Silicon Investor - Netflix (NFLX) and the Streaming Wars

[zax] Netflix Is Reportedly Eyeing Lionsgate After Losing Roku Bid To Fox – A Look At...

zax — 6/16/2026 1:02:15 PM

Netflix Is Reportedly Eyeing Lionsgate After Losing Roku Bid To Fox – A Look At Why The Fox Deal Might Have Appealed To Roku Board

According to a report by Semafor, citing sources, Netflix is pursuing a large deal and is among several media companies interested in buying Lionsgate Studios.

stocktwits.com

The bid for a large company points to a shift from Netflix’s original strategy of building growth to buying growth.

Roku’s board acted in the best interests of its shareholders as Netflix’s offer was lower than the $160-per-share bid Fox made, the report said.

Earlier this year, Netflix lost out to Paramount Skydance in the bidding for the assets of Warner Bros. Discovery.

Shares of Netflix (NFLX) drew significant investor buzz on Tuesday after a media report suggested that the streaming giant has set its eyes on film studio Lionsgate (LION) as a potential acquisition target.

At the time of writing, NFLX stock was down nearly 3% while LION stock was up roughly 8%.

Is Netflix Looking To Buy Lionsgate?

According to a report by Semafor, citing sources, Netflix is trying to pursue a large deal and is among several media companies interested in buying Lionsgate Studios. However, it has not submitted a formal indication of interest.

stocktwits.com

[Ron] Netflix released its first-quarter earnings report. The company beat Wall St...

Ron — 4/16/2026 4:46:45 PM

Netflix released its first-quarter earnings report.

The company beat Wall Street expectations for revenue, reporting $12.25 billion for the first quarter, topping the $12.18 billion expected by analysts polled by LSEG and 16% higher than the $10.54 billion it reported in the year-ago quarter.

Thursday marked the company’s first earnings report since it walked away from its proposed acquisition of Warner Bros. Discovery’s streaming and film assets in February.

Netflix reported net income of $5.28 billion, or $1.23 per share, nearly double the $2.89 billion, or 66 cents per share, that it reported during the same period last year. The company cited higher-than-projected operating income and the $2.8 billion termination fee that it received after the WBD deal fell through.

Reported EPS was not immediately comparable to analyst expectations of 76 cents.

On Thursday Netflix also announced that Reed Hastings, Netflix’s co-founder and current chairman, would exit the board in June when his term expires.

Hastings stepped down from his CEO role in 2023. Greg Peters, who had served as chief operating officer, stepped into the co-CEO role alongside Ted Sarandos.

“Netflix changed my life in so many ways, and my all-time favorite memory was January 2016, when we enabled nearly the entire planet to enjoy our service,” Hastings said in the company’s shareholder letter on Thursday. Hastings will now focus on philanthropy and other pursuits, according to the letter.

First quarter look
Netflix reported both its revenue and operating income were up during the first quarter -- 16% and 18%, respectively -- on the back of “slightly higher-than-planned subscription revenue.”

cnbc.com

[Ken Adams] Thanks for responding. I got a private note from another long time Trading View...

Ken Adams — 4/15/2026 10:37:58 AM

Thanks for responding. I got a private note from another long time Trading View "free" user whose problem was similar to mine. His cleared up the next day, and mine did as well, although not for several hours after his fix. All is well once again.

[nicewatch] Just wrote a nice message the internet gobbled up, oh well. Check if Tuesday was...

nicewatch — 4/15/2026 4:14:07 AM

Just wrote a nice message the internet gobbled up, oh well. Check if Tuesday was ok with your free tradingview stats. I am a paying sub but use same spx ticker you apparently do. They had a data snafu on Monday. Tuesday seemed fine to me but whether ongoing issue will have to be monitored.

[Ron] Ken, my account is free, although I did register with them with an email address...

Ron — 4/13/2026 4:22:11 PM

Ken, my account is free, although I did register with them with an email address.
I don't trade much but still keep an eye on the markets. It shows me weekly, daily and intraday charts.

[Ken Adams] Noting that link from TradingView, I found this morning that their "free" days h...

Ken Adams — 4/13/2026 3:33:27 PM

Noting that link from TradingView, I found this morning that their "free" days have apparently come to an end. My formerly reliable S&P daily chart is not accessible, along with all the assorted freebies. They still show ads that offer free content, but I can't find any of that today.

I need a chart service that's free. I no longer trade, but still have investments that I like to watch. I'll need to find another source, even if I have to settle for delayed charts. Suggestions appreciated, of course.

[Ron] Inflation, streaming and 'subscription fatigue' tradingview.com

Ron — 4/13/2026 2:52:24 PM

[Zen Dollar Round] Streaming prices have doubled in a decade as Netflix and other platforms become ...

Zen Dollar Round — 9/9/2024 10:04:39 PM

Streaming prices have doubled in a decade as Netflix and other platforms become more like cable

The monthly subscription fee for a standard, ad-free Netflix plan has risen 94% over the last 13 years

By Bruce Gil
August 21, 2024

When Netflix NFLX first launched its streaming service in 2011, it offered subscribers access to thousands of movies and TV shows on-demand and ad-free for a relatively low monthly fee of $7.99.

Over a decade later, the streaming space is filled with entries from major and minor media companies alike. But instead of the growing competition lowering prices, they have gone up — in some cases, by more than double.

And while traditional cable is on the decline, until very recently media companies had struggled to turn a profit with their streaming businesses. In the quest to profitability, media execs have turned to ads, live programming, crackdowns on password-sharing, channels, and bundles — making streaming increasingly more like like cable.

Of course, another revenue generator streaming execs have relied on has been price hikes.
(interactive version of this graph at website)

Between 2011 and 2024, the average price of a monthly subscription fee for a streaming service has risen 87% to $14.92 — nearly double Netflix’s NFLX original price.

Here’s how much every major subscription service’s monthly fee has increased since its launch

Netflix’s monthly subscription price for a standard, ad-free plan has nearly doubled (up 94%) to $15.49, from $7.99 in 2011.
Hulu’s price has risen 58% to $18.99, from $11.99 when it first launched its commercial-free plan in 2015.
Apple AAPL TV+’s price has more than doubled (100.2%) to $9.99 in just five years, from $4.99 in 2019.
Disney DIS+’s price has seen the biggest hike at 129% to $15.99, from $6.99 in 2019.
Max has increased 13% to $16.99, from $14.99 when it debuted as HBO Max in 2020.
Peacock’s price has jumped 40% to $13.99, from $9.99 in 2020.
Paramount+’s price has risen 30% to $12.99, from $9.99 in 2021.

The state of play of streaming

Netflix, the company that sparked the streaming revolution, has maintained its dominance for over a decade. As of the end of June, it had more than 277 million paid subscribers.

The streaming pioneer has increasingly turned to ads to generate more revenue. The company said that its ad-supported memberships, which it launched at the end of 2022, grew 34% quarter over quarter in June, and that it accounted for 45% of all new signups in markets where the plan is available.

Disney’s DIS streaming business — which includes Disney+, Hulu, and ESPN+ — turned a profit for the first time during its third fiscal quarter of the year. Disney joins Netflix and Warner Bros. Discovery WBD in being one of the few media companies to operate a profitable streaming business.

However, in March, Disney chief executive Bob Iger admitted thatnearly five years after its debut, the company’s streaming platform is still lagging behind the industry’s “gold standard” Netflix.

Since then, the media conglomerate has announced new tech updates, including an improved recommendation algorithm and playlists, to close the gap.

Paramount Global PARA, the company behind CBS, MTV and Paramount+, also announced recently that its streaming business has turned a profit. Still, the company is looking to cut costs and said it is laying off about 2,000 roles this year. Paramount is also expected to merge with Skydance Media.

Warner Bros. Discovery WBD, the parent company of HBO and Max, is struggling, along with Paramount and Disney, at navigating the changing media landscape where streaming is overtaking traditional TV. All three have made layoffs this year.

Warner Bros. Discovery CEO David Zaslav is reportedly considering splitting its streaming and studio assets from its cable network business.

Apple AAPL TV is reportedly started to reign in its costs on original programing after spending over than $20 billion producing its own TV shows and movies.

And NBCUniversal’s CMCSA Peacock has experienced a boost this summer from live programming — via the 2024 Paris Olympics and Snoop Dogg.

Link: qz.com

[Zen Dollar Round] Netflix Stock Hits All-Time High On Advertising Sales Success Subscription str...

Zen Dollar Round — 8/21/2024 8:11:22 AM

Netflix Stock Hits All-Time High On Advertising Sales Success

Subscription streaming video leader Netflix ( NFLX) on Tuesday said its upfront advertising commitments more than doubled this year. The news drove Netflix stock to a record high.

Netflix reported that its second year of upfront negotiations with advertisers generated a 150% increase in ad sales commitments compared with last year. The ad commitments included spots for consumer products, technology, entertainment, auto, retail and fast-food restaurants.

In a blog post, Amy Reinhard, president of advertising at Netflix, said the ad sales commitments were in line with company expectations. However, Netflix did not cite specific dollar figures.

Netflix, which launched its ad-supported service option in November 2022, said it closed advertising partnerships for the upcoming seasons of "Squid Game," "Wednesday," "Outer Banks," "Ginny & Georgia," and "Love Is Blind," in addition to live events such as "WWE Raw" in 2025, and this year's Christmas Day NFL games.

Meanwhile, Netflix is "looking forward" to the launch of its in-house ad tech platform, which will be tested in Canada in November and launched globally in 2025, Reinhard said.

Netflix Stock Breaks Out On Ad Report

"Over the last few months, we've hit great milestones for our ads business, including closing another successful Upfront market, building and implementing an expanded programmatic suite, enhancing our global measurement capabilities, and securing impactful global ad campaigns," Reinhard wrote.

She added, "We'll continue to improve the Netflix ads plan to ensure our members are delighted by the experience while simultaneously creating solutions that deliver results for our marketers, putting brands at the center of the best shows and films in the world, to a highly valuable and engaged audience."

On the stock market today, Netflix stock rose 1.5% to close at 698.54. Earlier in the session, Netflix stock hit an all-time high of 711.33. That eclipsed its previous high of 700.99 from November 2021.

With the move higher Tuesday, Netflix reached a buy point of 697.49 from a late-stage cup base, according to IBD MarketSurge charts.

Further, Netflix stock is on the IBD 50 list of elite stocks.

Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.

Link: investors.com

[Zen Dollar Round] Netflix reports earning after the bell today. Netflix earnings: Analysts make k...

Zen Dollar Round — 7/18/2024 11:00:57 AM

Netflix reports earning after the bell today.

Netflix earnings: Analysts make key shift as stock tests record peak

Netflix shares nudged higher Thursday ahead of the streaming group's second-quarter earnings report, set for after the closing bell, with investors focused on the revenue impact of its new ad-supported offering.

Netflix ( NFLX) is undergoing the biggest revamp of its TV streaming app in more than a decade to try to keep its 270 million subscribers engaged for longer periods. It also wants Wall Street to focus on how satisfied its customers are more than how many subscribers the company brings in.

The group will stop reporting quarterly subscriber gains next year, having already dumped its regular forecasts for quarterly additions. It's looking to wring more cash from its lower-priced plans, which show ads within its streaming content.

Netflix in fact told investors in May that its ad-supported tier, which costs around $6.99 a month, topped 40 million active users that month, up from just 5 million over the year-earlier month.

Still, Wall Street at present remains focused on subscriber additions. Analysts expect Netflix brought in a net 4.82 million new users over the three months ended in June, a tally that would be the smallest in more than a year.

Netflix pushing into live events

That's still likely to help drive revenue 16% above the year-earlier quarter, however, to around $9.5 billion. Analysts also say the figure could rise as high as $9.8 billion over the three months ending in September as the group mulls new price increases to match recent moves by its competitors.

"In our view, recent price increases by competitors and ongoing low rates of churn support Netflix price increases over coming quarters," said KeyBanc Capital Markets analyst Justin Patterson, who recently lifted his Netflix price target by $22 to $735 a share. (Churn is the measure of subscribers switching to rival services.)

"As pricing returns to a more normal cadence, we believe Netflix has ample room to sustain more than 10% annual revenue growth with 2% to 3% annual operating-margin expansion," he added.

Netflix is also looking to beef up its offerings of live programming, which are crucial to the growth of advertising-based video on demand. These include the addition of two National Football League games on Christmas Day and next year's launch of WWE "Raw" wrestling events.

In January Netflix agreed to pay TKO Group Holdings $5 billion for the streaming rights to "Raw," the WWE's flagship weekly wrestling program. Streaming is slated to start in 2025.

Emmy haul

"Netflix’s still limited foray into live major sports with Christmas NFL games complementing scripted WWE content and successful behind the scenes efforts including Drive to Survive and Break Point reinforces a view that streaming bundles will increasingly emulate the traditional linear bundle," said Benchmark analyst Matthew Harrigan.

Original content has also been increasingly important for Netflix, although its recent slate has been helped by shows that it licenses from mainstream networks as well.

Last summer's strikes by both the the Writers Guild of America and the Screen Actors Guild hit Netflix hard, ultimately reducing its overall offering of TV and movie titles by around 15%, following at least a decade of increases. Netflix now looks to be focusing on quality over quantity.

Netflix earned a total of 107 Emmy nominations this year for titles including "The Crown," "The Bear" and the controversial series "Baby Reindeer." Winners are slated to be announced Sept. 15.

Netflix shares were marked 0.36% higher in premarket trading to indicate an opening bell price of $649.82 each. That move would extend the stock's year-to-gain to around 33.5% and put it within touching distance of the all-time peak of $697.49 it reached earlier this month.

Link: finance.yahoo.com

[Sr K] Finance BUSINESS Netflix Shareholders Vote to Recommend Refreshed Executive-Pa...

Sr K — 6/7/2024 1:46:01 AM

Finance

BUSINESS

Netflix Shareholders Vote to Recommend Refreshed Executive-Pay Plan

Plan calls for co-CEOs to receive total target pay of up to $40 million each

By
Ben Glickman

June 6, 2024 6:47 pm ET

Share

Resize

Listen
(2 min)

Nexflix shareholders recommended approval of a new executive pay plan. PHOTO: LUCY NICHOLSON/REUTERS
Netflix NFLX -0.27%decrease; red down pointing triangle shareholders voted to recommend approval of a refreshed executive-pay plan a year after the company’s previous proposal was rejected.

The streaming company said Thursday that shareholders had voted for advisory approval of the new plan, which gives both chief executives total target pay of up to $40 million each. The outcome of the vote is nonbinding.

Less than 30% of the company’s shareholders voted in favor of last year’s compensation package, which allowed executives to choose how to allocate pay between cash and stock options. The vote in June 2023 came shortly after the Writers Guild of America urged for the plan’s rejection amid a strike.

The company said in October it was making big changes to executive compensation following the vote, and in December unveiled overhauled pay packages. The new plan set fixed base salaries for executives and established grants of time- and performance-based restricted stock units instead of options.

Co-CEOs Ted Sarandos and Greg Peters would receive a $3 million base salary and would have a target bonus of $6 million. The remainder of the chiefs’ $40 million in compensation would come in the form of restricted stock awards.

Executive Chair and former Co-CEO Reed Hastings would have a base salary of $100,000 under the new plan, while other named executive officers would have a base of $1.5 million.

Write to Ben Glickman at ben.glickman@wsj.com

[Sr K] Record price at the close, or during the day.

Sr K — 5/21/2024 1:58:22 AM

[Sr K] Q1 Earnings 3 hours ago · Streaming video giant Netflix (NASDAQ: NFLX) beat ana...

Sr K — 4/18/2024 7:47:17 PM

Q1 Earnings

3 hours ago · Streaming video giant Netflix (NASDAQ: NFLX) beat analysts' expectations in Q1 CY2024, with revenue up 14.8% year on year to $9.37 billion.

Stock slipped

[Glenn Petersen] h/t Ron Behind Netflix Film Chief’s Exit — And What It Means for Streaming Movi...

Glenn Petersen — 2/1/2024 5:36:12 AM

h/t Ron

Behind Netflix Film Chief’s Exit — And What It Means for Streaming Movies

Under Scott Stuber, the streaming giant spent lavishly on original movies, but insiders point to the Bela Bajaria-run TV unit as the future: "Middle of the road programming."

Netflix Plans Fewer Pricey Movies As Scott Stuber Exits – The Hollywood Reporter

[Sr K] FINANCE INVESTING Netflix Co-Founder Gives $1.1 Billion in Shares to Silicon Va...

Sr K — 1/29/2024 8:11:18 PM

FINANCE
INVESTING

Netflix Co-Founder Gives $1.1 Billion in Shares to Silicon Valley Charity Favored by Billionaires

Reed Hastings donates to foundation with $10 billion in assets after gifts from Mark Zuckerberg and other tech founders

By
Theo Francis
Updated Jan. 29, 2024 6:58 pm ET

Share

Resize

Listen
(4 min)

Reed Hastings’s gift accounts for about 40% of the executive’s direct ownership stake in Netflix. PHOTO: KYLE GRILLOT/BLOOMBERG NEWS

Netflix co-founder Reed Hastings donated $1.1 billion worth of his stake in the streaming company to a California-based charity that is popular with technology founders because it gives them tax breaks and privacy.

The Netflix executive chairman gave the shares to Silicon Valley Community Foundation, which had more than $10 billion in assets at the end of 2022. Previous donors have included Facebook co-founder Mark Zuckerberg, who gave more than $1 billion worth of Facebook stock a decade ago.

Exc.

[Zen Dollar Round] True, I've even seen some outright porn ads on FB when watching Reels, they show...

Zen Dollar Round — 1/25/2024 12:24:44 PM

True, I've even seen some outright porn ads on FB when watching Reels, they show up as tiny ads at the bottom of the window. It's rare, but I report them when they've appeared.

[Ron] Facebook needs to do a much better job policing ads. All kinds of illicit mater...

Ron — 1/25/2024 9:31:55 AM

Facebook needs to do a much better job policing ads. All kinds of illicit material on there.
Including for fake streamers.

[Zen Dollar Round] I've seen a few small streaming devices advertised on FB claiming to give free a...

Zen Dollar Round — 1/25/2024 8:31:55 AM

I've seen a few small streaming devices advertised on FB claiming to give free access to all the major streaming services and I knew there was no way they could be legit.

Not sure why Facebook allows such ads, but some seem to run for at least a couple of weeks before I don't see them anymore.

[Glenn Petersen] Streaming Pirates Are Hollywood’s New Villains Illegal subscription services th...

Glenn Petersen — 1/25/2024 5:28:52 AM

Streaming Pirates Are Hollywood’s New Villains

Illegal subscription services that steal films or TV shows bring in $2 billion a year in ads and subscriber fees.

By Thomas Buckley
Bloomberg
January 24, 2024 at 11:00 AM UTC

Ever since taking on Netflix Inc. at its own game, old Hollywood has struggled to turn a profit in streaming, with the likes of Disney+, Peacock and Paramount+ losing billions of dollars each year, sparking concerns on Wall Street that the services will never be as profitable as cable once was. But the age of streaming has been a boon for some unintended winners: pirates that use software to rip a film or television show in seconds from legitimate online video platforms and host the titles on their own, illegitimate services, which rake in about $2 billion annually from ads and subscriptions.

With no video production costs, illicit streaming sites such as myflixer.to and projectfreetv.space have achieved profit margins approaching 90%, according to the Motion Picture Association, a trade group representing Hollywood studios that’s working to crack down on the thousands of illegal platforms that have cropped up in recent years.

Initially the rise of legitimate online businesses such as Netflix actually helped curb digital piracy, which had largely been based on file uploads. But now piracy involving illegal streaming services as well as file-sharing costs the US economy about $30 billion in lost revenue a year and some 250,000 jobs, estimates the US Chamber of Commerce’s Global Innovation Policy Center. The global impact is about $71 billion annually.
Global Video Piracy Visits

In the US, which counts almost 130 subscription piracy sites, the MPA estimates that the top three combined have about 2 million users paying $5 to $10 per month for films, TV shows and live sports. Analysts say the user number could soar as the cost of subscriptions from legitimate companies such as Walt Disney Co. approach $20 per month as they seek to bolster the finances of their streaming platforms. “Some of these pirate websites have gotten more daily visits than some of the top 10 legitimate sites,” says Karyn Temple, the MPA’s general counsel. “That really shows how prolific they are.”

Last year, Philadelphian Bill Omar Carrasquillo—who broadcast his lavish lifestyle to about 800,000 followers on YouTube and who the FBI said ran one of the most “brazen and successful” TV piracy schemes ever prosecuted by federal officials—was ordered to forfeit $30 million in assets including a dozen properties, a Lamborghini and $6 million in cash. At its peak, the illicit streaming business GearsTV had 100,000 subscribers and brought in about $1.5 million in monthly sales. In March 2023, Carrasquillo was sentenced to five and a half years in prison.

Some pirate sites are invitation-only platforms that can gain traction on the dark web. But most are legitimate-looking streaming websites, searchable on Google and advertised on Facebook and TikTok. They’re funded by ads as well as subscriptions and offer a buffet of film, TV and live sports that’s wider in variety than legitimate outfits because they usually steal content from multiple services. (In some cases, viewers mistake the platforms for legitimate streaming services because of how slick they look.) Subscription payments are sometimes made in cryptocurrency, but they’re more often processed via credit cards and PayPal—which can help the MPA find the businesses and shut them down.

The MPA says that in recent months, Russian crime rings have paid patrons to sneak into theaters with camcorders and record films including Book Club: The Next Chapter, Barbarian, Smile and Lyle, Lyle, Crocodile at AMC Entertainment Holdings Inc. theaters in Los Angeles. The footage is then uploaded to the internet and watermarked with links to illegal online casinos owned and operated by the same criminal organizations, to encourage viewers to place bets on those gambling platforms.

“The people who are stealing our movies and our television shows and operating piracy sites are not mom and pop operations,” says Charlie Rivkin, chief executive officer of the MPA, who adds that some of the operators also engage in drug trafficking, child pornography, prostitution and money laundering. “This is organized crime.”

Rivkin, a former US ambassador to France and onetime CEO of the Jim Henson Co. (home of the Muppets), joined the MPA in 2017 after the organization failed five years earlier to build consensus between Hollywood and Silicon Valley to win passage of legislation in Congress aimed at stopping online piracy. Web companies such as Google and Yahoo! said the move would give the government too much power to shut down sites accused of infringement. In 2017 the association formed the Alliance for Creativity and Entertainment, an enforcement task force of about 100 detectives circling the globe—and sometimes skirting death threats—to help local authorities arrest streaming pirates. It’s led by Jan van Voorn, a veteran of Interpol and the Marine Corps, where he helped combat drug trafficking.

ACE says it’s helped shrink the number of illegal streaming services in North America to 126, from more than 1,400 in 2018, aided in part by the MPA’s support for a 2020 federal law that made large-scale streaming of copyrighted material a felony rather than a misdemeanor. But internationally, piracy increased 39% for films and 9% for TV shows in 2022, led by demand for movies such as Paramount’s Top Gun: Maverick and series including HBO’s House of the Dragon, according to data tracker Muso’s latest report. The reach of illegal streaming services is booming, with a record 215 billion visits to the illicit sites in 2022, Muso says. And measures by legitimate streaming operators to shore up earnings—for instance, cracking down on password-sharing—will further increase visits to illicit platforms, according to Muso.

The main red flag that a site is operating illegally is pricing, which starts at about $5 per month—less than a third of a basic Netflix subscription—for access to a seemingly limitless trove of films and shows from multiple streaming platforms. Another clue is that a site is anonymously registered, obscuring ties to its owner. To fight the pirates, the MPA’s investigators track down a platform’s operators and puts them on notice with cease-and-desist orders.

