☀️ NETFLIX kills US Basic plan; Preview of Q2 Earnings Expectations
Major Authors unite against AI / Iger addresses the TV troops / RSN 💰 math trouble for Sports teams as ARIZONA deal is axed
Mornin! This is Sean McNulty (connect with me on LinkedIn here if ya like), and here’s the Hollywood + Media news to know on WEDNESDAY July 19, 2023.
Where Q2 Earnings Season begins today! Man, I hope Richard got me a t-shirt to match his this time… 🙏.
Wall Street money was already placing their bets yesterday as NFLX stock was +5%, with Street analysts pretty much all indicating the password crackdown will yield a subscriber bonanza (relatively speaking - this isn’t 2019). Strikes? What strikes?
But we’ll see what the report brings us later this afternoon, and more importantly what fun charts they put in the report this time 🧐.
AND: As expected, NETFLIX has now killed the $10 a month “Basic” plan in the US and UK, following its demise in CANADA a few weeks ago. Existing Basic subs can keep their plan as long as they’re still subscribing… but no more new Basic subs in NETFLIX’s largest global market.
Essentially - it was a drag on Revenue.
NETFLIX Ad-Tier: $7 a month, but they said on the Q1 call that they were broadly making enough Ad Revenue on these subs to equal the Revenue on the Standard $15.50 Members.
SO: $10 a month Basic customers… with no Ad Revenue to boost $$ - ARPU says ya gotta go.
HMM: According to CNN’s Reliable Sources, Iger reportedly had an off-site with the DISNEY TV heads yesterday, after his CNBC comments last week and… when the highlight seems to be how much he believes in uh, ABC NEWS, well there ya have it.
As one DIS exec in attendance laid out, it was "the usual jewel in the crown stuff — except now we know that he's selling the jewel." More in the link.
AND: This just caught my ear on YT pre-roll (several times) yesterday… as VERIZON is now literally saying the phrase “cut the cable” to lower your bill in their ads for new Fios 2 Gig Internet service (they mean switching from “Cable” Broadband to VERIZON Fios… but, ya know 😉).
ALSO: I’m beginning to think… ya know, hmm, maybe it’s just AT&T itself that’s the problem 🤔? It’s times like this when we really miss John Oliver.
PLUS: MICROSOFT increased the deal break-up fee with ACTIVISION in order to extend the deal deadline to Oct 18, from… err, yesterday.
IN TODAY’S EDITION
A refresher on NETFLIX’s Q2 business and programming highlights going into today’s earnings call.
TIKTOK sets new WARNER MUSIC deal.
A look inside the Regional Sports Network 💰 math that MLB (and soon NHL and NBA) Sports teams have to replace, as the RSN business model collapses and DIAMOND SPORTS cuts another MLB team from BALLY SPORTS.
SONY and Adam Devine have a good week on the NETFLIX Films chart, with UNI likely on deck for some good numbers next - my weekly breakdown of the view numbers and comps to know, and more.
🪧 STRIKE FORCE
SAG-AFTRA granted waivers to 39 independent film productions yesterday, including two from A24 (which is not part of the AMPTP #funfact). Full list is in the link.
The WGA should lean more into things like this roundup of TV writer Streaming residual payment anecdotes. Err - that is the lack of payments when shows they worked on were licensed to Streamers, vs. Cable or Broadcast.
AND: Here’s a list from SAG containing SAG-AFTRA asks and AMPTP counteroffers. Scroll down to the bottom for the 2-column grid, to avoid that list at the top with a lot of broad language.
ALTHOUGH: This still contains broad language on some points… without listing the actual numerical counter from the AMPTP at points, along with some interpretative SAG language which is… really not helpful here.
Things like: “Countered with an inadequate increase that does not even come close to adjusting these figures for inflation,” without saying what the increase was (this was in regards to an item on SPAN protections).
FINALLY: Looking at this 8-page list - with very few agreed upon items… it’s hard to see why Fran & Duncan put out that cheery, positive video towards the end of June saying progress was being made.
🤖 TODAY IN AI…
Yes, this new occasional section is still written by me. For now. Just a couple of things to note this morning:
8,000 authors including James Patterson, Margaret Atwood and Jonathan Franzen signed a letter to MICROSOFT, META and others developing the major AI tools, asking them to not use their books to train their AI without their permission so… ya know, the AI can learn to write in their creative style.
“It is only fair that you compensate us for using our writings, without which AI would be banal and extremely limited.”
GRANTED: A strongly worded letter has about as much legal effect as writing something in this newsletter (I bet they didn’t even include any gifs 🙄).
BUT: When OPEN AI’s broadly-worded retort is that their product is trained on “licensed content, publicly available content, and content created by human AI trainers and users,” without providing an actual list…
AND: MICROSOFT is now making major revenue via said AI product (get ready for a $30 per use upcharge to use the OPEN AI capabilities in MICROSOFT Office) which may or may not be trained on copyrighted materials…
YEAH: “Section 230” doesn’t provide you any protections here ya’ll like it did in the early days of Internet growth so… 2024 will probably be a very good time to be an IP lawyer.
📽 THE SILVER TV 📺
NETFLIX Films Weekly Global Viewership Chart
Week of July 10 thru July 16:
usual caveats: back of the napkin math, assumes everyone finished the movie (including the credits), no one watched twice, or that a bunch of folks didn’t rewind certain parts, etc. so consider these minimum numbers. and it’s based on NETFLIX’s self-reported numbers.
Another Mixed Bag Week
The Out-Laws had a strong first full week, suggesting more life for the pic than the opening weekend indicated, and SONY’s 65 also had a healthy first full week on the service.
So… let’s dive in!