Dec 16, 2021 • 11M

THB #57: In The Year 2000... 22...

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David Poland
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It’s that time of year for those of us who opine for a living to stick our necks in the guillotine in the courtyard while people throw old vegetables and fruit… or in Hollywood, poly blend sweaters and cars without built-in wi-fi.

Some fearless and fearful predictions for 2022…

There Will Be No Major Acquisitions/Mergers In 2022.
Everyone seems to be waiting on the next shoe to drop on Viacom/Paramount or Sony Pictures or Lionsgate. But Amazon is buying a $9 billion MGM/UA right now, they aren’t going in for $25b - $60b for one of these others in a hurry. Apple shows no signs of prioritizing a big build of their platform. High profile, but not deep. Netflix really doesn’t need to buy a big pile-on of new people and all of the neuroses of each of these companies. And John Malone isn’t still in Lionsgate to try to blend that company’s assets with the new Discovery/Warners effort.

The only real option for something to happen is for some combination of these 3 companies to merge in an effort to scale to compete. But it seems more likely that Lionsgate will spin Starz off than try to scale it themselves. Neither Paramount or Sony has shown a tendency to acquire or build.

Truth is, the theme of “must scale up” for streamers, endlessly droned about this last couple years, is false. It is not the size of the library, it’s how you use it. Netflix has used their first mover advantage brilliantly… but they are now adjusting. Disney is being held back by not full integrating Hulu into an absolute must-have bundle with D+, but has had great success with the classic brand. HBO Max has the massive foothold of HBO, but also a deep, deep library of TV and film content, including some major IP. But under Zaslav, it seems clear that he will clean up the paths to the content the two organizations already control and then… who knows?

The goal is to get control of enough of those 50-hours-a-week that people watch television to make paying for the service each month feel comfortable. Exciting is great… but what streamers need is for subscribers to be at peace. Not throwing away money… but not necessarily being the most watched thing on the TV. Try to match the ubiquitousness of Netflix… or find your own voice the fills the void that people turn their TV on to fill each day. But stop following the leader. March to your own drum and do it well.

Who Sticks, Who Flips?
Amazon will make room for DeLuca and Abdy. The likelihood is, if Amazon wasn’t acquiring MGM/UA and someone else was, and those people let DeLuca and Abdy go, Amazon would be in a hurry to hire them. Ted Hope is a great Ted Hope. But Michael and Pamela have a similar interest in high quality, but a natural lean into a more commercial mindset. This seems to fit the Amazon mindset to a fare thee well.

Zaslav will not make room for Jason Kilar. I don’t know that Zaslav is shy or fearful of other popular people, but one of Kilar’s greatest gifts is clearly building constituencies that want him to win. What hard charging leader needs that guy floating behind him as he makes his own decisions, brilliant or stupid? The biggest question, to me, is to what degree Zaslav is going to clear out the executive ranks in each content segment of the company. There are some hard core cockroaches in the Warner Media world… and that isn’t meant as an insult. These people are survivors and they rise while others get squished. Of course, the looming issue when any of these sea changes happen is who will replace the devil you know? Elizabeth Gabler has a nice set-up at Sony, but running Warner Bros. would be a statement for both sides. Is Peter Rice really looking for a way out at Disney? Who is the great young marketing genius in town?

The NFL Joins The Mass Market With Streaming
Sunday Ticket will flip into a more current DTC model, abandoning the exclusivity of DirecTV or any other outlet that will use it as bait, rather than as a cash engine. The current annual revenue stream is approximately $600 million, earned from 2 million consumers paying about $300 each for a full season. There will be some partner (Amazon, Apple, or ESPN most likely), who doesn’t get a piece of the action from the NFL. For them, the benefit will be having a captured sports market coming to their space for 17 weekends a year… worldwide. So whoever it is, they should already have an international footprint with their streamer and be ready to push that footprint even harder.

The first season will open up the buying opportunity to individual games, season passes for single out-of-town teams, and weekend passes for the full non-local service. The NFL will make a deal with their partners at Fox and CBS to allow for local stations to get a revenue share - maybe even local ad time - so that buyers who pay for full packages can see those games in the same place as they see the out-of-market games.

The first year target will be to get 30 million consumers to spend at least $75 each… $2.25 billion. But that is just the beginning. Over the following years, the model will be adjusted to maximize both buying households and overall revenues.