If they don’t comply, the MPA begins what Van Voorn calls “the disruption phase,” which seeks to disable their payment and hosting platforms, social media accounts and domain names. If the perpetrators still won’t comply, the MPA escalates the case to civil or criminal status and works with Europol, Interpol and national police forces dedicated to intellectual-property theft and cybercrime. It’s taken as little as two weeks to dismantle a site’s operations in Egypt and as long as four months in Spain, Van Voorn says.

Consulting firm Parks Associates predicts that legitimate US streaming services’ cumulative loss from piracy since 2022 will reach $113 billion in the next two years. “While there is some optimism that emerging countermeasures and best practices may see piracy begin to plateau by 2027, there is no consensus among stakeholders as to when it may begin to decline,” says Steve Hawley, a Parks Associates analyst.

For now, Van Voorn says he’ll continue to fight bootleg streamers—even if it sometimes feels like whack-a-mole. In November, ACE shuttered Zoro.to, Goku.to and ShowboxMovies, which together had close to 400 million visits per month. The same month it closed down the two largest illegal video platforms in the former Soviet republic of Georgia and formed a partnership with sports streaming giant DAZN to shut down illicit live sports site watchwrestling.ai, which operated out of India. Van Voorn’s team also had a breakthrough in Vietnam—historically a piracy hot spot—when it helped close down 2embed, a site that provided films and TV shows to hundreds of criminal platforms around the world.

The move is part of ACE’s mission to target disseminators at the top of the bootleg food chain that farm out pirated shows and movies to illegal sites. “Taking down these content sources and therefore impacting 25 or more services at once is a very effective strategy,” Van Voorn says. “We’re working hard to be the one-stop shop for the growing piracy issues around the world.”

Streaming Service Costs Drive New Era of Hollywood Piracy - Bloomberg (archive.ph)

[Glenn Petersen] Netflix adds 13.1 million subscribers, tops revenue estimates as membership push...

Glenn Petersen — 1/24/2024 6:13:35 AM

Netflix adds 13.1 million subscribers, tops revenue estimates as membership push gains steam

PUBLISHED TUE, JAN 23 202412:00 PM EST
Sarah Whitten @SARAHWHIT10
CNBC.com`

KEY POINTS

Netflix added 13.1 million subscribers during the fourth quarter.
The company now has 260.8 million paid subscribers.
The company also topped Wall Street’s revenue expectations.

Netflix adds 13.1 million subscribers, tops revenue estimates as membership push gains steam

LOS ANGELES — Shares of Netflix jumped in extended trading Tuesday after the company reported adding 13.1 million subscribers during the fourth quarter, stronger growth than Wall Street expected as the streamer builds its ad-supported service and cracks down on password sharing.

Netflix now has 260.8 million paid subscribers, a new record for the service.

The subscriber growth easily tops the 8.76 million paid membership adds Netflix reported in the third quarter. The company also blew past Wall Street’s fourth-quarter expectations of 8 million to 9 million.

Here are the results:

Earnings: $2.11 per share vs. $2.22 per share expected by LSEG, formerly known as Refinitiv
Revenue: $8.83 billion vs. $8.72 billion expected by LSEG
Total memberships: 260.8 million vs.256 million expected, according to Street Account

Netflix reported fourth-quarter net income of $937.8 million, or $2.11 per share, versus $55.3 million, or 12 cents per share, in the prior-year period.

The company posted revenue of $8.83 billion for the quarter, up from $7.85 billion in the year-ago quarter.

As Netflix focuses on improving profits, the company increased its 2024 full-year operating margin forecast to 24%, up from a range of 22% to 23%. It cited the weakening of the U.S. dollar and a stronger-than-forecast fourth-quarter performance.

The company also projects earnings per share of $4.49 for the fiscal first quarter of 2024, higher than the $4.10 Wall Street had expected.

While rivals in the streaming space have struggled to reach profitability, and have been cutting down on content spend, Netflix is prepared to invest in a larger slate. However, it won’t be doing that through acquisitions of traditional entertainment companies or linear assets, the company said in a letter to shareholders Tuesday.

“As our competitors adjust to these changes, it’s logical to expect further consolidation, particularly among companies with large and declining linear networks,” the company said. “We’re not interested in acquiring linear assets. Nor do we believe that further M&A among traditional entertainment companies will materially change the competitive environment given all the consolidation that has already happened over the last decade.”

But that won’t stop the company from partnering with content makers who have traditionally worked in the linear space. Netflix took another step toward building subscribers when it announced earlier Tuesday that it would stream the popular WWE Raw starting next year. The deal is the streaming platform’s biggest step yet into live entertainment.

The company foresees continued competition going forward.

“It’s why continuing to improve our entertainment offering is so important, and as many of our competitors cut back on their content spend, we continue to invest in our slate,” the company wrote to shareholders.

Netflix is still navigating its transformation from targeting subscriber growth to focusing on profit, using price hikes, password crackdowns and ad-supported tiers to boost revenue.

Investors got a sneak preview of growth in Netflix’s advertising-based plan earlier this month, when the company’s president of advertising, Amy Reinhard, told attendees at the Variety Entertainment Summit at CES that the company now has more than 23 million global monthly active users. That’s up from 15 million that the company reported in November.

While Netflix doesn’t see ads as its primary revenue driver in 2024, it’s still looking to scale that part of its business.

“We’re focused on the additional work that we can do in that space,” said Greg Peters, co-CEO of Netflix, during the company’s earnings call. “That means making the ads plan more attractive. We’ve added streams, higher resolution, downloads, it means engaging partner channels. You’ll see us do more than that.”

Netflix is also looking at making its ad tier more attractive to advertisers, including by bolstering its sales teams and ad operations to “meet brands where they need us and how they need us.”

“We’re focused on the long-term revenue potential here,” said Peters. “We’re very optimistic about it. It’s a huge opportunity.”

Netflix (NFLX) earnings Q4 2023 (cnbc.com)

[Sr K] ‘The Brothers Sun’ Review: Surprising Siblings on Netflix Michelle Yeoh plays t...

Sr K — 1/4/2024 11:41:18 AM

‘The Brothers Sun’ Review: Surprising Siblings on Netflix

Michelle Yeoh plays the mother of two very different brothers living in Taipei and Los Angeles in this gangster-comedy series.

By John Anderson
Jan. 4, 2024 12:00 am ET

Share

Resize

Listen
(4 min)

image
Michelle Yeoh PHOTO: COURTESY OF NETFLIX
With a nod to both the Corleones and the Karamazovs, “The Brothers Sun” is about crime and siblings and begins with the highly lethal triad assassin Charles “Chairleg” Sun (Justin Chien) being attacked in his Taipei kitchen while trying to follow an episode of “The Great British Baking Show.” That he will dispatch the killers, using his rolling pin, isn’t a question. But can he do it before he burns his cake? Of such ingredients are comedy thrillers confected.

Exc.

[Glenn Petersen] It’s “shakeout” time as losses of Netflix rivals top $5 billion Disney, Warner,...

Glenn Petersen — 12/29/2023 6:56:15 AM

It’s “shakeout” time as losses of Netflix rivals top $5 billion

Disney, Warner, Comcast, and Paramount are contemplating cuts, possible mergers.

ANNA NICOLAOU AND CHRISTOPHER GRIMES, FINANCIAL TIMES - 12/28/2023, 9:25 AM
Via Ars Technica

The world’s largest traditional entertainment companies face a reckoning in 2024 after losing more than $5 billion in the past year from the streaming services they built to compete with Netflix.

Disney, Warner Bros Discovery, Comcast and Paramount—US entertainment conglomerates that have been growing ever larger for decades—are facing pressure to shrink or sell legacy businesses, scale back production and slash costs following billions in losses from their digital platforms.

Shari Redstone, Paramount’s billionaire controlling shareholder, has effectively put the company on the block in recent weeks. She has held talks about selling the Hollywood studio to Skydance, the production company behind Top Gun: Maverick, people familiar with the matter say.

Paramount chief executive Bob Bakish also discussed a possible combination over lunch with Warner CEO David Zaslav in mid-December. In both cases the discussions were said to be at an early stage and people familiar with the talks cautioned that a deal might not materialize.

Beyond their streaming losses, the traditional media groups are facing a weak advertising market, declining television revenues and higher production costs following the Hollywood strikes.

Rich Greenfield, an analyst at LightShed Partners, said Paramount’s deal discussions were a reflection of the “complete and utter panic” in the industry.

“TV advertising is falling far short, cord-cutting is continuing to accelerate, sports costs are going up and the movie business is not performing,” he said. “Everything is going wrong that can go wrong. The only thing [the companies] know how to do to survive is try to merge and cut costs.”

But as the traditional media owners struggle, Netflix, the tech group that pioneered the streaming model over a decade ago, has emerged as the winner of the battle to reshape video distribution.

“For much of the past four years, the entertainment industry spent money like drunken sailors to fight the first salvos of the streaming wars,” analyst Michael Nathanson wrote in November. “Now, we are finally starting to feel the hangover and the weight of the unpaid bar bill.”

For companies that have been trying to compete with Netflix, Nathanson added, “the shakeout has begun.”

After a bumpy 2022, Netflix has set itself apart from rivals—most notably by being profitable. Earnings for its most recent quarter soared past Wall Street’s expectations as it added 9 million new subscribers—the strongest rise since early 2020, when Covid-19 lockdowns led to a jump.

“Netflix has pulled away,” says John Martin, co-founder of Pugilist Capital and former chief executive of Turner Broadcasting. For its rivals, he said, the question is “how do you create a viable streaming service with a viable business model? Because they’re not working.”

The leading streaming services aggressively raised prices in 2023. Now, analysts, investors and executives predict that consolidation could be ahead next year as some of the smaller services combine or bow out of the streaming wars.

Warner, home to HBO and the Warner Bros movie studio, has made a small profit at its US streaming services this year, in part by raising prices, aggressively culling some series and licensing others to Netflix. However, this has come at a price: Warner lost more than 2 million streaming subscribers in its two most recent quarters.

The company, which merged with rival Discovery last year, has long been rumored as a potential takeover candidate, with Comcast seen as the most likely buyer. But Zaslav in November hinted that his group wanted to be an acquirer instead of a target.

“There are a lot of?.?.?.?excess players in the market. So, this will give us a chance not only to fight to grow in the next year, but to have the kind of balance sheet and the kind of stability?.?.?.?that we could be really opportunistic over the next 12 to 24 months,” he said on an earnings call.

The terms of the Warner-Discovery merger barred the group from dealmaking for two years. That period expires on April 8.

Disney, the largest traditional media company, is in the midst of a gutting restructuring that has featured 7,000 job cuts and attacks from activist investors. It lost more than $1.6 billion from its streaming businesses in the first nine months of 2023, during which its Disney+ service gained 8 million subscribers. The company says it will turn a profit in streaming in late 2024.

Bob Iger, Disney chief executive, this year openly pondered whether some of its assets still fit within the company, prompting speculation that he was considering disposals. But no deals emerged, leading some investors to conclude there is little appetite among private equity or tech companies for acquiring legacy businesses.

Paramount’s shares have risen almost 40 percent since early November as sale speculation mounted. The stock rose sharply after the Skydance talks were reported, but both Paramount and Warner shares fell after news of their discussions came to light.

Analysts said the two companies’ high debt levels were an immediate concern for investors. “We suspect investors will focus on pro forma leverage above all else,” Citi analysts wrote in a note last week. They estimated that an all-stock combination of Warner and Paramount could yield at least $1 billion of synergies.

But Greenfield said merging two companies with lossmaking streaming services and large portfolios of declining television assets was not the answer to their problems.

“The right answer should be, let’s stop trying to be in the streaming business,” he said. “The answer is, let’s get smaller and focused and stop trying to be a huge company. Let’s dramatically shrink.”

© 2023 The Financial Times Ltd. All rights reserved. Not to be redistributed, copied, or modified in any way.

[Glenn Petersen] Amazon Prime Video will start showing ads on January 29th / Movies and TV shows...

Glenn Petersen — 12/27/2023 6:59:21 AM

Amazon Prime Video will start showing ads on January 29th

/ Movies and TV shows on Amazon’s streaming service will start getting broken up with ads in January — unless you’re willing to pony up an extra fee each month.

By Chris Welch, a reviewer specializing in personal audio and home theater. Since 2011, he has published nearly 6,000 articles, from breaking news and reviews to useful how-tos.
The Verge
Dec 26, 2023, 2:41 PM CS

Earlier this year, Amazon announced plans to start incorporating ads into movies and TV shows streamed from its Prime Video service, and now the company has revealed a specific date when you’ll start seeing them: it’s January 29th. “This will allow us to continue investing in compelling content and keep increasing that investment over a long period of time,” the company said in an email to customers about the pending shift to “limited advertisements.”

“We aim to have meaningfully fewer ads than linear TV and other streaming TV providers. No action is required from you, and there is no change to the current price of your Prime membership,” the company wrote. Customers have the option of paying an additional $2.99 per month to keep avoiding advertisements.

The rest of the email summarizes the many benefits of a Prime subscription — no doubt an attempt to keep customers from cancelling over this decision. Verge readers were none too pleased about the initial news back in September:

This will discourage me from using the service more than encourage me from paying more

Amazon Prime currently costs $14.99 each month or $139 annually. (Prime Video can be subscribed to individually for $8.99/month.) The new charge for ad-free streaming would bring Prime to just under $18, and would push standalone Prime Video to just under $12.

Amazon also operates Freevee, a free, ad-sponsored streaming service. The company’s email notes that “live event content such as sports, and content offered through Amazon Freevee will continue to include advertising.”

The move comes as competing streaming services continue to raise subscription rates across the board and push ads upon customers on their cheapest monthly plans. Disney Plus, Hulu, Max, Netflix, and Paramount Plus all include ads on their most affordable tiers. The monthly cost of Amazon Prime itself isn’t changing, but if you want to preserve the same experience you have today starting on January 29th, you’ll end up paying more.

Amazon’s full email follows below.

Dear Prime member,

We are writing to you today about an upcoming change to your Prime Video experience. Starting January 29, Prime Video movies and TV shows will include limited advertisements. This will allow us to continue investing in compelling content and keep increasing that investment over a long period of time. We aim to have meaningfully fewer ads than linear TV and other streaming TV providers. No action is required from you, and there is no change to the current price of your Prime membership. We will also offer a new ad-free option for an additional $2.99 per month* that you can sign up for here.

Prime is a very compelling value. Prime members enjoy a wide range of shopping, savings, and entertainment benefits, including:

- More than 300 million items are available with free Prime shipping and tens of millions of the most popular items are available with free Same-Day or One-Day Delivery.

- Access to exclusive and broad streaming video content (including Prime Video exclusives like The Lord of the Rings: The Rings of Power, The Boys,Tom Clancy’s Jack Ryan, Citadel, The Wheel of Time, Reacher, and The Summer I Turned Pretty, as well as blockbuster movies such as Air, Creed III, Dungeons & Dragons, Candy Cane Lane with Eddie Murphy, and exclusive live sports including NFL Thursday Night Football).

- Access to Prime Video Channels, which provides an unmatched selection of subscription channels like Max, Paramount+ with SHOWTIME, BET+, MGM+, ViX+, Crunchyroll, PBS KIDS, NBA League Pass, MLB.TV, and STARZ—with no extra apps to download, and no cable required. Customers only pay for the ones they want, and can cancel anytime.

- The ability to use your Prime shopping benefits—like fast, free delivery, a seamless checkout experience, 24/7 live chat support, and hassle-free returns—on online stores beyond Amazon.com with Buy with Prime.

- Exclusive deals and shopping events like Prime Day.

- Ad-free listening of 100 million songs and millions of podcast episodes with Amazon Music.

- Prescription medications as low as $1 per month and fast, free shipping from Amazon Pharmacy.

- Access to unlimited eligible generic prescription medications for only $5 per month (including free shipping) with RxPass from Amazon Pharmacy.

- High-quality health care from One Medical for only $9 per month (or $99 annually), with the option to add up to five additional memberships for the family for only $6 per month (or $66 annually) each.

- Free two-hour Fresh grocery delivery on orders over $100 (and delivery charges between $6.95 to $9.95 for orders less than $100), and in-store savings on select groceries at Amazon Fresh and Whole Foods Market stores across the U.S.

- Unlimited photo storage with Amazon Photos.

- Gaming benefits with Prime Gaming.

- More than 3,000 books and magazines with Prime Reading.

- A free, one-year Grubhub+ membership trial valued at $120 per year, offering unlimited $0 delivery fees on orders over $12.

And, you can expect additional features and programs added in the future for our Prime members.

As mentioned above, no action is required from you. If you wish to sign up for the ad-free option, you can click here. And, as always, if you have questions about your Prime membership, you can manage your account here.

Thank you for being a valued member of Amazon Prime.

Sincerely,
The Amazon Prime team

Amazon Prime Video will start showing ads on January 29th - The Verge

[Glenn Petersen] Warner-Paramount Deal Would Test Appetite for Streaming Consolidation Merger of...

Glenn Petersen — 12/24/2023 7:14:22 AM

Warner-Paramount Deal Would Test Appetite for Streaming Consolidation

Merger of two debt-laden media giants would face several hurdles, but the industry’s drive for deals will only pick up

By Dan Gallagher
Heard on the Street
Wall Street Journal
Dec. 21, 2023 11:23 am ET

In the current Hollywood rumor mill, one thing remains certain: Streaming consolidation will be a lot easier said than done.

Warner Bros. Discovery combining with Paramount Global is the latest pitch. The Wall Street Journal and other media outlets reported late Wednesday that Warner Chief Executive David Zaslav met with Paramount Chief Bob Bakish earlier this week to discuss a possible deal. No formal talks are yet under way, and the news comes just a couple of weeks after reports that Paramount’s controlling shareholder, Shari Redstone, was talking about a potential deal with an investor group led by Skydance Media.

Paramount’s share price jumped 11% in the week after Puck News reported those talks, clearly putting the company in play. So it is little surprise that Zaslav—a consummate deal maker—is also kicking the tires.

Combining the owners of the Max and Paramount Plus streaming services also makes a certain amount of sense in a world where every streamer not named Netflix is losing money or owned by a tech giant ( Amazon and Apple) that can stomach the losses. Warner and Paramount combined have about 158 million subscribers, which exceeds those of Disney’s core streaming services and would come second only to the 247 million subscribers Netflix currently boasts.

But such a combination would bring together two companies under a mountain of debt—$61 billion combined as of the end of the third quarter. Meanwhile, the benefits from combining the scale and reach of two media titans would also likely draw the ire of regulators. Warner Bros. and Paramount would have accounted for 24% of this year’s domestic box office and 30% of last year’s, according to the movie industry tracking site The Numbers.

And there are the two companies’ respective TV empires, which include major production studios, a wide base of sports rights, popular cable channels ranging from HBO to Showtime to MTV as well as the CNN and CBS news operations. Analyst Robert Fishman of MoffettNathanson estimates that the two companies would account for about 35-40% of viewing time over so-called linear TV networks. This, he wrote in a note Thursday morning, would represent “a greater share than any single entity has controlled since the pre-cable network era and likely to be among the biggest sources of potential regulatory pushback.”

That pushback could take place no matter who is in office by the end of 2024. “We believe it would face very tough antitrust scrutiny from the Biden administration, including around increased content leverage over pay TV providers and writers/unions,” TD Cowen’s policy analyst Paul Gallant wrote in a note to clients Thursday. And his colleague Doug Creutz, the broker’s media analyst, noted separately that the Trump administration attempted to block the previous deal involving the former Time-Warner empire. “We also note that Warner’s news network CNN has been a verbal target of Trump in the past, and we would guess that he probably still holds a grudge,” Creutz wrote.

Hence, Wall Street is putting long odds on a Warner-Paramount combination. Warner’s stock price slid more than 5% Wednesday after Axios reported the talks, and the stock fell another 4% in early Thursday trading. Paramount’s share price also slipped about 1% Thursday morning.

That reaction is unlikely to cool deal speculation. Paramount is clearly looking to do something; Bernstein analyst Laurent Yoon called the company’s current position “untenable” in a report earlier this month, citing the shrinking cable-TV business, debt and a streaming business that is “subscale with limited new releases to drive engagement and scale.”

Warner also signaled during its third-quarter report last month that it might start looking to do more deals again, given its improving free cash flow. Michael Morris of Guggenheim thinks the lack of NFL rights is a major hole in Warner’s sports portfolio. In a report last month, he named Paramount and Fox Corp.as the most likely acquisition targets that could fill that gap. “No single content property drives U.S. consumer engagement like the NFL,” he wrote. Fox shares common ownership with the parent company of The Wall Street Journal.

Still, most analysts believe Warner is unlikely to do any deal before April 8. That is when the company would be free of any tax penalty that could arise from doing a major acquisition within the two-year window of the merger of WarnerMedia with Discovery. The cable TV market is only going to worsen between now and then, while the streaming and theatrical businesses could face pressure from a lower influx of new content because of the labor strikes that crippled production in Hollywood for much of this year. Those trends will likely raise the impetus for struggling media giants to make deals.

Investors should brace for some drama.

Write to Dan Gallagher at dan.gallagher@wsj.com

Warner-Paramount Deal Would Test Appetite for Streaming Consolidation - WSJ (archive.ph)

[Glenn Petersen] Scoop: Warner Bros. Discovery in talks to merge with Paramount Global Sara Fisc...

Glenn Petersen — 12/22/2023 7:06:09 AM

Scoop: Warner Bros. Discovery in talks to merge with Paramount Global

Sara Fischer
Axios
December 20, 2023

Warner Bros. Discovery CEO David Zaslav met with Paramount Global CEO Bob Bakish on Tuesday in New York City to discuss a possible merger, Axios has learned from multiple sources.

Why it matters: The combination would create a news and entertainment behemoth that would likely trigger further industry consolidation.

Zaslav also has spoken to Shari Redstone, who owns Paramount's parent company, about a deal.
WBD's market value was around $29 billion as of Wednesday, while Paramount's was just over $10 billion, so any merger would not be of equals.

Details: The meeting between Zaslav and Bakish, which sources say lasted several hours, took place at Paramount's headquarters in Times Square.

The duo discussed ways their companies could complement one another. For example, each company's main streaming service — Paramount+ and Max — could merge to better rival Netflix and Disney+.
It's unclear whether WBD would buy Paramount Global or its parent company, National Amusements Inc. (NAI), but a source familiar with the situation says that both options are on the table.
WBD is said to have hired bankers to explore the deal.

Between the lines: The deal could drive substantial synergies.

WBD could use its international distribution footprint to boost Paramount's franchises, while Paramount's children's programming assets could be essential to WBD's long-term streaming ambitions.
CBS News could be combined with CNN to create a global news powerhouse. CBS' crime dramas, such as "NCIS" and "Criminal Minds," could be combined with Investigation Discovery and TruTV.
CBS Sports' footprint could be combined with WBD's. For example, CBS and WBD's Turner Sports currently share TV rights for March Madness.

Be smart: Paramount is under enormous pressure to find a strategic partner or buyer, as it's staring down a mountain of debt.

The firm's stock jumped 12% earlier this month following a report from Puck that Skydance Media and RedBird Capital Partners were eyeing a potential deal to buy a majority stake in NAI.
NAI reached a deal with creditors to restructure some of its debt in September and previously slimmed down by selling Simon & Schuster. It's also in talks to unload BET.

Behind the scenes: One source familiar with the discussions says the strategy being considered mirrors Zaslav's blueprint for prior mergers.

