Tag: HBO

“The Mandalorian vs The Queen’s Gambit: Who Won November” at Decider

In what is now a recurring column, over at Decider I took a look at all the ratings data I could find to declare the streaming winner in the US for November. This one is packed with with charts, tables and data.

(If you’re curious for the older editions, here’s September and July.)

Also, I discuss the latest Nielsen streaming data in this thread:

How Google’s Antitrust Case Explain Quibi’s Demise – Most Important Story of the Week – 23 Oct 20

Honestly, it’s either feast or famine with news in entertainment. Some weeks, I look at all the stories and can’t figure out what is the most important. Then other weeks, I have a plethora to choose from. This week fell on the “plethora” end of the spectrum.

Two stories led the pack. Quibi raised and lost $2 billion dollars. So that’s a big story. Yet, splitting up Google could have tens of billions of market moving ramifications. How do I pick when Quibi is so juicy, but Google is so important? Why, by combining the two! 

(As always, sign up for my newsletter to get all my writings and my favorite entertainment business picks from the last 2 weeks or so.)

Most Important Story of the Week  – Google’s Antitrust Lawsuit and Quibi’s Demise

The background, in case you didn’t hear: 

– The Department of Justice under Bill Barr filed a lawsuit with 12 state attorney’s general arguing that Google is an uncompetitive monopoly in search. This lawsuit makes lots of similar arguments to the Microsoft case of the 1990s about using their power to exclude competitors. 

– Quibi is exploring options to shut down, as reported in the Wall Street Journal.

So how does the former relate to the latter?

To explain that, consider a thought experiment. Imagine that along the way, Jeffrey Katzenberg pitched Susan Wojcicki (the head of Youtube) the plan for Quibi. And she loved it. (Hypothetically.) She replies, “Jeff, don’t launch Quibi as a standalone service, we’ll buy it! And you run it as a standalone venture.” Then assume they keep everything else the same. The same budgets. The same product. The same everything.

Would Quibi still be around? 

Yes!!!

And the explanation is fairly simple: Google can afford $2 billion in losses over three years. In fact, Google can afford to lose $2 billion dollars every year on one business. And maybe more. 

My favorite example to show this is the money pit that is Youtube TV. When it launched, Youtube TV cost $35 per month. After adding some more channels, it bumped up its price to nearly $60. And that’s every month. For nearly 2 million subscribers. The thing is Youtube was likely losing money every month on Youtube TV, and potentially still is losing money every month on that service.If Google is losing $20 per subscriber per month, then they could easily be losing half a billion dollars per year. If not more. 

In other words, Google will easily lose billions on a speculative streaming venture.

This gets to the realization I’ve had debating the streaming wars over the last year or so. And it started with Apple TV+. Essentially, I’d find myself talking past folks when we discussed our opinions on Apple TV+. I’d say that I thought the lack of a library, lack of ownership in original content and unclear pricing were strategically bad decisions. Then folks would counter that it didn’t matter because Apple could afford the losses. The same arguments are made for Amazon and Google in a number of businesses as well.

But these are two different arguments. One is about the quality of the strategy. One is about the access to resources. These two questions help frame the streaming wars. And they are two questions we should ask about every major player (from both entertainment and technology) in the streaming wars:

  1. Does a streamer have a good business strategy?
  2. Does the parent company have immense resources to allow deficit financing?

For example, I’d say that Apple TV+ has a bad strategy overall, but they have a parent company that can shield those losses. And while Prime Video has eventually clawed its way into second or third place in the US streaming rankings, it likely has lost lots of money in the process. But who cares because Jeff Bezos is the world’s richest man.

We could go on, or I could make a quad chart to give you my take on this equation:

Screen Shot 2020-10-23 at 9.00.56 AM

For Quibi, a questionable strategy meant they ran out of business. For Apple TV+, who has arguably the same bad strategy (if not even more cash burn), it doesn’t matter because they can burn cash unlimitedly. Disney likely can’t afford perpetual losses. Netflix is the only firm in the middle because it’s strategy clearly worked, but it also lost tons of money. It also needs to make some money, because it doesn’t have a wealthy parent, yet some would argue the equity markets do that for them.

The lesson here is really for practitioners. The business leaders out there. Draw lessons from those with good strategy, not those who have cash resources you may or may not have the ability to match. Good strategy is still good strategy. (What is good strategy? Books are written on it, but for me it’s a product that matches the needs of a targeted customer segment that creates value over the long term, by leveraging a competitive advantage.)

Society could also take some lessons from this. The market should pick winners or losers because they have good strategies. Because that means companies are creating value. When external factors support money losing enterprises, it’s usually because they are trying to acquire monopoly power, which is bad for innovation and customers.

These are trends that Quibi tried to fight against, but ultimately failed. Too many folks are spending too much in ways that don’t require earning money for it to have a fighting chance. Whether or not Jeffrey Katzenberg and Meg Whitman should have seen that coming is an open question. And likely their business model was flawed, as I’ve written about before. But the reason they went bankrupt, ultimately, is because they didn’t have a parent company support massive losses. 

This is the power of Big Tech and while the current antitrust lawsuit isn’t about this price gouging specifically, it’s still about the power of Big Tech. 

Additional Google Antitrust Thoughts

– Does this impact M&A by Big Tech? Especially when it comes to big tech snatching up smaller entertainment companies? I constantly read that Amazon should buy Viacom-CBS. Heck, just last week I wondered why Netflix doesn’t buy Sony, since they license all their shows. A source said he’s heard a lot of rumors that Netflix wants to buy Viacom-CBS. All of a sudden, mergers for vertical integration purposes look a lot dicier.

– What about entertainment mergers? That’s a good question. The ire of antitrust litigators will likely stay focused on Big Tech for the foreseeable future. If the DoJ casts their eye of Sauron around, though, Comcast and AT&T are the next in the crosshairs, given their mutual penchant for mergers, the local and national monopolies and vertical consolidation.

– Is this bad for Youtube? Potentially. One of the easy remedies for the government to insist on is that Google divest Youtube to diversify the advertising market. Given that Youtube makes almost as much money as Netflix each year in revenues, this is a reasonable request. However, the current case makes no mention of breaking up big tech, and neither did the Cicilline report. 

– What about price gouging/predatory pricing in entertainment? This is much more of a stretch, but a potential spinoff branch of antitrust. In other words, under scrutiny, the DoJ could say, “Hey, if you run a video service as part of a vertically integrated firm, you can’t lose money simply to gain market share.” This is the least likely outcome of these questions, but if it were enacted it would have the largest ramifications on streaming video of any other decision.

(I had more thoughts on Quibi too that will be up at a different outlet later.)

Data of the Week – What Happened to HBO’s 88 million International Subscribers?

When I spent weeks trying to figure out how much money Game of Thrones made for HBO, it required understanding HBO’s subscriber totals. Unfortunately, Warner Bros (now Warner Media) never made it easy. Before 2011 they didn’t report anything, so I had to rely on news sources. When AT&T acquired Warner Media, it stopped reporting HBO subscribers at all. Meanwhile, they combined Cinemax and HBO subscribers in the same total, even though most Cinemax subscribers were subscribed to both. To top it off, Warner never actually broke out subscribers in a table, you had to search the narrative to find the totals.