Premium Format Theaters Explode
The number of Premium Format Theaters in mutiplexes will more than double in 2022 to over 3000. IMAX, Dolby, and the individually chain-branded rooms will continue to restructure the finances of theatrical. The rooms take up more space and have had fewer seats than “normal” theaters and they cost more to create. But amongst the trends we have seen as we have slowly returned from COVID is that people who want to go to the theaters want to go to these premium experiences.

The question will be, as it has been so many times before, how will these changes be paid for? Exhibition has been in survival mode for almost 2 years. And distributors are dancing around the theatrical window like Hårgan around the maypole, waiting for the ritual death (see: Midsommar).

In Los Angeles, a premium theater ticket in an AMC is an extra $5.50 over a “normal” screen. 3D is a buck more. If you are trying to reach out to a narrower audience that is willing to pay more for a better experience, that 20% bump in the ticket price is a potential savior. It will take a few years for any newly converted premium room to make its cost back. But it seems to me that this is the price of entry for the future of exhibition. There will still be plenty of people who are not interested in paying that premium… and not every screen should be premium. But while we miss the Arclight standard, the next standard is another step forward.

2022 Will Be More Consistently Inconsistent At The Box Office Than 2021
January has a couple muscle movies and a thin schedule. February is loaded to the gills with potential solid Bs, a couple of which could pop, though Sony will hope to convert Spider-Mania into a big win with Uncharted. And then The Batman on March 4… which everyone has run away from, leaving a barren landscape for most of the month, aside from the counter-programmed Downton Abbey 2. April has a couple $100 million titles, but others still have to show themselves as marketable. Then summer starts… dyads… Strange and Cruise, Dinosaurs and Buzz… and July gets 3 tentpoles with more Minons, more Thor, and The Rock as superhero.

The key to consistency at the box office will be the titles that are not big noise yet. DC League of Super Pets could make May much stronger… or not. John Wick too. Lost City (they seem to have lost the D). The Bad Guys. Bullet Train. Secret Headquarters. I have no idea on these titles or many others, really. And some will surely stand up. The Hanks/Elvis movie… if that turns out to be a $100m title, it will matter… a lot.

Wall Street Will Not Cooperate With Execs Desperate To Raise Their Stock Price
Wall Street will continue to punish every company with a streamer without the call letters NFLX. Stop trying to make “fetch” a thing… because at these prices, it could kill you.

Cord cutting will continue… another 10%.
But there is going to have to be an event that turns the corner for streaming as the foundational delivery system to accelerate in the way that is inevitable in time. 200mbps - 300mbps in household internet for $30 - $50 a month seems to be the threshold. It’s shocking how many people cannot get that level of service.

The evolution of The Academy (AMPAS) will be directly reflective of who replaces Dawn Hudson and how quickly she is replaced.
The Academy Board of Governors is a group of powerful and brilliant people. But they tend to meander unless led. The CEO is going to be that leader, like it or not. Before Dawn, the leadership was like the staff in a British household drama… invisible, but clearly in charge. Dawn has been unable to lead the organization towards best possible options throughout her run. None of it is a complete disaster. That is not the standard. But in classic political terms, “Is The Academy better off now than it was when she took the job?” There is no question that the push for inclusion has been good and important. But that was forced and overreached from the start. It should never have been contentious. But the show has floundered. The museum is middling, especially in light of the resources that have been expended and available. And the entire award season has become more and more of an island. Whoever is hired for the job needs to be highly passionate and ambitious for the organization… not a log roller. The sooner, the better.

The Golden Globes will be back on TV in 2023.
How many times must we see this happen? It will not be as lush an organization. It will be heavily intertwined with Penske Media. And enough of the players will play, even if a lot of talent will not show up. Essentially, next year’s Globes will be a rebuild, like it was in the early years of the NBC deal. But CCA will not have a big footprint this year… in no small part because the organization has refused to find a brand for its award that anyone can remember (which they needed to do years ago).

People forget… everyone involved knew what HFPA was before the LA Times put it in the paper. Some have turned the corner and have had enough. But many just want their marketing toy back. Follow the money. It’s all made by the show happening on a network… none made by keeping it off the air. Organizations “vetting” the show will be given millions in grants. So it will be back on the air.

Until tomorrow…