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☀️NETFLIX silences the haters, but US market stays saturated
AMAZON hits new low in NFL audience / Mila Kunis rules NETFLIX box office / PAR+ sets key new EUROPE launch plans
Mornin! This is Sean McNulty and here’s the Hollywood + Media news to know on WEDNESDAY October 19, 2022.
Where AMAZON’s latest sales cutting-edge sales tactic ahead of the Holiday season 🧑🎄 comes from… SEARS & ROEBUCK #innovation, as I was surprised to see this snazzy lookin’ product from ya’ll in my mailbox yesterday.
Although with all of the technology at your fingertips AMAZON… and as a PRIME VIDEO subscriber - gotta say addressing it to “Current Resident” was rather disappointing. It’s me! Sean whatshisname from that email thing!
PLUS: Looks like I picked the right week to talk about the dearth of CHRISTMAS pics this year… first Hanks RSVP’d, now Brad’s coming to the Holiday party too as PARAMOUNT is going wide with Damien Chazelle’s “Babylon” on Fri Dec 23 (previously PAR was doing a limited Dec 25 open, and wide on Jan 6).
Did I mention I could also really use a new car for CHRISTMAS? (worth a shot right?)
IN TODAY’S EDITION:
As NETFLIX has gifted us with Streaming numbers…The Ankler is gifting this edition of The Wakeup to all. Guessing one of those things may generate more chatter - but either way let’s kick off Q3 earnings season together, before the rest of my #MediaNerd🤓 analyses go for paying subscribers only in the weeks ahead.
📽 THE SILVER SCREEN
The movie premiered at TRIBECA earlier this year, and stars Ray alongside Laurie Metcalf and Sebastian Maniscalco in a story about a dad whose hopes & dreams get pumped up when his son gets an offer to play college hoops 🏀, only to see heartbreak derail the plan, and the ensuing repercussions.
No price disclosed, Will hit theaters TBA 2023. /THR
Mila Kunis is bringing the heat…
“Luckiest Girl Alive” : 29.7 Million views for first full week
This is a pretty huge first full week number (total views near 52 Million in first 10 days)
“The Curse of Bridge Hollow” : 16.6 Million views for opening weekend
Puts it at 17th biggest opening weekend since the start of May
Gotta figure this one may get a little more love as HALLOWEEN approaches (this is the spooky Marlon Wayans family adventure pic)
“Blackout” : 15.6 Million for first 5 days (dropped Wed Oct 12)
This was a Josh Duhamel / Abbie Cornish 81 minute action movie, in case you too truly had no idea what this is.
“Mr. Harrington’s Phone” : 11.4 Million for first full week
This launched 2 days before “Luckiest Girl Alive” but still - Mila took over no matter how you cut it.
“Sing” : 6.8 Million views
Yup, “Sing” the 2016 UNI animated movie (looks to have come into window about a week ago)
#FunFact “Sing 2” was the 9th most watched pic in the US
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📺 THE TV SET
AMAZON PRIME sets Simu Liu to lead “Seven Wonders” series based on Ben Mezrich book. Justin Lin is already attached to direct. Simu will play a “brilliant botanist-adventurer” (is there another kind?) who teams up with a “slippery international fixer” (is there another kind?) to solve an ancient mystery tied to the 7 Wonders of the World. /Variety
IN THE EXECUTIVE SUITE
TIKTOK’s head of partnerships (and former WME & HULU exec) Bryan Thoensen is going to SPOTIFY to head up their content strategy, and partnerships with podcasters. /THR
ON THE GLOBAL STAGE
PAR+ will launch in FRANCE on Dec 1, as a ‘hard bundle’ with CANAL+, so basically it’s included for a large existing subscriber base with the price of a CANAL+ tier, and PAR+ likely gets a check based on the size of the base I believe.