Last earnings report, AT&T decided to bring back HBO subscriber totals. So I updated my long term tracker. But AT&T decided to only report domestic/United States subscribers. Huh. Then in the latest earnings report, they added international subscribers, but claimed it was only 21 million. Double huh. So here’s my updated chart for HBO subscribers:

Screen Shot 2020-10-22 at 9.11.17 PM

What happened to the 94 million at peak and 88 million as of 2017? And how high did it get in 2019 as Game of Thrones debuted?

I’ve reached out to HBO for comment, and will let you know if they reply.

Other Contenders for Most Important Story

Netflix’s Earnings Report

If you want my initial thoughts, here’s the Twitter thread:

Reflecting on it, I’m surprisingly sanguine about Netflix’s earnings. I thought the content was more of a drag than it ended up being. For example, the films did pretty well with three besting the 70 million households watched by 2 minutes viewed total (55 million at 70% completion by my translation). Here’s a chart:

IMAGE 3 NFLX Viewership

Caveats abound, as I like to say. First, the challenge is that the shift from 2019’s 70% completion to 2020’s 2 minutes viewed just crushes the narrative. As Netflix has said, this conversion usually means a show gains about 35% more viewers. That’s a lot. And if you took all the Netflix shows down to the 70% threshold, the numbers look less impressive.

Second, the weakness may have been in television more than anything else. Really, Netflix’s top three series are Stranger Things, The Witcher and Money Heist (La Casa de Papel), in that order. And the last of those does very poorly in the United States. Given that binge-worthy TV series drive time on Netflix, not having one of those really does hurt Netflix, and that’s why they likely missed subscriber targets in Q3. 

The End of the Fast and the Furious

All things must come to an end, but even Universal’s biggest money maker of the last decade? As others said, we’ll see if Universal can hold to this promise.

A New Contender for “Next Game of Thrones”

The big question for 2022? Which series will be the “next Game of Thrones”, as I wrote about here. More than anything, every streamer is trying to mimic the success of HBO, even though it’s not clear to me audiences are clamoring for more fantasy series. (Contrary point? The Witcher did great numbers for Netflix.)

The news is that Disney+ is adapting 1988’s Willow into a TV series. This series immediately has more importance than many Netflix’ series. Mainly because Disney+ needs quarterly hits to drive subscribers and this is in “white space” that isn’t Marvel or Star Wars. (Netflix has tons of TV shows to bank on.) Plus, it could appeal to adults. Also, full disclosure: I loved Willow as a kid but haven’t rewatched on Disney+, so guess I’m doing that this weekend.

Charlie Brown Heads to Apple TV+

Well, how about that for a licensed content acquisition? All my hatred on not having a library, and then Apple grabs the Charlie Brown holiday specials, which are a tradition in many homes, exclusively for their service. 

I love this move for Apple. (Caveat: price is everything, and I don’t know the terms.) For a service that needs growth, this is a great move. Honestly, I think it will drive more subscriber acquisition than Borat or Coming to America 2 for Amazon Prime Video.

Who Will Win the Battle for the next “Game of Thrones”?: How “People” Change the Odds of Success

(This is another entry to a multi-part series answering the question: “Who will win the battle to make the next Game of Thrones?” Previous articles are here:

Part I: The Introduction and POCD Framework
Appendix: Licensed, Co-Productions and Wholly-Owned Television Shows…Explained!
Appendix: TV Series Business Models…Explained! Part 1
Appendix: TV Series Business Models…Explained Part 2
Appendix: Subscription Video Economics…Explained Part 1
Where We’ve Been)

Two weeks ago, we checked back in on the news about the contenders vying to be the “next Game of Thrones”. Let’s keep the momentum going and get right into the “People” portion of our framework. At the end, I’ll unveil my current working model for evaluating TV series.

Why “People” Matter In Every Deal

The “people” in a typical venture capital deal are the leaders of a start-up. This means the founders and the soon-to-be chief officers. Is the CEO a great technology guy, but not great at scaling? Or an operations guy who has a dynamite CTO already in place, but no marketing experience? Conversely, is the product great and so is the opportunity, but you need to replace the leadership to make the company truly succeed? (Uber/WeWork much?)

In a real world example, lots of investors in Quibi invested because of the team of Jeffrey Katzenberg and Meg Whitman. He could handle content; she’d handle everything else. (Only later did we find out they couldn’t work well together.)

As I use the “POCD framework” for evaluating TV series—a concept I dabbled with at my previous job—I’ve found the “People” portion to be extremely important. Who is the showrunner? Who is the creator? Are they the same person? Or do you need to bring in a more established showrunner to replace the creator’s vision? Does the showrunner have the ability to manager a team, or will they do it all themselves? Can the writers work with the directors to bring their vision to bring the show? Are the producers able to corral the showrunner and bring things in on-time and on-budget?

Hopefully, the answer to all those questions are positive. Meaning the creator has a great vision, the showrunner can deliver on their vision, the writers room writes great content, the directors can film it, and the production team will run everything well. The reason this is important is because, if a studio can hire the right people more consistently than competitors, they can achieve outsized returns.

Those outsized returns fall into two rough buckets. The first bucket is the “quality” bucket: Can the show runner make a good nee great show?

Well it depends. Unfortunately, most showrunners and creators are…average.

Average isn’t bad, you see. It just means that while all showrunners are great people—and indeed highly skilled at what they do—their “hit rate” is average. Which means that most of the time the shows and films they make are bombs/duds and a few times they are blockbusters. (About 1 in ten.) That’s just the math. That’s right, logarithmic distribution of returns applies to the people making shows too:

Slide03 copyAt the far right end, some showrunners can buck this trend to reliably churn out hits, but they are few and far between. Think Greg Berlanti, Shonda Rhimes, Mark Burnett or Chuck Lorre. Even then, they have more duds than you initially remember when you scan their IMDb. If either Game of Thrones or Lord of the Rings had a top tier showrunner attached, it would increase the likelihood that a show becomes a “hit” or “the next GoT/superstar” in our model. (Or if they had a top tier development exec with a similar track record. No streamer does yet.)

The converse to good showrunners is a chaotic leadership situation. If a show has lots of creators moving in and out and lots of directorial turnover, that’s a bad thing. (Though not always. The Walking Dead did just fine and it’s on its fourth showrunner.) 

My model also punishes showrunners with extensive mediocre track records. Which unfortunately is quite a few showrunners out there. For all its admiration of experimentation, Hollywood is surprisingly conservative at decision-making. Development executives hire the same writers and directors instead of trying someone new because it’s “safer”. These showrunners produce a show for a few years that is mostly “Meh” (a technical term), and then move on to another pitch/job. In the model, if I saw a fantasy series had that type of showrunner, it would increase the likelihood that a show is another also ran TV show, not the next Game of Thrones.

The second outcome is the “logistics” bucket. Can a show come out on time and on budget?

