THB Headlines: October 13, 2022

Played by Netflix, again... and Halloween Ends

Netflix ad-supported plan to launch in Nov at $7 a month

Suckers!

Netflix got us again. All the talk about an ad tier for The Streaming King seemed like they were going to really change the face of streaming. But the devil, as always, is in the details.

“You want ads?! We’ll give you ads!” But they’ll only make the tier of interest to you if you are on their lowest customer tier. Before this, Netflix discouraged subscription at their lowest priced plan, $9.99 a month, by making it a 480p stream, which is not considered Hi-Definition. Also, the “Basic” level allows only one viewer at a time. The next level up. “Standard,” is $15.49 and offers 1080p and 2 streams at once. Lots of people are comfortable with that boundary, not much of the library is in 4k, even if you had it (and TV people will tell you that the streaming 4K isn’t really 4K anyway). The “Premium” tier is 4k and up to 4 streams at any one time… $19.99 a month.

Here comes the “Basic with Ads” tier at $6.99. 1 stream and 780p, which will now become the norm for non-ad Basic subscribers too. Also, there will be some content that is not available on this level because of unresolved contractual licensing issues.

If you are currently a Standard subscriber, you could cut your monthly bill by 55%. But you could have cut it by 36% anytime in the last year by simply switching to Basic. If you didn’t change plans to save more than 1/3 off your monthly bill, are you really going to switch now to save 55% with the additional burden of ads and missing content?

Not likely.

If you are a Premium customer, are you… no… don’t even have to finish the question.

Netflix told the Wall St Journal (off the record, of course) that they are projecting “13.3 million ad-supported viewers in the United States by the third quarter of 2023.”

Maybe. But I would have to bet that the majority of that group is not new subs, but existing Basic tier subs. Putting that aside, 13.3 million subs x $6.99 = $1.116 billion a year. US/Can is a 70 million+ subscriber, $14 billion a year market for Netflix.

I would be shocked if Netflix breaks out ARPU by pricing tier in investor releases next year, so we will be doing some guessing. How many subs will be added? How much will domestic ARPU drop? How much ad revenue - limited by the small percentage of subs seeing ads - will there be, getting counted in the ARPU?

If 10 million Basic tier subs take on ads, that’s $360 million less in subscription revenue. Some have estimated the ad opportunity in the first year at around $400 million (which may have changed with the details released today). Likewise, if there are 3.3 million new subs at Basic with Ads, that’s “only” $276.8 million more in sub revenue.

Let’s go wild and say that the new tier adds $350 million and 4 million new subs to the Netflix US/Can business. Well… that suggests almost a 3% increase in domestic revenues.

And a year from now, if Netflix doesn’t add more ad tiers next year, the expansion part will be used up. The domestic market is not significantly elastic.

It could go worse. It could go better. But the real question is, can it make a significant, lasting difference? The answer, based on this offering is “no,” at least domestically.

The ad-supported plan from Netflix will be available in Canada, Mexico, United States, Brazil, United Kingdom, France, Italy, Germany, Australia, Korea, Japan, and Spain by November 10.

I don’t have nearly enough detail information about the 10 non-domestic markets to claim any deep insight. But it is of note that all of these are high-ARPU markets, so much of the same “here’s a gift you will never open” circumstances here at home are likely in play in all of these countries.

There is nothing wrong with Netflix taking action to increase incremental growth. But the real issue, for Netflix and everyone else, is how to continue to expand the streaming business across the globe and how to increase revenues. If they do not, streaming is still a viable opportunity. It is not, as so many things are now presented, an either/or situation.

The question for Netflix is when they will become a $40 billion a year revenue business instead of a $30 billion a year business. Let’s put aside the $50 billion+ business that Wall Street once imagined.

