Monday AM Briefing #61

The stories and trends in OTT streaming you *need* to know for this morning & the week ahead

A Short Essay on Talent Trade-offs in Streaming vs. The Creator Economy

I wrote about transparency in last week’s Monday AM Briefing, focusing on how Disney management wasn’t incentivized to be transparent with Scarlett Johansson.

I also wrote about the creator economy business logic built into Blackstone’s Hello Sunshine investment, and how it may compensate for the growing uncertainty in revenues from the streaming marketplace.

Kim Masters’ interview of Blumhouse producer Jason Blum on The Business podcast connects the dots between the two. He describes Johansson as leading “a much bigger existential fight” to answer the question:

“How are we going to come to terms with the fact that streamers don’t share on streaming?”

He thinks:

“the consumer is better off - meaning, movies and TV shows are better - if the people involved those movies and shows participate in the success and failure of those shows.”

Meaning, there is a trade-off emerging between talent’s incentives for creativity and streamers' business need for a lack of transparency.

Blum also highlights how getting paid upfront - like the $400MM he received from Universal for The Exorcist trilogy - hits on this question of incentives for success. Any back-end profit participation is already accounted for because the deal price assumes all three movies “already have been released and have been huge hits”.

Blum doesn’t think this upfront model is sustainable: “it’s completely madness”. But, “if that is what the market is bearing”, he is going to take advantage of it.

Another worry is that if this upfront model starts assuming movies are not “huge hits”, streamers will offer lower salaries for talent “across the board”.

With all of these emerging marketplace dynamics, what should talent do?

Blum hopes Johansson’s suit is the first of other lawsuits to come.

A different answer lies in Hello Sunshine’s bet on creator economy business models, which reflects how talent may hedge against less transparency and less money.

The $900MM of additional funding that Hello Sunshine secured from Blackstone, Kevin Mayer and Tom Staggs ($500MM guaranteed, the rest conditional on outcomes, according to Matt Belloni) is positioned to accelerate the growth of its DTC models like book clubs, podcasts, e-commerce.

Is the creator economy model a good hedge? Are these the types of bets that could scale for Hello Sunshine?

There’s one, very un-Hello Sunshine “yes” answer from the creator economy that surfaced last week.

In the video above, Facebook Gaming streamer Corinna Kopf casually shared to YouTube star Dave Dobrik that she made $4.2MM in just over a month on OnlyFans. She made $1MM in the first 24 hours.

OnlyFans is best known for NSFW content, but Kopf tells Dobrik that only one of the 65 photos she has shared was topless. That photo netted her $165,000, or 4% of her total revenues, to date. The rest of her $4.2MM is from repurposed Instagram photos, a move that has been lucrative but angered fans.

Nothing we have read about Hello Sunshine’, to date, involves or implies OnlyFans as part of its strategy.

But, the bet is generally on the creator economy business logic compensating, if not over-compensating, for whatever income Hollywood talent is losing as streaming shifts the Hollywood model away from revenue-sharing.

Corinna Kopf earning $4.2MM on OnlyFans from her 1MM+ Facebook followers and 6MM Instagram followers offers compelling back-of-the-napkin math and plug-and-play logic.

Meaning, when Kopf makes $4.2MM in one month, Reese Witherspoon seems well- positioned to make similarly successful plug-and-play, creator economy DTC-type bets with nearly 4x the Facebook followers at 3.8MM and 4.33x the Instagram followers at 25.9MM.

But I think Kopf is a relevant example of how the trade-offs exist in the creator economy business models for Hollywood talent, too.

Because, the OnlyFans model seems to fall outside of the types of female empowerment Reese Witherspoon has been pursuing with Hello Sunshine, to date. But, Blackstone is betting $2.5B on the business logic that Corinna Kopf-levels of success are attainable for Hollywood talent in the creator economy, too.