GERMANY, AUSTRIA and SWITZERLAND will launch on December 8. SKY CINEMA subscribers in these countries will also get it for free with their subscription, but sounds like there will be an additional DtoC component in these markets as well (can subscribe / download it via AMAZON Channels, ROKU etc). /Variety
💻 THE MEDIA BIZ
NETFLIX beats their own Q3 expectations, as NETFLIX loves to do
Any way you cut it… this was a positive quarter. Wall Street agreed last night, putting the stock +14%.
Ok fine - first the bad news:
US / CAN growth really looks to be stalled out, +100k (now at 73.39 Million)
NETFLIX is essentially back to where it was 2 years ago in this region.
Last Q4 they grew 1.2 Million in US / CAN, so this will really be the true test.
However that’s when the Ad-tier launches this year - so any direct comps will be tough, and basically the Ad-tier can’t come soon enough here to see if there’s more US / CAN maple syrup to squeeze at the $7 price point (What? We can’t give CAN an analogy every now and then?).
63% of US adults in a Harris Poll this month said cost was the deciding factor in choosing a streaming service.
The strong dollar is lowering #ARPU (Avg Revenue Per User) in LATAM and EUROPE/EME… just as EMEA surpasses US / CAN in subscriber numbers. So even though subscribers are still growing in global regions - actual Revenue is hitting challenges (albeit relatively temporary).
Specifically - the Majority of subscriber growth (over 50%) is still coming from APAC (Asia Pacific), where #ARPU is still going down - but not really due to the strong dollar (though that is a factor), but more due to the low $$ amount you can get away with charging for a streaming service in some big countries there. Which is a long-term systemic issue.
And… that’s probably about it really. Otherwise 🌞:
GLOBAL SUBSCRIBERS: 223.1 Million
+2.4 Million (1.4 Million above expectations)
GLOBAL Q3 REVENUE: $7.92 Billion
Beat expectations by about $100 Million
Free Cash Flow (ie money that can be used to invest in things, or pay off debt - kinda extra play money in a crude sense): $472 Million
Overall Net Income (profit): $1.4 Billion
And as NETFLIX reminded people in their Earnings letter (twice) - they’re on track to be $5+ Billion in the black this year, while all major streaming competitors are on track to be $10 Billion in the red.
DOLLAR DOLLAR BILLS YA’LL
Forget the 2010s when free cash flow was non existent and it was all about “look at our subscriber growth”… “Revenue” is the new “Subscribers” at NETFLIX, and they’re trying to make Wall Street get on board with this new way to gauge success (especially when it comes to their competitors).
So much so, that NETFLIX will no longer give Subscriber guidance for the upcoming quarter starting in 2023 (just Revenue and other financial projections).
This also mitigates the frankly unknown behavior that will result from launching the Ad tier in 12 countries.
#FunFact: The 12 countres they’re launching in account for 75% of all TV & Streaming Ad spend globally.
NUMBERS BY REGION:
SUBS: 73.39 Million (+100k)
Bumped down to the #2 region for the 1st time.
ARPU: $16.37 (+ 40cents)
This has grown pretty much every quarter… ever.
The Ad-tier launch could very well change that and cause a dip soon, more likely Q1 2023 than the upcoming Q4.
EMEA (Europe/Middle East/Africa)
SUBS: 75.53 Million (+570k)
Now NETFLIX’s biggest global region
ARPU: $10.81 (2nd quarter of decline due to strong dollar)
NOTE: This region still only brings in about 2/3s of US Revenue, despite it now having more subscribers. #USA!USA!
LATAM (Latin America)
SUBS: 39.93 Million (+310k)
ARPU: $8.58 (again down, but mostly due to strong US dollar)
APAC (Asia Pacific)
SUBS: 36.23 Million (+1.4 Mil)
This is down about $1 in 6 months, and the strong dollar is less here to blame vs. adding subscribers in countries where the price of the service is low in some big regions here (INDIA namely)
In fact Revenue has fallen in the region for the past 2 quarters (again coinciding with a price cut in INDIA)
Individual countries are not officially broken out in any region to give more color to the number.
NETFLIX really does not expect many current subs to downgrade to the Ad-tier (except for newsletter folks named Sean).