When it comes to making blockbusters, this is less important. However, if you’re running a business, given that 95% of showrunners are average, this can be the difference between profit and loss. This can be forecast, with the right data, pretty reliably. I, for example, knew that certain showrunners and directors who worked regularly with our streamer would be late or over budget when we hired them, because they were late or over budget previously. Unfortunately, this type of data isn’t public available—studios don’t make a habit of sharing when they go over budget—so I can’t use it in this series.

It is worth noting that this was part of the genius of HBO and Game of Thrones. They managed to keep that show on every single year while being the most expensive show on television. But an incredibly efficient expensive show, if that makes sense. 

(The great production houses out there—Jason Blum, HBO the last two decades, Marvel this decade—really do deliver on time and on budget, while hitting high quality bars. That’s not an accident.)

Meanwhile, most of the streamers struggle to get second seasons out within 18 months of big shows. We don’t know if these shows are “on budget” but with the way Netflix spends money, probably not? While this is important, it won’t make the model because we won’t know about financial/timing trouble until it happens.

The Results

With that explanation in mind, I’m going to be fairly conservative on evaluating these leadership teams. While picking people is really important, the benefits don’t show up on an individual show, but on a long-term/portfolio level.

Thus, I’m more worried about overvaluing “noise” than true signal in evaluating these leadership teams. (Long term, I hope to do more data analysis to better judge creative hires, but I don’t have those databases yet.) As a result, I’ll default to the “null hypothesis” more than usual.

Let’s go show by show.

Read More

Who Will Win the Battle for the next “Game of Thrones”? : Where We’ve Been

 

(This is another entry to a multi-part series answering the question: “Who will win the battle to make the next Game of Thrones?” Previous articles are here:

Part I: The Introduction and POCD Framework
Appendix: Licensed, Co-Productions and Wholly-Owned Television Shows…Explained!
Appendix: TV Series Business Models…Explained! Part 1
Appendix: TV Series Business Models…Explained Part 2
Appendix: Subscription Video Economics…Explained Part 1
)

A trope of genre fiction is the character with unfinished business. The lone wolf who harbors a grudge against someone or something that harmed his family, destroyed his life or stole his (or her) kingdom. 

July was “unfinished business” month at The Entertainment Strategy Guy headquarters. I’ve started quite a few series and let news or time distract me from finishing them.  Having checked back in on “Should Your Film Go Straight to Netflix?”, “Coronavirus Impact on Entertainment” and “The Star Wars 2019 Business Report”, it’s time to return to a series that’s over a year old, diving into a deliciously provocative topic: which TV series will make the most money for its streamer, the next Game of Thrones or the next Lord of The Rings?

Why didn’t this series get finished? Two reasons. First, I got severely distracted by explaining all the math behind my models as I was building them. This resulted in five articles that were essentially “appendices”. (Seriously, if you want to understand the economics of streaming TV, check them out.) Second, pulling the data on past fantasy TV series and movies took longer than I anticipated.

No more! Today I’ll review:

– A summary of this series so far.
– An update on the news in “fantasy TV” since last summer.

Summary of Where We Were

Cue the narrator voice for a genre series returning after a two year hiatus: “Previously, on GoT vs LoTR vs Narnia”. My challenge is about as difficult: explain a several thousand word series in a few hundred words. 

This series was inspired by the general rise in fantasy programming at all the streamers. It wasn’t just Amazon that wanted the next Game of Thrones, so did Netflix and Disney+ and even HBO itself. I framed the question as:

Which franchise will make the most money for its streamer in the future, Game of Thrones, Lord of the Rings or Chronicles of Narnia?

My initial assessment—what I call a “Blink” look—is that HBO will win. Frankly, they paid way less than Amazon. (Initially described as a $250 million dollar deal for Amazon.) Then I heard that Amazon guaranteed 5 seasons! That’s at least $1.25 billion, and maybe more. That only gives the edge even further to HBO. At first, I didn’t really consider Netflix a viable competitor. (I was wrong.)

Then I moved onto the analysis. Which means building models to see what they tell us. The basic formula is pretty simple:

(The probability of success X The revenue upside in success ) — Costs = Likelihood of money made

The tricky part is calculating all that. To explain it, I’m using the “POCD” framework: 

People
Opportunity
Context
Deal

It’s a framework from the venture capital world, but I’m applying it uniquely to TV series. Essentially, people, opportunity and context describe how much revenue a company can make, and the deal explains the costs. 

I’ll make a bespoke model for every series under consideration using the various POCD inputs to change the probabilities or potential revenue/costs. I explained the TV profit model here and here, and also explained the tricky nature of streaming video economics here. (Those last two articles laid the ground work for my series on “The Great Irishman Project”.)

Then came the distraction. Since I had built this kick-ass TV series business model, I decided to use it on the original Game of Thrones. In a big piece published on Decider, I estimated how much money I thought GoT had brought in for HBO. (A whopping $2 billion plus.) This provides terrific context for the “upside” of all these fantasy series. (I wrote a few “director’s commentaries” for this article too.)

So that’s where my series left off. But the news didn’t end just because the series was delayed.

All The News Since Last Summer

When I started this series, I focused on three fantasy series based on arguably the three most influential fantasy books of all time…

Game of Thrones prequel (HBO)
Lord of the Rings prequel (Amazon)
Chronicles of Narnia (Netflix)

 Since then a few fantasy series have come out…

The Dark Crystal: Age of Resistance (Netflix)
Carnival Row (Amazon)
His Dark Materials (HBO)
The Witcher (Netflix)

And more have been developed or are in production…

The Wheel of Time (Prime Video)
Sandman (Netflix)
– Untitled Beauty and the Beast (Disney+)

If all those qualify for this battle, we’re up to 10 potential contenders for the replacement for Game of Thrones. And that doesn’t include potential series (Disney’s Book of Enchantments and Lionsgate’s The Kingkiller Chronicles) that died in development. And I haven’t even looked at Syfy’s lineup to see what else could qualify. (The incomparable Magicians just ended after their fifth season. Pay attention to that data point for later.) 

The Specific Updates

HBO and Game of Thrones prequel

In one of the more fascinating single day development moves, HBO both cancelled one prequel series (The Long Night/Bloodmoon) and announced another prequel series about the Targaryens (set about 300 years before GoT) called House of Dragons. I could spin this as good or bad for HBO, but either way their series is still happening. Right now, HBO is saying the prequel will arrive in 2022.

Amazon and Lord of the Rings prequel

Amazon meanwhile is furthest ahead, having started production this spring in New Zealand, only to be another Covid-19 casualty. (Though I believe production is set to start production soon or already has.) Amazon was under time pressure to get a TV series in production within two years, and that appears to have motivated the streamer.

Netflix and Chronicles of Narnia

If you search for Chronicles of Narnia and Netflix, you run into a series of articles asking, “Is this thing still happening?” And no one really knows. Netflix insists it is, and Entertainment One has hired a “creative architect”, but there is no release date or known shooting schedule. Which means we’re going to drop this series from our main contenders for another lower down.

The Dark Crystal and Carnival Row 

I’d describe these two series and “came and went” at Netflix and Amazon (respectively). Like the Magicians, these two series demonstrate that not every fantasy series is a guaranteed blockbuster. Though the former was arguably more popular due to the “Netflix Effect”. Still, neither is set to be the next Game of Thrones. 