When merging with Scripps in 2018 and then WarnerMedia in 2022, Zaslav kept his core strategic team in place while retaining new creative talent leaders from the companies he acquired.
Executives are confident that the deal would receive regulatory approval, despite D.C.'s active antitrust climate. Notably, Warner Bros. Discovery doesn't own a broadcast network, which would clear an easier path than would a combination with a company like NBC owner Comcast.
A tax provision used to merge WarnerMedia and Discovery expires next year, which would legally allow WBD to explore another deal.
Zaslav told investors last month that the company's cost-cutting measures and debt reduction now put it in a position "to allocate more capital toward growth opportunities."

Paramount, WBD and NAI declined to comment.

The bottom line: Talks between WBD and Paramount are still early and may not ultimately result in a deal. But given the acceleration of cord-cutting and the growing encroachment of Big Tech on media, neither company can remain on the sidelines for long.

Disclosure: The author of this story is a paid contributor to CNN.

Warner Bros. Discovery in talks to merge with Paramount (axios.com)

[Glenn Petersen] In Search of Cash, Studios Send Old Shows Back to Netflix When building their o...

Glenn Petersen — 12/22/2023 6:25:06 AM

In Search of Cash, Studios Send Old Shows Back to Netflix

When building their own streaming companies, many entertainment studios ended lucrative licensing deals with Netflix. But they missed the money too much.

By John Koblin and Nicole Sperling
New York Times
Dec. 15, 2023

For years, entertainment company executives happily licensed classic movies and television shows to Netflix. Both sides enjoyed the spoils: Netflix received popular content like “Friends” and Disney’s “Moana,” which satisfied its ever-growing subscriber base, and it sent bags of cash back to the companies.

But around five years ago, executives realized they were “selling nuclear weapons technology” to a powerful rival, as Disney’s chief executive, Robert A. Iger, put it. Studios needed those same beloved movies and shows for the streaming services they were building from scratch, and fueling Netflix’s rise was only hurting them. The content spigots were, in large part, turned off.

Then the harsh realities of streaming began to emerge.

Confronting sizable debt burdens and the fact that most streaming services still don’t make money, studios like Disney and Warner Bros. Discovery have begun to soften their do-not-sell-to-Netflix stances. The companies are still holding back their most popular content — movies from the Disney-owned Star Wars and Marvel universes and blockbuster original series like HBO’s “Game of Thrones” aren’t going anywhere — but dozens of other films like “Dune” and “Prometheus” and series like “Young Sheldon” are being sent to the streaming behemoth in return for much-needed cash. And Netflix is once again benefiting.

Ted Sarandos, one of Netflix’s co-chief executives, said at an investor conference last week that the “availability to license has opened up a lot more than it was in the past,” arguing that the studios’ earlier decision to hold back content was “unnatural.”

“They’ve always built the studios to license,” he said.

As David Decker, the content sales president for Warner Bros. Discovery, said: “Licensing is becoming in vogue again. It never went away, but there’s more of a willingness to license things again. It generates money, and it gets content viewed and seen.”

In the coming months, Disney will start sending a number of shows from its catalog to Netflix, including “This Is Us,” “How I Met Your Mother,” “Prison Break” and several editions of ESPN’s sports documentary series “30 for 30.” “White Collar,” a Disney-owned show that used to be part of the same lineup as “Suits” on the USA Network, will also join the service. (Old episodes of “Suits” have been one of Netflix’s biggest hits this year.) The popular 2000s-era ABC hit “Lost,” which left Netflix in 2018, is also returning next year.

Jeremy Zimmer, the chief executive of the United Talent Agency, said the studios’ about face was a “financial necessity.”

“They said, ‘Wow, in order for us to compete in streaming, it’s costing us billions to create new content to drive subscriptions,’” Mr. Zimmer said. “‘Where are we going to find the money? Oh! We have this stuff that’s been sitting here. We can sell that.’ It’s a very logical progression.”

Acknowledging the motivation, Dan Cohen, the chief content licensing officer for Paramount, said one of the biggest advantages to licensing for traditional media companies was that “the margins tend to be high.”

Many Warner Bros. movie titles also began appearing on Netflix last month, including the 2021 blockbuster “Dune.”Credit...Chia Bella James/Warner Bros. Pictures
-----------------------------

Movies and series from other studios have long provided a vital backbone to Netflix, allowing executives to populate the service with established favorites to complement its original series like “The Crown,” “Wednesday” and “The Diplomat.” The company said on Tuesday that from January to June, 45 percent of all viewing on the service came from licensed shows and movies.

While the amount of licensed content on the service is growing after a slowdown, content from other studios never completely went away. According to Netflix, the top 10 most-watched movie list for a one-week period ending Dec. 10 includes four films from Universal Pictures alone. Those movies come to Netflix from a handful of agreements with Universal, one of which was reached in 2021, in which new animated theatrical releases like “The Super Mario Bros.” go to Netflix as part of a structure that toggles titles between Netflix and Universal’s own streaming service, Peacock.

The streaming giant has a similar agreement from 2021 with Sony Pictures, whereby the studio sends movies like “Spider-Man: Across the Spider-Verse” and the Jennifer Lawrence comedy “No Hard Feelings” to Netflix four to six months after their theatrical run is complete.

Studios are also licensing content to services like Amazon, Tubi and Hulu, of which Disney is the majority owner. And, in most cases, Netflix does not have exclusive access to the movies and series it’s getting; many titles will also be available on entertainment company services like Max and Hulu.

Still, the return to Netflix is notable.

When Warner Bros. was beginning to build out its streaming service — now known as Max — in 2020, it held back content from Netflix, which was now a direct and formidable competitor. Netflix has 247 million subscribers worldwide, while Max has less than half that.

David Zaslav tossed that policy aside soon after he took over as chief executive of Warner Bros. Discovery in April 2022. Last month, several seasons of “Young Sheldon,” a CBS show that Warner Bros. produces, became available on Netflix. The series quickly found itself on the service’s top 10 most-watched list.

Many Warner Bros. movie titles also began appearing on Netflix recently, including the 2021 blockbuster “Dune,” and D.C. films like “Man of Steel,” “Batman v Superman: Dawn of Justice” and “Wonder Woman.”

For years, Netflix had been trying to get its hands on HBO content. Though HBO had a history of licensing several of its shows — “Sex and the City” to the E! Network, for instance, or “The Sopranos” to A&E — the company steadfastly refused to license to Netflix.

That abruptly changed several months ago when Netflix bought the rights to stream HBO series like “Insecure,” “Ballers,” “Six Feet Under,” “Band of Brothers” and “The Pacific.”

Nearly all of the shows quickly became hits on the streaming service.

“I am comfortable with it, and so far, it seems to be working,” Casey Bloys, HBO’s chairman, said at a news media conference last month, adding that any show that has become available on Netflix has also seen an “uptick” in viewing on the Max streaming service.

Netflix credits its large subscriber base and its recommendation algorithm as the reasons that a 22-year-old show like “Six Feet Under” or a once forgotten basic cable legal drama like “Suits” can become a hit on its service.

“That is a reflection of what we do best,” Mr. Sarandos said this week.

Still, Netflix does not anticipate returning the favor.

Mr. Sarandos said that the company doesn’t have a division for licensing original series nor does he see any reason to set one up.

“I do think that we can add tremendous value when we license content,” he said. “I’m not positive that it’s reciprocal.”
-----------------------------
John Koblin covers the television industry. He is the co-author of “It’s Not TV: The Spectacular Rise, Revolution, and Future of HBO.” More about John Koblin

Nicole Sperling covers Hollywood and the streaming industry. She has been a reporter for more than two decades. More about Nicole Sperling

A version of this article appears in print on Dec. 16, 2023, Section B, Page 1 of the New York edition with the headline: Studios Loosen Reluctance To Send Shows to Netflix.

Studios Are Loosening Their Reluctance to Send Old Shows Back to Netflix - The New York Times (nytimes.com)

[Sr K] In case there's more here, from the WSJ, Netflix Releases Full Viewership Data ...

Sr K — 12/12/2023 9:49:45 PM

In case there's more here, from the WSJ,

Netflix Releases Full Viewership Data for First Time

Report shows hours viewed for over 18,000 titles, including Netflix originals and licensed content

By
Ben Glickman
Updated Dec. 12, 2023 4:02 pm ET

Share

Resize

Listen
(3 min)

Netflix and other streaming services agreed in September to allow writers greater insight on show performance on streaming. PHOTO: DADO RUVIC/REUTERS

Netflix released its first-ever engagement report, revealing the viewership of its top programming through the first six months of the year.

The streaming giant has previously declined to release specific data on viewership of all its programs. The engagement report released Tuesday reports hours viewed for over 18,000 titles, including Netflix originals and licensed content.

Exc.

So the difference seems to be

and licensed content

[Glenn Petersen] After years of resisting, Netflix releases viewing statistics for nearly all tit...

Glenn Petersen — 12/12/2023 5:36:45 PM

After years of resisting, Netflix releases viewing statistics for nearly all titles

PUBLISHED TUE, DEC 12 20232:54 PM EST
UPDATED AN HOUR AGO
Alex Sherman @SHERMAN4949

KEY POINTS

Netflix is increasing transparency for almost all the movies and shows on its service.
Netflix will release “What We Watched” reports every six months.
Co-CEO Ted Sarandos said Netflix’s protectiveness of its data has led to distrust in the creative community.

Rege-Jean Page and Phoebe Dynevor star in Netflix’s “Bridgerton.” / Netflix
---------------------------------
Creators rejoice: Netflix is finally revealing viewership statistics on nearly all of its shows and movies.

Netflix released its first “What We Watched” report Tuesday, which ranks almost all of its shows and movies by amount of hours viewed over the past six months. Netflix will release updated reports every six months, the company said.

Netflix has long had a reputation for lack of transparency about the popularity of its shows and movies. This has led to some distrust in the creator community, co-CEO Ted Sarandos acknowledged during a conference call with reporters Tuesday. Netflix kept its viewership data private as it built its business so it could experiment while not giving away data to potential competitors, Sarandos said.

“This is the actual data that we use to run the business,” Sarandos said. “I’m the co-CEO of a public company, so sharing bad information has consequences.”

Netflix now has almost 250 million global subscribers, far outpacing any other streaming service. That has given Sarandos confidence he can be open with viewership statistics. Hollywood actors and writers both mentioned heightened transparency during their strikes earlier this year as they campaigned to be paid in line with how audiences consumed their content. Netflix has also launched an advertising tier that demands more transparency as brands want information about how frequently certain shows and movies are watched.

“This is probably more information than you need, but I think it creates a better environment for the guilds, for us, for the producers, for creators and for the press,” Sarandos said.

Season one of “The Night Agent,” a Netflix original action thriller, was the service’s most-viewed show during the past six months, garnering 812 million viewing hours. “The Mother,” starring Jennifer Lopez, was the streaming service’s top movie. Between January and June, 55% of Netflix viewing came from original films and series and 45% from licensed titles, Sarandos said.

Netflix revealed viewing information for more than 18,000 titles, accounting for 99% of all its viewing and all titles watched more than 50,000 hours.

Read Netflix’s report here.

Netflix releases viewing stats for nearly all titles for first time (cnbc.com)

[Glenn Petersen] Disney+ adding Hulu integration as streaming bundles accelerate PUBLISHED WED, ...

Glenn Petersen — 12/6/2023 2:49:28 PM

Disney+ adding Hulu integration as streaming bundles accelerate

PUBLISHED WED, DEC 6 20231:28 PM EST
Drew Richardson @JOHN6ANDREW
CNBC.com

KEY POINTS

Disney is beginning to roll out a Hulu integration on its Disney+ streaming platform.
The company had previously offered a bundle of Disney+ and Hulu, but Wednesday’s release is part of a push to integrate the two platforms.
It comes after a slew of other streaming bundles have made their way onto the market.

The Disney+ website on a laptop computer in the Brooklyn borough of New York, US, on Monday, July 18, 2022.
Gabby Jones | Bloomberg | Getty Images
--------------------------------

Disney is beginning to roll out a Hulu integration on its Disney+ streaming platform in a bid to bundle subscribers. The full launch is expected March 2024, Disney said Wednesday.

The company had previously offered a bundle of Disney+ and Hulu, but Wednesday’s release is part of a push to integrate the two platforms. Disney last month agreed to buy the remaining one-third stake in Hulu that was owned by Comcast’s NBCUniversal.

“It’s an unbelievable value in terms of the price point for the Bundle,” Joe Earley, president of direct-to-consumer for Disney, said in a statement. “Beyond unlocking that experience for our existing Bundle subscribers, our hope is to inspire Disney+ and Hulu standalone subscribers to upgrade to the Bundle as well, once they see everything that can be accessed.”

The two streaming platforms differ in their content offerings, with Disney+ geared toward family-oriented content and Hulu oriented more toward adult dramas and unscripted TV. The gradual launch of the integration will give parents a chance to adjust parental controls before the full release in March, Disney said.

The beginning of the integration comes after a slew of other streaming bundles have made their way onto the market.

Paramount and Apple were reported last week to be mulling a bundle of the company’s streaming platforms. Streaming leader Netflix and Warner Bros. Discovery’s Max have also partnered with Verizon, which will offer a bundle of the two platforms.

Disney first announced its bundle of Disney+, ESPN+ and Hulu in 2019.

Disclosure: Comcast owns NBCUniversal, the parent company of CNBC.

Disney+ adding Hulu integration as streaming bundles accelerate (cnbc.com)

[Glenn Petersen] Media stocks jump after report says Apple, Paramount are discussing streaming bu...

Glenn Petersen — 12/2/2023 5:32:51 AM

Media stocks jump after report says Apple, Paramount are discussing streaming bundle

PUBLISHED FRI, DEC 1 20232:18 PM EST
UPDATED MOMENTS AGO
Drew Richardson @JOHN6ANDREW

KEY POINTS

Warner Bros. Discovery and Paramount Global shares jumped Friday.
Apple and Paramount are discussing bundling their streaming services, The Wall Street Journal reported.
Warner Bros. Discovery has been open to bundling its Max service with rivals.

Media stocks jumped Friday following a Wall Street Journal report that Apple and Paramount Global are in early-stage talks to offer a bundle of the two company's streaming platforms.

The companies have talked about bundling Apple TV+ and Paramount+ in an offering that would cost less than subscribing to the two separately, The Wall Street Journal reported Friday.

Shares of Paramount closed up nearly 10% Friday, while Warner Bros. Discovery, which owns streaming service Max, closed up more than 8%. Paramount is down about 6% on the year, while Warner Bros. Discovery, which reported a streaming profit in the third quarter, is up about 19%.

Apple and Paramount did not immediately respond to CNBC's request for comment.

Paramount+ and Apple TV+ could be an ideal match for a bundle given their differing content strategies. Apple TV+ is known to offer a robust library of exclusive and prestige content, while Paramount+ boasts a larger back-catalog of recognizable TV shows and movies.

The report comes as talk heats up in the media industry about bundling rival streaming services together.

Streaming leader Netflix and Max entered into an agreement with Verizon to bundle the two services at a reported $10 a month, less than the $17 the combination would normally cost, the Journal previously reported. Liberty Media Chairman and Warner Bros. Discovery board member John Malone has often discussed what streaming bundles could look like. Disney currently offers a bundle of Hulu, Disney+ and ESPN+.

The trend has extended beyond streaming. Following a dispute earlier this year, Disney and Charter entered into an agreement where some Spectrum customers would gain access to the ad-supported Disney+ plan, a move some experts predict could become more common.

An Apple partnership could be a strong opportunity to help Paramount pivot in the rapidly changing media environment. Paramount's controlling shareholder Shari Redstone has been open to making big deals, CNBC has reported, as the company suffers from declining revenue and streaming losses.

Apple, Paramount streaming bundle report boosts media stocks (cnbc.com)

[Glenn Petersen] NFL’s Black Friday game is the latest warning sign for traditional TV PUBLISHED...

Glenn Petersen — 11/27/2023 5:06:17 AM

NFL’s Black Friday game is the latest warning sign for traditional TV

PUBLISHED FRI, NOV 24 20237:30 AM EST
UPDATED FRI, NOV 24 20238:48 AM EST
Drew Richardson @JOHN6ANDREW
CNBC.com

KEY POINTS

The NFL’s first-ever Black Friday game will be on Amazon’s Prime Video rather than traditional TV. The Miami Dolphins and the New York Jets play at 3 p.m. ET.
The streaming broadcast will feature nods to Amazon’s Black Friday deals and an exclusive performance by Garth Brooks.
Sports fans have so far remained loyal to linear TV, but even cable stalwart ESPN is working on offering all its programming to streaming audiences.

The Miami Dolphins and the New York Jets face off in the National Football League’s first ever Black Friday game this week — but it’s not going to be the usual broadcast or cable offering. The game will stream exclusively on Amazon’s Prime Video.

The NFL’s decision to start a new Thanksgiving tradition with a streaming platform instead of a broadcast or cable channel is yet another indicator of trouble for linear, or traditional, TV, which has suffered from slumping ad revenue and customers cutting the cable cord.

The Black Friday matchup is an expansion of Amazon’s “Thursday Night Football” deal with the NFL, which has helped drive a 6% jump in NFL viewership since last year. And with the game streaming the day after Thanksgiving, Amazon could capture some of the holiday viewership, which broke records last year.

“I don’t make predictions on ratings,” Brian Rolapp, the NFL’s chief media and business officer, told CNBC’s Julia Boorstin this week. “But I think they’ll be good.” The Black Friday game kicks off at 3 p.m. ET.

Thanksgiving Day is already a football tradition, with the Detroit Lions and Dallas Cowboys headlining matchups through the years. Fox, CBS and NBC all will broadcast games on the holiday.

The NFL and Amazon hope the Black Friday game will become an annual tradition, executives said Tuesday at a media conference. In a push to drive Amazon e-commerce sales, the streaming broadcast will feature QR codes at the bottom of the screen that will link to some of Amazon’s Black Friday deals. Country music icon Garth Brooks will take the stage in an exclusive postgame concert.

Amazon’s 11-year “Thursday Night Football” deal and YouTube TV’s “NFL Sunday Ticket” package are just a few examples of live sports programming making the jump from cable to streaming. In October, Warner Bros. Discovery rolled out its Bleacher Report Sports Add-On Tier for the company’s flagship streaming platform Max, offering subscribers hundreds of live sports events.

ESPN’s pivot
ESPN has long ruled sports programming on traditional TV. But that could all change when the cable stalwart brings all its programming to streaming, in a planned direct-to-consumer release.

Yet even as the streaming trend picks up, sports programming is helping keep cable and traditional TV alive, for the moment.

Earlier this year, data firm Nielsen reported that traditional TV made up less than half of overall TV usage in July. But linear popped back in August and September. The jump was largely driven by the return of college and professional football, Nielsen said in a report released last month. ESPN also snagged the top 11 telecasts for the month of September, 10 of which were football-related.

ESPN has so far weathered the storm of the TV decline, capturing a “modest increase” in ad revenue in parent company Disney’s most recent quarterly report, even as overall TV revenue for the company fell.

Sports programming is holding the linear television industry together, according to Macquarie analyst Tim Nollen. And ESPN is a huge part of that.

But ESPN’s dominance in sports programming could pose a potentially fatal threat to linear TV. When ESPN unleashes its direct-to-consumer service, which would offer much more than its current ESPN+ app,it could be the push sports fans are waiting for to abandon the bundle altogether.

“When ESPN puts their DTC product online, depending on the pricing, it may create a critical mass of live sports outside of the bundle to accelerate cord cutting,” said UBS media and telecom analyst John Hodulik. “That’s what I think people are waiting for.”

Disney CEO Bob Iger told CNBC’s Boorstin on Nov. 8 that Disney will launch a direct-to-consumer ESPN flagship no later than 2025, putting the sports programming world on notice.

But not everyone is convinced that ESPN’s foray into streaming will do too much damage too quickly.

“When you look at the economics that ESPN gets from the pay TV bundle, they cannot just step away and pirouette to DTC and everything stays the same,” said sports media consultant and former Fox Sports executive Patrick Crakes. “There’s no DTC streaming product that scales like pay TV, even today, with pay TV in decline.”

The future looks more like a reimagined pay TV bundle, Crakes said, with streaming products included in the traditional economics of bundle. It’s reminiscent of the recent Disney-Charter agreement, in which Disney+ and ESPN+ are now included in some Spectrum cable packages.

But challenges could lie ahead for media companies that have not yet made the jump to bring their programming to the streaming world.

How vulnerable is Fox?

A FOX Sports TV camera operator during the week 5 NFL game between the Atlanta Falcons and the Carolina Panthers at Mercedes-Benz Stadium on October 11, 2020 in Atlanta, Georgia.
David J. Griffin | Icon Sportswire | Getty Images
-----------------------------------------

The biggest loser of the slowing ad market will be Fox, Macquarie’s Nollen said. (Macquarie Group and its affiliates own a net long of 0.5% or more of the equity securities of Fox Corp.)

Other media companies, including NBCUniversal through its Peacock service, have pivoted in large part to streaming ventures, where ad revenue through those platforms can partially offset the slump in linear. The problem with Fox? It doesn’t have a streaming platform beyond its free, ad-supported service Tubi.

“Fox made the decision to double down on the bundle a few years ago and then they’ve done surprisingly well for it,” said Nollen. “But if cord-cutting accelerates and everyone picks up streaming sports elsewhere, I just don’t understand what Fox’s plan is.”

When asked for comment, Fox referenced a quote made by Fox Corp. CFO Steve Tomsic at the Bank of America media conference in September.

“I can see a world where the ESPNs of this world do go DTC, but I’m not sure how impactful that will be for us or the entire industry,” he said. “If there is the emergence of some sort of sports bundle that is across different network providers, then the first port of call is going to be Fox in terms of people wanting to aggregate our content with their service just given how strong our sports offering is.”

Disclosure: Comcast is the parent company of NBCUniversal and CNBC.

NFL Black Friday game Jets vs Dolphins on Amazon Prime, not on TV (cnbc.com)

[Glenn Petersen] Disney to buy remaining Hulu stake from Comcast in widely expected move PUBLISH...

Glenn Petersen — 11/2/2023 4:25:21 AM

Disney to buy remaining Hulu stake from Comcast in widely expected move

PUBLISHED WED, NOV 1 20234:32 PM EDT
UPDATED WED, NOV 1 20237:57 PM EDT
Mike Calia @NEWSMC615
CNBC.com

KEY POINTS

Disney will now own all of Hulu after agreeing to purchase the remaining one-third stake from Comcast’s NBCUniversal.
The long-expected transaction sprang from the aftermath of Disney’s purchase of Fox’s entertainment assets in 2019.
Disney sells Hulu as part of a streaming bundle with Disney+ and ESPN+.

Disney said Wednesday that it had agreed to buy Comcast’s one-third stake in streaming service Hulu, a long-expected outcome.

Disney said it expects to pay Comcast’s NBCUniversal about $8.61 billion by Dec. 1, reflecting the guaranteed minimum value of $27.5 billion for the streaming service the two sides agreed upon in 2019. That deal sprang from Disney’s purchase of Fox’s entertainment assets, which gave it two-thirds of Hulu.

Disney could pay more based on Hulu’s equity value as of Sept. 30. The company said the appraisal process should wrap up some time next year.

“We look forward to the appraisal process and the determination of Hulu’s fair market value which we expect will reflect the extraordinary value of the business,” Comcast said in a statement.

Originally, Disney and Comcast had set a deadline to resolve Hulu’s ownership by January. In September, the rival media giants moved up that deadline, effectively acknowledging the outcome announced Wednesday.

