The Streaming Wars are on! Shots fired!
The services haven’t even debuted and already prices are being slashed and people are using old Jonathan Landgraf quotes against him!
It’s been a few weeks since we checked in on the Great Entertainment Semi-Finals, and in that gap, the world of entertainment has turned a few times, somewhat for the good; mostly for the doomed and painful.
Let’s start with the most recent, shall we, since it’s hard/impossible not to talk about.
So the rap on the coming WarnerMedia offering was that it was a PowerPoint without a story to tell; it was an entertainment offering straight out of AT&T’s accounting department’s soul. And if that was the rap, its public unveiling went a long way to showing why sometimes the scuttlebutt has it on the nose.
The “content” buried in this announcement may (or may not) be incredible (we’ll get to that later), but there’s something in the notion that a company wanting to lure the public in an incredibly competitive landscape with their unparalleled showmanship, ought to be able to put on a semi-competent show. TO ANNOUNCE THE ROLLOUT OF ITS. MOST. IMPORTANT. HIGH PROFILE. MISSION CRITICAL. NEW. PRODUCT.
Instead, we get a parade of executives from the depths of WarnerMedia, apparently there to showcase the fact that with HBO MAX, it’s the org chart that’s the real star. Every day.
The one quasi-famous person whom they brought to the stage, J.J. Abrams, began with an apology for being inappropriately dressed, and then got on with his job: introducing Kevin Reilly. After all, what is talent for?
They had three years to prepare for this day. And in the end, with these roll-out events, there’s only one thing you really have to do: break out your stars and hand them the mike. And they could’’t do that.
The Disney+ rollout may have also been under the guise of an analyst day intended for investors, but it had some razzmatazz for everyone to leaven any of the financial boilerplate. Robert Iger still has enough of the common touch that he did not introduce his bet-the-company streaming service to the public with the announcement: “A reduction of one basis point in wireless churn is equal to $100 million.”
John Stankey looks like a linebacker, and he may be the only man on the planet who can lead this phone company to the future, but boy, every time he issues a statement or makes a presentation does he come across as human chloroform.
If WarnerMedia really wants to make money off some of its content, it should sell Stankey’s presentation to hospitals, to use as a multimedia sedative for its chronically suffering patients. Turn it on and you’ll the ward snoozing more comfortably than they have in years, faster than you can say “unsilo-ed.”
AT&T needs to bring down its significant debt load, and it’s too bad the company can’t pay it off with its endless surplus of cliches. “This platform will be synonymous with quality.” “Storytelling was born here.” I was ready for Bob Greenblatt to announce: We at HBO Max have determined every great show has three components that make it unforgettable. A beginning. A middle. And an end.
So what is HBO MAX? Well, it’s HBO. We heard quite a bit about what HBO is. “The definition of prestige TV,” we were reminded. Fair enough. They certainly have a solid claim on that. But far as I knew, prestige is a niche, perhaps even the definitional niche. The people who cover media for publications with the name of a city in the northeast in their titles may not to this day believe that there’s anyone on earth who did not watch Mad Men, but thanks to modern science, we now know, almost no one watched Mad Men.
So how does HBO MAX get from the prestige niche to their destination here?
Well, by throwing in lots of other stuff. A lot of dots for Adult Swim on that chart. Who know Adult Swim had such an enormous footprint in our land? And where they were lacking – it’s the black dots for Max to the rescue!
And for cheap. $14.99 . . . . Or the same price that people have been paying for HBO already. We heard lots of talk about everything that’s coming our way, for free, if you’re already an HBO subscriber: A cartoon about Ellen’s childhood, 25 Greg Berlanti shows for starters. A sitcom produced by Elizabeth Banks. All the shows you currently love on TNT! 50 Max movies! (Apparently Max is its own thing? It’s not just a modifier of the new expanded HBO. There’s a separate Max division making movies. It’s actually HBO and MAX. Together at last.
So WarnerMedia is following Netflix into the Everything Business; attempting to have everyone on Earth’s favorite show, or at least their second or third favorite. Or fourth. Problem with the Everything Business, as Netflix has found, is it’s expensive. Extremely expensive. There’s nothing that suggests there’s enough subscription dollars on the planet to make it actually profitable. But hey, when you’re the Telephone People and you’re already carrying $158 billion in debt on your credit card, and looking ahead to hundreds of billions more on 5G construction costs, then really, what is another $3 billion or $4 billion between friends? This all became numbers in the wind a long time ago.
Or as an Ankler friend pointed out:
One unsaid thing: I know everyone feels there’s no choice here but to go to streaming. But if you back out the math, 50 million subs in 2025 – Warner’s target, at $15 a month, assuming zero discounting, is $9 billion in 2025. Even if you take the more aggressive 90 million global target and make the also faulty assumption that everyone globally is going to pay $15, that’s $16.2B.
WarnerMedia made $7.8 billion last QUARTER and that was down from $8.35B the quarter before. That’s $16.2B if you round up. HBO Max has no choice but to decimate basically every other part of the Warnermedia cable business revenue except for theatrical which is relatively small (not that theatrical won’t suffer for all but event movies). Why pay $100 a month for what you can get for $15? (Not to mention making the skinny bundle even more irrelevant unless you need sports.) They’re trading a quarter for a nickel and they paid $5 for the right to do it.
Big takeaway from that exercise is that they have to bolster the wireless business and hide the fees in your data bill or something because this makes no sense otherwise.
Unless you think the advertising-supported service will work (I do not) and will drive a lot of targeted ad revenue. (Great job going into targeted ads right at the moment that the whole idea of that is becoming toxic, by the way. Maybe AT&T can also try a cryptocurrency and wreck some elections.) You’d be a fool not to sign up for this, as Stankey said. And even then streaming remains a completely unproven business model at these price points.
From the consumer perspective: so we replace your cable bundle with some new streaming skinny bundle of your favorite brands. The other problem here: In this avalanche of show announcements between all the services, they are forgetting to invent more hours in the day. No one can possibly watch, or even think about watching, more than a tiny sliver of all the wonderful things coming their way. No one can even watch more than a sliver of the shows targeted at themselves personally.
So yes, in theory, people can pay six bucks a month or $14 a month for a few different services without breaking the bank, and make sure they have access to everything, everywhere, all the time. But why would they? With every service pouring billions on in an avalanche of new stuff, how many people are really going to feel like they need four or five avalanches? To be part of the conversation?
Maybe somewhere in that avalanche is the big, major show that’s going to break through and have everyone talking. (Or at least everyone within a niche talking.) The next GoT might well have just tumbled past us. But there’s at least a non-zero chance that it didn’t. And then . . . another service to get another avalanche of stuff that you don’t have time to watch?
What’s even more alarming is that AT&T showed today its belief that the thing that’s going to hook those hundreds of millions of subscribers of tomorrow, is a terrific org chart, an “enhanced user experience” (yeah, they’ve got one of those), and a mountain of self-deluding MBA jargon. That’s entertainment!
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