HBO and His Dark Materials

As one of HBO’s first “Monday premieres”, this series was overwhelmed by Watchmen in terms of buzz. It has a better chance than either of the two previous series at being a future Game of Thrones, but the odds of that are pretty low.

The Witcher on Netflix

And now we have a legitimate contender! Lots of folks pointed out that I should have dropped Narnia for The Witcher when I first started this series. Indeed, The Witcher may have single handedly helped Netflix meet subscriber targets by releasing right at the end of 2019. It is arguably Netflix’s first or second biggest show currently on the air. (With the acknowledgement that “on the air” is an anachronism.) In other words, The Witcher has a great chance to be the next Game of Thrones.

Meanwhile, I’m going to monitor every other fantasy series that pops up in development or production. (For example, Amazon’s Wheel of Time series has promise.)

Now that we know where we’ve been, and what’s happened since, we can move into our four-part framework for predicting which of these series will win the battle. Tomorrow, we’ll continue with the first letter in our framework, P for People.

HBO U.S. Subscribers Over Time – Visual of the Week

Inspired by AT&T’s release of HBO Max “activations” and total HBO subscribers, here’s a timeline of HBO subscribers and HBO+Cinemax subscribers over time:

IMAGE 1 Chart

If you’d like to see that in table form, along with some financial numbers, here you go:

Screen Shot 2020-08-03 at 11.13.55 AM

What about total subscribers? Again, we only have data from 2011-2017, but here you go:

Screen Shot 2020-08-04 at 9.35.20 AM.pngSome quick points and explanations:

– This data was cobbled together from random leaks, Time-Warner’s annual reports and AT&T’s earnings reports. (Links here, here, or here for leaks and here for Statista.) If you know of any I missed, send them my way.

– There is a chance that the reason AT&T didn’t release 2018 numbers for HBO, in addition to the merger being ongoing is because their numbers during Game of Thrones season 8 last spring were higher than they are right now. We don’t know because of gaps in the data, but looking at 31.4 million HBO subs alone in 2015, then considering they had 5 million digital only subscribers in 2017, that could easily have been higher than the current 36 million.

– With only 3 million subscribers having “activated” HBO Max, that service has a lot of room to grow. I’d compare that to the early days of Amazon Prime Video; it too had a lot of time to convince people to try it out, but also the free cash flow to wait. Math and explanation of activations over at Variety.

– If you want more on the financials of HBO, and discussion of their subscriber counts over time, read my article at Decider and the Director’s Commentary.

– Comparing multiple subscriber counts with different definitions reminded me of this table I built for Netflix last fall. I’ll update it this fall with yet ANOTHER definition for Netflix.

Most Important Story of the Week – 21 February 20: Youtube Offers HBO Max…and an “All Update” Column

As I stared at the list of stories I wanted to put in my weekly column last week, I couldn’t help but notice that they all connected back to some previous article I’ve written before. So here’s an “All Update” column, starting with a distribution story that hits on the most important trend of the streaming wars.

Most Important Story of the Week – Youtube TV Will Offer an HBO Max Add-On

A contrarian may see this as just another minor move in the distribution landscape. Equivalent to Disney+ finally getting distribution on Fire TV devices. And I didn’t make a big deal about that. 

Well, this is bigger. 

Google/Youtube is moving its troops onto the “key terrain” of the streaming wars. As I wrote back in November, the rise of “digital video bundlers” (or DVBs) is the trend to monitor when looking for who will “win” the streaming wars. The bundlers will, potentially, control the fates of the streamers. And hence have the best chance to capture the most value in the digital video value chain. The Youtube partnership with HBO Max could cause a cascade of strategy moves.

First, this is Youtube getting into the “streaming bundling game” versus just the “vMVPD” game. The distinction is subtle, but important. In the “virtual multichannel video programming distributor” game, the vMVPDs are mostly mimicking traditional cable bunde\le. So Youtube, Hulu, Sony Vue (rest in peace), DirecTV and Sling are mostly offering a bundle of traditional channels in a new package. This has only worked out so-so well so far.

Now that Youtube TV is going to offer HBO Max, they aren’t just about linear channels. While this isn’t their first streaming service they offered—they have the AMC owned niche streamers like Sundance Now, Shudder, and Urban Movie Channel—this will be their biggest streamer add-on. And the broadest offering so far. Likely this won’t be their last move either. Could CBS All-Access be next? Or even Disney+?

If so, then the line between vMVPDs and “channels” businesses will blur further. Here’s my quick take on how the potential DVBs are shaping up:

Screen Shot 2020-02-24 at 2.14.25 PMYoutube also needs this since right now Google is lagging on the device front. While the Chromecast works very, very well, Google can’t monetize it. You can’t download apps to it, just stream from another device. This will mean they need to lean on Youtube/Youtube TV even more to bundle their offerings.

Second, this is a smart move for HBO Max. May is rapidly approaching and scanning the other Live TV services and Channels, I haven’t seen a lot of announcements about where/who will distribute HBO Max. On the one hand, AT&T claimed that if you subscribe to HBO you’ll get HBO Max. But how that will work in practice remains to be seen. Does that just include linear offerings? Or only AT&T owned offerings? Does it include Amazon and Apple? That’s being negotiated right now.

AT&T’s goal, like Disney+, is to get HBO Max out via as many distribution channels as possible. Frankly, to make your money back, this makes sense. (Though it also shows that the power is mostly with the distributors, not the streamers.) Youtube is the first step.

Third, this impacts how the other vMVPDs will respond to HBO Max. Does Hulu—which offers HBO—automatically offer HBO Max as well? It would make sense, but that would then be a game changer for Hulu, which doesn’t offer any other streamers yet. And if it’s offering access to HBO’s streamer, why not sell Disney+ subscriptions and/or access right along side?

So Youtube could be the domino that starts a chain of OTT offerings.

Fourth, Netflix. 

(Legally I have to mention them every week) 

There is a careful balance for each streamer between reach—being on the most devices—and controlling the customer relationship—in both user experience, data and owning the credit card data. Netflix is on the extreme of one end; as the most successful streamer, they don’t care about reach and want to own everything about the customer relationship. 

HBO Max is clearly willing to give up some of that with Youtube TV for the reach. Disney, with Amazon for example, gave up some data to get Disney+ on Fire devices. Disney+ though, is NOT in Amazon’s channel business. Because they don’t want Amazon to own that relationship.

If I were Netflix—and I don’t think they quite understand this—I’d be worried that the distributors are going to offer increasingly compelling user experiences sans Netflix. Be it Youtube or Roku or Hulu or Amazon Channels or Apple Channels, customers are going to increasingly find themselves using one ecosystem. While switching between Disney+ and HBO Max and Netflix isn’t that difficult, it’s still a small barrier to entry. 

But little things can add up. And if folks only use Youtube TV to get 60% of their TV viewing, then that could rise to 70%. Then 80%. And Netflix could be the piece on the outside looking in. (Alternatively, some streamers like CBS All-Access and Peacock could never even get a look.)

Is it guaranteed to happen? Obviously not. But if Youtube TV “becomes TV”, then Netflix can’t. And only one of those two companies is banking on “becoming TV” to support its stock price.

