While no one has a clue what entertainment will look like in 10 years or even 5 (Holograms? Nano-memes? Personalized smell-scape encounters?) a few random data points bubbled up this week edging suggesting a shape of things just over the horizon. Taken together, they don't look great.
1. THR reported yesterday that the even more movie studios are sitting out the Super Bowl.
The advertising Super Bowl that is where the great brands of the nation line up to capture the attention of a hundred million drunken people half-comatose from lethal doses of rancid bean dip.
Or more important, speak over the heads of those viewers and show off to each other about their creative marketing firepower and black belt moves in capitalism's greatest beauty pageant. On Sunday, when the whistle blows, the mighty will take do battle at each commercial break: sodas, breakfast cereals, snack foods, cars, search engines, dating apps, travel apps shopping apps, accounting apps, home security apps, app building apps – the giants of our time, and our film studios will be almost nowhere among them
The piece noted:
Combined, the Hollywood studios used to drop as many as eight or 10 spots during the NFL championship, if not more. In 2018, that number fell to six and was even lower last year.
For all I know, from a targeting perspective, a Super Bowl ad is the biggest waste of money you can find: the most diffuse audience on Earth in an environment with maximum competition for mind share at astronomically expensive rates – why throw money at that?
As an accounting decision, it makes total sense. As a Movies Must Live at the Center of the Culture or Die decision, it is scary to see film pushed off the main stage; even sadder the assurances that some will have a presence in the pre-game. When movies genuinely ruled the world, if there was a chance to force your way into the center of any conversation, no expense was spared. I'm sure they're much smarter now.
2. The AT&T earnings report showed a decline in revenue as they stopped renting out their shows, saving them for the launch of the MAX to come.
There's nothing particularly unusual about this, just another day in the Streaming Wars aka The Great Entertainment Semi-Finals. It's not every day you see media companies turn their back on billions in revenue – particularly companies sitting on mountains of debt like AT&T. It's another demonstration of how the entertainment goliaths are mortgaging their entire futures on the promise of the streaming path forward.
To put that revenue hit in perspective, the Warner Media division's revenue was $8.9 billion, compared to the entire company is sitting on $151 billion in debt.
3. Apple in their earnings report didn't feel the need to even spell out Apple TV + numbers, saying simply that it was off to a "rousing start."
4. Disney announced that it is working on an updated version of Bambi. This just about marks the end of the stupendously successful Disney operation of reworking their hits from their Silver Age of the 80's/90's. With Mulan pending, the big titles of that era have just about been exhausted, leaving them to turn to the Golden Age. They've already had some success there (Alice in Wonderland, Jungle Book) and some mixed results (Dumbo, Lady and the Tramp). While names like Bambi may be universally familiar it's through the gauze of by now ancient history; it's not like audiences are howling for a new movie about George Washington chopping down the cherry tree either.
So what does all this add up to?
Since time immemorial, as soon as anyone gets into the entertainment business, the first thing they try to figure out is how to not be in the entertainment business.
Because it's a terrible business to be in if you're looking for businesses. It's a business where
Not only is everything you do an entirely new product,
But you have absolutely no idea about whether anyone is going to want to buy it or not.
As to that first part, imagine being General Mills and every two months having to wipe out your product line and have to introduce a new cereal - one that's not Cheerio's because people just ate that.
And then as to the second part: you can have the biggest stars, the most successful genre, a familiar title, heck a sequel to the most successful movie on Earth, and the public might still just shrug and say, no thanks. We're going to try this instead. Or stay home this month. Or year.
A terrible business. A business that no one in their right mind would get into...if you didn't count the perks (and who's thinking about those). It's a business for people with a very high appetite for failure. For extremely public and humiliating failure about your most personal instincts and choices.
The history of the entertainment industry can be seen as a series of attempts to get around those immutable laws. The movie industry began with the creation of movie stars, to create brands bigger than just the individual titles. (Brands that, in those days, they could own as well.)
Sequels, spin-offs, reboots and eventually universes – all attempted workarounds of the fact that: you never know what the hell these popcorn eaters are going to like.
TV series have a longer life, of course, but try introducing a new one lately. Or predicting how long audiences are going to stay with the hit of last week.
The Big IP era we're passing through was an attempt to go all-in on a particular workaround of the laws of entertainment. So far, it's worked very well for some people, some of the time. But even this is not eternal. Marvel has defied gravity, but the year will come when even they will produce a flop. Or two or three. And being Big IP, these aren't cheap flops.