Disney already sells Hulu as part of a streaming bundle with its Disney+ and ESPN+ products.

Read the full release from Disney.

Disclosure: Comcast’s NBCUniversal is the parent company of CNBC.

Disney to buy remaining Hulu stake from Comcast (cnbc.com)

[Glenn Petersen] Netflix stock surges as profit beats expectations, ad-tier subscriptions rise ...

Glenn Petersen — 10/18/2023 7:08:29 PM

Netflix stock surges as profit beats expectations, ad-tier subscriptions rise

PUBLISHED WED, OCT 18 202312:00 PM EDT
UPDATED 33 MIN AGO
Sarah Whitten @SARAHWHIT10
CNBC.com

KEY POINTS

Netflix shares popped more than 12% after it posted earnings.
The company reported a boost in subscriber growth driven by a password-sharing crackdown efforts and interest in its new ad-supported tier.
Netflix also raised prices for its basic and premium plans in the U.S.

LOS ANGELES — Netflix shares surged after the closing bell Wednesday as the company reported a boost in subscriber growth driven by a password-sharing crackdown efforts and interest in its new ad-supported tier.

The streaming giant added 8.76 million global subscribers during the quarter, higher than 5.49 million Wall Street had expected, according to estimates from Street Account. It’s the biggest quarterly net add total for the company since it added 10.1 million subscribers in the second quarter of 2020 – when Covid restrictions kept people home.

Here are the results:

Earnings: $3.73 vs $3.49 per share expected, according to LSEG, formerly known as Refinitiv
Revenue: $8.54 billion vs $8.54 billion expected, according to LSEG
Total memberships expected: 247.15 million vs. 243.88 million expected, according to Street Account

Netflix said that its ad plan membership grew nearly 70% quarter-over-quarter, although it did not disclose what percentage of its base is subscribed to this tier.

The results were the latest confirmation that Netflix rules the streaming world, as its would-be rivals scratch and claw to become profitable.

The company’s dominance shows in its pricing power. Netflix said it is keeping its ad tier pricing at at $6.99 a month in the U.S. while its basic and premium services will see a price hike starting Wednesday. Netflix’s basic plan will now cost $11.99 (up from $9.99) and premium will be $22.99 a month (up from $19.99). Netflix’s standard plan will remain at $15.49 a month.

The price increases come as the company seeks to improve its profitability and grapple with higher production costs.

As part of its new deal with Hollywood’s writers, Netflix, alongside other members of the Alliance of Motion Picture and Television Producers, have agreed to higher wages and monetary benefits based on streaming popularity. The AMPTP has yet to finish negotiations with striking actors, but expectations are that costs for creating content will rise when a new contract is finalized.

“We spent hours and hours with SAG-AFTRA over the last few weeks and we were actually very optimistic that we were making progress,” said co-CEO Ted Sarandos during the company’s taped earnings comments Wednesday. “But then at the very end of our last session together the guild presented this new demand on top of everything of a per subscriber levy, unrelated to viewing or success, and this really broke our momentum unfortunately.”

Sarandos noted that Netflix and other members of the AMPTP remain committed to reaching an agreement with actors. It is unclear when negotiations will continue. Talks have been stalled for about a week.

Representatives from SAG-AFTRA did not immediately respond to CNBC’s request for comment.

The company forecast that revenue will jump 11% in the fourth quarter, reaching $8.69 billion, below Wall Street expectations of $8.77 billion. Netflix said it expects net subscriber adds will be similar to the third quarter.

It warned that the strength of the U.S. dollar in recent months will result in a roughly $200 million drag on fourth-quarter revenue.

As for Netflix’s profitability, the streamer now expects its full-year 2023 operating margin will be around 20%, the high end of its previous forecast range of 18% to 20%. It also said full-year 2024 should see operating margins of 22% to 23%.

The company also addressed shareholder concern about its executive compensation model, telling investors that it would make “substantial changes” in 2024 to a more conventional model. Compensation will still be based on performance.

Sarandos and former co-CEO Reed Hastings each took home more than $50 million in 2022. Hastings took most of his earnings in stock options, while Sarandos elected to have a $20 million base salary and the rest in stock.

After Greg Peters was named co-CEO and Hastings stepped down, the company set a salary cap of $3 million for executives. However, they are still entitle to an annual target bonus and additional stock rewards.

Disclosure: Comcast is the parent company of NBCUniversal and CNBC. NBCUniversal is a member of the AMPTP.

Netflix (NFLX) earnings Q3 2023 (cnbc.com)

[Glenn Petersen] Netflix Deepens Videogame Push, Ripping Page From Its Hollywood Script Streamer...

Glenn Petersen — 10/16/2023 1:09:44 PM

Netflix Deepens Videogame Push, Ripping Page From Its Hollywood Script

Streamer to put greater emphasis on developing games based on its popular programming, including ‘Squid Game,’ ‘Wednesday,’ ‘Black Mirror’

By Jessica Toonkel, Sarah E. Needleman and Sarah Krouse
Wall Street Journal
Oct. 16, 2023 5:30 am ET

Last year Netflix put up a billboard on Los Angeles’s Sunset Boulevard to poke fun at itself. It read: “Wait, Netflix Has Games?”

The company is working hard to clear up any confusion. It is deepening its push into the videogame industry, taking advantage of the studios it has acquired in the past two years to create more titles based on popular Netflix movies and TV shows.

Though Netflix has up to now focused on mobile games—which appeal to casual gamers and can be downloaded on a smartphone or tablet—it is taking steps to expand into higher-end games that can be streamed from TVs or PCs. That approach would put it up against giants such as Sony and Microsoft, which just closed its $75 billion acquisition of Activision Blizzard, and would bring some significant technical challenges.

Over the next several months, Netflix subscribers will be able to play games on their mobile devices based on hits such as Korean thriller “Squid Game” and supernatural comedy “Wednesday,” according to people familiar with the situation. Similarly, Netflix is discussing games based on “Extraction,” its Sherlock Holmes series and its “Black Mirror” series, the people said.

Even as Netflix creates homegrown titles, it will continue to license the well-known games, from “Bloons TD 6” to “Classic Solitaire,” that currently make up its catalog. It has discussed plans to release a game within the popular action-adventure series “Grand Theft Auto” from \ Take-Two Interactive Software through a licensing deal, some of the people said.

Netflix is creating a game based on supernatural comedy ‘Wednesday,’ but will continue to license other games such as ‘Classic Solitaire.’ PHOTO: NETFLIX
--------------------------------------------

The strategy rips a page from the streaming giant’s playbook in Hollywood, where it built an audience based on reruns from other studios—such as “Friends,” “The Office” and “Breaking Bad”—while gearing up machinery to churn out originals like “House of Cards” and “Stranger Things.”

Netflix faced scant competition in the early days of its ascent in streaming video. Gaming is different. It is a decades-old industry dominated by some of the world’s biggest tech companies, with global sales expected to reach $187.7 billion this year, according to research firm Newzoo.

Netflix doesn’t generate revenue from its games. Subscribers can download them from the app at no extra charge. For now, games are part of a strategy to keep fans coming back to the streaming service even when their favorite shows are between seasons, helping to retain subscribers and attract new ones. Netflix, which reports quarterly results on Wednesday, added 5.9 million subscribers in the June quarter.

Netflix games have been downloaded 70.5 million times globally as of Sept. 20, up from 30.4 million last September, according to app tracker Apptopia. That is a fraction of the hundreds of millions of downloads for game companies such as Roblox and Activision, the publisher of the megahit “Candy Crush Saga.” Fewer than 1% of Netflix’s 238 million subscribers are playing Netflix’s games daily, Apptopia estimates.

Netflix declined to comment.

Gaming is a draw for media companies in adjacent industries because of how much time people spend playing. The New York Times has had success turning many of its subscribers into players of its casual games like “Wordle” and “Spelling Bee.” Netflix has to make a similar case with its own customers.

“Would a non-gamer play a Netflix game?” said Judah Silver, an agent with United Talent Agency who works with game developers. “That is the big question.”

It is also unlikely that videogame enthusiasts would subscribe to Netflix just to access its games. Many Netflix games can be purchased or downloaded for free through other platforms, including “Exploding Kittens” and “Teenage Mutant Ninja Turtles: Shredder’s Revenge.”

Some of the mobile games Netflix offers, such as ‘Exploding Kittens,’ are available elsewhere. PHOTO: NETFLIX
---------------------------------

Luis Ruvalcaba, a 38-year-old gamer and insurance professional who lives near Indianapolis, said he doesn’t subscribe to Netflix and wouldn’t sign up just to access its games. “I don’t see myself ever getting a Netflix subscription for gaming,” he said, adding that he already subscribes to Xbox Game Pass and PlayStation Plus.

Mobile games have their drawbacks. Netflix has found that about half of the subscribers who press the “Get Game” button on the app actually go on to play it, according to a person familiar with its game operations. That might be because in some cases, subscribers have to go to Apple’s App Store to finish downloading games. Also, the games take time to download and eat up memory.

Billion-dollar bet

Netflix will have to step up its investments to make console-quality games, said Jefferies analyst Andrew Uerkwitz, who estimates the company has spent about $1 billion on games so far.

Netflix is looking to hire dozens of game executives and has posted a job for a director to oversee its first big-budget game. Such “triple-A” games can cost hundreds of millions of dollars to make. The recruits will join a team of around 400 people.

At an internal Netflix leadership meeting in 2022, an analyst from investor Capital Group, which holds a large stake in the streamer, questioned the value of the game push and expressed concerns it was taking resources away from programming, according to people familiar with the situation.

Inside Netflix, backers of its game foray point to a heightened urgency to attract and retain customers, especially since the company last year saw its first decline in subscribers in over a decade. Offering games can help the company justify the cost of a subscription as it raises prices, which it plans to do again in coming months, The Wall Street Journal reported.

“Netflix needs to get this right if they are going to get people to spend more time with them,” said Brandon Ross, an analyst with LightShed Partners.

Netflix executives decided to get into games in 2020 during the height of the Covid-19 pandemic. At the time, Netflix subscriptions were growing rapidly as people were stuck at home, but executives were aware that to keep its edge, Netflix had to continue to offer more kinds of content.

Top executives debated a few ideas for keeping subscribers engaged—including creating educational classes where celebrities could teach subjects such as cooking or the art of negotiating—but settled on games, said people familiar with the discussions.

Netflix is developing a game based on its hit Korean thriller, ‘Squid Game,’ that will be available to play on mobile devices. PHOTO: NETFLIX
----------------------------------

Netflix hired Mike Verdu, who previously oversaw game studios at Meta and 0 Electronic Arts, to lead the initiative. Verdu would tell colleagues that there is a game out there for everyone, even for those who don’t consider themselves gamers.

In September 2021, the company bought Night School Studio, which created Netflix’s first internally developed game, “Oxenfree II,” a sequel to Night School’s earlier “Oxenfree” game in which a young girl finds herself with friends on a haunted island. The following year, the company acquired Boss Fight Entertainment, which makes action and storytelling games, and Next Games, which had made games based on properties such as Netflix’s “Stranger Things” and AMC Networks’ “The Walking Dead.”

Netflix’s games team is working closely with the teams involved in releasing programming to coordinate timing, according to people familiar with the situation. Five of Netflix’s most downloaded games are based on its own shows and movies, according to market-intelligence firm Data.ai.

Adam Wood, a 48-year-old avid gamer, said he enjoys Netflix’s games and lately has been consumed with “Into the Breach,” in which players try to save the Earth from gigantic aliens. Wood said he probably wouldn’t subscribe to Netflix just for its games. They are “like an awesome bonus,” he said. “It is definitely a nice-to-have.”

Phone controller

Netflix is already starting to move beyond the phone with a new app, “Netflix Game Controller,” that can turn your phone into a controller so that games can be played on a TV or computer. The company is testing the app in Canada and the U.K.

Some Netflix executives were concerned that this approach might limit the kinds of games the company can offer: Action games would likely require a more traditional game controller, with protruding buttons. Netflix decided to opt for the phone approach, despite the limitations.

Moving into streaming games—also known as cloud gaming—would make sense for Netflix, given the limitations of downloadable mobile games. But cloud-based gaming is expensive and difficult to execute.

Unlike movies and music, games are interactive, with highly detailed images created in real-time based on players’ actions. Google struggled to succeed with its cloud-gaming subscription service Stadia, which launched in 2019. It closed that business earlier this year.

Google’s challenges have come up in internal meetings at Netflix as some employees have asked why Netflix is looking to go deeper into a market where such a titan has failed, said people familiar with the situation.

Netflix co-CEO Greg Peters has reiterated the company’s commitment to games. “We know we’re not going away…because someday we’re going to be everywhere with games across all devices that we serve,” he told investors in September.

Write to Jessica Toonkel at jessica.toonkel@wsj.com, Sarah E. Needleman at Sarah.Needleman@wsj.com and Sarah Krouse at sarah.krouse@wsj.com

Netflix Deepens Videogame Push, Ripping Page From Its Hollywood Script - WSJ

[Glenn Petersen] Comcast, Disney hire investment banks to value Hulu as sale process makes progre...

Glenn Petersen — 10/12/2023 2:58:49 PM

Comcast, Disney hire investment banks to value Hulu as sale process makes progress

PUBLISHED THU, OCT 12 20232:28 PM EDT
Alex Sherman @SHERMAN4949
CNBC.com
KEY POINTS

Comcast and Disney have hired investment banks to appraise Hulu.
On Nov. 1, Comcast and Disney can both trigger an option that will kick off a sale process where Disney will acquire Comcast’s minority stake in Hulu.
Hulu has a minimum valuation of $27.5 billion, as set in 2019; Comcast CEO Brian Roberts said last month he believes Hulu is ‘way more valuable today.’

Comcast and Disney have hired investment banks to value Hulu, the next step in what’s been a nearly five-year process to put the streaming service under one owner.

Comcast, which owns one-third of Hulu, has hired Morgan Stanley, and Disney, which owns the other two-thirds, has hired JPMorgan Chase. Each bank is tasked with providing a fair value for Hulu — a condition of an agreement set up in 2019 that allows either Disney or Comcast to trigger an option forcing Disney to buy Comcast’s 33% stake.

Spokespeople for Comcast, Disney, Morgan Stanley and JPMorgan declined to comment.

Nearly five years ago, Comcast and Disney set up an unusual agreement after Disney acquired the majority of Fox’s assets in a $71 billion deal, including Fox’s minority stake in Hulu. That deal gave Disney majority control over Hulu, because Disney already owned one-third of the streaming service.

Comcast didn’t want to sell its stake in Hulu to Disney right away because it believed the value of streaming video would increase between 2019 and 2024. Still, Comcast executives also understood the company would no longer have operational control over the future of the company. Consequently, Disney and Comcast worked out a deal where Comcast could participate in the assumed appreciation of the business while also setting a time where Disney could eventually unify ownership and integrate Hulu into its long-term streaming strategy.

Initially, the companies set an option strike date of January 2024. Last month, the two companies agreed to move up the deadline at which Hulu will be valued from January 2024 to Sept. 30. That deadline represents the final date at which Hulu’s valuation will be assessed by both Morgan Stanley and JPMorgan Chase.

On Nov. 1, Comcast can force Disney to acquire its 33% stake in Hulu and/or Disney can trigger its option to acquire the stake from Comcast. That’s expected to happen, Comcast CEO Brian Roberts said at the Goldman Sachs’ Communacopia conference last month.

“We are excited to get this resolved,” Roberts said at the conference. “The company is way more valuable today than it was [in 2019]. And we are looking forward to seeing how that process [plays out].”

Once the option is triggered, Morgan Stanley and JPMorgan will begin their assessments of Hulu’s value. If the two banks’ final valuations are within 10% of each other, the average of the two banks’ determinations will be the price at which Hulu is valued. Disney would then pay Comcast 33% of that value for its stake. The 2019 deal set a floor valuation for Hulu at $27.5 billion.

Rafael Henrique | SOPA Images | LightRocket | Getty Images
----------------------------------

If the two banks’ assessments aren’t within a 10% range of each other, then Disney and Comcast would agree to hire a third investment bank to make another valuation conclusion. To set the sale price, that third valuation would then be averaged with the previous assessment that’s closest to it.

The valuation calculation process isn’t straightforward. Hulu has 48.3 million subscribers. A pure-play streaming service at its scale has never been sold before. Roberts argued during the Goldman conference that a fair appraisal would also have to include synergy value. Disney’s ownership of Hulu helps prop up Disney+ and ESPN+ subscribers because Disney bundles all three streaming services together.

There is no timetable for how long the valuation process will take or when a deal will get done, but Roberts acknowledged Disney and Comcast both want a resolution sooner rather than later, which is why they agreed to move the option strike date forward several months.

“It will take a little time for this to play out,” Roberts said. “But both companies wanted to get it behind us. So we pulled the date forward.”

Roberts said at the conference Comcast plans to return proceeds from a sale to shareholders.

Disclosure: Comcast is the parent company of NBCUniversal, which owns CNBC.

Comcast, Disney hire Morgan Stanley, JPMorgan to value Hulu (cnbc.com)

[Glenn Petersen] Netflix Prepares to Send Its Final Red Envelope New York Times September 23, 20...

Glenn Petersen — 9/24/2023 6:24:06 AM

Netflix Prepares to Send Its Final Red Envelope

New York Times
September 23, 2023

In a nondescript office park minutes from Disneyland sits a nondescript warehouse. Inside this nameless, faceless building, an era is ending.

The building is a Netflix DVD distribution plant. Once a bustling ecosystem that processed 1.2 million DVDs a week, employed 50 people and generated millions of dollars in revenue, it now has just six employees left to sift through the metallic discs. And even that will cease on Friday, when Netflix officially shuts the door on its origin story and stops mailing out its trademark red envelopes.

“It’s sad when you get to the end, because it’s been a big part of all of our lives for so long,” Hank Breeggemann, the general manager of Netflix’s DVD division, said in an interview. “But everything runs its cycle. We had a great 25-year run and changed the entertainment industry, the way people viewed movies at home.”

When Netflix began mailing DVDs in 1998 — the first movie shipped was “Beetlejuice” — no one in Hollywood expected the company to eventually upend the entire entertainment industry. It started as a brainstorm between Reed Hastings and Marc Randolph, successful businessmen looking to reinvent the DVD rental business. No due dates, no late fees, no monthly rental limits.

It did much more than that. The DVD business destroyed competitors like Blockbuster and altered the viewing habits of the public. Once Netflix began its streaming business and then started producing original content, it transformed the entire entertainment industry. So much so that the economics of streaming — which actors and writers argue are worse for them — is at the heart of the strikes that have brought Hollywood to a standstill.

Even before the strikes, streaming had rendered DVDs obsolete, at least from a business perspective. At its height, Netflix was the Postal Service’s fifth-largest customer, operating 58 shipping facilities and 128 shuttle locations that allowed Netflix to serve 98.5 percent of its customer base with one-day delivery. Today, there are five such facilities — the others are in Fremont, Calif.; Trenton, N.J.; Dallas; and Duluth, Ga. — and DVD revenue totaled $60 million for the first six months of 2023. In comparison, Netflix’s streaming revenue for the same period reached $6.5 billion.

Despite the reduced staff, this operation still receives and sends some 50,000 discs a week with titles ranging from the popular (“Avatar: The Way of Water” and “The Fabelmans”) to the obscure (the 1998 Catherine Deneuve crime thriller, “Place Vendôme”). Each of the employees at the Anaheim facility has been with the company for more than a decade, some as long as 18 years. (One hundred people at Netflix still work on the DVD side of the business, though most will soon be leaving the company.)

A few of them started straight out of high school, like Edgar Ramos, and they can run Netflix’s proprietary auto-sorting machines and its Automated Rental Return Machine (ARRM), which processes 3,500 DVDs an hour, with the precision of Swiss watch engineers.

“I am sad,” Mr. Ramos said while sorting envelopes into their ZIP code bins. “When the day comes, I’m sure we will all be crying. Wish we could do streaming over here, but it is what it is.”

Mike Calabro, Netflix’s senior operations manager, has been with the company for more than 13 years. He said the unexpected moments of frivolity were a big part of why he had stayed, like the drawings made by renters on the envelopes or the Cheetos dust and coffee stains that often mark the returns, evidence of a product that has been well integrated into customers’ lives.

But when asked if he had ever met some of the most active customers in person, Mr. Calabro quickly replied, “No!” In fact, the anonymous look of the facility, which provides a stark contrast to the giant Netflix logos that adorn the company’s other real estate, is intentional. Visitors, it is clear, are not welcome.

“If we put Netflix out on the door, we would have people showing up with their discs, saying: ‘Hey, I’d like to return this. Can you give me my next disc?’” Mr. Calabro said.

That was the usual transaction with a video rental retailer, but Netflix wanted to make sure customers knew this was something different.

“It was a decision we made very early on,” Mr. Breeggemann said. “If they knew where we were, we’d run into that problem. And then it wouldn’t be a good customer experience. We wanted to mail both ways.”

Netflix’s DVD operations still serve around one million customers, many of them very loyal.

Bean Porter, 35, lives in St. Charles, Ill., and has subscribed to Netflix’s DVD and streaming services since 2015. She said she was “devastated” that there would be no more DVDs. Ms. Porter was able to use her subscription to watch DVDs of shows like “Yellowstone” and “The Handmaid’s Tale” — episodic television made for other streaming services that would have required her to buy additional subscriptions.

She and her husband also watch three or four movies a week and find Netflix’s DVD library to be deeper and more diverse than any other subscription service. She often hosts cookouts in her backyard and invites neighbors to watch movies on an outdoor screen. That is easier to do with a DVD, she said, than with streaming because of internet connectivity issues. And she has become involved with the DVD operations’ social media channel, posting videos, interacting with other customers and chatting directly with the social media managers working for the company.

“I’m pretty angry,” she said. “I’m just going to have to do streaming, and I feel like what they’re doing is forcing me into having less options.”

To ease the backlash, Netflix is allowing its DVD customers to hold on to their final rentals. Ms. Porter intends to keep “The Breakfast Club,” “Goonies” and “The Sound of Music.” As for the last DVD she intends to watch: She’s leaving that up to fate.

“I have 45 movies left in my queue, and where I land is where I’ll land, as there are too many good options to pick from,” she said.

The employees have a more sanguine attitude. Lorraine Segura started at Netflix in 2008 and used to rip open envelopes — 650 envelopes an hour. When automation came, she was one of the few employees who traveled to the facility in Fremont to learn how to run the machines and pass that training on to others. Now she runs the floor with Mr. Calabro as a senior operations manager.

“I’ve learned a lot here: how to fix machines, how to make goals and hit targets,” she said before leading her team in a round of ergonomic exercises to prevent repetitive stress injuries. “I feel empowered now to get out in the world and do something new.”

The post Netflix Prepares to Send Its Final Red Envelope appeared first on New York Times.

Netflix Prepares to Send Its Final Red Envelope – DNyuz

[Glenn Petersen] Amazon Prime Video Content to Include Ads Staring Early 2024 By Jake Rudnitsky ...

Glenn Petersen — 9/22/2023 7:35:18 AM

Amazon Prime Video Content to Include Ads Staring Early 2024

By Jake Rudnitsky
Bloomberg

Amazon.com Inc .said it will introduce limited advertisements to its Prime Video streaming service in the US, UK, Germany and Canada early next year as it seeks to increase investment in content.

Prime will also include an ad-free option for an additional $2.99 per month in the US, while pricing in other countries will be published later, the company said in a statementon Friday.

The introduction of advertising comes as the world’s largest online retailer is engaged in a companywide cost-cutting program. Competition among streaming providers has also intensified, leading to price hikes as well as the introduction of free or ad-supported tiers to win or keep customers.