Last note: Youtube TV’s price point is still uncompetitive. It is somehow the only remaining Live TV bundle offered at $50. As a result, it’s boosted it’s subscribers from 1 million last year to roughly 2 million this year, as it announced in its latest earnings. The key question is how much they lose every month. $1? $5? More? The higher the number, then the more Google is using revenue from one business to enter another using predatory pricing. That’s not good business necessarily, but market power. It stifles innovation in the long run and should worry us.

Entertainment Strategy Guy Update – ViacomCBS’ House of Brands 

So did CBS let us know what their strategy is? Scanning their last earnings report, not really.

They could be a content arms dealer. Mentioned it. They could lean into streaming. Mentioned it. They could lean into live TV. Mentioned it. They could be a leader in advertising. Mentioned it too. They want to be all things to all people

So that’s the downside case. They still don’t have one strategy. But if we’re looking for bright spots, at least they are making some smart moves. They plan to expand their streaming offering. Here’s their pitch:

Screen Shot 2020-02-24 at 10.45.03 AM

Ignoring the misuse of the term “ecosystem”, if they execute the “House of Brands” strategy it may provide a better user experience than some other streamers. And it will work better than trying to launch BET+ on its own and Smithsonian on its own and so on. In general, broad services have the advantage over niche platforms, and CBS already has a “broad” advantage like their fellow legacy media conglomerates. As I wrote in August, you could imagine a version of Disney+’s brands…

disney-plus-layout

..with ViacomCBS brands like BET, Paramount, MTV, Comedy Central and Paramount instead. (If I were better at Photoshop, I’d have done it.) Is that better than Disney? No. But it’s a clearer offering than if Netflix tried to offer something similar for its library of Babel offering. (Still probably behind HBO Max and Peacock though.)

I said back in August that trying to offer “the perfect bundle” is their best strategy. I happen to like their three tiers: Free is a great entry price; CBS-All Access can compete with Disney+, Peacock and HBO Max while Showtime goes for HBO and Netflix. That seems to be our three tiers right now. 

Notably, though, I don’t think they can be a streamer and a “content arms dealer”. If you sell genuine hits like South Park, Sponge Bob and Yellowstone to competitors, there won’t be enough left for your service. Given that they can’t survive without a viable streamer, they need to focus on that strategy. 

(For my past articles on SuperCBS, click here, here or here.)

M&A Update – Apple Looks for a Library/MGM on the Sales Block

After it’s nine original TV series—plus or minus 2—there isn’t a lot else to watch on Apple TV+. Which is why I thought it was bonkers launch without a content library for customers. The biggest library on the block is MGM’s and a few months back the Wall Street Journal reported Apple was indeed in talks to acquire the former major studio (and its library).

Yet it didn’t happen then. Still, as Alex Sherman comments in his look at M&A in 2020, it’s probably more likely that MGM gets sold than not. It’s long been rumored that its private equity owners are looking for an exit. So why hasn’t it happened? My gut is that between the PE folks desire for a sizable return and the strings attached to their library—most of it is rented out for the next few years—it gets hard to find the right deal.

(Related note: In the Wall Street Journal article, the Pac-12 was also in negotiations with Apple that apparently didn’t go anywhere. I remain skeptical that going to one distributor like an Apple will be worth it for the Pac-12, but we’ll see. Here are my big articles on the Pac-12 and what that implies about the future of sports here.)

Entertainment Strategy Guy Update – What about the Oscars?

Are the Oscars just an increasingly unpopular TV event or a portent of the eventual declines all feature cinema? Probably just the former. The global box office hit an all time high last year. Instead, as I’ve long suggested, the Academy needs to nominate more popular films to bring in a bigger audience. (And not just via a popular film category.) Here’s an updated table on how unpopular the nominated films were in general:

Screen Shot 2020-02-24 at 2.15.17 PM

Screen Shot 2020-02-24 at 2.14.55 PM

So while there was a slight rise in “unadjusted box office”, the trend is still downward from the 2010 recent peak. (Adjusting box office for inflation shows an even worse decline.) Hence, the ratings were down again.

A related question is whether this push for Oscar nominated films makes sense for those producing the films, such as the streamers. As two recent articles show, Oscar nominations lead to box office revenue. And presumably Netflix viewership. The only caution? Well, the cost of those increasingly expensive awards campaigns may not pay back even that amount of Oscar revenue.

(For my articles on Oscars and popularity, click here, here or here.)

Entertainment Strategy Guy Update – Netflix Originals Aren’t Permanent

Over in the United Kingdom, the Netflix “Original” Happy Valley  is going to be departing the platform soon. This shouldn’t be a huge surprise for business watchers, but I have the feeling that customers won’t quite understand it. If originals are original, then how can they leave? Well, it depends more on how Netflix paid for it (rent it, lease it or buy it) then whether they call it an original. What’s On Netflix has a good article on this here.

(For my articles on what an original is, read my definitions from back in May. Or read my article at Decider from last month which also explains the difference.)

Most Important Story of the Week – 8 November 19: Franchise Lessons from all the Game of Thrones and Star Wars News

What happens when one week has so much news and the next has very little? Well, you roll one topic over. So the “most important story” this week is last week’s runner-up. 

The Most Important Story of the Week – Game of Thrones and Star Wars Franchise Lessons

Last week began and ended with dueling Star Wars and Game of Thrones news….

– First, HBO cancelled it’s “Age of Heroes” prequel series for Game of Thrones.
– Second, HBO announced another prequel series for Game of Thrones, based on the book Fire & Blood about the Targaryens.
– Third, David Benioff & DB Weiss—the Game of Thrones showrunners—had left the Star Wars prequel they planned to make

Since HBO Max sucked up the oxygen out of the entertainment biz room last week, I didn’t really have time to examine what the big franchise moves meant for entertainment. Which is a shame; monetarily, these announcements would have been the most important story in most weeks.

Here’s why: both of these franchises are worth billions. As I’ve written extensively on here and here. And it’s not too bold to say that how HBO manages Game of Thrones and how Disney manages Star Wars will play a key role in either launching successful streaming services or failing (and losing billions).

Today, let’s look beyond how fans will feel about these announcements, to what we can learn from a business strategy perspective. Meanwhile, Marvel will keep coming up, because it’s the most well-run franchise in the game right now.

Business Issue 1: Pilots Are Great Investments

You’ve probably heard the old story that Seinfeld tested very poorly as a pilot. Development executives bring this up all the time when a pilot inevitably gets bad reviews. “Well, Seinfeld tested poorly too!” It ignores obvious counters that most pilots that test poorly ended up being poor TV series. Conversely, quality pilots are highly correlated with successful series. Take Game of Thrones. Sure, the initial pilot tested poorly, but the reshot pilot is one of the greatest in TV. The Breaking Bad pilot was similarly fantastic. 

This is why, I praised HBO for making a pilot for their “Age of Heroes” GoT prequel. You’re about to invest maybe a hundred million dollars in a TV series. Make a pilot and see if it’s good. Except then HBO went straight-to-series on their House of the Dragon prequel series. Sigh. Essentially, HBO Max made a good decision (make a pilot, it tested poorly, don’t go forward) and then made a bad decision (go straight to series). 