Doesn’t sound like they’re really gonna publicize this new $7 option, which they see as mostly an opportunity to bring in new new folks… and/or as a solve for piracy (giving folks who use other people’s accounts - whom they call “borrowers” btw, how cute - a more attractive option to get their own account).
Will not be a meaningful addition to Revenue in Q4 as it’s essentially launching mid quarter.
SIDE NOTE: With the sizable younger audiences that AMAZON PRIME has brought to the NFL (see updates in the AMAZON item below), NETFLIX’s also likely much younger audience could steal some real $$ from Broadcast & Cable (over time) if this grows to be a meaningful size of subscribers.
This is still a little grey. Yes “borrowers” can now transport their proflies (watchlists, what the algorithm knows about your viewing preferences etc) to their own new (paid) accounts.
But they also announced that paying account holders will also be able to add “Extra Members” to there account… presumably for an extra fee, but there really wasn’t a lot of detail offered here (if there is a fee - how much, how many can you add, etc).
So while this was addressed… this will mostly be a ‘more to come in 2023’ matter.
Don’t count on it, and please don’t call “Glass Onion” a theatrical release. This was the most tense part of the earnings “call” (its just a YT video with one analyst asking questions of top management).
A lot of rationales given on the call for different business strategies were given sound logic to back them up.
This one - not so much, as they strained hard to give this “Glass Onion” thing rationales that just weren’t quite lininig up (using an analogy of ‘hey it’s just like we bring films to festivals’ wasn’t great)… all of which ignored the big Tudum in the room of the most obvious reason (that the rest of the town already thinks), I.e. “We’re testing the waters on theatrical”.
And after the Never Advertising policy went out the door real fast this year, the credibility isn’t great on this other “Never” pillar either, and this still reeks of an ongoing matter with great internal debate.
THE LOOK AHEAD
Projecting a rosy Q4 Subscriber wise, expecting to add 4.5 Million more (no regional breakdown).
Revenue looks solid if not unspectacular ($7.7 Billion) - again mostly thanks to the strong dollar / bad exchange rates.
No debt payments on the horizon thru 2023, $6+ Billion cash on hand, $13 Billion in long-term debt.
And again remember folks: Revenue is the new Subscriber.
First here’s a brand new 30min Ankler podcast with myself, Janice & Richard giving some more color to all of the above.
I’ll be doing #MediaNerd🤓 analyses for all major earnings calls in the weeks ahead - DISNEY, ENDEAVOR, WBD and… well let’s just say I have a lotta calls and corporate hold music to listen to in my future.
SNAP and VERIZON are up end of this week, COMCAST, FACEBOOK and many others up next week too.
If of interest:
📝 IN OTHER WORDS…
“Yes. It’s a commercial discussion in the same way that we have the same commercial discussions with studios on terms.”
- TIM RICHARDS, CEO of Euro movie theater chain VUE when asked about the deal terms with NETFLIX being similar to studios in regards to revenue split on “Glass Onion”.
The NFL is moving a Sunday game to Friday next year 🏈 (THANKSGIVING will still have 3 games on CBS, FOX and NBC), which will give AMAZON a pretty sweet venue to promote all of their Black Friday sales (assuming Denver isn’t playing).
Not to mention - an ideal venue to promote (and release?) a certain Holiday movie starring The Rock and Chris Evans, that supposedly also has undisclosed tie-ins to the larger AMAZON ecosystem. #shopping
AMAZON is getting a very “Welcome to the NFL” lesson as this season goes on: the Thursday Night Football franchise is only as good as the games you get… and last week’s was another huge dud of a game.
TNF hit a new low of 7.6 Million people streaming on AMAZON last week for WASHINGTON vs. CHICAGO 🤦♂️.
The local TV broadcasts in Chicago (830k) and DC (380k) added another 1.2 Million for 8.8 Million total (AMAZON advertising airs in the local re-broadcasts as well so that counts).
But 8.8 Million is far below the 12.5 Million average guarantee AMAZON gave advertisers at the start of the season. TNF is averaging 10.8 Million so far on the season.
