Monday AM Briefing #62
The stories and trends in OTT streaming you *need* to know for this morning & the week ahead
First, a little self-promotion.
I had a fun, half-hour conversation with RevThink’s Tim Thompson and Keith Rauch on their podcast Connecting the Dots, which offers an insiders’ view of what’s shaping the content-making world.
It’s worth watching because we covered:
Disney's Q3 earnings and the Scarlett Johansson lawsuit,
how this new creators' economy is really working, and
the challenges of a lack of transparency for talent and creatives’ current deals and future deals?
Also, in first five minutes I break down my approach to analysis, which I haven’t done before (trust me, it sounds better in conversation).
A Short Essay on the Next Phase of Scarlett Johansson vs. Disney
Disney CEO Bob Chapek was asked on the Q3 earnings call by Jessica Reif Ehrlich of Bank of America about Disney’s relations with talent:
With the jury out on like how much the box office will come back to pre-COVID levels, how do you think about the success of a film in today’s environment? And how does that impact the way you attract talent, the way you compensate talent? And what changes do you expect to make, if any, in your film strategy from here?
Chapek used the opportunity to deliver gentle but firm pushback against the narrative set by Scarlett Johansson’s lawsuit and Black Widow’s “day-and-date” release:
What I will say is that just like we’ve done many times before, as the business has evolved and transformed, we’ve figured out ways to fairly compensate our talent, so that no matter what the business model is that we have to go to market with, everybody feels satisfied. And I will say that since COVID has begun, we’ve entered into hundreds of talented arrangements with our talent. And by and large, they’ve gone very, very smoothly. So, we expect that, that would be the case going forward. Certainly, this is a time of anxiety the marketplace as a lot has changed recently. And again, these films that we’re releasing right now were imagined under a completely different environment than unfortunately, the fate has delivered us. But, we’re trying to do the best thing for all our constituents and make sure that everybody who’s in the value chain, if you will, feels like they’re having their contractual commitments honored, both from a distribution and a compensation standpoint.
But the real counterpunch came after the call, when Deadline reported that Emma Stone has closed a deal to star in the sequel to Cruella.
The piece notably included this quote from Endeavor executive chairman Patrick Whitesell:
“While the media landscape has been disrupted in a meaningful way for all distributors, their creative partners cannot be left on the sidelines to carry a disproportionate amount of the downside without the potential for upside. This agreement demonstrates that there can be an equitable path forward that protects artists and aligns studios’ interests with talent. We are proud to work alongside Emma and Disney, and appreciate the studio’s willingness to recognize her contributions as a creative partner. We are hopeful that this will open the door for more members of the creative community to participate in the success of new platforms.”
If there are indeed lawsuits to follow after Scarlett Johansson’s lawsuit - as Blumhouse Media’s Jason Blum predicted to Kim Masters on The Business - Emma Stone and Endeavor’s larger roster of talent will not be among them.
This points to a logical question: will there ever be other lawsuits by talent against Disney given the Emma Stone deal and the “hundreds of talented arrangements” Chapek spoke to on the call?
Patrick Whitesell’s quote focuses on “an equitable path forward that protects artists and aligns studios’ interests with talent’, but not transparency.” But, Disney’s outcomes with Emma Stone and “hundreds” of talent have less to do with “equitable” in the broadest sense of the term, and are more self-interested (as Matt Belloni reported last night, the “equitable” outcome is much more specific to Emma Stone).
But, transparency remains the primary concern of Scarlett Johansson’s lawsuit and Hollywood talent, as Joe Flint of The Wall Street Journal reported last week:
Now, the studio that produces a movie is often selling its post-theatrical rights to streaming services and TV channels owned by the same corporate parent, such as Universal Pictures and Peacock. Stars and directors often fear the sibling streaming service won’t pay a fair market rate for a movie—meaning the talent’s share of the fee will also be below-market.
“The problem is, how do you even approximate fair value if everyone is selling to themselves?” asked one lawyer who often represents talent in these disputes.
In other words, which data are streaming services incentivized to share when they own the distribution channels and are under no legal obligation to share their business results (as I wrote in last Monday’s A Short Essay on Scarlett Johansson v. Disney, Transparency & Incentives)?
