ran cheap reruns. It’s been surprisingly successful for them:

image-1-estimates

Lots of News with No News – The Emmys!!!

I put less emphasis on The Emmy’s than anyone else. From a business perspective, I just don’t think they tell us much about what customers want or how businesses are doing. (They mostly tell you who spends the most on Emmy campaigning, as brutal as that sounds.)

The story was Schitt’s Creek, which went from nothing to something with a run on Netflix. Using the “Netflix is a Broadcast Channel” thinking, though, this makes sense. It’s like a show went from a small cable channel to running on NBC. Since it was good, naturally it had a boom in viewers.

1.2 Million Folks Bought Mulan in the US During It’s Opening Weeknd: The (Not) Definitive Analysis of Disney’s Mulan Experiment

How many folks bought Mulan?

That’s the buzziest question in the streaming wars right now.

Since we don’t know, we’re left to pick at the analytics tea leaves. Fortunately, as each day passes, we’ve got more tea leaves to pick through.

(Partly, the question is relevant because it gets to the buzziest question, “Who’s winning, Tenet or Mulan?”. I’ll answer that on Wednesday.)

Far from throwing my hands up, I’ve started to realize these tea leaves are signal not noise. So if/until Disney tells us otherwise, I’ve done my best to compile all the Mulan on Disney+ data we have. Consider this a “meta-analysis” on Mulan. First, I’ll summarize each data source and what it tells us, next I’ll try to compare this to Trolls: World Tour, then I’ll compare all the data sources, and finally I’ll make my estimates for Mulan’s performance.

(I covered some of these data points in a column and Tweet thread two weeks ago. Today, I’m updating all that data and tossing in my estimates at the end. Also, if you’re new to the EntStrategyGuy, my newsletter goes out every two weeks with links to my writings and the favorite things I read over the last two weeks.)

To start, though…

Bottom Line, Up Front

Don’t want to read the entire thing? Fine, here are the talking points you can deliver confidently without reading the whole article.

— The story about Mulan’s performance is remarkably consistent, if you ensure you are comparing “Apples to Apples”.
— Right now, I’m fairly confident at estimating that its opening weekend Mulan was purchased about 1.2 million times. (Other estimates range between 1 to 1.5 million, giving us a fairly tight range.)
— That implies that it made about $36 million on its opening in total revenue.
— Based on its rapid decay, the Trolls: World Tour comp and the fact that it will only be in PVOD for 8 weeks, I estimate Mulan will generate about $90 million in US sales over its lifetime. (Based on the estiamtes, this could be as smalls $75 million and as high as $135 million.)

What We Know: 6 Different Sources Tell a Remarkably Similar Story about Mulan

Disney took a big swing by releasing Mulan straight to Disney+ (and only Disney+) for $30 a pop. That left multiple analytics firms—each vying to get new customers to buy its data, a important point about self-interest to note—to fill in the gap. Reelgood said one thing about the popularity; Samba TV said something else; Antenna said something else and then Yahoo took 7 Park’s data in a completely different direction.

The better analogy than tea leaves is actually the old parable about the elephant and the five blind men. Each grabs a different part of the elephant, so feels something different. That applies to our measurement firms. One is measuring viewership; another purchases; another app downloads. Toss in different time periods and sources, and it seems bewildering.

But if you put the whole picture together, it’s not that confusing. After 7 Park put out a great thread clarifying their data this weekend, I’m fairly convinced each source is telling the roughly same picture.

Source 1: Google Trends

This source is so easy anyone can use it. So be careful. Google tracks search traffic data which has been shown to be a very good proxy for interest. Here’s the time period going back to when Covid-19 started featuring top streaming films:

G Trends - PVOD Comparison

What’s the simple takeaway? Interest in Hamilton far outpaced anything else in the straight-to-streaming space. (See my article in Decider for details.) This, for me, is the context of Mulan.

However, since we’re triangulating on Disney+, it’s also worth looking at a “Disney+ only” look:

G Trends - PVOD Disney Only v02

Mulan was big, but paled in comparison to Hamilton.

Source 2: Antenna

Antenna tracks subscription behavior across a range of services such as iTunes, Amazon Fire TV, Roku, Google Play and others. Last week, they released their analysis of Mulan’s opening weekend in this great chart:

Antenna Longer Time Period

This is the most skeptical look I have of Mulan’s huge driver in interest from Disney. Yes, it helped boost sign-ups for Disney+, but less than any other major theatrical driver of the last few months. Also note how this aligns/correlates with Google Trend data, but not perfectly. Black is King did better than Mulan, according to Antenna, but Google Trends has lower interest. (Google Trends has more interest in Artemis Fowl than Black is King.) 

There is a similar story with Frozen 2 driving more sign-ups than Onward according to Antenna, and Google Trends telling an opposite story. (This explanation is fairly simple: Frozen 2 launched right as lockdowns started, so that’s more the story of lockdowns driving parents to subscriber, not interest in Frozen 2.)

Antenna’s data goes further on Mulan. They also used their data to breakdown Mulan purchases by sign-up time period. 

Antenna Subscriber Percentages

Antenna also  released purchases by sign-up time period. So I took those numbers, and combined them with the above chart to give us this estimate of the average % of subscribers who dropped $30 on Mulan:

Antenna Subscriber Purchas Rate

Save that number, we’ll get back to it. But it’s not the only look Antenna provided. They gave some data to LightShed Partners (and then tweeted it), which compares daily sales of various PVOD releases with “purchases by day”:

Antenna Daily Purchases

This is great because we can use a few numbers to compare Trolls: World Tour sales to Mulan. Hang on to this number too. And pay attention to those steep decay curves.

