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SNAP 27% stock drop, TWITTER losses set off Ad biz cutback alarm
MAGIC MIKE 3 in talks for theatrical vs HBOMAX / TCA goes back to virtual again / PAR+ sets Sarah Michelle Gellar to lead Teen Wolf series
Mornin! This is Sean McNulty and here’s the Hollywood + Media news to know on FRIDAY July 22, 2022.
Where I’m sending a Happy Birthday to my friend Joel! 🎂 It’s technically tomorrow… but yeah I’m not sending out a newsletter for that (sorry man).
And I always remember it every year, because it’s the day after mine.
PLUS: Anyone wanna give Joel and I a gift? How about a month at Sandy Bullock’s MALIBU beach house? 😎 Well one of them at least (apparently she has a bigger house in the same community #WhoDoesnt). I mean come on, it’s only $30k! And you can totally come for dinner. One night.
AND: A special shot out to NBC NEWS for spending an hour+ of “breaking news” yesterday morning on President Biden having Covid, including having medical experts on to explain the symptoms of Covid. In July 2022.
Exhibit A in why the public increasingly thinks the news business is a joke in poll after poll.
PLUS: Who had Paris in the BENNIFER 2.0 honeymoon pool? And apparently it’s not the PARIS Hotel in Vegas, so I’m out. It seems their “couple of the people” Vegas wedding vibes were short lived… and they took a private jet au Francois. I mean what are they, farmers?
ALSO IN THIS EDITION:
#MediaNerd🤓 returns to break down the SNAP Q2 earnings report disaster, and TWITTER’s Q2 report following it’s lead this morning. Social Media is hitting an advertising problem. All eyes now on META next week.
New Trailers galore
DIS+ adds R-rated movies
“Abbott Elementary” gets new vote of confidence at ABC and more
📽 THE SILVER SCREEN
Ok yes I’m mainly putting this at the top for the gif, but don’t think the complaint letters should be too vast.
Oh right the headline - Variety talked to Soderbergh, who is back directing the final move in the trilogy (“Magic Mike’s Last Dance”) and he said moving it from HBOMAX to movie theaters is now on the table… and frankly I’d be surprised if Zaz kept this a streaming pic.
It’s hard to think of a movie that lends itself better to a group theatrical experience.
But sad news - the BROADWAY show idea is now dead. Then again, this is a Vegas show 100%.
Err not those SUPREMES (the musicians… or the judges), but rather a pic called “The Supremes At Earl’s All-You-Can-Eat”, based on a 2013 book about a trio of women and their friendship over the years through marriage and children and, well just life.
Gina Prince-Bythewood (“Love & Basketball”, “The Old Guard”) wrote the script, Tina Mabry is directing (she comes mostly from TV - “Pose”, “Women of the Movement” being her most recent). /Deadline
ALSO IN MOVIES
DISNEY+ adds R-rated movies “Deadpool”, “Deadpool 2” and “Logan” to the service. TV-MA MARVEL series from NETFLIX were all added earlier this year too, further indicating rolling HULU in there in the US may not be such a shock. /Deadline
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📺 THE TV SET
Called “Wolf Pack”, about a teen boy & girl who are forever changed when a wildfire “awakens a terrifying supernatural creature” - gonna go with a wolf here.
SMG plays the arson investigator. /Deadline
ALSO IN TV
TCA shifts back to virtual again. I mean do you know how long it takes to get to Pasadena at 9am?? Err I mean - Covid safety first. Oh hi COMIC-CON 👋. /Deadline
NETFLIX buys 6 episode Danish series from “Drive” director Nicholas Winding Refn called “Copenhagen Cowboy”. It’s a “neon-drenched noir series” (Is there another kind of light with Refn?) about a young woman navigating Copenhagen’s criminal underworld. /THR
IN THE HOLLYWOOD EXECUTIVE SUITE
NETFLIX’s longtime VP of Product Todd Yellin is departing in September (“product” meaning how NETFLIX looks in the app/site, images, recommendations, tabs, etc - the user experience overall). He’s leaving to return to filmmaking, where he started his career 17 years ago before joining NETFLIX. /Variety
WBD Corp Comms group announces new leadership setup under Zaz lieutenant Nathaniel Brown, as 8 WARNER MEDIA veterans of the division depart:
Gregory Ho, Lauren McCabe, Janine Richardson, Caroline Rittenberry, Jennifer Toner, Rob Wheeler, Laura Young and Emily Zalenski. /Deadline
WME promotes 2 to Agent in the Comedy group - Marisa Garcia (focused on touring biz) and Ben Shimmel (focused on new talent scouting). /Variety
📝 IN OTHER WORDS…
“It's clear revenue growth has slowed considerably, and we are acknowledging we must adapt our investment strategy accordingly.”
- SNAP CFO Derek Anderson on the Q2 earnings call yesterday.
