|With the madcap fun of the Oscar race behind us, we can get back to focusing on the subject at hand – the imminent meltdown of the entertainment industry as we know it as we head into the World Entertainment Semi-Finals, coming sooner than we’d like.
There are two parties whom we all but know (not that we ever really know) will have berths in the final showdown: Disney and Netflix. And right now, which of those do you suppose has the upper hand?
Given the numbers in this chart, Netflix will be worth more than Disney sometime by the end of the week, give or take a couple hours.
That’s Disney, with its Marvel and its Star Wars and its total domination of the box office; its theme parks all over the globe; and its mountains of Winnie the Pooh-branded pajamas and Doc McStuffins ice capades shows. All of that is now worth less than an app with a bunch of Adam Sandler movies and a Full House spin-off.
This net worth is significant because that is money in the bank to fund the warmachine for the head-to-head matchup. Whoever’s got more, can make more. Netflix with its magical valuations has access to endless cheap money to fund anything. Particularly if they don’t have to squander that cash on ride operators suddenly getting all persnickety about wanting to get paid enough not to have to sleep in their cars.
There ’s plenty of pluses and minuses for both companies going into the semis. Disney stockholders, for one, suddenly seem to be getting cold feet about IP Bob’s Go Big strategy. Shareholders yesterday made Wall Street history by becoming the first S&P 500 shareholders of 2018 to vote down an executive compensation package: a very special equity grant of not more than $100 million, between friends.
To find the last time a show business exec had his or her compensation rejected,I’m told you have to go back to the 1870’s, when Lily Langtree’s manager asked the home office for an extra 17 bucks to buy a new waistcoat in the Pareestyle that he’d had his eyes on. he was duly horse-whipped in the public square.
Fortunately, disaster was averted here. The shareholders’ opinion was non-binding and doesn’t really count for anything, as the Board put it in their decision to duly ignore the guidance:
Disney’s board said it would take the vote into account in future CEO compensation decisions. But it also said the terms of Mr. Iger’s extension were in Disney’s interests and essential to the deal’s success.
Also interesting to note: While this story was ubiquitous in the financial press, the WSJ, etc, by a strange coincidence neither THR, Deadline, Variety nor The Wrap thought that the CEO of the largest studio having his compensation rejected by shareholders was a story that merited coverage in their pages. Not a mention, not a nod. Nada. Funny how that just worked out everywhere…Almost like someone was making some calls…
Anyhow, this is no time to get wobbly, shareholders. You may be the last line between us and algorithm bosses deciding that nobody needs to spend $800 on a breakfast.
Netflix, on the other hand, is so beloved by Wall Street that all it has to do is win a lousy documentary prize and its stock soars, as investors practically shove cheap money down its throat.
Fortunately for Disney, if there’s one rule Hollywood has metaphysically proven in its century of experimentation, it’s that there’s no amount of money you can’t squander in the quest for hits.
Netflix has spent the past couple years attempting to brute force jailbreak this law. It’s counter-theory has seemed to be, Sure, a billion dollars doesn’t guarantee quality, but how about three billion dollars? How about five billion dollars? Seven? It’s been like someone insisting that the only reason your hair gets wet in the rain is because you have such a cheap haircut. If you’d just shell out a little more on your styling there’s no way rain would fall on it.
This week’s latest cinematic opus to run across no man’s land into the machine gun emplacements has been the Jared Leto yakuza movie The Outsider. Once again, debuting on Netflix, another thing called a movie that at one glance doesn’t look like any kind of movie anyone has ever seen before, outside of some off-prime time screenings at the AFM.
If you’re working at a normal studio, you have one or two of these total misfires in a year and people start calling for your head. How many is Netflix going on? 15? 20? This quarter? Any normal company would be getting murdered over results like that. Instead, Netflix gets: You won a documentary prize! Take some more money!
Elsewhere in the brave, new, streaming world, the NYT took a look at the pitch process that sold The Looming Tower to Hulu. Documentarian Alex Gibney, looking to make the big leap to dramatic production, led his screenwriter and the author of the book THAT the project was based on, to what HE considered an unlikely meeting with the second tier streamer. Instead they found:
The Hulu executives surprised the “Looming Tower” team by offering them the works. A straight-to-series order, with no lengthy development process? Done. A promise not to buckle under pressure from the federal agencies who may not like how the series would portray them? Done. The biggest dollar commitment? Done.