Kopf and David Dobrik (Forbes estimated he earned $15.5MM in 2020) are may reflect the top 1% of creators. But, they earn their keep by taking the kinds of risks A-List Hollywood talent prefer not to take, and especially not on Onlyfans.

The streaming marketplace offers risks commensurate with the more risk-averse approach of A-List Hollywood talent with their brands.

What are the trade-offs for Hollywood talent to achieve Corinna Kopf-levels of success in the creator economy? Do they offer outsized returns when compared to “safer” but decreasing streaming dollars?

It’s not yet clear.

Must-Read Monday AM Articles

• The Verge’s Nilay Patel interviewed YouTube chief product officer Neal Mohan about YouTube and the creator economy (NOTE: link to podcast and transcript). YouTube creators can now earn up to $100,000 per month.

• AdAge reported on YouTube’s “struggle” to capture Connected TV ad dollars.

• Observer’s Brandon Katz wrote about the M&A market dynamics behind the Hello Sunshine deal.

• Disney attorney Daniel Petrocelli told Variety that Scarlett Johansson’s contract demands are “a highly orchestrated PR campaign to achieve an outcome that is not obtainable in the lawsuit.”

• There was an Ariana Grande concert in Fortnite over the weekend. Kyle Chayka wrote about the Metaverse in The New Yorker, and envisions Mark Zuckerberg’s vision as “an all-encompassing social-media feed, with all the problems thereof”. But do Metaverse models need safeguards?

• Insider has the details on multiple job descriptions for Netflix’s games division. ($ - paywalled). The company behind the show StartUp is considering making another season of the show, three years after it ended due to its success on Netflix ($ - paywalled)

• Asian regional streaming platform Viu has overtaken Netflix in raw subscription terms in Southeast Asia. But, Netflix’s prospects in Asia-Pacific look stronger in the second half of the year, according to research firm Media Partners Asia.

• TVRev’s Alan Wolk makes a compelling argument why Netflix is “losing its lustre”.

• The LA Times asked four staffers how they would fix NBC’s Olympics broadcast, which has underperformed in ratings. Vulture TV critic Jen Chaney discussed why The Tokyo Olympics Haven’t Felt Like Must-See TV.

• Variety VIP reports that downloads of the Peacock app at least doubled last month ($ - paywalled)

• ViacomCBS reached a deal with Comcast to distribute Paramount+ in Europe ($ - paywalled).

• Bloomberg’s Lucas Shaw has a must-read interview with South Park co-creator Matt Stone after it announced a $900MM deal with ViacomCBS. Parrot Analytics broke down why the data suggests South Park may be worth more than $900MM to ViacomCBS and Paramount.

• Redbox CEO Galen Smith described to Protocol how DVD rental service Redbox has turned its kiosks into part billboard, part promotional opportunity to get people hooked on streaming.

• Anime streaming company Crunchyroll hit 5MM subscribers. Antenna reports niche subscription video services have subscriber bases that have grown more than twice as fast the past two years compared to the seven biggest streamers.

• The Suicide Squad opened to $26.5MM at the box office, lower than the $30MM expected, but HBO Max chief Andy Forssell told VarietyTheSuicide Squad boasted the second-most viewed opening of any film premiering day-and-date on HBO Max. 

• WarnerMedia launched a new brand studio, House of Max, for its new AVOD service with the main goal to “create an effective environment that aligns with marketers’ goals and puts the viewer at the heart of the streaming experience.”

• A J.D. Power survey released last Thursday and reported by Bloomberg suggests consumers are paying an average of $55 a month on streaming, up 45% since April 2020, the survey showed.

• The Media Rating Council, a nonprofit organization that audits Nielsen ratings, says that Nielsen’s Total Usage of Television time (or TUT) from February was lowballed by between 2% and 6% among viewers in the adults 18-49 demo most coveted by advertisers.

• A new report from Midia Research found 52% of all consumers stop paying attention when ads come on the TV, and that figure is as high as 61% for people aged 55 and over.