💻 THE MEDIA BIZ
WHY THE HUGE DROP:
SNAP said Q3 Revenue is looking flat thus far vs. a year ago, and also declined to issue a guidance for Q3. Two things Wall Street does not want to hear. Missing Q2 Revenue Growth projections by 7% also not helping.
Even CEO Evan Spiegel didn’t say a word on the Earnings Call, leaving his CFO and Chief Business Officer to answer all questions from analysts… although apparently he was there on the call. #leadership
SNAP Q2 Revenue was $1.1 Billion, but they lost $422 Million:
The largest quarterly loss in at least the past 4-5 years
That’s about 3X the loss from a year ago: $422 Million vs $152 Million
SNAP has now lost $782 Million in first half of 2022. That’s more than 1/3 of their total Revenue ($2.2 Billion).
And Revenue growth is going in the wrong direction:
Revenue Growth Q1: 38%
Revenue Growth Q2: 13%
Likely Revenue Growth Q3: near 0%
To their own admission - the immediate nature of their Ad buying system apparently made it almost too easy for Advertisers to cut their spends due to economic concerns (inflation, interest rates, supply chain etc) according to SNAP.
Question is: Is SNAP a Recession Bellweather, or an outlier - i.e. are Advertisers really cutting back at large, or just moving their money to TIKTOK etc?
We will find out more in the FACEBOOK and GOOGLE earnings calls next week.
AND: SNAP is pretty much an entirely Advertising revenue based company, very sensitive to such cutbacks.
When a recession looms, or at minimum a “challenging economy” arises (inflation, supply chain, etc), Advertisers always cut Brand advertising first which seems to be the cause of the Revenue problem here.
SNAP really has nothing else to fall back on, and now the term we all love is coming up to prominence… wait for it, yes - Diversification.
SNAP has to find new ways to make money (SNAP+ anyone?), and increase the effectiveness of their Direct Response advertiser campaign data & ROI to try and get more of that $$, which is often the last thing Advertisers cut.
DIRECT RESPONSE is essentially “Hey buy these Warby Parker glasses!” vs “Kraft Mac&Cheese is awesome!” (that would be brand).
OR: An HBO ad with a bunch of stuff in it saying “HBO is da best!” is brand vs “Hey get $2 off HBOMAX for your first month” which is direct.
This is the good news - SNAP still continues to add a healthy amount of users.
Daily Active Users (DAUs): 347 Million, +18% vs a year ago, and up 15 Million from April thru June alone. This also exceeded their projections back at the end of in Q1.
US: 99 Million, +3% vs. a year ago
#ARPU: $7.93 (+7% from a year ago)
EUROPE: 84 Million, +10%
#ARPU: $1.98 (essentially flat from a year ago)
REST OF WORLD: 162 Million, +35%
#ARPU: $0.96 (-10% vs. a year ago)
AND ENGAGEMENT IS GOOD:
Users 25+ years-old engagement with shows and Discover was +40% vs last year.
Ad impression growth was +9% in the quarter.
BUT THE PROBLEM IS:
SNAP’s biggest user growth continues to be in REST OF WORLD - the region where it makes the least amount of money. by far. And the numbers are going in the wrong direction.
REST OF WORLD #ARPU: -10% vs a year ago
And in NORTH AMERICA, its most profitable region, user growth is really topping out (+3% vs last year). Low user growth in the region where you make the most $$ from each user = no bueno.
71% of SNAP revenue was from the US
15% is from Europe
14% from Rest of World
SO: SNAP has a money problem. And given its REST OF WORLD user count will likely meet or exceed the US & EUROPE number combined by early next year… it’s a growing one.
Freeze the employee headcount (or “slow hiring”) and reduce R&D projects to try and control costs (ie losses).
Improve Ad data info to try and get more Advertiser money back. Basically improve data about ROI & Ad-driven engagement conversions. This will take time and no time horizon was indicated.
Keep growing global/Rest of World users to at least keep overall User growth going in the right direction… since the US is kinda dunzo. Sound familiar? #Netflix
WILL IT WORK
SNAP did not offer any Q3 financial guidance and… well, I think there’s a few rough quarters ahead here until Advertisers start spending again - and your guess is as good as mine there, but we’re definitely at the very start of this.
And $4 a month SNAP+ ain’t gonna cut it for Revenue growth.
Either way - expect the Streaming services to get a lot more questions about how their Ad Sales are going over the next few weeks than they were probably figuring on before.
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I’m gonna say a lot of the same things I said above so this’ll be shorter… although the stock narrative is different thanks to the involvement of one main character, who seems to lack melanin and loves a good hose-off.
But yeah… we’re seeing something similar here:
USERS: Still growing at 238 Million Daily Active Users (DAUs), that’s +16% vs last year.
This (basically) met expectations.
Unlike SNAP - TWTR users are still materially growing in the US (+14% vs last year) and Internationally (+17%)
REVENUE: Not growing at $1.17 Billion for Q2, -1% from a year ago
Cited “advertising headwinds” (Ad budget cutting) due to economic factors (inflation, interest rates etc) just as SNAP did so… it’s not just a SNAP thang.