When it comes down to it, overall going straight-to-series is just another example of how prices are increasing for distributors without actually increasing the top line. It increases the upfront costs (full season commitments to talent) while decreasing the hit rate (no pilot data to kill duds early). HBO feels like it has no choice, though; since Netflix and Amazon are pushing everything straight-to-series, to stay competitive, everyone has to make everything straight-to-series.

Creative Issue 2: The Source of Game of Thrones Greatness

Still, there may be business logic for why HBO chose one pilot over the other here to go straight-to-series. Looking at what made Game of Thrones great, a lot of things contributed from the showrunners crafting a great story to Peter Dinklage just owning it. But if I had to pick the single biggest driver, it would be George R.R. Martin. Yes, Benioff & Weiss successfully managed a monster TV show, but at its core they wrote in an extremely fleshed out world of George R.R. Martin’s creation.

As a Game of Thrones fanatic, I’ve read everything GRRM has written on the series. Including a history book and the Targaryens Fire & Blood book (the one that is the basis for the straight-to-series order). If you asked me, what has a more fleshed out world, the Targaryen reign or the “Age of Heroes”, it’s the former by a landslide. (The Dunk & Egg books seem like a no brainer for a limited series as well.)

If that’s where you think the source of GoT’s success comes from, that makes the decision for which prequel series to order much easier. Go with the “Targaryens” every time. It has literally hundreds of pages of source material that will require much less from its showrunners than the “Age of Heroes”, which has about a dozen pages of material to draw from. 

Even in Disney’s own house, as the latest departure shows, they can’t  learn any of the lessons about leveraging your source material. Star Wars decided to toss out all it’s source material after the Lucasfilm acquisition. Specifically, the dozens of books in its “Legends” universe. (I’ve, uh, read all these too.) Instead, Kathleen Kennedy and team burned it all to the ground, and as a result had to come up with new stories from scratch. (Sometimes these stories had a vague connection to the Legends universe, but emphasis on vague.) Which makes the hit rate much lower than what Marvel is doing. It also requires A-List directors–or at least Kathleen Kennedy wants to work with A-List talent–which makes business point four below much harder.

Alternatively, Kevin Feige leaned into Marvel’s history. This source material is part of the reason Marvel has been so successful. It’s not like Kevin Feige is writing all these Marvel stories from scratch. He’s just adapting the best Marvel stories of all time, like Civil War or The Infinity Saga. 

Business and Creative Issue 3: Avoid Bad Villains

Multiple friends—all Game of Thrones fans; all unsatisfied with the finale season—complained to me about the prequel series being about the rise of the White Walkers. The logic goes, “They were dispatched so quickly and easily, I don’t want to see them in another series.” Yes, this is an unrepresentative sample size, but it speaks to very real creative issues.

If that sentiment showed up in the testing—and I believe HBO tested the latest pilot with focus groups—then that alone could explain why the prequel didn’t move forward. Doubly so if combined with the lack of source material on the “Age of Heroes”. 

There is a business lesson here too, one about coordination and intertwining storylines. If the ending of the White Walker story was more satisfying for viewers, then maybe my friends message saying, “Man, I can’t wait to see the beginning to that.” Instead, the abrupt/rushed downfall of the White Walkers in a dark episode of television fundamentally ended the ability to create another revenue stream for HBO/AT&T. 

Star Wars faces this too. The last trilogy create a brand new bad guy (Snoke), then [spoiler alert] killed him off, and is currently debating if the big bad guy–Kylo Ren–will become a good guy. Notably, in Avengers Thanos stayed bad the whole time. And now Star Wars may bring back Emperor Palpatine. In other words, after one of the best bad guys of all time–Darth Vader–Star Wars doesn’t know what to do.

Business Issue 4: Franchise Management is Hard. Really Hard.

The challenge for a network like HBO or a studio like Disney is managing not just the creative for one series, but thinking how the movements/plots in one TV series impact the larger business. Or one film impact the larger brand perception.

My current working theory is that Warner-Media doesn’t have as ingrained “franchise management” as a skill as someone like Disney. Disney has TV series and movies for Star Wars, Marvel, Disney animation and Pixar. Every character worth their salt has teams dedicated to manage that brand, building value over time. They really are experts at it and integrating it everywhere.

Compare that to GoT. Game of Thrones acts like an HBO property first and foremost. So HBO gets first crack at all the TV shows, but then nothing else happens. (Part of this is due to the fact that George R.R. Martin still owns the rights, but obviously AT&T should try to buy those.) We see the same thing with Harry Potter going the other way: lots of movies, no TV shows. (And slipping viewership.) DC probably has the most things being made, but with little connection between the movies and TV shows, just volume. (And a comic strategy of rebooting the whole thing every five or so years.)

This is likely the key issue with Lucasfilm too, in that top tier talent doesn’t want to sacrifice their creative vision for the larger universe’s needs. Which begs the question, “Why doesn’t Kennedy bring in creatives who will fulfill her vision?” That would mean not flashy names–like Benioff & Weiss–but directors who get the job done.

Really, only one person has figured out how to reliably do this right now.

The Reality: Marvel/Kevin Feige is the Best at Franchise Management Right Now

If you take all the lessons from Game of Thrones and Star Wars above, Marvel does each one well. Pilots? Feige does test shoots for controversial films to make sure they’ll work. (He did with Ant-Man, for example.) Source material? Yep, he picks the best stories and adapts them well. Good bad guys? Yep, Feige finds fresh bad guys each film. (Though arguably kills them off too quickly.) Coordination? Um, yeah we just saw that with Avengers: Endgame. (He found a set of directors who shared his vision, by the way, in the Russo brothers and gave them four huge films.)

Finally, he keeps the quality high. That’s a unique skill he has. (Unique as in one of maybe 5 folks in Hollywood.) Which is a credit to him. Marvel was barely anything when this century started. But by giving Kevin Feige the reins, his successful stewardship has created tons of value. And now he’s taking over TV whereas HBO/HBOMax is trying to figure it out and Lucasfilm fumbles for the next creative vision.

Other Contenders for Most Important Story – Apple TV+ Launched

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The 2019-2020 NBA-to-Entertainment Translator: The Update

Basketball, in my opinion, is a great testing ground for theories on strategy, valuing assets and data analysis. That’s why I developed my ownValue Over Replacement Executive” theory last fall. Or why I used the NBA to explain the misleading statistics here. Or compared overall deals to NBA trades here. Or why I’ll roll out the “four factors of streaming video” in a few weeks. 

It works because basketball—and really all sports—are a controlled environment, with standardized statistics and clear winners and losers. That makes it a great laboratory to test out a lot of theories. The challenge for entertainment executives is understanding that the data is a lot messier in business than sport.

My favorite basketball-inspired series was from last fall where I rolled out my “NBA-to-Entertainment” translator, comparing each NBA team to its analogue in the crazy world of the Hollywood. I did this in three articles:

Part I: The Eastern Conference

Part II: The Western Conference

Part III: The Rest

In honor of the return of America’s 2nd (or 3rd) biggest sport, I’m going to take a gander back at what I wrote last year. I won’t hit every team/company, but will call out some of the biggest hits, misses or just fun teams/companies to write about. 