Ads will appear in other markets, including France, Italy, Spain, Mexico, and Australia, later in the year, Amazon said. Amazon Prime costs $139 annually or $15 a month.

Amazon Prime Video Content to Include Ads Staring Early 2024 - Bloomberg (archive.ph)

[Glenn Petersen] Hollywood is paying a steep price for never really figuring out the streaming mo...

Glenn Petersen — 9/17/2023 8:16:18 PM

Hollywood is paying a steep price for never really figuring out the streaming model

PUBLISHED SUN, SEP 17 20238:00 AM EDT
Lillian Rizzo @LILLIANNNN
Sarah Whitten @SARAHWHIT10
CNBC.com

KEY POINTS

In the last decade the media industry model has been upended by the consumer shift to streaming, and legacy media giants are in the midst of figuring out how to make it work.
The recent dispute between cable company Charter Communications and Disney highlights how companies are clinging to that old model.
This issue is at the forefront of the writers and actors strikes, which have halted Hollywood productions, putting media companies at a further disadvantage.

People carry signs as SAG-AFTRA members walk the picket line in solidarity with striking WGA workers outside Netflix offices in Los Angeles, July 11, 2023. / Mario Tama | Getty Images News | Getty Images
----------------------------------------
Picket signs have lined the gates of Hollywood’s studios for nearly five months, as the industry’s writers and actors rally for AI protections, better wages and a cut of streaming profits.

The problem is streaming isn’t yet profitable for many studios.

Sparked by the creation of Netflix’s direct-to-consumer platform in 2007, streaming has upended the economics of the media industry. Yet, it’s still unclear whether it’s a sustainable business model for the future.

“Without sounding hyperbolic, the change in the economics of the North American media industry in the last five years has been breathtaking,” said Steven Schiffman, an adjunct professor at Georgetown University.

Legacy media companies like Disney, Warner Bros. Discovery, Paramount and NBCUniversal scrambled to compete with Netflix when it began creating original content in 2013 and slowly pulled market share over the next five years. The studios padded their platforms with massive content libraries and the promise of new original shows and films for consumers.

However, the subscription-based streaming model proves vastly different than the ad-revenue-fueled traditional TV bundle. High licensing costs and low revenues per subscriber quickly caught up with studios, which had previously placated shareholders with massive subscription growth.

Netflix was the first streamer to report a loss in subscribers in 2022, sending its stock and other media companies spiraling. Disney has followed suit. Since then, both have set subscription numbers aside in favor of advertising, a password-sharing crackdown and raising prices.

Media companies also have begun slashing content spending budgets. Disney CEO Bob Iger has promised the company will focus on quality over quantity when it comes to both its streaming and theatrical businesses, pointing to Marvel as an example of too much content.

Yet streaming remains the focus for all of these companies as consumers rapidly cut the cord and opt for streaming. To make up for the losses, media organizations are now relying on methods that once made the traditional bundle so successful.

“What’s the fundamental solution? In some way, shape or form, it’s everything brought together,” said CEO Ken Solomon of the Tennis Channel, owned by Sinclair, of the various business models in media. “It’s about understanding where to put a little more resources and how they all are glued together to satisfy the consumer.”

A broken model
Two strategies media companies long relied upon — windowing content to various platforms and creating more cable channels to reap higher fees from the bundle — proved lucrative and still reap profits.

“This gun has been cocking itself for decades,” said Solomon, noting that the pay TV bundle was a good value proposition until it became too expensive for consumers. That gave Netflix an opening to upend how the entertainment industry makes and spends money.

Legacy media companies scrambled to follow suit, unsure if the model actually worked. But they were desperate to keep up with changing consumer demand, and in the process they depleted other revenue streams.

Now turmoil rules the industry. Companies like Disney and Warner Bros. Discovery are in the midst of reorganizations — slashing jobs and content costs while trying various ways to piece together profits.

An image from Netflix’s “Stranger Things.” / Source: Netflix
-------------------------------------
“All of these companies spent more money than they likely should have,” said Marc DeBevoise, CEO and board director of Brightcove, a streaming technology company.

Netflix, with a considerable head start, is the only company to make a profit off of streaming. “For everyone else, it’s still dictated by linear TV,” said UBS analyst John Hodulik. “That’s a problem as the decline in customers accelerates and streaming is not a big enough opportunity to offset that.”

Although subscriber growth initially ramped up streaming subscriber growth and bolstered many media stocks, it was short-lived. Fears of a recession, inflation and rising interest rates led Wall Street to reassess these companies and focus on profitability as subscriber growth slowed.

A content arms race
Netflix’s entrance into media signaled the beginning of a content arms race that, ultimately, hasn’t paid off for any media company.

Content spending ballooned across the industry, with each company spending tens of billions of dollars for new shows and films in an effort to lure in new subscribers — and keep the ones they already had.

“The networks had aligned with their streaming services and taken all the elasticity out of it. They were throwing money at a problem and hoping that it was going to solve itself,” said Solomon. “There was no economics behind it.”

Race to launch

Netflix— launched streaming service in January 2007, first original content launched February 2013
Hulu— launched streaming service in March 2008
Paramount+— launched as CBS All Access in October 2014, rebranded as Paramount+ in March 2021
Disney+— launched streaming service in November 2019
Peacock— launched streaming service in April 2020
Max— launched as HBO Max in May 2020, rebranded as Max in May 2023

There were also massive one-off licensing deals for shows like “The Office,” “Friends”and “Seinfeld,” which viewers were actively watching on repeat.

Studios even struck exclusive contracts with some of Hollywood’s biggest writer-producers — Ryan Murphy, Shonda Rhimes, J.J. Abrams, Kenya Barris and the duo of David Benioff and D.B. Weiss — in the hope that they could create new projects that could capture the attention of audiences.

Show budgets draw a lot of attention these days. But Jonathan Miller, a former Hulu board member and current CEO of Integrated Media, doesn’t recall that being a focus when it was just the four major broadcast networks creating all of the content.

DeBevoise, a former ViacomCBS (now Paramount) executive, said he doesn’t remember greenlighting a show, including “Star Trek Discovery,” in the mid-2010s at CBS for more than $10 million an episode, noting many were “much, much less expensive.”

Meanwhile, Solomon, who once ran Universal Studios Television, recalled when his budgets for top TV shows like “Law & Order” were below $2 million an episode. “I thought budgets were out of control back then,” he said.

Shonda Rhimes attends 2018 Vanity Fair Oscar Party on March 4, 2018 in Beverly Hills, CA. / Presley Ann | Patrick McMullan | Getty Images
-----------------------------------
Disney sought to capitalize on the success of its Marvel Cinematic Universe by developing more than a dozen superhero shows for its Disney+ platform. Although the seasons were shortened, often only six to 10 episodes, each episode cost around $25 million. Similar production budgets were seen for the company’s foray into the new live-action Star Wars TV series.

Netflix has poured money into multiple seasons of political drama “The Crown,” science fiction darling “Stranger Things” and a series based on The Witcher video game franchise. Production costs per episode for these series ranged from $11 million to $30 million.

And Warner Bros. Discovery is adding more Game of Thrones series to its catalog of direct-to-consumer offerings with “House of the Dragon,” which cost around $20 million per episode, and the upcoming “A Knight of the Seven Kingdoms: The Hedge Knight,” which has not begun filming.

Meanwhile, e-commerce giant Amazon shelled out a record $465 million on its first season of a Lord of the Rings prequel series, which was met with tepid responses from critics and fans alike.

“The price of content isn’t always determinant of success. ‘The Simpsons’ were crudely animated initially, right? So, it’s not necessarily that if you go spend a lot of money, it works,” Solomon said.

Bart Simpson plays esports in an episode of “The Simpsons” that aired on March 17, 2019. / Fox
-----------------------------------------------
At the same time the economics for actors, writers and the industry as a whole changed.

“The problem is that the cost increases don’t make sense given the revenue models. Something got broken in this part of the business if that kind of increase happened and actors and writers don’t feel like they got their fair share,” DeBevoise said.

A growing disconnect
While many of Hollywood’s biggest studios are publicly traded and must share quarterly financial reports, there are no rules about providing streaming-viewership data. This lack of transparency has made recent contract negotiations between studios and the industry’s writers and actors especially contentious.

“There’s a frustration about how these people can get together and share this information and come up with something that is reasonable for both sides,” said Schiffman, the Georgetown professor. “But until that happens, in my view, this thing goes on until next year.”

Streaming studios, in particular, have long been reluctant to share data around viewership and don’t want compensation to be tied to the popularity of shows, including those that have been licensed from other studios.

Hollywood strike doesn’t have an end in sight, says Puck’s Matt Belloni

This is in stark contrast to how linear television has handled popular shows. Traditionally, studios pay residuals, long-term payments, to those who worked on film and television shows after their initial release. Actors and writers get paid every time an episode or film runs on broadcast or cable television or when someone buys a DVD or Blu-ray Disc.

When it comes to streaming, there are no residual payments. Studios that get a licensing fee pass on a small sum to actors and writers, but no additional compensation is given if the show performs well on the platform. Actors, in particular, are looking to change this.

“Why I think the streaming model has been a difficult model for the actors and writers, and I was part of helping that model, is that there was a fundamental shift of long-term versus short-term economics that likely wasn’t properly understood or explained,” said DeBevoise.

Back to the future
Media companies’ effort to make streaming profitable is drawing out many of the old business models that were successful in the past.

The subscription streaming model is being subsidized now by tried and true models like advertising, licensing content to other platforms, cracking down on password sharing, and windowing content to different platforms with longer stretches of time in between.

“Netflix understood finally, because of the Street, that subscriber numbers don’t mean jack, if the economics don’t pencil out,” said Peter Csathy, founder and chair of advisory firm Creative Media.

Even the pay TV bundle, despite rampant cord cutting by consumers, remains a reliable source of revenue.

The recent dispute between Charter Communications and Disney highlighted this fact, and led to Disney+ and ESPN+ being bundled with some pay TV subscriptions.

The consumer is ultimately the winner in the Disney-Charter deal, says media mogul Tom Rogers

“We, the distributors, are funding the streaming experience. And it’s frankly a better content experience on streaming than what is provided to us on linear TV,” said Rob Thun, chief content officer at DirecTV. “These companies will cease to exist without the funding of distributors’ licensing fees. Perhaps this is a moment of awakening.”

Disney and even Netflix, which long resisted ads, are among the companies relying more on ad-supported offerings to boost subscriber growth and bring in another revenue stream, even as the ad market has been soft.

This is especially true as free, ad-supported streaming services like Fox Corp.’s Tubi and Paramount’s Pluto — which are likened to broadcast networks — have also exploded. Besides the parent companies leaning on the ad revenue from these platforms, other media companies, like Warner Bros. Discovery, are funneling content there for licensing fees.

“In terms of the business models, they all ‘work,’” said DeBevoise. He noted paid tiers for the more expensive, timely content will remain, while free and options with commercials will support the older library shows and movie. “There are going to be hybrid models that reincarnate the dual-revenue cable TV model with both a subscription fee and ads. It’s all going to be about price-to-value and time-to-value for the consumer.”

Disclosure: Comcast is the parent company of NBCUniversal and CNBC.

Hollywood pays steep price for not figuring out streaming (cnbc.com)

[Glenn Petersen] Linear TV Falls Below 50 Percent of Viewing for First Time Nielsen's monthly pl...

Glenn Petersen — 8/15/2023 2:15:31 PM

Linear TV Falls Below 50 Percent of Viewing for First Time

Nielsen's monthly platform rankings show broadcast and cable making up less than half of all TV use.

BY RICK PORTER
The Hollywood Reporter
AUGUST 15, 2023 5:00AM

Broadcast and cable networks made up less than half of all TV use in July — the first time linear TV viewing has fallen below 50 percent in Nielsen’s two-plus years of tracking viewing time by platform.

While overall TV use in July edged up from the previous month, the growth came in streaming — which hit an all-time high of 38.7 percent of all TV usage — and the “other use” category, which includes video games played on a TV screen and physical media playback, among other things. That made up 11.6 percent of usage.

Streaming was up from 37.7 percent of TV viewing in June, marking its third consecutive month of an increased share of viewers’ time. July was also the third straight month that streaming’s share of TV use hit a high.

As for linear TV, broadcast networks fell to just 20 percent of viewing in July (vs. 20.8 percent in June). Cable came in at 29.6 percent, down from 30.6 percent the previous month. For both, it was a low point since Nielsen began releasing its monthly platform rankings, which it calls the Gauge, in June 2021. In those first monthly rankings, broadcast and cable accounted for 63.6 percent of all TV use in the United States, whereas now it’s at 49.6 percent.

Streaming, meanwhile, has grown from about a 26 percent share of viewing in June 2021 to 38.7 percent in July — a 48 percent jump.

Among individual streamers, YouTube (not including its YouTube TV service) led the way as usual with 9.2 percent of all TV use, followed by Netflix at 8.5 percent. Fox’s AVOD service Tubi had its best month to date with 1.4 percent of all use, tied with Max.

Acquired series led the streaming bump in July, with Suits on Netflix and Peacock accounting for more than 18 billion minutes of viewing during the month — about the same amount of viewing time as Stranger Things had in July 2022. Disney+’s Bluey had about 5 billion minutes of viewing for the month.

Nielsen’s Gauge rankings for July 2023 are below.

Platforms

Streaming: 38.7 percent of TV usage
Cable: 29.6 percent
Broadcast: 20 percent
Other: 11.6 percent

Streaming Services

YouTube: 9.2 percent of total TV usage
Netflix: 8.5 percent
Hulu: 3.6 percent
Prime Video: 3.4 percent
Disney+: 2 percent
Max: 1.4 percent
Tubi: 1.4 percent
Peacock: 1.1 percent
Roku Channel: 1.1 percent
Paramount+: 1 percent
Pluto TV: 0.9 percent
All others: 5.1 percent

Broadcast, Cable Hit Lows in July 2023 TV Platform Rankings – The Hollywood Reporter

[Glenn Petersen] Could a True Streaming Bundle Be Upon Us? By Josef Adalian, Vulture's West Coa...

Glenn Petersen — 8/13/2023 4:23:53 PM

Could a True Streaming Bundle Be Upon Us?

By Josef Adalian, Vulture's West Coast editor
August 11, 2023

Imagine if you could watch Yellowstone, Hijack, And Just Like That…, and The Summer I Turned Pretty all in once place. Photo-Illustration: Vulture; Photos: MAX, Apple TV, Amazon, Paramount
-------------------------------

A veteran media executive I’ve known for decades has long had a theory about how the streaming revolution will play out. Even as legacy companies such as Disney and NBCUniversal started blowing up their business models to compete with the Netflixes of the world, he kept warning me that many of the momentous changes we were seeing wouldn’t last forever. “All TV regresses to the mean,” he would tell me over and again, almost like a mantra. His prediction has been proven right several times in recent years, from the shift back to weekly releases of shows to the introduction of ad-supported tiers on services that once shunned them. And now, there’s evidence another golden oldie of TV’s linear age could be poised for a comeback: the TV bundle.

The buzz about bundling has been steadily growing in TV industry circles since May, when Warner Bros. Discovery CEO David Zaslav took a break from his usual mustache-twirling to lay out case for why companies with streaming platforms needed to get on the ball and figure out a way to package their respective services together in one consumer-friendly package — a.k.a. a bundle. “For me, it seems very clear that if we were to package this great product that we have with others … it would be great for consumers,” Zaslav said during an appearance at an industry conference. But more importantly from a corporate point of view, a bundle “would probably reduce churn,” the CEO said, and could make it possible to spend less on promotion and customer acquisition since all parties in the bundle would “be marketing one product.”

If we don’t do it to ourselves, I think it will be done to us.— David ZaslavReducing churn — how many people cancel a service every month — has taken on increasing importance as price hikes have rolled out across streaming (including the big ones announced Wednesday by Disney+ and Hulu). And this week, the number of prominent media execs signing a chorus of “I Want My Bundle Back” doubled when Paramount Global CEO Bob Bakish seemed to join Zaslav in affirming his support for the idea during an earnings call with investors. “We’ve been believers in bundling for a long time,” he said in response to a question from an analyst. “Bundling has been one of the tried-and-true methods of value creation in media, and certainly, as we enter the streaming space, bundling is part of our strategy.” To be sure, Bakish’s praise of bundles was in the broadest possible sense and included shout-outs to ideas a few steps removed from the old cable bundle, such as his company’s making a deal with Walmart to give Walmart+ customers free access to Paramount+. But he also pointed to agreements Paramount Global has struck outside of the United States, specifically partnerships with European satellite giants Sky and Canal+, as examples of “hard bundles” that might work one day in the States. “We are continuing to look at incremental opportunities in this regard, and the only thing we know for sure is it will be a growing part of what we’re doing,” Bakish said. “We like bundling.”

But liking and believing in bundling are not the same as actually going all in on the idea. While Disney has had success packaging together streaming services it owns (Disney+, Hulu, ESPN+) into the Disney bundle, it hasn’t shown any inclination to let its platforms be connected with third-party streamers. And while there are signs attitudes are softening — more on that later — that’s largely been true of the other six biggest American streamers (Netflix, Max, Prime Video, Apple TV+, Paramount+, and Peacock). An industry insider I spoke to this week believes the holdup is understandable given the risks involved. “You’re making serious trade-offs if you do this,” he said.

The most obvious is that, because bundling involves discounting, companies make less money per subscriber than they would on an à la carte basis — particularly if a current customer switched to a bundle to save some dough. And with ad-supported tiers now standard across major streamers (even on Apple TV+, which has advertising in its sports programming), “You have to think about what the ad split is among partners and how it’s constructed,” the industry insider said.

And then there’s the thorny question of whether competing streamers would want to handle the packaging and promotion of a bundle themselves (the way Disney does with its in-house services) or allow someone else to play middleman. The latter scenario would more closely mirror the linear model, where an Xfinity or DirecTV sells a bundle of channels and then pays individual services a pre-negotiated fee per subscriber. Both Paramount Global and Warner Bros. Discovery (at least under Zaslav) have been relatively relaxed about working with outside parties: Both participate in the Amazon Prime Video channels program, while Paramount has also opted into the Apple TV channels universe. Netflix, however, has refused to let its content get aggregated into those ecosystems, while Disney also currently boycotts those programs.

But interestingly, telecom giant Verizon has had much better luck getting streamers to play the bundle game. In June, it quietly began selling its customers a discounted package of Netflix’s premium tier and Paramount+ with Showtime for $26 per month — about 20 percent less than the $32 it would cost to buy both separately. It’s the first time the two streamers have ever been offered together in a bundle, and one of — if not the — first times Netflix has agreed to such a plan. One reason Verizon may be having more luck innovating in bundles is because it doesn’t try to put content from various streamers into a single user interface the way the channel stores do. Instead, it simply serves as a hub for Verizon customers to sign up and pay for subscriptions through their phone and internet account. Streamers are more comfortable with this approach because it means they retain tight control over user data and still have a semi-direct relationship with consumers. It wouldn’t be surprising if we see Verizon, and possibly other cell carriers, leading the way in innovating on the streaming-bundle front.

That doesn’t mean Amazon, Apple, and Google should be counted out as factors in the future of bundling. While Netflix might not need them for scale, other streamers might be more willing to compromise a bit in exchange for deals that help them dramatically increase their subscriber footprint. And while the tech companies have so far been focused on giving consumers a unified streaming experience — i.e., content from multiple streamers in one app — it’s possible they might be willing to move to a Verizon-like role that makes them more of a hands-off wholesaler. Indeed, in his conference appearance earlier this summer, Zaslav suggested some of the tech giants might already be mulling the idea of creating their own bundles. “If we don’t do it to ourselves, I think it will be done to us,” he said. “It will be Amazon that does it. It will be Apple that does it. It will be Roku that does it. They’re already starting to do it.”

Indeed, we are seeing more bundles pop up with smaller streaming services. AMC Networks, for example, has been a big believer in the concept for some time now. Since last April, it’s been part of a package pushed by Amazon’s Prime Video channels bundling AMC+ with Starz at a discounted rate. (The plan works by giving anyone who signs up for either service the opportunity to add the other at a lower price point, effectively creating a discounted bundle.) In a May earnings call, AMC Networks CEO Kristin Dolan said her company’s “long-standing distribution relationships” — namely, decades of working with cable companies — will help it during what she believes will be “the forthcoming shift to streaming bundles. These bundles are beginning to gain traction as the marketplace evolves and consumers seek a more simplified and integrated experience when it comes to managing their various services.”

Other medium-size players seem equally keen on bundling. In addition to the mash-up with AMC+, Lionsgate-owned Starz is part of another bundle pairing its service with Amazon-owned MGM+ at a 20 percent discount. That offer is available on channel stores run by Amazon Prime Video, YouTube TV, and the Roku Channel.

Despite all the signs that streaming’s future will involve more bundles, we might still be a few years away from anything close to what the cable ecosystem offered: one platform, one price. As noted earlier, several big streamers remain staunchly opposed to sharing the same user interface as rivals, and it’s hard to see that changing soon. And as much as platforms want to reduce churn and, if possible, increase overall subscriber counts, they also want to be careful to not end up selling their product too cheaply. If you take in $2 less per user but net 20 million consistent subscribers, a bundle makes perfect sense. But if most of your users switch to a cheaper bundle deal and you only net a few million more customers, “Do you end up limiting your upside and how much you make overall?” our streaming industry insider wonders.

What’s more, with so many changes expected to hit the industry over the next two years — many analysts have hinted at major mergers and acquisitions next year and in 2025 — there’s always the danger of doing a deal that seems good now but ultimately becomes a headache. “Once you get into bed with someone, you’re in bed with them for a while,” the insider says. “You don’t want to be locking yourself into the wrong deal.” And yet, this same source also thinks we are still likely to see more aggressive bundling emerge relatively soon because, despite the risks, many streamers desperately need new ways to boost subscriber counts and revenue. “I wouldn’t say everything is on the table, but the entire industry is looking for models that work,” he says.

Could a True Streaming Bundle Be Upon Us? (vulture.com)

[Glenn Petersen] Ad-Supported Streaming Tiers to Generate Over $10 Billion in Revenue by 2027, St...

Glenn Petersen — 7/31/2023 3:41:26 PM

Ad-Supported Streaming Tiers to Generate Over $10 Billion in Revenue by 2027, Study Predicts

London-based research firm Ampere Analysis estimates that ad tiers from Netflix, Disney and others have collectively surpassed 100 million users

The Wrap
July 31, 2023

Ad-supported streaming tiers from Netflix, Disney and others have collectively surpassed 100 million users in the United States and could generate over $10 billion in revenue domestically by 2027, new research from the London-based firm Ampere Analysis found.

More than 1 million Netflix accounts and around 800,000 Disney+ subscribers in the U.S. are on ad-supported tiers, according to Ampere, representing nearly 2% of each service’s total subscriber base. The firm estimates that more than 90% of Hulu subscribers are on the ad-supported tier, representing around 45 million subscriptions.

Prior to the launch of Max, Discovery+ had somewhere in the region of 10 million ad-supported accounts, while HBO Max had around 2 million, Ampere said. It added that Peacock has more than 30 million ad-supported subscribers, the most of any new U.S. OTT service, while Paramount+ has more than 25 million ad-supported subscribers in the U.S.

Ampere believes that hybrid services are “an increasingly important element of streaming service monetization, and hybrid tiers often generate more revenue per subscription than their ad-free counterparts.” It also says that the tiers “represent a way for consumers to maintain a wider array of subscriptions while economic times remain tough.”

Ampere’s latest research comes as earnings season for the major studios is in full swing.