This is a 10% miss on expectations.
If you remove an acquisition they made, Revenue was +3%… but obviously still not anything to crow about.
However unlike SNAP - they have the whole Elon thing which frankly puts a whole different framing on this.
While the TWTR stock is down this AM, it isn’t crashing in pre-market trading.
Just like SNAP - Most of their users are outside the US, but US users are far more profitable:
US: 42 Million DAUs ($662 Mil of Q2 Revenue)
INT’L: 193 Million DAUs ($515 Mil of Q2 Revenue)
LOSS: TWTR lost $270 Million in Q2, compared to a profit of $66 Million a year ago.
There is no Q2 Earnings call scheduled with analysts. Thanks Elon. So… not a lot here on what levers they’re gonna pull to try and combat the Ad slowdown - but the whole October Musk lawsuit trial has basically put a pin in the company until then no matter what.
The next canaries in the Advertising coal mine are up Tues (GOOGLE) and Wed (FACEBOOK), with assists from SPOTIFY, COMCAST, ROKU, and AMAZON.
Is it August yet?
ALSO IN MEDIA
VERIZON Fios adds 268k Broadband customers in Q2, a good sign given recent concerns the boom seen in Covid was beginning to slow.
But video cord cutting continues to grow, as they lost 86k TV customers. This time last year it was 62k. /THR
COMCAST is up next on Thursday.
WBD has sigh of relief - EU regulators clear their JV between EUROSPORT and the UK’s BT SPORT services, with the eventual idea that WBD will assimilate BT SPORT down the line. /THR
🏦 STOCK NOTES
CINEWORLD (Regal Cinemas) -7% ($0.24)
ALTICE +22% ($11.23) Based on a rumor they’re looking to sell their cable systems in the Southwest for up to $20 Billion.
👩💻 THE FSS FEED:
(new Stuff to Watch this weekend, Friday - Saturday - Sunday)
🎧 WEEKEND LISTENS
This Kev Hart - Trevor Noah chat on Kev’s COMEDY GOLD MINDS pod was really great, talking about the global nature of joke writing, how to know when to ‘step back’ a bit from 24/7 work, and thoughts on success vs. happiness. SPOTIFY APPLE
Janice & Tatiana kindly invited me on The Ankler Hot Seat for a fresh podcast today discussing:
The SNAP disaster and the flashing red lights it puts out there for Social Media & Streaming companies on the cusp of the big Q2 Earnings Call week starting on Tuesday.
The state of #MeToo “problematic figures” in Hollywood and beyond as we approach the 5 year mark of the Harvey story in a few months - how much has the town changed as figures like Brett Ratner attempt to re-emerge?
And in an industry where success begets imitation, why doesn’t “Yellowstone” have 5 similar series on other networks or streamers yet?
ALSO: If you have any really good industry-related podcast analysis or interview episodes that you like, send em along! email@example.com
ONLY IN THEATERS:
UNIVERSAL “Nope” - tracking is about $50 Million. My call is this goes over.
APPLE TV+ “Trying” Season 3 - STREAM HERE
Sweat at the Beach 🏖
Sweat at the Pool 🩳
🎥 TRAILER HOUSE
WB “Don’t Worry Darling” trailer 2 - yeah that’s intense. Nice trailer cut though! IN THEATERS SEPT 23
PARAMOUNT “Dungeons & Dragons: Honor Among Thieves” trailer - Chris Pine as kinda the Danny Ocean of the COMIC-CON set, put to some LED ZEPPELIN. Odd that Regé-Jean doesn’t get one word in this, but seems fun! Plus always happy to see Hugh Grant and sure this played well at the CON yesterday. IN THEATERS MARCH 2023
FX “Welcome to Wrexham” docuseries trailer - This looks great, nice work as always FX Marketing group. PREMIERES THU AUG 24 (also on HULU)
HBO “Industry” Season 2 trailer - This is a really good spot, gotta think if there were a few or… well any real “known” faces in this, it would be getting a lot more attention. Hopefully this season moves the needle a bit here. The Monday night timeslot probably not helping that cause though. PREMIERES MON AUG 1
SEARCHLIGHT ON HULU “Not Okay” movie trailer - Zoey Deutsch as kind of a loser photo editor at a social media / influencer company who fakes a trip to Paris on INSTA in a bid for online popularity, which lo and behold works… until Paris has a big terrorist attack and yeah things get complicated. While comedic, it looks to be a more serious treatment of this premise than a flighty YA pic, nice trailer. PREMIERES FRI JULY 29
PARAMOUNT+ “Teen Wolf: The Movie” teaser trailer - PREMIERES… soon.
🎧 PLAYING ME OFF
I watched “Begin Again” uh, again recently, and this is just a song to start your weekend right on a happy funky step. SKIPWORTH & TURNER, “Thinking About Your Love”.
If you need some new tunes:
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