(By the way, this is an exercise in narrative building fun, not an accurate, data-crunched analysis. With essentially each “input”—either team or company—being filled with thousands of variables over the course of a year, I can pick and choose to build mostly any narrative I desire. Which makes for a fun read, but should be a sneaky lesson for those of us crafting strategies.)

The Walt Disney Company is…The Los Angeles Lakers

Call: Biggest miss

Let’s not pull punches, fellow Lakers fans. While Disney was having arguably the greatest year in theatrical performance in its history—Avengers: Endgame, Captain Marvel, Toy Story 4, The Lion King—the Los Angeles Lakers were tanking. It wasn’t the worst season in team history, but it wasn’t great. And we had Lebron James on the roster!

Lebron—who I also called the “Marvel Studios” of entertainment—was still Lebron. And the same way that Disney put together superstar studios (Star Wars, Pixar, Marvel), the Lakers added Anthony Davis in the off season. That’s why I have to keep this pairing for now. The Lakers added a superstar and Disney is about to add Disney+. Plus, cynically, both Lebron and Disney have ongoing China business that clouds their moral judgement, so that feels appropriate.

Netflix is…The Golden State Warriors

Call: Biggest hit

Wow, does anything capture Netflix’s last year—continued global subscriber growth, but one earnings miss tanked their stock price—than Golden State making the finals, but losing to Toronto? Emotionally, those feel identical. Other similarities: Golden State lost Kevin Durant, and Netflix is losing all the Disney movies. 

As we gaze towards the future, both Netflix and the Dubs face competing, viable visions of the future. In optimism, Golden State gets back Klay Thompson, De’Angelo Russell becomes a super star, and by next year they’re competing for championships. In pessimism, it all falls apart. In optimism, Netflix gets its costs under control, keeps growing globally, and takes over the world. In pessimism, it all falls apart.

This is a fun one to keep watching.

Amazon Prime/Video/Studios is…The Toronto Raptors

Call: Close miss

One could squint and make the case that Amazon crushed it in 2019. An Emmy win for Fleabag, the super hot Marvelous Mrs. Maisel (also winning awards) and then you have The Boys being a sneaky popular series! Amazon has the hardware and so too do the Raptors.

But it doesn’t quite capture Amazon’s year. For all the TV success, Amazon had a string of movie misses from Booksmart to Brittany Runs a Marathon. Those misses feel like not re-signing Kawhi Leonard. Most importantly, for all its talk about 100 million global subscribers, no analysts really think that the Prime Video service has taken the crown from Netflix. As for Twitch, it’s huge. But how huge? We don’t know.

HBO is…The Houston Rockets

Call: Hit

How can you have the biggest show on television, and feel like your company is falling apart? By having every executive leave and your corporate parent trying to change who you are. The Rockets have the greatest scorer in the NBA, but they didn’t make the Western Conference finals because of a poor regular season, sort of how HBO’s slate outside of GoT is very “okay”. 

The future isn’t terrible, with another polarizing superstar—Russell Westbrook aka The Watchmen—joining the crew, but definitely filled with question marks. (Will the GoT prequel live up to the hype? Will Westbrook and Harden co-exist? Will HBO Max ruin the HBO brand? Will Harden come through in the playoffs?)

While we’re here, we may as well knock out the rest of the AT&T/Time-Warner conglomerate.

Warner Bros is…The Milwaukee Bucks
AT&T/Time Warner is…The Los Angeles Clippers
Dallas Mavericks is…Turner (CNN/TNT/TBS)

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Is Disney Bringing Back the Vault? My Analysis on the Strategic Implications of Disney+ Content Library

If the streaming wars were a medieval war, original content are the mounted knights. Especially the pricey TV series. Like knights of the medieval ages, these extremely expensive weapons will likely win the war for one side or the other. This would make the siege engines the tech stack and distribution infrastructure. The logistics supplying and feeding the armies is the hordes of lawyers and finance folks in the bowels of each studio.

But an army is much more than aristocrats in suits of armor. It needs masses of peasants clinging to sticks and spears, ready to be mowed down by mounted knights or crushed under hails of artillery. Who is that in the streaming wars?

Well, library content, of course. 

Over the last few weeks, we’ve gotten quite a bit of news about the size of the various infantry nee “library content” that a few of the new streaming services are rolling out. Let’s run down the news of the last few weeks:

– First, Disney reveals the number of films and episodes for Disney+ in its earnings call.

– Second, Bloomberg reveals Apple won’t have a content library.

– Third, Disney reveals not just the count of its library, but the specific films and TV series.

Altogether, we now know quite about Disney’s plans for Disney+. As a result, I’m going to dig MUCH too deep into it trying to draw out strategic implications and meaning from Disney+’s future content library. Today, my goal is to focus on the strategic dimensions of Disney’s content plan. Its strengths. Its weaknesses. What it says about Disney’s future plans (and constraints to those plans). 

I have two reasons for doing this. First, since Disney+ is fairly small of a library, we can draw a bit more conclusions than we could about some other streaming services—like Netflix or Amazon—which have thousands of movies that change constantly. 

Second, library content really is important. To continue the martial analogy, infantry won’t win the war on its own—smaller armies often best bigger ones—but having a bigger army sure can help. Having the best library content is a tremendous head start. 

Both those points collide in Disney+’s future catalogue. Despite its smaller library, Disney+ may launch with the most valuable content library in streaming. Pound for pound, this will be the strongest film slate on a streaming platform, with a decent TV slate. But I’ll be honest: it may not be as strong as you think. I’m about as bullish as they come on Disney+, but running through the actual numbers has sobered me up.

Let’s dig in to explain why.

What We Know about Disney+

One of the secretly important parts of the last Disney earnings call was their description of their upcoming content slate. Here’s a screen grab of Variety’s coverage, that quote Disney CEO Bob Iger directly:

IMAGE 1 - Variety Quote

If you’re like me, as you pondered this for a later Twitter thread, you captured the pieces in Excel. Like this:

IMAGE 2 My Capture

Unfortunately, we still had a lot of questions. Marvel films? Which ones? Star Wars films? Which ones? And which animated films? Then, before D23—Disney’s annual convention for super fans—Disney provided the answers to some news outlets, like the LA Times, which had had a huge list of confirmed films. So I dug in. 

Disney+ Film – By The Numbers

The obvious takeaway is that Disney+ won’t come close to the volume of films that other film services will have. To calculate this, I’ll be honest I simply googled “film library count” and looked up Amazon, Netflix and so on. I found a few sources for Netflix and fellow streamers. After that sleuthing, here’s my projections for the biggest streaming services.

IMAGE 3 - Est 2020 Film Smales

Here are the key sources I used: ReelGood (Netflix 2014, 2016), Flixable (Netflix 2010, 2018), HBO (current), Variety (Amazon and Hulu 2016) and Streaming Observer (Amazon, Netflix, Hulu and HBO, 2019). The caution is that I’m not sure the Amazon numbers are accurate and that some of the sources aren’t also counting films available for TVOD/EST. But these numbers were reported in Variety and Streaming Observer, so I’m inclined to trust them.