Netflix, which recently eliminated its basic ad-free plan in the United States as it expands its password sharing crackdown, added 5.9 million paid subscribers during the second quarter of 2023 for a total of 238.4 million globally. During its upfront presentation to advertisers in May, Netflix reported that the ad tier had nearly 5 million monthly active users.

Meanwhile, NBCUniversal parent Comcast reported that Peacock had a total of 24 million paid subscribers. The streaming service, which dropped its free tier for new users in January, recently said it would bump up the price for its Premium and Premium Plus tiers to $5.99 and $11.99, respectively, which will take effect on Aug. 17. Due to certain streaming rights and contracts with content providers, some Peacock content still has ads.

Next up on the earnings docket will be Warner Bros. Discovery, which rolled out its Max rebrand on May 23 — which offers a $9.99 per month Max Ad Lite tier, $15.99 per month Max Ad Free tier and $19.99 per month Max Ultimate Ad Free tier.

Meanwhile, Paramount Global, which charges $5.99 per month for its ad-supported option, and Disney, which launched its $7.99 per month ad-supported Disney+ tier in November, will report earnings on Aug. 7 and 9, respectively.
\
Ad-Supported Streaming Tiers to Generate Over $10 Billion in U.S. (thewrap.com)

[Glenn Petersen] ESPN is trying to forge a new path as a digital-first, streaming entity. Disney ...

Glenn Petersen — 7/22/2023 3:28:45 PM

ESPN is trying to forge a new path as a digital-first, streaming entity. Disney realizes ESPN won’t be able to make money like it previously has in a traditional TV model.

Until last quarter, Disney’s bundle of linear TV networks still had revenue growth because affiliate fee increases to pay-TV providers — largely driven by ESPN — made up for the millions of Americans who cancel cable each year. That trend finally ended last quarter, according to people familiar with the matter. Accelerating cancellations have now overwhelmed fee increases, and linear TV revenue outside of advertising has begun to decline.

*********************************

ESPN held talks with NBA, NFL and MLB in search for strategic partner, sources say

PUBLISHED FRI, JUL 21 20231:30 PM EDT
UPDATED FRI, JUL 21 20232:55 PM EDT
Alex Sherman @SHERMAN4949
CNBC.com

KEY POINTS

-- ESPN has held early talks about strategic partnerships with the NBA, NFL and MLB that could include the leagues taking an equity stake in the business, sources told CNBC.

-- Disney CEO Bob Iger talked about bringing a strategic partner into ESPN in an interview last week with CNBC.

-- Striking a deal directly with the leagues would be unprecedented but would give ESPN a safety net that it would receive premium content from the leagues.

As Disney considers a strategic partner for ESPN, Chief Executive Officer Bob Iger and ESPN head Jimmy Pitaro have held early talks about bringing professional sports leagues on as minority investors, including the National Football League, National Basketball Association and Major League Baseball, according to people familiar with the matter.

ESPN has held preliminary discussions with the NFL, NBA and MLB about a variety of new partnerships and investment structures, the people said. In a statement, an NBA spokesperson said, “We have a longstanding relationship with Disney and look forward to continuing the discussions around the future of our partnership.”

Spokespeople for ESPN, the NFL and MLB declined to comment.

Talks with the NFL have occurred in conjunction with the league’s own desire for a company to take a stake in its media assets, including the NFL Network, NFL.com and RedZone, said the people, who asked not to be named because the talks have been private.

The NBA and Disney have broached many potential structures around a renewal of media rights, the people said. Disney and Warner Bros. Discovery have exclusive negotiating rights with the NBA until next year.

Iger said last week in an interview with CNBC’s David Faber that Disney is looking for a strategic partner for ESPN as it prepares to transition the sports network to streaming. He didn’t elaborate on what exactly that meant beyond saying a partner could bring additional value with distribution or content. He acknowledged selling a stake in the business was possible.

Disney owns 80% of ESPN. Hearst owns the other 20%.

“Our position in sports is very unique and we want to stay in that business,” Iger said to Faber. “We’re going to be open minded about looking for strategic partners that could either help us with distribution or content. I’m not going to get too detailed about it, but we’re bullish about sports as a media property.”

Theoretically, a jointly owned subscription streaming service among multiple leagues could eventually give consumers new packages of games and other innovative ways to take in content.

The move would be a logical one for Disney as it tries to move past the traditional cable subscriber model and underscores how badly the company wants to find a solution for the sports network as its linear subscribers decline. Still, ESPN ratings have climbed in recent years on major sporting events. There’s no better partner for sports content than the leagues, themselves.

Superficially, it may make less sense for the NBA, NFL and MLB which sign lucrative media rights deals with many media partners that fuel team revenue and player salaries with a range of media companies.

Professional sports leagues could face conflicts of interest if they take a minority stake in ESPN. Owning a stake in ESPN may irritate Disney’s competitors, such as Comcast’s NBCUniversal, Fox, Amazon, Paramount Global and Apple, who help make the leagues billions of dollars by participating in bidding wars for sports rights. Taking an ownership stake in ESPN could give leagues the incentive to boost the value of that entity rather than striking deals with competitors.

There would also be hurdles for Disney. ESPN also employs hundreds of journalists that cover the major sports leagues. Selling an ownership stake to the leagues could cloud the perception of objectivity for ESPN’s reporting apparatus.

Still, the leagues are already business partners with ESPN. It’s possible ESPN could put measures in place to ensure reporters can continue to cover the leagues while minimizing conflicts, but it adds another layer of complexity to any deal.

A streaming-first ESPN

ESPN is trying to forge a new path as a digital-first, streaming entity. Disney realizes ESPN won’t be able to make money like it previously has in a traditional TV model.

Selling a minority stake in ESPN to the leagues could mitigate future rights payments, allowing Disney to better compete with the big balance sheets of Apple, Google and Amazon. It would also guarantee ESPN a steady flow of premium content from the leagues.

Until last quarter, Disney’s bundle of linear TV networks still had revenue growth because affiliate fee increases to pay-TV providers — largely driven by ESPN — made up for the millions of Americans who cancel cable each year. That trend finally ended last quarter, according to people familiar with the matter. Accelerating cancellations have now overwhelmed fee increases, and linear TV revenue outside of advertising has begun to decline.

“A lot has been said about renting [sports right] versus owning,” Iger said last week in his CNBC interview. “If you can rent it and continue to be profitable from renting, which we have been and we believe we will continue to be, then there’s value in staying in it. We have great relationships with Major League Baseball, and the National Hockey League, and various college conferences, and of course the NFL and the NBA. It’s not just about the live sports coverage of those leagues, those teams, it’s also about all of the shoulder programming it throws off on ESPN and what you can do with it in a streaming world.”

ESPN would like to morph itself into a streaming hub for all live sports. Management would like to launch a feature allowing ESPN.com or the ESPN app to funnel users to games no matter where they stream, CNBC reported earlier this year.

While striking a deal with professional sports leagues wouldn’t be easy, Disney appears to be pushing the envelope on its thinking to prepare for a streaming-dominated world that includes its full portfolio of sports rights.

“If [a partner] comes to the table with value, whether it’s content value, distribution value, whether it’s capital, whether it just helps derisk the business — that wouldn’t be the primary driver — but if they come to the table with value that enables ESPN to make a transition to a direct-to-consumer offering, we’re going to be very open minded about that,” Iger said.

ESPN had talks with NBA, NFL, MLB in search for strategic partner (cnbc.com)

[Sr K] The streaming giant gained 5.9 million subscribers in the second quarter and sai...

Sr K — 7/19/2023 11:05:45 PM

The streaming giant gained 5.9 million subscribers in the second quarter and said the Hollywood strikes will lead to less content spending and more free cash flow this year.

Excerpt

[Glenn Petersen] Netflix, Citing Reduced Spending Amid Strike, Ups Free Cash Flow Estimate by $1....

Glenn Petersen — 7/19/2023 5:55:49 PM

Netflix, Citing Reduced Spending Amid Strike, Ups Free Cash Flow Estimate by $1.5B

The streaming giant is the first Hollywood studio to disclose earnings figures amid the actors' work stoppage.

BY ERIK HAYDEN
The Hollywood Reporter
JULY 19, 2023 1:18PM

In a high stakes moment for Hollywood amid a double strike of both actors and writers, Netflix reported earnings on July 19 and disclosed that it is upping its free cash flow estimate to $5 billion-plus for the full year, citing “lower cash content spend” due to the impact of the Writers Guild of America and SAG-AFTRA work stoppages and “timing of production starts.”

The update on free cash flow — a metric Wall Street uses to gauge how much money is left over for a company once all financial obligations are met — is a window into how major conglomerates are navigating the strikes. Netflix raised its free cash flow estimate $1.5 billion in full year 2023 from $3.5 billion.

The last time that there was widespread production stoppages was when COVID-19 hit stateside in March 2020, which also happened to be the year that Hollywood studio conglomerates grew free cash flow, as analyst firm MoffettNathanson has noted. “The sorry news for writers is that, in declaring a strike, they may in fact be helping the streaming giants and their parent companies,” was how the Wall Street team put it in a May 3 research note.

Netflix had been expected to spend around $17 billion on programming content this year. In its second quarter, the streaming giant gained 5.9 million subscribers as it built a total global paid membership base of 238.39 million, far outpacing its rivals like Disney+ (157.8 million subscribers) or Max/Discovery+ (97.6 million).

In its last earnings update in April, Netflix co-CEO Ted Sarandos described the company as being prepared if the writers went on strike, saying, “we had to make plans for the worst and so we do have a pretty robust slate of releases to take us into a long time.”

With the Writers Guild of America strike kicking off on May 2 and SAG-AFTRA joining the fray on July 13, Netflix is the first Hollywood studio to disclose earnings figures amid the actors’ work stoppage. Comcast, home to NBCUniversal, will report on July 27 followed by Warner Bros. Discovery (Aug. 3) and Disney (Aug. 9).

Prior to the current negotiating round, Netflix had made separate deals with SAG-AFTRA, including a pact that was ratified by membership last August covering scripted, dramatic episode and feature productions. In the current standoff, Netflix is represented by the Alliance of Motion Picture and Television Producers, which bargains on behalf of major studios including Disney, NBCUniversal and Warner Bros. Discovery.

As actors and writers both seek pay gains with new deals, highly-paid studio executives have been under increased scrutiny as the strike has dragged on. Warner Bros. Discovery chief David Zaslav, who has seen his 2021 pay package of $247 million become a rallying cry for those pointing out income inequality in Hollywood, has taken much of the hit amid his company’s cost-cutting and restructuring push.

But Disney’s Bob Iger, who has usually fashioned himself as a talent-friendly voice during media appearances, also drew ire when calling striking writers and actors “ not realistic” during a CNBC interview that preempted SAG-AFTRA’s call for a strike on July 13. “There’s a level of expectation that they have that is just not realistic, and they are adding to a set of challenges that this business is already facing, that is quite frankly, very disruptive,” Iger stated.

Netflix, Citing Strike, Ups Free Cash Flow Estimate by $1.5B – The Hollywood Reporter

[Glenn Petersen] Netflix subscriptions jump 8%, revenue climbs as password sharing crackdown take...

Glenn Petersen — 7/19/2023 4:41:46 PM

Netflix subscriptions jump 8%, revenue climbs as password sharing crackdown takes hold

PUBLISHED WED, JUL 19 202312:00 PM EDT
UPDATED 5 MIN AGO
Lillian Rizzo @LILLIANNNN
CNBC.com

KEY POINTS

-- Netflix subscriptions rose 8% in the second quarter as its revenue climbed year over year.

-- The company is cracking down on password sharing.

Netflix said Wednesday that its quarterly revenue and subscriptions rose, as efforts to curb password sharing took hold.

Earnings: $3.29 a share. That may not compare with the $2.86 per share expected by Refinitiv.

Revenue: $8.20 billion. That may not compare with the $8.30 billion expected by Refinitiv.

The streaming giant said it added 5.9 million customers during the second quarter amid its broader crackdown on password sharing in the U.S. Netflix said it would roll out its new policy to the rest of its customers on Wednesday.

Netflix’s stock fell as much as 5% in after hours trading.

The company reported revenue of $8.20 billion, up 3% from $7.97 billion in the prior-year period. Net income of $1.49 billion climbed from $1.44 billion in the year-ago quarter.

The earnings report comes soon as investors look for more information on the rollout of Netflix’s ad-supported streaming tier and account-sharing crackdown.

However, Netflix said it was too early to report a breakdown of revenue from the ad-supported tier — which was introduced late last year — as well as the accounts that have come from the new sharing policy.

Netflix said Wednesday it expects a boost in revenue in the second half of the year as it begins “to see the full benefits of paid sharing plus the steady growth in our ad-supported plan.”

Netflix said it now forecasts revenue of $8.5 billion, up 7% year-over-year, for the third quarter. It attributed the expected revenue growth to more average paid memberships.

The company also anticipates paid net subscriber additions in the third quarter will be similar to the second quarter. Meanwhile, Netflix expects revenue growth in the fourth quarter to “accelerate more substantially” as the efforts to curb password sharing gain steam and as advertising revenue grows.

This is breaking news. Please check back for updates.

Netflix (NFLX) earnings 2Q 2023 (cnbc.com)

[Glenn Petersen] Scroll down for Netflix news. Disney is seriously wounded. Bob Iger Shifts From...

Glenn Petersen — 7/17/2023 5:00:52 AM

Scroll down for Netflix news. Disney is seriously wounded.

Bob Iger Shifts From Building an Empire to a Disney Yard Sale

Netflix just had its best month in years and Disney is looking to sell its TV assets. What does that mean for the future of Hollywood?

Good afternoon from New York, and thanks to Thomas Buckley for the help with a packed newsletter.

While we will get to the major Disney news in a minute, let’s look ahead to a big week for Netflix and the entire entertainment business. The worldwide leader in streaming TV will report second-quarter financial results on July 19, and expectations are high. Shares of Netflix are up more than 90% since the market bottomed out in October, and the company is the 11th best stock in the S&P Index since then.

Investors and analysts are optimistic about the company’s advertising business and its crackdown on password sharing. New data from Antenna underscore why:

June was Netflix’s best quarter of domestic growth in years. About 3.5 million people signed up for Netflix in the US last month, an increase of more than 100% over its recent averages. Netflix accounted for one-quarter of all new domestic streaming sign-ups last month, at least among the services measured by Antenna.

This doesn’t mean Netflix added 3.5 million customers in the US. (That would be shocking.) Those are gross additions. Lots of people also canceled their Netflix accounts. But people are signing up a lot faster than they are canceling. That is good news for a company that hasn’t added customers at home in two years.

Netflix has cautioned that the password crackdown won’t boost its customer base until the second half of this year, but the data suggest that it has already prompted millions more people to start paying.

As a reminder, Netflix co-CEO Ted Sarandos is one of several moguls and celebrities speaking at the inaugural Screentime conference in the fall. You can buy a ticket a here.

Bob Iger shifts from building an empire to a Disney yard saleBob Iger built Disney into the world’s most powerful entertainment company by acquiring Pixar, Marvel and Lucasfilm. Now he’s looking to downsize.

Iger put roughly a third of the company up for sale this week, declaring Disney’s linear TV assets noncore. That includes TV networks ABC, FX and Freeform. He also said Disney is looking for a strategic partner for ESPN — though he’s not willing to sell the whole thing — and the company is already looking to sell or restructure its TV and streaming business in India.

It’s a stunning if inevitable turn of events for an executive who spent so much of his career working in TV, and for a company that relied on cable networks for the majority of its profit. Before the pandemic, Disney’s media networks generated 35%, or $24.8 billion, of company revenue and more than 50%, or $7.5 billion, of its operating income.

Yet the accelerating decline of cable TV has limited Iger’s options. He thought he’d solved this problem with Disney+ and Hulu, his two mass-market streaming services. But his streaming business is expected to register a loss of about $800 million in the company’s just-ended third quarter.

Management chased streaming subscribers at unsustainably low prices to goose the launch of Disney+ in 2019 and is now seeking to raise prices without alienating customers. (Disney+ lost 4 million subscribers last quarter.)

Iger put up a for-sale sign during an interview with CNBC in Sun Valley, Idaho, home to an annual summit of the media and tech elite organized by the investment bank Allen & Co. The conference has long served as an incubator for some of the media industry’s most high-profile deals — and a source of endless photos of executives walking in Patagonia vests.

It’s not yet clear how serious Iger is about selling entire TV networks. ABC, for example, is key to retaining NBA rights. FX has been a key supplier of programming to Hulu, which Iger plans to keep and fold into Disney+.

Yet Iger’s CNBC interview was unmistakably a distress signal. Disney is contractually obligated to buy Comcast Corp.’s one-third stake in Hulu in a deal that would value the business at least at $27.5 billion. It’s also wrestling with a colossal debt pile stemming from its $71.3 billion acquisition of 21st Century Fox in 2019.

A sale of the TV business could fetch around $8 billion, according to Wells Fargo analyst Steve Cahall — which would largely offset the cost of acquiring the piece of Hulu it doesn't yet own. Most of the potential suitors for linear TV networks are financial entities, like private equity firms, that would milk them for cash as they decline into obscurity.

The list of interested parties in ESPN is longer, and could include tech giants like Apple, as well as sports companies like Fanatics. The streaming side of the sports giant, ESPN+, remains more of a niche business. But Disney continues to signal it will offer all of ESPN outside of the cable bundle in the near future.

Iger came back to Disney last November a conquering hero eager to rescue the company from the era of Bob Chapek (his successor and predecessor). He said he’d only stick around for two years, a deadline few took seriously given Iger’s inability to relinquish control during his first stint as CEO.

After receiving a two-year contract extension this past week, Iger has three more years to clean up a big mess that also includes a slowdown in the company’s theme-park business, a series of misses for the company’s film division and the strike by Hollywood actors and writers against all of the media companies.

Rumors have long swirled that Iger will end up selling all of Disney to Apple. It’s still hard to imagine Iger selling Disney to anyone. He was always a builder — not a seller. But Bob the builder is doing a lot more cutting this time around.

Iger’s comments should spook his peers. If a diversified company like Disney is bailing on its cable networks, what does that mean for companies like Paramount Global and Warner Bros Discovery Inc.? They still make almost all of their profit from networks that are shrinking.

<snip>

Bob Iger Shifts From Building an Empire to a Disney Yard Sale - Bloomberg

[Glenn Petersen] Netflix’s Next Act Is Investing in Video Games First came DVDs. Then came strea...

Glenn Petersen — 7/16/2023 5:02:38 AM

Netflix’s Next Act Is Investing in Video Games

First came DVDs. Then came streaming movies and TV. Now, Netflix is betting big on video games—and new release ‘Oxenfree II’ may be just the beginning of a long-term plan.

By Lewis Gordon
The RIinger
Jul 14, 2023, 6:30am EDT

In 2007, just before DVD sales started to slump, Netflix unveiled its streaming technology. Streaming, which was initially bundled with DVD subscriptions, arrived hot on the heels of widespread predictions about the death of Netflix, which had weathered challenges from giants such as Walmart, Apple, and Amazon. “We’ve gotten used to it,” Netflix CEO Reed Hastings told The New York Times about the doomsday predictions, before adding that he understood why people were forecasting his company’s demise. “Because DVD is not a hundred-year format, people wonder what will Netflix’s second act be.”

More than 15 years later, Netflix is gearing up for what appears to be its third and most ambitious act: video games. The company has long had its eyes on interactive entertainment: A Stranger Things tie-in game arrived in 2017; the interactive drama Black Mirror: Bandersnatch was released a year later. In its 2021 fourth-quarter earnings report, Netflix admitted that the rise of streaming rivals was affecting its “marginal growth.” Thus, pushing into a new medium makes sense, especially because the company has publicly identified video games as its biggest competition in the cutthroat fight for attention. “We compete with (and lose to) Fortnite more than HBO,” the company stated in its 2019 earnings report. Since then, Netflix has followed the adage of so many smart, merciless companies: If you can’t beat them, join them, and if you need to, buy them.

Sean Krankel, founder of video game studio Night School, sits at the center of this effort. He used to share a building in northeast Los Angeles with the music producer Diplo’s record label, a block away from the Beastie Boys’ recording studio. Now, following the acquisition of his company by Netflix in September 2021, the game maker works out of Netflix’s L.A. building, a space at the heart of corporate Hollywood that he says looks like a “Hype Williams music video.” Rather than brushing shoulders solely with independent creatives, he and his newly enlarged team brush shoulders at lunch with computer engineers and more than a few movie and TV makers. Wednesday was a big day for both Krankel and Netflix: It marked the arrival of Night School’s latest game, Oxenfree II: Lost Signals, for PC, PlayStation, Switch, and mobile—the highest-profile game yet produced by a Netflix-owned studio.

Even with positive reviews (“a refreshingly slow-paced adventure,” wrote The Guardian; “spooky sequel tenderly captures the ambiguity of early adulthood,” opined Kotaku), Night School alone won’t take the fight to Fornite. Oxenfree II, like the studio’s other titles, is an artsy, single-player experience. Yet for this very reason, the fit with the streaming giant seems natural. Netflix is one of the planet’s leading producers of narrative entertainment; Night School is a game studio committed to interactive storytelling and adept at wringing compelling mechanics from tools of drama such as dialogue.

Since acquiring Night School, Netflix has bought three additional existing studios outright; it has also established two, one in Helsinki and another in California. There are some 67 games in the Netflix library, playable through its iOS and Android apps; 86 more are in development, with 16 of those being made by in-house studios. Consequently, Netflix Games has swollen to 450 employees, headed up by VP of games Mike Verdu (a former Electronic Arts executive), VP of game studios Amir Rahimi (former president of mobile games company Scopely), and VP of external games Leanne Loombe (who joined from League of Legends developer Riot).

In spite of the new division’s rapid expansion, its ambitions have appeared (at least by the standards of other tech companies moving into the video game space) remarkably sensible—perhaps even cautious. Indeed, distinguishing Netflix from the likes of Google and Amazon—the former of which recently shuttered its cloud gaming service, Stadia, while the latter has suffered a string of failed projects—was part of Netflix’s pitch to Krankel when negotiations took place in 2020. “We’ve seen many players come into the space and attempt to take a big swing,” Krankel says. “[We heard] early on that the approach was going to be very careful and measured and that it would not be, ‘Let’s climb to the top of the mountain and plant a Netflix flag in there and [say] we’re changing the industry.’”

For the time being, Netflix is doggedly sticking to its mobile-first message: The company declined requests to interview Verdu and Rahimi, the two executives whose work will arguably bear fruit further down the line. Nor has it allowed access to anyone at its newly established studios in Helsinki or California, the latter of which is working on an all-new “ AAA multiplatform game” led by game makers with considerable chops: Joseph Staten, a key creative on the Halo and Destiny franchises, and Chacko Sonny, former Overwatch executive producer. Netflix appears disinclined to reveal too much of its hand before it’s absolutely ready to do so.

Still, even as Krankel talks up the company’s slow-and-steady approach, he’s visibly animated about what the mid- to long-term future at Netflix holds. On the subject of “ transmedia storytelling,” surely the buzziest term in all of entertainment, he says “the momentum is real” and that it’s “always” on his mind. As for cloud gaming, which has the potential to shake up the industry more than any other technology in the coming years, he says he’s “excited” about the “ubiquitous, simple, and frictionless” possibilities it offers. Between these two pillars of Netflix’s strategy, Krankel and his team arguably find themselves at the nexus of not just the future of video games but entertainment at large. If they have a counterpart, it’s perhaps the TV and movie creatives who must have felt something similar a little over a decade ago, just as video on demand was poised to upend how we watch, what we watch, and how people who make what we watch get paid.