SILVER LINING: The games are still way up in younger demos:
AND: While this week is two 2-4 teams (SAINTS and CARDINALS), at least the football itself should be more exciting. /Sports Media Watch
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NBA $$ numbers and Streaming
First - a CORRECTION to my CLIPPERS DtoC Streaming analysis from yesterday: Yes, a d’oh - the LA CLIPPERS new streaming service is called ClipperVision. BallerVision is the name of one of the 6 streams on the service where former players & guests do a running commentary, a la “Manningcast” on ESPN2 Monday Night Football.
The first game streams on Saturday night for any interested parties.
Now - A few additional thoughts for fellow #MediaNerds🤓 (everyone else by all means skip down to the trailers).
It will have 74 of the 82 regular season CLIPPERS games per Sportico, for $200 a season.
The BALLYS SPORTS SO CAL Cable Network & Streaming service will have 63 of those 74 games for $190 a year (but just the linear feed - the bonus feeds are ClipperVision only).
Note: for the $190 a year BALLYS streaming price, you also get ANAHEIM DUCKS games in addition to the CLIPPERS.
Wonder which service the CLIPPERS will promote to their fans at the games…?
KTLA gets the other 11 of the 74 ClipperVision games on free-over-the-air TV.
8 games are on National TV outlets only (ESPN / TNT).
LA CLIPPERS had the third lowest average audience rating for games last year of any NBA club at the end of the 2021 season per SBJ.
SO: Let’s say for argument’s sake the CLIPPERS could get 300k people to pay $200 a year for ClipperVision (esp if they abandoned the Cable TV biz altogether, which they’re nowhere near doing yet). That’s roughly $60 Million in Revenue for a season.
Plus Advertising revenue (assuming ClipperVision will have some sponsor integrations).
Again if the team abandoned a Cable deal going 100% streaming and they could also sell all the TV ads in the game. As of now BALLYS keeps all that Revenue presumably.
Plus - any additional flywheel revenue they could generate by selling merch, special events, etc to subscribers.
According to The HuddleUp,
whenif the NBA gets the price they want for their new US TV deals in 2025, each team would get about $275+ Million a year as their cut.
Add in further checks from international NBA TV deals, and NBA LEAGUE PASS etc - that only ups each team’s check higher.
SO: $60-ish Million (for example) in local streaming, vs $300+ Million a year from NBA League revenue.
While local streaming is great… the majority of NBA team money still comes from the ‘bigger picture’ - not a local streaming business.
Especially for teams with smaller followings, and/or in smaller markets.
Still - local money is significant for NBA, NHL and MLB teams, and when the cable TV/RSN gravy train eventually runs out of steam… many teams could face challenging revenue shortfalls and need to find creative solutions, a la ClipperVision.
ALSO IN MEDIA
APPLE TV drops price of the entry streaming device to $129. So now it’s only 4X the cost of ROKU and AMAZON FIRE devices that do basically the same thing. /Variety
If you were forwarded The Wakeup, get it as part of your subscription to The Ankler:
Hits your inbox weekdays by 8:30am (ish) East Coast time
🏦 STOCK NOTES
Pretty quiet Tuesday.
👩💻 NEW TO WATCH:
IFC “Documentary Now” new season at 10p
NETFLIX “The School for Good and Evil” - STREAM HERE
COMEDY CENTRAL “Reno 911” new season
🎥 TRAILER HOUSE
HULU “Welcome to Chippendales” limited series trailer - Great spot! And looks to be a really smart “White Lotus” follow up for Murray Bartlett. PREMIERES TUE NOV 22
MGM “Creed III” trailer - Damn this looks good… Directed by Michael B. Jordan. IN THEATERS FRI MARCH 3
HBOMAX “Low Country: The Murdaugh Dynasty” docuseries trailer - About that bonkers SOUTH CAROLINA lawyer double-murder case. PREMIERES THU NOV 3
🎧 PLAYING ME OFF
New video for a THOMAS RHETT / KATY PERRY collab, “Where We Started”
If you need some new tunes:
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