Source 3: 7 Park

7Park is another data analytics firm, though they don’t clarify where and how their data is collected. However, they have been releasing streaming data for a while now.

7 Park entered the data fray this week with a buzzy article on Yahoo, that slightly oversold the analysis. 7 Park measured, through the first 12 days of September (which covers through Saturday of Mulan’s second weekend), the percentage of users who watched Mulan among all Disney+ users during the time period measured. That italicized portion is key. Which is why Mulan could get 29% of streams during its opening weekend, but then a much smaller number when you look at Q3 to date:

7 Park Long Time Period

How does that 10.3% compare to Antenna and Google Trends? Favorably. As 7 Park pointed out in their thread, the demand ratio from Hamilton to Mulan matches Google Trend very well. As for their data versus Antenna, they measure different things. One compares to subscriber base while the other compares to active users. Assuming active users are between 50-75% of the total subscriber based, then the numbers tell a similar story.

Source 4: Samba TV

Samba TV measures viewership on connected TVs specifically. Samba TV also ran an analysis on Mulan viewership, from the opening weekend, coming up with the number that 1.12 million folks purchased Mulan during the opening weekend. It’s unclear if this is connected TV’s only or if they extrapolated out to all customers. Does this match the other numbers? Yes, as we’ll see.

Source 5: Sensor Tower

Sensor Tower measures application downloads. For the streaming wars, they track how often folks are installing streaming application. (Hedgeye analyst extraordinaire Andrew Freedman uses their data to forecast Netflix and Disney+ subscribers fairly well.) According to Sensor Tower, Mulan drove a week-over-week increase in downloads of 68%, which compares to 79% for Hamilton during its opening weekend. This is a bit lower than the Antenna, 7Park or Google Trends data. Sensor Tower only tracks mobile viewing, which may explain the difference.

Source 5: Reelgood

The biggest outlier is Reelgood’s data. Reelgood is an application that helps folks find and curate their streaming offerings. Reelgood uses their data (they claim 2 million users) to then estimate demand for various titles. Here’s their chart with notably the streams as a percentage of top 20 streams.

Reelgood Top 20 copy

This genuinely surprised me since customers had to purchase Mulan, which should have decreased its viewership. Instead, in a follow up, Reelgood said that Mulan actually surpassed Hamilton, which only had 9.68% of streams. This is the only source that implies that demand for Mulan was higher than Hamilton. So it’s our biggest outlier.

Missing Sources

Just to note, of the major sources I track, Nielsen and Parrot Analytics both haven’t entered the Mulan fray. The reason is that both focus on TV series with their publicly available data. (Though Nielsen does have feature film viewership data.)

Trolls Would Tour Comparison

That’s the data, let’s make the comparisons. First, here is the leaked details or estimates of Trolls: World Tour’s performance.

Screen Shot 2020-09-21 at 12.59.08 PM

Unlike Disney (so far), Comcast was much more willing to leak positive data about their Trolls: World Tour experiment. A few things to note, these estimates aren’t quite as steep as Antenna’s data, but match real world churn/decay better. We’ve seen this with other streaming titles where the opening weekend is about half the viewership of the first month or so of a title. And then with trolls the opening month is about half the viewership of the title lifetime to date.

This point may be interesting, but its definitely possible that about as many folks watched Trolls: World Tour after it dropped to $6 to rent then watched at $20. This chart from The-Numbers shows how popular Trolls: World Tour was even 3 months after PVOD:

DEG At home

WIth these numbers, we can compare purchases between Trolls: World Tour and Mulan using Antenna’s data. I did this by measuring the various peaks in the above Antenna chart with purchases by day.  Which made this chart:

Antenna Demand as Trolls

Since they’re decaying at roughly the same rate, we can use this to estimate Mulan sales. In other words, I estimate that Mulan had about 61% of the sales of Trolls: World Tour on PVOD. The caveat is that Mulan is available in less places than Trolls or Scoob, meaning demand could have been as high, but without additional TVOD channels it reached less customers. But that still results in lower sales/demand.

Comparing all the Sources

Wow. So if you’re still with me, here’s my summary of everything we know. Here are the estimates I derived for purchases for the first weekend, where the data allowed me to make that estimate:

Summary Comparison v01

Let me explain this. Given that Antenna and 7 Park are percentages of subscribers or active users, the 15-35 million are potential ranges of Disney subscribers/users. Then I picked the number that is my current “best guess” for each. In other words, I think Disney+ has about 30 million US subscribers, and about 20 million active users in a given quarter. If you disagree, pick another input. For Samba TV, I just used their estimates. For Trolls: World Tour I multiplied the estimated 2.25 million Trolls opening weekend customers (40 million divided by $20) by 61%, the rough proportion from the chart above.

All these sources say about 1.1-1.4 million folks watched on the opening weekend. Splitting the difference, and picking the number I like best, gives me an estimate of 1.2 million.

From there, we can estimate lifetime sales. I’m using my estimate that opening weekend will generate 50% of the first month’s sales. Both Antenna and Google Trends back this up. For example, it has already seen a second weekend drop in demand of about 75% in Google Trends. Also, given this decay, I think its second month will only see about 20% more sales:

Summary Estimate Lifetime

Using best case scenarios (33% viewing in the second month, 1.5 million opening weekend), I get to $135 million lifetime PVOD. Using worst case, I get to $75 million.

Phew. I’m wiped out. There are tons more issues to unpack, especially how this compares to Tenet. But I’ll do that next time.