Time may be the most important factor in understanding how Netflix is approaching its push into video games. Loombe frequently stresses how “early” in the process the company is. “We don’t want to assume that we’re going to get every single member to play overnight, or that we’re going to be able to provide a game to every single one of our members straightaway,” she says via video chat. “We’re really thinking about this as a long-term play.”

To put into perspective how long a play this might turn out to be, consider Netflix’s streaming drive of the 2000s and 2010s. The investor, author, and essayist Matthew Ball dates the development of Netflix’s streaming software all the way back to 2001. It would take six years for streaming to be made publicly available, and even then, it wouldn’t become its own stand-alone service for another three years. Netflix as we conceive of it today began life in 2011 with the announcement of a two-season order for House of Cards. That’s a full decade Netflix spent building up its streaming and production capabilities. According to Loombe, there are definite “parallels” between what Netflix has done with streaming and how it’s approaching its game strategy.

So where do those gaming efforts stand? Netflix’s mobile titles are a notably disparate bunch. Among others, they include a Hello Kitty rhythm game, a SpongeBob cooking game, and a handful of titles licensed from mobile juggernaut Gameloft, including arcade racer Asphalt Xtreme. There are mobile ports of prestige indies such as Kentucky Route Zero, Immortality, and Twelve Minutes, as well as a handful of similarly ambitious games that, if you were browsing for a TV show or movie, would be grouped under the “Only on Netflix” header: charming platformer Poinpy, open-world flying game Laya’s Horizon, and Ubisoft’s recent Valiant Hearts sequel. Finally, there are the adaptations of Netflix’s own IP: Too Hot to Handle, based on the salacious reality TV show; the aforementioned Stranger Things game; and Queen’s Gambit Chess, which will arrive on July 25.

Apple Arcade, another mobile subscription service, initially cultivated a slate of titles that shared an elegant, refined aesthetic and innovative interactivity (from vaporwave rhythm game Sayonara Wild Hearts to mechanical tinkering simulation Assemble With Care) before pivoting to more casual titles in an effort to mitigate so-called “churn” (i.e., the loss of subscribers). Netflix, by contrast, has aimed for a broad audience from the get-go. After all, the company’s remit couldn’t be wider: “We want to entertain the world,” states the marketing spiel on its website, an ethos reflected in its TV shows and movies. For every Roma there is an Extraction; for every Mindhunter, a Love Is Blind. Now, for every Laya’s Horizon there is a match-3 Strangers Things game.

The current pitch to developers is similar to that of Apple Arcade: In the highly competitive world of mobile gaming, where a monetization strategy known as “ free-to-play” reigns supreme, Netflix pays for games to come to its subscription platform, thus freeing studios of the financial risk involved in development and allowing them to pursue something close to their unfettered creative vision. “As with film and TV, our game deals are based on flat fees,” Loombe told Axios in March, shutting down what many fear is a slippery slope for games and subscription models: the introduction of performance-based payment deriving from metrics like “engagement.”

Mark Hickey, VP of mobile at Devolver Digital, the publisher behind Netflix titles Poinpy, Terra Nil, and Reigns: Three Kingdoms, won’t dish on deal specifics, stating only that Netflix has made it “viable” for his company and developers to release premium games on mobile. “The realities of the premium market up to say, 2018 or 2019, made it very prohibitive,” he says. “With services like Netflix coming online, that’s sort of cleared a bottleneck, at least in terms of the business opportunity.”

For Ryan Cash, CEO of Snowman—the maker of serene, flow-based experiences like Netflix exclusive Laya’s Horizon, and mobile hits Alto’s Adventure and Alto’s Odyssey—the lack of ads is another big perk to signing with Netflix. If you’re flying down the mountain in Laya’s Horizon, “ads popping up” would “really take people out of it,” he says. “With services like Netflix, we just worry about doing what we do best, which is making a killer experience.”

Krankel, now firmly settled in the Netflix nest, speaks exuberantly of the recording facilities he and his team have access to (crucial for a fully voice-acted game like Oxenfree II with a script of branching dialogue options), as well as the branding and marketing departments that cut each flashy trailer. Perhaps most important is the translation of Oxenfree II (and its cult forebear) into more than 30 languages, which Night School wouldn’t have been able to achieve independently. Netflix operates in 190-plus countries, spanning 60 languages; ensuring its games remain accessible is a big deal.

For developers, the tantalizing elephant in the room is Netflix’s ready-made audience of 232.5 million subscribers. As it stands, though, the company’s games are reaching only a small fraction of those viewers, according to the figures from mobile analytics company Sensor Tower shared by Omdia lead games analyst George Jijiashvili. Since the launch of Netflix games in November 2021, its titles have been downloaded 44 million times. That’s an average of 2.3 million downloads per month, or approximately one for every 100 Netflix subscribers. The two most popular games are those that make use of Netflix’s own IP: dating sim Too Hot to Handle and retro action-adventure Stranger Things: 1984. Compared to leading mobile titles like Subway Surfers (over 20.5 million downloads in May 2023 alone) and Garena Free Fire (20.3 million), the Netflix figures are tiny, making clear, Jijiashvili says, “the scale of the mobile games business and how small Netflix’s share of that total market is.”

The straightforward explanation for why Netflix’s games service hasn’t resonated with those who enjoy its TV shows and movies is the way it’s accessed. Once you’ve selected the game you want to play in the Netflix app, you’re redirected out of it to either the Apple or Android store to download the game, at which point you’re asked to log into your Netflix account to verify that you’re allowed to play. It’s a far cry from the company’s ultimate goal, which is to have Netflix games “playable on every Netflix device that you have.” This is one of the reasons that, among those I’ve talked to informally, there’s a sense that the current mobile iteration of Netflix games is but an aperitif to a main course that’s at least five and, more likely, closer to 10 years away.

InIn 2006, MIT’s then-codirector of comparative media studies, Henry Jenkins, coined the term “transmedia storytelling.” In the book Convergence Culture, he painted an evocative picture of “consumers” assuming the “role of hunters and gatherers, chasing down bits of story across media channels, comparing notes with each other via online discussion groups, and collaborating to ensure that everyone who invests time and effort will come away with a richer entertainment experience.”

This vision of storytelling spanning books, movies, TV shows, augmented reality games, and, of course, traditional video games, is now pervasive, and few companies appear to be exploring its possibilities more seriously than Netflix. Loombe says this is one of the reasons she joined the company—to create experiences that are “cohesively connected” across mediums in such a way that they have a “direct correlation or impact” on one another.

Transmedia storytelling has already arrived on Netflix. Think of Cyberpunk: Edgerunners and Arcane, animated television shows based on the hit video games Cyberpunk 2077 and League of Legends, respectively. These aren’t fairly faithful adaptations like The Last of Us TV show, but works set in the same universe as their source material that tell their own discrete stories. Each has been effusively received: Arcane won Best Animated Program at the 2022 Emmys, and Cyberpunk won Anime of the Year at the 2023 Crunchyroll Anime Awards.

This is a notable shift from the shoddy film and TV adaptations or licensed video game tie-ins of yesteryear. The thoughtful execution is wildly different from the previous approach, which Krankel calls “mercenary.” The more instructive analogy is to the extended Matrix universe devised by the Wachowskis. The Animatrix, an anime series featuring shorts by filmmakers including Cowboy Bebop’s Shinichiro Watanabe, and video game Enter the Matrix, were released to accompany the premiere of The Matrix Reloaded in summer 2003. Even if Enter the Matrix was a merely competent third-person shooter for the era, its storytelling was notably ambitious, interweaving with the film’s plot with surprising grace. As Jenkins wrote four years later, “There is no one single source or ur-text where one can turn to gain all of the information needed to comprehend the Matrix universe.”

Yet for all the immersiveness of this playfully meta approach to storytelling, even the most successful transmedia experiences can feel more than a little coercive. Take Cyberpunk: Edgerunners, whose opening moments are emblazoned with the logo of CD Projekt Red, cocreator of the show and developer of Cyberpunk 2077. Like the game, the anime is hyperviolent and stylish, as much a fantasy of cyberpunk as a forewarning. The show was so successful at depicting its fictional dystopia that with the roll of each episode’s credits, I could feel a prickle in my thumbs to pick up the controller and step into the interactive version. Rather than a critic or even an algorithm guiding my entertainment habit, it was something closer to “big IP,” and all the market forces underpinning it.

This is the common critique of transmedia experiences—that for all the rich potential of such symbiotic storytelling, it is driven by a relentless capitalist logic, resulting in, as Will Bedingfield put it for Wired, a popular culture liquidized into “one money-flavored corporate soup.”

Regardless, the commercial potential is obvious. Ball believes that Netflix sees video games as a crucial part of the wider IP landscape, now and likely even more so in the future. “Whether or not Netflix remains a video-centric business, it’s clear that just thinking about a franchise as a single medium isn’t sufficient to maximize the value of that franchise economically with its fans,” he says. “You need to be multimedia, multimodal, and gaming happens to be a particularly fast-growing, and though competitively intense, more permissive category.” According to Ball, gaming is the medium generating the most new IP with genuinely devoted fan bases. Thus, he says, “For a company that thrives on franchises, and has a mixed record of producing them over the last 15 years, building a capability in gaming … has perhaps the best odds of creating a new tentpole.”

You only have to cast an eye over the roughly 60 known game-based TV or movie productions in development to get a sense of how far this can go. Netflix has green-lit a good many of those, including an animated version of Tomb Raider and an “epic, genre-bending” live-action TV adaptation of Ubisoft’s open-world action franchise Assassin’s Creed. Loombe refuses to divulge whether the TV show and the Assassin’s Creed game it’s developing will be released synchronously, but the possibility has almost certainly been discussed. If you believe we’re nearing “ peak IP,” it may be time to think again.

IfIf anything could expedite this transmedia future, it’s arguably the cloud. Loombe describes Netflix being in the “R&D” phase of cloud gaming which lets players stream games across the internet to any display rather than using a console or PC. “Early conversations have happened with our developers,” she says. “It’s important that we have partners on this journey with us because we want to make sure the technology we’re building and the platform that we’re building is connected to how developers are making games.” The use case for cloud gaming Loombe cites is not a hard-core gaming experience, but a casual one. “We really want members to be able to watch television and then be able to switch into playing games,” she says. “Maybe it’s a Friday night where they can sit and play with their friends or their family … much more of a social game.” The company has recently posted a number of job ads that appear tailored to what it’s calling “ a new class of hilarious, social party video games.”

Krankel sees an opportunity for Night School’s slower-paced, narrative-focused games to shine through the cloud. “Our games, certainly the ones so far, have not been so twitchy,” he says. “We’re less concerned [with latency], I would imagine, than some crazy multiplayer game.”

Currently, though, fast-paced, multiplayer games with shooting mechanics like Fortnite, Call of Duty, and Grand Theft Auto Online are precisely what resonate with the vast majority of hard-core gamers, and Netflix arguably needs them along for the ride as well as more casual players. Despite the recent rise of services like Microsoft’s xCloud (which is bundled with Microsoft’s own subscription service, Game Pass) and Nvidia’s GeForce Now, the jury is still out on cloud streaming’s capacity to accommodate such experiences. A recent New York Times article assessed many of the services, and the results were mixed at best. Even for Microsoft’s xCloud (still in its beta phase), running on the company’s own Azure data centers, “the performance varied drastically and randomly.” For some testers, game performance was “flawless,” and for others “completely unenjoyable.”

Opinions on the technology appear to be as variable as its performance. On the one hand, David Linthicum, a cloud computing expert and chief cloud strategy officer at Deloitte Consulting, describes the technology as essentially having already “proven itself.” There are “not trivial” issues, he admits, such as latency, bandwidth allocation, and the changes required to infrastructure (including fitting data centers with state-of-the-art GPUs to handle the real-time rendering of graphics), but he says these are problems he and his industry colleagues know how to solve. “It’s more of a marketing problem than a technology problem,” Linthicum says, alluding to the failed cloud gaming businesses of the past 10 years, such as OnLive and Stadia. “In our view, the technology’s surmountable.”

Others disagree, including Jacob Navok, the former head of Shinra, Square Enix’s cloud gaming division (which closed in 2016). Navok, the cofounder and CEO of a company that’s developing a new type of interactive cloud experience, points to many of the same issues but describes them as fundamentally prohibitive to the widespread adoption of cloud gaming. First, there’s the “massive cost” of investing in the rendering infrastructure, which may be underutilized. Picture the scenario: an army of expensive, highly specialized GPUs installed in a Boston data center firing up to meet the peak demands of 10,000 concurrent players on a Friday night. But those GPUs can’t be used for players in, say, San Diego, because the GPU needs to be close enough that players won’t detect a loss in frame rate. Thus, that hardware might sit idle for large portions of the day, perhaps failing to justify the cost of its installation.

According to Navok, an even bigger problem—one he describes as a “hidden secret” except to the tech companies themselves—is that bandwidth is even more expensive than GPU infrastructure (“three times” as much, he stresses). Gaming, which relies on a seamless, unbroken, and up-to-date stream of visual information, simply takes up more bandwidth than video, and relies to a greater degree than video on local “ edge data centers.” Most tech companies, like YouTube and Microsoft, own the so-called “dark fiber” they use that’s buried beneath our streets that constitutes the internet, but Netflix is reliant on a third-party provider: Amazon Web Services. “You’re paying them for the toll,” Navok says. “That cost is tremendously expensive.”

The last problem Navok highlights is literally the “last 10 feet in your home”—the poor-quality routers that tend to drop packets of data. “That is the real issue,” he says. “And you don’t have a way to fix that because it’s not important to almost anything that you do, except for cloud gaming.” Of course, the irony is that millions of homes already have a game console, thus negating the demand for the technology.

Taken together, these are the technical issues that likely caused Sony CEO Kenichiro Yoshida to refer to cloud gaming as “very tricky” in an interview last month with the Financial Times. Navok’s forecast for when these problems might get fixed is gloomier than most of his industry peers’: 2040. “I used to think 2030 back when 5G was going to be a thing,” Navok says. “But none of that promise has been fulfilled.”

Sony and Netflix are not tech giants on the scale of Microsoft or Amazon, so they can’t necessarily solve these issues by themselves. The future of cloud gaming (and thus, the viability of Netflix’s push into it) is likely to be determined by the negotiations between such infrastructure-owning companies and those reliant on them—and the former probably won’t be inclined to make things easy for the latter. Indeed, the potential of cloud gaming to transform the industry isn’t lost on either game makers (it’s the “most exciting and scariest” part of upcoming changes, Mike Rose, founder of No More Robots, told Wired) or regulators: The U.K. Competition and Markets Authority’s concerns about cloud gaming are the only thing holding up the Microsoft-Activision merger.

OverOver the past few years, developers have spent a lot of time pondering what the “Netflix of games”—that is to say, the subscription model—might mean for the industry. In what’s still the fledgling phase, there’s an opportunity for developers and publishers of all types to foster relationships with companies like Netflix and Microsoft that are trying to build out their libraries of content. Xalavier Nelson Jr., head of indie studio Strange Scaffold, says this represents another “healthy addition” to game makers’ available revenue streams (which include actually selling games, private investment, bespoke deals with platform holders, and smaller pots of arts funding). “All of this means that distribution-wise, games is arguably the healthiest entertainment medium out there,” he says. “The subscription model contributes to that.”

Times might be good now, but there are concerns from prominent industry figures, particularly within the indie space, that this might not always be the case. Speaking to Protocol in 2021, Rami Ismail, maker of hits including Nuclear Throne and Luftrausers, outlined the risk subscription services posed to indies should they actually replace the purchasing of games. “That’s where we’re headed, whether we like it or not,” he said. “On Xbox, people pay $9.95 or $15 [for access to a large library]. How am I going to compete with my $10 game?”

Rebekah Saltsman, CEO of Finji, the studio and publisher behind acclaimed indies such as Tunic, Chicory, and Night in the Woods, has concerns that revenue derived from subscription platforms won’t keep pace with the rising costs of making games. “If we turn a buying population into a subscription population, that means we have to rely on subscription fees and buyouts,” she said to GamesIndustry.biz. “And in general, subscription buyouts don’t pay for that many years of a team’s developments, unless your team is very small.”

Savvy developers will likely also have one eye on what’s happening in Hollywood with the ongoing Writers Guild of America strike. Writing for Vulture, Josef Adalian and Lane Brown reported that many writers felt the last decade was an elaborate “bait and switch.” In its early days, the streaming age appeared to herald a plethora of exciting possibilities for writers. As the number of shows ballooned, so did the number of writing jobs, and the streaming platforms, including Netflix, started paying more money up front. In essence, “every show [became] a winner—just not a very big one.” Performance-based incentives were offered for future seasons, but most shows got canceled before those were triggered.

Now, the grievances go, the residuals the WGA fought for are declining, and writing staffs are shrinking. Maybe the most ominous sign for games is the fact that Netflix, like its rivals, has cut spending on content, reducing its tab by more than $1 billion in the first quarter of 2023 compared to last year in an apparent bid to boost cash flow. The new streaming economic model is now so deeply ingrained that creatives are beholden to the whims of companies like Netflix, which over the past 10 years have eroded other means of getting paid.

Adam Hines, cofounder of Night School and cousin of Krankel, isn’t overly concerned about the fate of game makers in this new subscription landscape, despite their lack of unionization. “I’m not worrying too much yet about it crippling video game creators’ ability to make an earning,” he says. “[In] Hollywood, to be on staff of a TV show, or to get a movie made, there’s very few avenues available to be able to do that. You kind of have to work with the major studios to get a job and maintain a job. You have a very narrow pathway. But for games, it’s still so open for any configuration of what a developer looks like. It can be one person who made a video game in their basement, a midsize team, a really small indie studio, and they’re all capable of signing deals with the platforms that make the most sense for themselves.”

It’s not just concerns about technology and the subscription model that pose challenges for Netflix in its mid-term future, but also potential labor blowback to transmedia storytelling. In an interview with the Los Angeles Times, The Last of Us game cocreator Bruce Straley bemoaned the lack of credit he received for HBO’s hugely successful adaptation, seemingly causing the game designer to rethink his attitude toward worker organization. “It’s an argument for unionization that someone who was part of the co-creation of that world and those characters isn’t getting a credit or a nickel for the work they put into it,” he told the Times. “Maybe we need unions in the video game industry to be able to protect creators.” Video game companies are notoriously lousy at crediting their workers. As a result, it’s not difficult to imagine a scenario where greater numbers of video game makers feel short-changed as the franchises they helped create migrate to other mediums, and the companies they work for make bank.

In addition to these legitimate anxieties of the development community, Netflix must now prove itself all over again in an entirely new medium. It has produced many great movies and at least some great TV shows. The video game, though, is a notoriously complex, finicky beast, one whose production timeline, at least at the blockbuster level, far exceeds that of TV and film. Can Netflix deliver the quality that brings players of many different stripes to the platform? “I don’t worry about them making something great,” Ball says. “The bigger challenge, and this is a challenge that’s faced by all large-scale tech companies, is really one of the definition of needle moving.”

Ball argues that while Netflix makes much of its 232.5 million subscribers, the actual number of users, with three-and-a-half to four per subscription, is closer to 1 billion. This is an eye-watering audience, one that far surpasses what even the most successful video games can muster. Ball refers to Candy Crush ( 273 million monthly players), Roblox ( 214 million), Minecraft ( 161 million), Fortnite ( 80 million), Grand Theft Auto Online ( 19 million), and Call of Duty ( 7 million). “There are relatively few games that reach tens of millions of users on a recurring basis,” he says. “Netflix has said its objective is for games to add value to their membership, but what it needs, by definition of being a subscription service which has thousands of movies, is a broad portfolio in order to reach tens of millions, if not hundreds [of millions], out of their billion-plus users. The question is how long does it take to build a large and rich portfolio.”

A recently disclosed email written by Xbox Game Studios head Matthew Booty in 2019 (and made public in the Microsoft FTC case) hints at the scale of the challenge Netflix is facing. “Content is the one moat that we have, in terms of a catalog that runs on current devices and capability to create new,” Booty wrote. “Sony is really the only other player who could compete with Game Pass and we have a two year and 10m subs lead.”

Netflix is clearly not starting from scratch. Its streaming technology is robust; it has a gargantuan bank of IP to work with (even if it’s not as widely beloved as legacy media companies like Disney), and it has already fostered relationships with some of gaming’s biggest companies.

As Loombe says, she was hired to help make video games the “next big thing” for Netflix. It may be that the company has alternative ideas about how to achieve this kind of success. The external games boss pushes back against the notions underpinning traditional, hard-core gaming.

“The Triple-A label these days is interesting, because I think there’s a lot of things out there that have the Triple-A quality but not necessarily the Triple-A title,” she says. Seemingly spitballing, Loombe imagines a Bridgerton video game (“exploring that world would be great”) and an Emily in Paris “fashion game.” Those examples speak to the company’s view that its games, like its TV shows and movies, should be built for the biggest audience possible. In this sense, Netflix appears to be lining up a video game push that goes far beyond traditional “gamers.” Its far-flung vision of the future is one gaming executives have long dreamed of—one where video games finally go massively mainstream.

Lewis Gordon is a writer and journalist living in Glasgow who contributes to outlets including The Verge, Wired, and Vulture.

Netflix’s Next Act Is Investing in Video Games - The Ringer

[Glenn Petersen] “Orange Is the New Black” Signalled the Rot Inside the Streaming Economy The in...

Glenn Petersen — 7/14/2023 5:28:05 AM

“Orange Is the New Black” Signalled the Rot Inside the Streaming Economy

The innovative and daring show was a worldwide hit for Netflix, but some of the actors say that they were never fairly compensated.

By Michael Shulman
The New Yorker
July 12, 2023

Some cast members, including Kimiko Glenn, center, are proud to have been on “Orange Is the New Black,” but feel shortchanged out of the wealth that it created. Photograph by Jessica Miglio / Courtesy Netflix
-----------------------------

In December, 2020, in the depths of pandemic winter, the actress Kimiko Glenn got a foreign-royalty statement in the mail from the screen actors’ union, sag-aftra. Glenn is best known for playing the motormouthed, idealistic inmate Brook Soso on the women’s-prison series “Orange Is the New Black,” which ran from 2013 to 2019, on Netflix. The orchid-pink paper listed episodes of the show that she’d appeared on (“A Whole Other Hole,” “Trust No Bitch”) alongside tiny amounts of income (four cents, two cents) culled from overseas levies—a thin slice of pie from the show that had thrust her to prominence. “I was, like, Oh, my God, it’s just so sad,” Glenn recalled. With many television and movie sets shuttered, she was supporting herself with voice-over jobs, and she’d been messing around with TikTok. She posted a video in which she scans the statement—“I’m about to be so riiich!”—then reaches the grand total of twenty-seven dollars and thirty cents and shrieks, “WHAT?”

The post got more than four hundred thousand likes and nearly two thousand comments, many from disbelieving fans: “Wait how is that even legal??” “how is this even real you were on one of the biggest netflix shows.” This past May, with screenwriters on strike and labor unrest sweeping Hollywood, Glenn reposted the video on Instagram, where she has almost a million followers. This time, not only fans but castmates weighed in. Matt McGorry, who played a corrections officer: “Exaccctttlllyyy. I kept my day job the entire time I was on the show because it paid better than the mega-hit TV show we were on.” Beth Dover, who played a manager at the company taking over the prison: “It actually COST me money to be in season 3 and 4 since I was cast local hire and had to fly myself out, etc. But I was so excited for the opportunity to be on a show I loved so I took the hit. Its maddening.”