Netflix’s two-minute standard is an answer for talent, and according to their Q4 2019 letter to shareholders is:
"similar to the BBC iPlayer in their rankings based on “requests” for the title, 'most popular' articles on the New York Times which include those who opened the articles, and YouTube view counts." Meaning, Netflix sees its consumer behaviors as being more analogous to other online behaviors than movie ticket purchases.
Disney’s standard is based on…?
If Disney indeed has an objective standard for reporting its revenues, it doesn’t seem like talent or Wall Street would be the first outside of Disney to learn about it.
The reality seems to be that as Disney gets more momentum in streaming, the less incentive they will have to offer transparency and to find common ground with Hollywood talent.
That is a market reality across every legacy media streaming service growing by the quarter (and WarnerMedia is now describing day-and-date as a “winning strategy”.
If streaming revenues continue to trend towards being dwarfed by theatrical blockbuster revenues, that market reality will also deliver lower, near-commoditized salaries for Hollywood talent (a point Tim Thompson makes in our conversation, above).
So, more lawsuits from talent seeking more transparency seem inevitable, even if as a necessary tactical counter-measure and not a strategy for talent to find wins.
Must-Read Monday AM Articles
Shang-Chi and the Legend of the Ten Rings star Simu Liu did not take well to Disney CEO Bob Chapek’s comment in which he called the 45-day window for the movie “an interesting experiment.”
AMC Theatres reached a formal agreement with Warner Bros. to show the studio’s 2022 slate on the big screen for an exclusive 45-day window.
Brandon Katz of Observer asks “What If… Kevin Feige Left Marvel Over the Reported Drama at Disney?”
Variety VIP+’s Heidi Chung notices how the theme parks business drives operating income for Disney, and bullish Disney investors seem blind to the threat of COVID to that operating income.
In another step towards “aggregator 2.0”, Verizon is providing one free year of AMC+ to certain new and existing Fios and wireless subscribers, the company announced Thursday.
FierceVideo’s Stewart Schley observes that “the field of play for video today looks more like the cellular data market, with its hundreds of millions of accounts, than the cable market of yore, with its opportunity gated by a set number of physical structures.”
Websites and apps featuring pirated movies and TV shows make about $1.3 billion from advertising each year, according to the online safety nonprofit Digital Citizens Alliance and the anti-piracy firm White Bullet Solutions Ltd.
Investor Dan Loeb is pushing Disney to adopt “an all-you-can eat DTC offering on a single platform under the Disney+ brand”. I think Hulu’s personalization engine would be need to be the back-bone of that set-up, and given the Disney Plus vs. Hulu engineering politics, that isn’t happening ($ - paywalled).
Discovery Chairman David Zaslav believes the regulatory environment will permit “a lot of consolidation” in media.
According to the Digital Entertainment Group (DEG), domestic spending on subscription streaming rose 21% in the first six months of 2021 to $12.2 billion, and 17% in the second quarter to $6.3 billion.
TCL, long the flag bearer of Roku TVs, announced it’s expanding beyond Roku and will release updated versions of its most popular TVs that come with Google TV on-board.
The Tokyo 2020 Games smashed BVOD records for host broadcaster Seven, and The Trade Desk’s general manager ANZ James Bayes has a good essay breaking down the implications.
Alex Weprin of The Hollywood Reporter wrote about how as pay TV declines, legacy media streamers may not be the direct-to-consumer distribution solution leagues are looking for in the long-run.
Courtney Kemp, the creator of the Starz franchise Power, has inked a high eight-figure overall deal with Netflix to create new series and develop other projects for a global audience through her End of Episode banner.
Director Robert Rodriguez signed a deal with WarnerMedia to “tap into the wealth of iconic IP available across the WarnerMedia portfolio and explore new stories to tell”.
Vulture broke down Netflix’s experiment with the horror trilogy Fear Street ($ - paywalled).
Lesley Goldberg broke down the South Park creators’ deal with ViacomCBS in The Hollywood Reporter. Martin Peers of The Information picks up on how the deal doesn’t pick either linear or digital, and argues “By trying to have it both ways, Bakish guarantees he won’t be as aggressive in streaming as he could be.” ($ - paywalled)