Advertising, for Netflix and others, is another opportunity with potential that is impossible to nail down, in terms of hard numbers, and will be for at least the next couple of years. This is not a criticism. It’s just reality. Maybe it will become a bigger thing and we will look back at 2018-2024 as “the good ol’ days” when streaming was cheap and mostly ad-free. Maybe it will battle subscription revenue to a draw. I’m sure all the streamers hope there is another variation of the model that will raise all boats before they reintegrate ads onto all but excessively expensive models (say, $300 a month for a commercial free TV experience) replacing too-expensive cable/satellite models.

Halloween Ends

Is this film in need of a full review? Not really.

David Gordon Green’s Blumhouse Trilogy of Halloween films is now complete. And here is my take:

They had a really great idea for a new film, bringing back Laurie Strode as a gray-haired adult woman who has given up on being passive, but is actively inclined to finish off Micheal Myers once and for all.

The first film, just titled Halloween like the original, was entertaining, but seemed like it was avoiding its natural ending.

Halloween Kills seemed to me - still does - like David Gordon Green & Co. mostly improvising a middle movie that barely moves the dial on the story, killing off a major character from the rebooted series, but not in any hurry to get anywhere so much as to hang around the bar and take the temperature of Haddonfield.

Halloween Ends starts a whole new B story around Corey Cunningham, a brand new character. Why did they need his story, which is a mixed bag? Because the part everyone was waiting for really only lasts about 20 minutes, maybe a half hour. So you have to entertain the audience until you get to that. And Green & Co do a better job doing that here than in the middle movie. All three films lean into mumbo jumbo language about evil and its meaning. But Ends almost makes that into a serious, lasting theme. Almost.

I won’t get into spoilers here, but the film does a nice job of playing with the question of whether Michael Myers is real or an idea… whether he is the embodiment of evil or if the evil is transferable… and whether the madness has taken over Laurie Strode completely. Yes, well into the 3rd act, Halloween Ends allows a legitimate take on this film that Michael Myers is actually long dead and only his evil is still floating around. And then, it answers the question.

Can I get through this without a spoiler or two? NO!

SPOILER ALERT… SPOILER ALERT!!!

I waited and was amused by much of the movie. The Chris Cunningham story worked sometimes and was a mess other times. What really failed it was the argument about why Laurie’s granddaughter was so drawn to a man who was going through a transformation into a serial killer, inspired by granny’s tormentor. It is a really interesting idea. But there was no real answer.

This was a Halloween movie without that element that was so much of what made the original everything it is. Premarital sex = death. We even get Jamie Lee Curtis doing a wild speech about letting her tits - her word - loose in the world. Moreover, the movie explicitly brings up the idea that kids don’t get killed, babysitters get killed. I actually laughed to myself at one point, as the film stayed modest, as we saw a Judy Greer flashback and I recalled that she is topless in Reboot within the first 5 minutes… in her 40s…

I wanted a recall to those origins… P.J. Soles teasing her boyfriend, Bob, she thinks… Annie being stalked as she preps for a night with her boyfriend. There is an homage to the original real Bob in Kills… one of the highlights of this film.

I would have loved if, somehow, Laurie’s granddaughter Allyson, so weirdly turned on by edge-of-sanity Chris already, became the embodiment - including happy, fun promiscuity - of the women of the original film, triggering Chris and his mask fetish. But this time, Laurie saves them.

Anyway…

When the trilogy finally gets to it, Michael on Laurie action, it soars. Some solid fighting. But when Laurie pins Michael down on the kitchen counter with a knife in the hand… then another… then another… then a slow knife to bleed him out… small tears leaked out from my eyes. There was something beautiful and fitting about this long journey coming down to Laurie understanding how to fight Michael…. being precise… being intentional. It was no longer just bravado. She was killing him like an adult who understood exactly what she was doing and how she had to do it.

But that wasn’t it. The choice to take Michael’s body on the roof of a car through the town, like a parade, was inspired. And again, moving. Then, the final disposal of the body. Kinda perfect.

SPOILERS OVER… SPOILERS OVER

For me, the last 15 minutes of Halloween Ends is the best work in all 3 films.