The conversation left Mr. Wright and his collaborators slightly dazed. “We walked out of that meeting and said, ‘Are we really doing this? Are we reallygoing to do Hulu?’” Mr. Wright said.
Mr. Futterman, the screenwriter, said Hulu had won “The Looming Tower” partly because of its guarantee of a speedy development, which appealed to him after his recent dealings with HBO.
Mr. Futterman — who was an executive producer, along with his wife, Anya Epstein, of HBO’s “In Treatment” — said he had grown frustrated by the cable network after it tied up projects he had put together with Ms. Epstein, including a stalled adaptation of the Jennifer Egan novel “A Visit from the Goon Squad.”
“I developed two projects with HBO with Anya after ‘In Treatment,’” Mr. Futterman said. “That was one of among about 200 they were developing.” After noting the promises made by Hulu, he added, “What situation would you rather be in?”
Well, great deal for Dan Futterman! And it’s certainly good to be Alex Gibney in this moment in history. But if you’re looking at this from the perspective of the company, or even, dare I say, the viewer, in the end whose development process do you think produces better results: HBO’s or Hulu’s? There’s the question of what situation Dan Futterman would rather be in and the question of what situation a company and its audience would rather be in, and those are not necessarily the same.
Whatever their slowness, HBO produces shows that perform pretty well for them and find viewers roughly fifty percent of the time. What’s that number at Hulu, or Netflix or Amazon? Ten percent? Two?
The word from people who have done it lately is that when you make a movie for Netflix, once they buy the pitch, you don’t hear a word from them until you turn in a finished, no-notes-needed, final cut and they call to see where they should send the check. In the meantime, filmmakers say, you can’t even get them on the phone.
Nice for the filmmakers. Nice for Martin Scorsese, who gets to go millions over budget and run months behind making a Martin Scorsese period gangster film for $140 million. So far, letting filmmakers run wild with no supervision on projects they couldn’t sell elsewhere hasn’t produced a whole lot of dazzling artistic achievement. Maybe what Scorsese’s career has been looking for lately was just someone with a blank check to let his imagination roam free. We shall see.
Again, at a normal company, if films like Bright and The Outsider were released every Friday on the nose, and it came out in the postmortems of those train wrecks that the executives overseeing them had barely spoken to the producers during production, people would be horse-whipped like Lily Langtree’s upstart manager.
But frankly, if you’re making a movie every single week, while also trying to make particular demographic on the planet’s favorite film, what other kind of process can you possibly have beyond: Here’s your check, we’re all rooting for you!
At a normal company, an executive who had overseen a string of debacles like this would be long gone. And Netflix certainly has enough money that they could bring in Stacey Snider or Jeff Rabinov or some usual suspecty figure to give them the hard news that you can’t make 80 great movies a year, and put together some kind of normal development process. Whatever Scott Stuber is doing there, it doesn’t seem to have morphed into anything like a “normal” process.
The problem is, they’ve been drinking so much of their own Kool Aid they now think it’s water. They are all in on the line that: if only you little people could see the numbers we see, you’d know what geniuses we are. And a change at the top would involve admitting that maybe they put eighty carts before the horses, and maybe the magic data isn’t the development wizard that the nerd manifestos promised it would be.
The big point being that when we get down to the semi-finals, after the run-up has wiped most of the companies without multi-billions to throw around off the face of the Earth, And when there’s finally just two or four or six companies staring each other down, it’s actually going to be a matter of quality: Which service is producing things that I want to watch? And when they start raising their prices, that might become a question of: which one service is producing the things I most want to watch.
For Disney, there’s a lot of learning to do in this new world; their TV division doesn’t exactly inspire huge confidence (see below). Not to mention that Netflix has a decade head start in building and optimizing a streaming platform. And for Netflix, the firehose is not going to do the trick forever. They’ve both still got room to change and adapt, but probably a lot less than they each think.