Now we've got the latest wave of companies coming ashore on the beaches of Hollywood. They need entertainment, but not for its own sake. There was as a day when a hit was an end in itself. You made a movie that printed cash! What could be better?
But these movie dollars, what mean they to the new conglomerates? What is a movie making a billion dollars (bringing home $300 million when all's said and done) to a company floating $150 billion in debt?
What all these companies have in common is they have bigger fish to fry, something bigger to sell, that entertainment is important if it can help them sell that. Amazon wants to sail diapers-by-delivery. AT&T to get you on their 5G phones. Apple wants to keep you in its ecosystem where you'll buy...everything. Disney has cruises, parks and toys to infinity.
They all to the extent they are gathering eyeballs are gathering data they could potentially sell or use for ads sales down the line.
Of the new titans, only Netflix is about the shows and nothing else. Which is why one can hear the clock ticking very loudly underneath its debt count.
But what they all sense is this world based on subscriber fees and 24/7 360 degree assaults on people's attention and mind space, it's about getting people hooked on something more dependable than an individual show or movie; you've got to get them committed to the service. Basically, do what Netflix did, but do it for someone else instead.
If you're AT&T putting your entire phone company on the line for this, you can't have the whole thing riding on: "JJ's development VP just had a great meeting with a guy who had a pitch for a snorkeling movie." There's got to be something bigger that you can depend on. A brand! Like Max. Or Peacock. Or Plus. Or TV Plus.
But how to get them and keep them. You can give away the service, like Apple and Peacock, but that's no guarantee people are going to use it. With Apple to all appearances thus far it seems like a guarantee people will ignore it.
The field of Big IP has been picked pretty clean. There aren't many world-renowned comic book companies just waiting for someone to notice them. When the agencies are fiercely mining the doc screenings of Sundance for plausible material, the hunt for IP has run pretty far afield from Iron Man and The Hobbit.
The libraries of beloved titles are being assembled, but people still need something new. Constantly.
So with the most fearsome competition, entertainers have ever faced, how can a new service win? Bring on the showrunners. What percent of these new services have been now consigned under the divisions of the Brand Name Showrunners? How much of the total operating budget falls under them?
Unfortunately, it's not necessarily the best people who create the next generation of hits. It's some little upstart, but will there be any money leftover to fund them?
In some ways, it feels like the Cold War arms race, spending until one side (or five) collapses under the weight of it. Which likely will happen soon enough.
But especially if you're new to Hollywood giant company, not used to regular public failures as part of your business, you're going to fall back on your comfort zone. And the comfort zone for tech companies, in particular, is: spare no expense to hire the best people. And just give them the resources to produce 40 times what they've been producing.
To put this all in a bow, what we're headed to is a world where entertainment is consolidated under this handful of titans, where the entire companies are put behind the needs of the streaming services (I'm looking at you theatrical window), and where everything will be created by 20 or so, spread way too thin mega-producers.
Beyond that this whole thing functions in a context where on the one hand, no one has yet demonstrated this can be a successful standalone business, on the other, it's a minor side project or loss leader to the others.
From a viewer's perspective, just behind us has been an incredible period of experimentation and creativity in entertainment, led, credit where it is due, by Netflix. But looking to the future, as things get more intense and scarier, as some of these offerings teeter on the brink of real historic, business school case study disasters, it's a question whether this build-up is forging the way for an even greater period of creativity and experimentation, or is everyone about to pull the reins in very tight; is the settling into camps, each led by a few chieftains, going to create a sameness? And is that sameness going to lead the entire industry off a very steep cliff?
And where that experimentation exists, where the creativity breaks through, with viewers silo'ed into different companies, how much harder will it be for that to breakthrough? It's already impossible to find anything on Netflix that isn't one of their Featured-to-Your-Flavor-Cluster picks of the week. The idea that the little films apps pick up by the wagonload at Sundance for $100,000 each would bubble up through discovery is now years behind us. Who even knows what's on Apple +.
If little things can't bubble up, the question will be even more striking: why waste money on them. For the prices of 10 of those, JJ can make the next Westworld.
This is all one scenario, There are other possibles. But we shouldn't be so optimistic that a bunch of companies with little experience in entertainment and limited strategic need to be here, faced with the Streaming Wars killing fields are automatically going to create a flowering of creative opportunities like nothing the world has ever seen.
All that said, humans need to be entertained, to hear and see stories, to forget their troubles for a few minutes isn't going anywhere and for the foreseeable future, screens will be the primary place where the planet looks to satisfy that urge. Ultimately, people who can speak to that longing without boring them to death are going to be in need, and probably in greater need than ever before.
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