(Also, these were US numbers only. Other countries complicates it, but from what I can tell library sizes tend to be correlated over time.)

As has been reported constantly, Netflix is losing content. Specifically, it can’t license as much content for as cheaply. This showed up in the data: 

IMAGE 4 - 2010 to 2020 Film Slates

As studio launches their own streaming service, they take their films from fellow streamers. While Netflix has suffered the worst, Amazon isn’t immune. Meanwhile, HBO has stayed at the same, small level for most of the last decade. (Some estimates had HBO at 800 films, but counting the available films on their site gives me about 300.) Hulu has been shrinking like the others too. 

You may ask, “Where did the CBS All-Access numbers come from?” Well, that’s Paramount’s library of films, which CBS bragged about in the merger announcement. Obviously most of those films are in licensing deals already, but if SuperCBS really wanted to, they could try to get them back. That is the potential library for CBS All-Access. (And it isn’t as bad as the last ten years suggest. The Godfather? Titanic? Mission Impossible? Those have value.)

The Value of those Disney+ Films

The challenge is to take those raw numbers and try to convert them into actual values. If you’re a streamer, you can build a large data set—and I mean big—with streaming performance, Nielsen ratings, IMDb and other metrics, and judge the value of various content catalogues. While that gets you a very accurate number, at the end of the day we don’t need those extra bells and whistles becasuee we have box office performance.

Box office captures about 90% the value of a movie for a streamer. In other words, if you wanted to know if people like a movie (and will rewatch it), box office explains probably 90% of that behavior. 

So I pulled the last ten years of films, looking for how many Disney films ended up in the top 5, ten and 25. The results are, well impressive. Especially recently. (An additional, very safe assumption: that films released in the last year are more valuable than films released two years ago, and films in the last five years are more valuable than films from ten years ago, and so on.) If Disney can put all those films on its streaming service, in comes the money. So take a look at this table, with the top ten films by US box office, with Disney releases highlighted:

IMAGE 5 Disney Last Five YearsBy my reckoning, that’s 18 of the top 5 films of the last five years, 22 of the top 10 films and 32 of the top 25. Incredible. And I realize I’m not breaking any news here.

So here is some new news. As I mentioned above, Disney released to the LA Times a list of films confirmed for Disney+, and well, it’s quite a bit few films. Here’s the last ten years of top 10 box office films, with the films actually making it on to Disney+ highlighted in blue:

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A TV Murder Mystery: Who Killed Game of Thrones?

Most of the time, when Hollywood kills off one of its TV shows, we know why. The ratings had been sinking or the talent asked for too much money. (Or recently, it was produced by a rival TV network/conglomerate.)

And yet, HBO killed off Game of Thrones, a TV series that was getting more popular with every season and making its parent company billions in the process. Meanwhile, other long-running series—with worse ratings—from The Simpsons to Grey’s Anatomy to The Walking Dead march on like, well White Walkers. The corpse of Game of Thrones is now—spoiler alert—as cold as Jon Snow’s after season 5.

Why? Who had the motive? And who issued the order?

We Officially Have a Murder Mystery

Frankly, there isn’t a great explanation for why HBO cancelled this series. In the past, I’ve estimated that this series was making an estimated $300 million a season for HBO. (And potentially much more. Read the original, and my director’s commentary here, here and here.) Sure, HBO has a great (on paper) slate premiering the rest of this year and next year, but you know what helps launch a great slate? The biggest show on TV.

Have no doubts this series was growing. The number of viewers rose in every territory that I could find that releases data. Over 44 million were tuning in per episode in America alone, up from 9.3 million in season 1.

GoT Viewership

Of course, in some circles—like HBO creator circles—the story is what matters. Maybe the creators wanted to wrap it up nicely. Except most of the criticism of the last season related to the fact that the series felt rushed. Here is just a sampling of critics and fans complaining that season 8 felt rushed. More episodes and more seasons would have solved this problem, and who knows, by a hypothetical season 9 maybe 50 million people are tuning in in America each year!

Who kills off a money making show? Who are our suspects?

The Suspects

HBO

The buck stops there. So we should start with HBO. Their motive in killing this show would be simple: It’s the most expensive show on television. And since it is already insanely profitable, any additional profits have to be split with talent who are negotiating tougher and tougher deals with more and more back end. Each additional season is less lucrative for HBO, and if the marginal benefits meet the additional costs, well economically HBO should cancel the series.

George R.R. Martin

Listen, George, you’re a part of this. You probably didn’t finish the plot of A Song of Ice and Fire, because if you had, you’d have published that book. Which you haven’t. Maybe you told HBO to stop the series. Or you never provided enough details to fully flesh out 3 to 5 more seasons of the show.

The Actors

When in doubt, blame temperamental actors. Am I right? “Talent” is what you bitterly mumble in Hollywood when you can’t control the situation.

The motives for these suspects—and really I’m talking the big five actors of Jon nee Kit, Cersei nee Leda, Jaime nee Nikola, Daenerys nee Emilia and Tyrion nee Peter—is pretty simple: they’re sick of working on this series. Or more precisely, as artists, they’re ready to make other movies about Greek Gods, Han Solo and Terminators. (Too far?)

Further, even if you don’t mind working on a TV show for the rest of your life—including shoots in both scorching deserts and freezing tundras—you do know how valuable you are. You can’t have a GoT without a Daenerys and Jon Snow/Stark/Targaryen. Knowing that, the actors negotiated phenomenally expensive payments per episode, over $1 million per actor. They also likely demanded higher back end percentages.

The Showrunners

If the actors are sick of this series, imagine the two people at the lonely top of the creative pyramid, David Benioff and D.B. Weiss (D&D in Reddit parlance). I can’t describe adequately how insanely time consuming this series was for these two individuals. They wrote a majority of the episodes, supervised the entire production from set design to costumes and oversaw all the editing and post-production; and oh by the way (NFL announcer voice), it was the largest TV production in history. 

Meanwhile, they had plenty of opportunities to do other things, from Star Wars to a new overall deal to ideas in their notebooks we can only imagine. If you’re worth hundreds of millions of dollars (my tentative figure for D&D once they collect GoT royalties), do you want to keep spending your winters in Iceland and dealing with the most demanding fans in television history? That would be enough to say, “Eight seasons and we’re done!”

AT&T

Is there a thing that AT&T hasn’t managed to screw up since it acquired Time-Warner turned into Warner Media? Since taking over, they’ve lost the head of their movie studio, the head of HBO and plenty of other executives. Meanwhile, they named their new streaming service HBOMax, which was universally derided, and DirecTV is hemorrhaging subscribers. Oh, and AT&T is the most indebted company in America. Maybe they killed GoT to keep the losses from piling up. 

Netflix

When you discuss TV on the internet, you’re contractually obligated to mention Netflix at least once. While we give Netflix a lot of credit and blame for, they’re not involved here. 

The Evidence

Like a detective in Law & Order, it’s time to interview the witnesses. Which in this case means various articles that describes the suspect’s state of mind. Supply your own “dum dum”.

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