When “Orange” premièred, ten years ago this week, it broke ground in multiple ways. Created by Jenji Kohan and based on Piper Kerman’s memoir, the show was ribald, off-kilter, playfully knowing about female sexuality, and sharp-eyed about the prison-industrial complex. Although it centered on Piper (Taylor Schilling), a sheltered, blond yuppie adjusting to life in minimum-security lockup, its selling point was the huge, multiracial, largely female ensemble, which, as The New Yorker’s Emily Nussbaum observed at the time, represented a “truly impressive array of prisoners, played by actresses of varying ages and appearances, including types rarely shown on TV.” The series was also a breakthrough for Netflix as it was transitioning from a DVD-rental-by-mail service to a streaming company with its own content; “Orange” arrived just a few months after “ House of Cards.” With “Orange,” Nussbaum noted, Netflix was “quickly establishing itself as a real rival to cable.” The shift came with a new viewing pattern: binge-watching, in which an entire season could be consumed at once. “House of Cards,” anchored by the star power of Kevin Spacey and Robin Wright, brought the company instant prestige. But “Orange” was a ground-up phenomenon, with a fervid fan base that would binge, binge, and binge again. The show’s runaway success was a cornerstone that helped build the Netflix brand, which in turn built the streaming economy, which has now taken over pretty much the entire industry.

A decade on, however, some of the cast feel disillusioned about how they were compensated, both during the original run and in the years since. Television actors have traditionally had a base of income from residuals, which come from reruns and other forms of reuse of the shows in which they’ve appeared. At the highest end, residuals can yield a fortune; reportedly, the cast of “Friends” has each made tens of millions of dollars from syndication. But streaming has scrambled that model, endangering the ability of working actors to make a living. “So many of my friends who have nearly a million followers, who are doing billion-dollar franchises, don’t know how to make rent,” Glenn told me. That struggle has brought sag to the precipice of a potential strike, authorized by more than ninety-seven per cent of about sixty-five thousand voting members. (The negotiation deadline, after an eleventh-hour extension, is tonight.) In certain ways, “Orange” was an early indicator of how lopsided the streaming economy would be, and a number of cast members are now conflicted: they’re proud to have been on such a progressive, influential show, but feel shortchanged out of the wealth that it created. “We all took a risk together,” Alysia Reiner, who played the corrupt warden Natalie (Fig) Figueroa, said. “And the reward for Netflix does not seem in line with the reward for all of us who took that risk. I can go anywhere in the world and I’m recognized, and I’m so deeply grateful for that recognition. Many people say they’ve watched the series multiple times, and they quote me my lines. But was I paid in a commensurate way? I don’t think so.”

I spoke to ten actors from the show, many of whom spent several seasons as “recurring guest stars,” meaning that they had substantial roles over numerous episodes but weren’t part of the core group categorized—and compensated—as series regulars. (According to TV Guide, Schilling was paid thirty-five thousand dollars per episode in 2014—far more than a day player, far less than Téa Leoni’s hundred and twenty-five thousand for “Madam Secretary,” on CBS.) “The first thing we say to each other when we see each other, is, like, ‘Yeah, it’s really fucked up—all my residuals are gone!’ ” Emma Myles, who spent six seasons playing Leanne Taylor, an ex-Amish meth addict, told me. “It’s always the first thing to come out of our mouths, because it’s so crazy and unjust. And everyone thinks we’re kajillionaires.” When Myles was cast, for the first season, she was having a rough time (astrologically speaking, she called it a Saturn return from hell): she’d lost a restaurant job, then was displaced by a house fire, then moved into a new apartment that had bedbugs. She was about to give up on New York when she got a three-episode offer for “Orange.” “I would explain to people, ‘Yeah, it’s for Netflix,’ and they were, like, ‘Oh, with the envelopes? That’s cute.’ ”

“Orange” was distributed by Netflix but produced by Lionsgate, which determined the cast’s up-front payments. Myles was paid scale, sag’s minimum rate, which was under nine hundred dollars per day. “They could and would pay us the absolute bare minimum, and there was really no wiggle room,” she recalled. Her contract was appended with sag’s 2012 New Media Agreement, which covered projects “produced for initial exhibition via the Internet, mobile devices, or any other platform known or which hereafter may be adopted” (now known as half of TV). sag had originally codified the agreement in 2009, after a yearlong standoff with the studios. At the time, streaming TV was mostly theoretical, except for the under-five-minute “Webisodes” that “Lost” ran on abc.com. The contractual terms were—and remain—much worse for actors than those of “linear” TV. (This is a major source of contention in the actors’ current standoff with the studios.) Traditional broadcast series pay residuals for each re-airing, calculated as a percentage of the actor’s salary. The 2012 New Media Agreement entitled Myles to residuals only after the first fifty-two weeks the show was on the platform; the amount was based not on how many times each episode was watched but on a percentage of the licensing fee that Netflix paid Lionsgate to distribute the show. (If this sounds confusing, don’t worry—the actors also find it baffling.) Myles still gets around six hundred dollars a year for a handful of guest spots on “Law & Order: Special Victims Unit,” stretching back to 2004, but her residuals this year for “Orange” have come to around twenty bucks.

Netflix didn’t share its viewership numbers (and still mostly doesn’t), making it harder for the actors to negotiate higher salaries. But the “Orange” cast could tell that the show was a megahit from their overnight fame. “We knew that it was insanely popular,” Myles said. “We’d walk out of our houses in whatever neighborhood we were living in, and people were going crazy.” The comedian Lea DeLaria, who played the lovable bull dyke Big Boo, recalled getting swarmed by a group of screaming teen-agers. “My girlfriend at the time said, ‘Lea, you’re a Jonas brother!’ ”

The fame could be destabilizing; Glenn said that she developed a “panic disorder.” One day, during a yoga class, she recalled, “I was coming out of Savasana, and, when I opened my eyes, there’s a face right in front of me, like, ‘Hi, can I get a picture with you?’ ” On the train, she’d get swarmed by “Orange” fans and worried for her safety. “I would get grabbed,” she recalled. When she joined the cast, in Season 2, Glenn was living in subsidized housing in Flatiron. Because the show didn’t pay for her transportation unless her call time was before 6 a.m., she either had to take the subway to the studio in Astoria or pay for a taxi herself. “The cab rides wouldn’t have been such a big thing if we were paid enough that it didn’t feel like we were spending our paychecks on it.”

Despite the Beatlemania-like fame, many cast members had to keep their day jobs for multiple seasons. They were waiting tables, bartending. DeLaria continued doing live gigs to keep up with her rent. Diane Guerrero, who played the fashionable inmate Maritza Ramos, worked at a bar, where patrons would recognize her. “How could you tell this complete stranger how much you’re getting paid for being on a television show?” she asked. “Because everyone’s reaction would be, like, ‘Oh, my God, I love you on that show! But also, what are you doing here?’ It was this incredulity that was teetering on offensive.” Myles was working in a basement for a financial firm, acting in live simulations for aspiring financial planners. One day, one of the candidates paused on the phone and said, “You sound exactly like the Amish meth head on ‘Orange Is the New Black.’ Has anyone ever told you that?”

For a while, there were more substantial residuals—only because Netflix didn’t cover every territory on the planet, and Lionsgate could resell the rights to cable channels overseas. All that dried up as Netflix went global and the show aged, and the residuals slowed to a trickle. “As the seasons progressed, we started to get more disgruntled about money, mostly because of how incredibly popular the show was,” one actor told me. “And then it felt, like, Well, my friends on network shows are incredibly wealthy.” The series regulars were eventually paid up to two hundred thousand dollars per episode, while the supporting cast made no more than fifteen thousand. Lori Tan Chinn, who appeared in six seasons as the inmate Mei Chang, told Time that she’d made so little on the show that she couldn’t afford the boxed sets; she considered going on food stamps, until she was cast on the Comedy Central sitcom “Awkwafina Is Nora from Queens.” Beth Dover recalled, “They’re telling us, ‘Oh, we can’t pay you this much, because we’re pinching pennies.’ But then Netflix is telling their shareholders that they’re making more than they’ve ever made.” She added, “We have not been fairly compensated by any stretch of the imagination.”

Starting in 2015, “Orange” won three consecutive sag Awards for Outstanding Performance by an Ensemble in a Comedy Series. But the cost of attending the ceremonies rankled some actors, who would have to fly themselves to Los Angeles and supplement the small stipends (if anything) they’d receive for beauty needs. “As the show got more and more known, my budget went down and down and down for any type of hair and makeup for awards shows,” Taryn Manning, who played Pennsatucky, said. Another actor recounted feeling “inadequate” because she couldn’t afford a designer dress and—like many in a cast that included a range of body types—couldn’t just grab a size 0 off the rack. “It sounds like champagne problems,” Glenn said. “But it’s expected of you.”

Before one sag Awards ceremony, the cast attended a house party thrown by Ted Sarandos, then Netflix’s chief content officer and now its co-C.E.O. Several actors remember that Sarandos gave a toast bragging that more people watched “Orange” than “ Game of Thrones”—a rare sliver of transparency about the ratings. (One actor called it a “whoops” moment.) But the cast found the line less uplifting than galling; if the show was really more popular than “Game of Thrones”—whose top cast members have been said to make more than a million per episode by the end—why were the salaries for “Orange” so paltry? DeLaria told me, “I remember all of us thinking, ‘Give us the money!’ But we were always saying, ‘Give us the money.’ We were keenly aware that we weren’t being paid.” She added, referring to her residuals, “I get twenty dollars! I would love to know: How much money did Ted make last year?” (Twenty-two million in salary, plus stock options.)

At the end of the fifth season, the series took a creative left turn: the inmates, having staged a prison riot, are split into separate buses, and the main characters are sent to maximum security. The change in setting was refreshing, but it meant writing off much of the supporting cast. Several actors said that they hadn’t even been told what was happening. “Everyone was under the impression that an entire bus of people was basically getting fired,” Myles recalled. “Those looks on our faces as inmates are being loaded onto those buses—‘Where are we going?’—that was not acting. That was real.” She no longer had an episode guarantee, but she was assured that she was still on the show. “They were, like, ‘Don’t worry, we’ll call you when it gets closer to that time.’ And they didn’t call me for two years.” Being in limbo could make it difficult to find other jobs, if casting directors assumed that they were still on “Orange.”

Morale slumped. “It was a miserable time in my life, even though it was a big success,” Manning said, of her years on the show. “Just so much doubt. Never knowing if you were a moment away from being killed off.” (Her character overdoses in the penultimate episode.) Though more actors were promoted to series regulars as time went on, many who appeared consistently were stuck as recurring guest stars. “As an actor, that’s a carrot that is always getting held in front of you,” Guerrero said. “If you dedicate enough, and if they like your character enough, you get the possibility of maybe one day being a series regular.” Some actors described the atmosphere on set like that of a fun sleepover, but others said that a hierarchy emerged, exacerbated by a wide disparity in pay. “It wasn’t just money. It was also respect,” DeLaria said. Marie-Lou Nahhas joined during the final season, as an Egyptian-born inmate at an ice detention center. “When I came on, the baggage of the frustration was already there,” she recalled.

How could a show so popular pay so little? One reason was the sheer size of the ensemble, mostly unknowns. At the beginning, the show was an experiment, and the tight budget was seen as a trade-off. “We were working in outlaw country,” Tara Herrmann, one of the writers and executive producers, told me. They were free to say or show most anything, she said, excepting erect penises and, in some international markets, swastikas. “We didn’t have to answer to corporate sponsorship. In a way, that’s why I always felt, like, O.K., so maybe the payouts aren’t as lucrative, but the offshoot is we get all this creative freedom.” She recounted a meeting with Netflix, in which she’d been told that the actors were getting a raise. “They were sure to explain that the pay bump wasn’t contractually obligated but a compensation they felt was overdue. I remember saying that I’d hoped the raise would put our cast on par with our sisters at ‘Game of Thrones’ or any big HBO show. But I don’t think it did.”

Kohan (who declined to be interviewed) had little say over the actors’ salaries, and she and her staff were just as in the dark about the ratings as the cast was. The day after the final season’s première party, Herrmann went on, “Jenji and I were brought to a conference room, and they finally shared the numbers with us: a hundred million users had seen at least one episode, and I want to say at least half had completed all six seasons. From an artistic standpoint, those numbers are breathtaking. And, from a business perspective, absolutely staggering. After revealing the numbers, the executive asked us, ‘How does hearing this make you feel?’ Jenji was silent and looks to me, and I said, ‘Like I want to renegotiate my contract.’ ”

As forward-thinking as “Orange” was, some people I spoke to saw Hollywood’s old blind spots at work. DeLaria observed, “I think some of this was because we were a female-centric show. I don’t think there’s anybody out there who doesn’t know that women are paid unequally to men. We can point at this show and really see it.” One representative blamed Lionsgate for lowballing the cast, particularly the actors of color: “The show was very much an ensemble. However, there was significant disparity between the pay of certain non-minority cast members and many actors of color who were the fibre of the show.” (Lionsgate and Netflix declined to comment on the record.) That disparity likely had roots in the narrative evolution of the series, which initially centered on Piper and her ex-girlfriend Alex Vause (Laura Prepon) but grew into a true multiracial ensemble piece. Danielle Brooks, who played Taystee, arguably the show’s emotional anchor toward the end, has said that she was paid less on the final season than the lead child actors made that same year on “ Stranger Things.”

All this is particularly ironic, given the show’s pointed critique of an exploitative capitalist machine, a carceral system that makes inmates work for pennies. Granted, prison is many times worse than a stingy Netflix show, but the parallels, Glenn said, were “uncanny.” sag’s call to arms has only reminded the “Orange” cast that their role in the streaming revolution has a dark underbelly. “We need to update the system,” Dover told me. “They’re finding ways to cut our wages, and so the middle-class working actor is screwed.” Although the show launched some cast members—Uzo Aduba, Laverne Cox—into high-profile careers, others have struggled. That’s not uncommon in show business, but usually starring on a worldwide hit leaves you with some financial cushion. “When you’re a kid, you have this idea: once I’m on something that people actually see, I’ll be rich, and I’ll have a house that has a bathtub,” Myles said. “And you look around after being on a hit show, and you’re, like, Wow, I’m still in the same one-bedroom apartment. Was this how it was supposed to be?” ?

An earlier version of this article misstated Lea DeLaria’s homeownership status

“Orange Is the New Black” Signalled the Rot Inside the Streaming Economy | The New Yorker (archive.ph)

[Glenn Petersen] How Netflix Plans Total Global Domination, One Korean Drama at a Time New York ...

Glenn Petersen — 7/13/2023 2:56:32 PM

How Netflix Plans Total Global Domination, One Korean Drama at a Time

New York Times
July 13, 2023

They met in a 20th-floor conference room in Seoul named for one successful project with Korean talent — “ Okja,” a 2017 film of one girl’s devotion to a genetically modified super pig — to discuss what they hoped would become another hit.

Quickly, the gathering of Netflix’s South Korea team became an unhappy focus group, with a barrage of nitpicks and critiques about the script for a coming-of-age fantasy show.

One person said the story line pulled in too many fantastical — and foreign — elements instead of focusing on character and plot. The creative components struck another person as too hard to grasp, and out of touch.

Finally, the executive who was championing the project offered a diagnosis: The writer had watched too much Netflix.

Inspired by the streaming service’s success in turning Korean-language shows into international hits, the writer wanted this show to go global, too, and thought more far-fetched flourishes would appeal overseas.

The fix, the executive said, was the opposite. The script needed to “Koreanize” the show, ground it in local realism and turn some foreign characters into Korean roles.

Netflix wants to dominate the entertainment world, but it is pursuing that ambition one country at a time. Instead of creating shows and movies that appeal to all 190 countries where the service is available, Netflix is focusing on content that resonates with a single market’s audience.

“When we’re making shows in Korea, we’re going to make sure it’s for Koreans,” said Minyoung Kim, Netflix’s vice president of content in Asia. “When we’re making shows in Japan, it is going to be for the Japanese. In Thailand, it’s going to be for Thai people. We are not trying to make everything global.”

Netflix’s 2023 Emmy nominations — a respectable if not record-breaking haul for the streaming service — tell one story of its ambitions: It received nods Wednesday for its prestige drama “The Crown,” its comedy-drama “Beef” and its reality shows “Love Is Blind” and “Queer Eye.”

In addition to that wide spectrum of English-language programming, Netflix’s ambition is to grow in relatively untapped regions like Asia and Latin America, beyond its saturated core markets in the United States and Europe, where subscriber growth is slowing. It is allocating more of its $17 billion annual content budget to expanding its foreign language programming and attracting customers abroad.

But the company is also betting that a compelling story somewhere is compelling everywhere, no matter the language.

This year, Netflix developed “ The Glory,” a binge-worthy revenge saga about a woman striking back against childhood bullies, which cracked the top five most-watched non-English-language TV shows ever on the service. Before that, at one point “Extraordinary Attorney Woo,” a feel-good show about a lawyer with autism, was in the weekly Top 10 chart in 54 countries. Last year, 60 percent of Netflix subscribers watched a Korean-language show or movie.

The overseas content has also taken on greater significance with the Hollywood writers’ strike, in which Netflix has become a focal point of frustration for the ways streaming services have upended the traditional television model. In April, before the writers went on strike, Ted Sarandos, one of Netflix’s co-chief executives, said that he hoped there wouldn’t be a strike and that he would work toward a fair deal. But he also promised, “We have a large base of upcoming shows and films from around the world,” adding that Netflix had to “make plans” for a worst-case scenario.

In building an audience abroad, Netflix has a head start on other major streaming platforms, although Disney and Amazon have announced plans to build their catalogs of international content. In many Asian markets, Netflix is also competing with a local streaming option — often created by broadcasters wary of ceding control to foreign media giants.

Asia, Netflix’s fastest-growing region, is a key battleground because customers watch a higher percentage of programming in their native tongues. Netflix already has shows in more than 30 Asian languages.

That’s where Ms. Kim, 42, comes in.

Ms. Kim joined Netflix in 2016. Her job is, essentially, to help Netflix do something that has never been done before: build a truly global entertainment service with shows in every market, while selling Americans on the appeal of foreign-language content. If she is daunted by the demand, she doesn’t show it.

She is chatty and direct, with an almost encyclopedic knowledge of Korean television dramas. But perhaps most importantly for her task, she is the woman who gave the Netflix-watching world “Squid Game.”

‘Don’t expect miracles’

In 2016, Netflix rented Dongdaemun Design Plaza, a Seoul landmark and futuristic exhibition space, for a red-carpet affair featuring the stars of one of its biggest shows at the time: “Orange Is the New Black.”

The hors d’oeuvres were served, on theme with the show, on food trays meant to mimic prison. Netflix was arriving in Korea’s entertainment industry with a big splash. But the tongue-in-cheek humor felt inhospitable and culturally out of touch, according to industry people who attended. It left the impression of an American company that did not understand Korea.

It was a clumsy start. A few months later, when Ms. Kim began in her role as Netflix’s first content executive in Asia with a focus on South Korea, she warned the company’s executives: “Don’t expect miracles.”

Ms. Kim said she needed to make Netflix feel less foreign and sell creators on why they should work with the company.

She traveled to visit producers at their offices instead of summoning them to see her. She arranged regular boozy dinners with producers — the custom in South Korea — knowing that it was difficult to gain their trust until they got drunk with her.

Over lunch, where she had a steaming bowl of beef offal soup, she described her strategy.

“Here, you first have to build a relationship,” Ms. Kim said. “At the time, I think the way we approached things felt very transactional and aggressive. When it comes to Asian partners, oftentimes it’s more than just the money we put on the table.”

Early in her tenure, she came across a movie script called “Squid Game” by Hwang Dong-hyuk, a respected local filmmaker. He had written it a decade earlier and could never find a studio to finance it. She said she immediately loved the irony of a gory “death game” thriller based around traditional Korean children’s games. She thought the concept might work better as a TV show, allowing for more character development than a two-hour film.

But it seemed like a strange choice for one of her first big bets. Similar titles were in the young-adult genre, such as “The Hunger Games” or “Battle Royale,” a Japanese cult film in which a group of students fight to the death.

“Who wants to see a death game with poor old people?” she recalled being asked by a member of her team.

But after she saw the set designs, she was convinced that it would be a big hit in Korea. Netflix decided to change the English title to “Round Six” to appeal to an international audience. Near the release date, Mr. Hwang asked to change the title back because he felt that “Squid Game” was closer to the show’s essence.

Much to everyone’s surprise, “Squid Game” garnered an enormous number of views in South Korea and across the world. It was a sensation that broke into the cultural zeitgeist, complete with a “Saturday Night Live” skit and Halloween costumes. And Netflix finally threw the right kind of party for the show’s Korean cast: an after-party, after dominating last year’s Emmy Awards.

“Squid Game” changed everything. It became the most-watched show ever on Netflix, and it spurred interest in other Korean content. In April, to coincide with a visit to the United States by South Korea’s president, Yoon Suk Yeol, Netflix said it was planning to invest $2.5 billion in Korean shows and movies in the next four years, which is double its investment since 2016.

After decades of Hollywood’s delivering blockbusters to the world, Netflix is trying to flip the model. Mr. Sarandos said that “Squid Game” proved that a hit show could emerge from anywhere and in any language and that the odds of success for a Hollywood show versus an international show were not that different.

“That’s really never been done before,” he said at an investor conference in December. “Locally produced content can play big all over the world, so it’s not just America supplying the rest of world content.”

‘Green-light rigor’

Global expansion requires a guiding principle. For Ms. Kim, that’s “green-light rigor,” a mind-set she brought to Netflix’s office in the Roppongi district of Tokyo, where she moved last year to oversee the content teams in Asia-Pacific except for India.

In some Asian countries, she explained, Netflix has a more limited budget, so the company has to select only the “must-haves” and pass on “nice-to-haves.” Green-light rigor also means not pandering to what Netflix imagines viewers across the world want.

How that discipline played out in practice was on display when the Japanese content team met to discuss whether to option a book for a show in late January.

The book in question was a love story set in a dystopian world with elements of science fiction. A data analyst said that based on the show’s projected “value,” he wondered whether Netflix would recoup its investment because of the sizable budgets usually required for science fiction.

Kaata Sakamoto, who heads the Japanese content team, said he worried about the mismatched expectations of viewers who might come expecting a romance drama and then find themselves in hard-core science fiction.

“It’s like someone who goes into a restaurant and they are served food that is different from what they want to eat,” he said. “If this is a ‘Romeo and Juliet’ tale, do we need a big sci-fi world setting? It feels like mixed soup.”

The executive pitching the project said the writer watched “a lot of Netflix” and was aware of what was popular. So instead of a pure love story, he wanted to infuse elements of dystopian science fiction — a popular genre on Netflix.

But Mr. Sakamoto, who played an active role in producing some of Netflix’s hits from Japan, seemed unconvinced.

“My question is what is it about this project that is uniquely Japanese?” he asked.

Netflix’s Tokyo office exudes an American vibe, but very little English is spoken in the creative meetings. This was the case when Mr. Sakamoto met with Shinsuke Sato, creator of “Alice in Borderland,” a science-fiction survival thriller that was Netflix’s biggest hit in Japan, to discuss a coming project.

It was a free-flowing discussion that touched on minute details of the project, from character development to plot twists to which scary animals would work best in computer graphics — reptiles could be easier than furry creatures, suggested Akira Mori, a producer who works with Mr. Sato. (“Maybe an alligator?”)

Later, Mr. Sakamoto said that in the past, a lot of talented Japanese who were successful in Japan had struggled to break through in Hollywood because they didn’t speak English well.

“But what Netflix has allowed is that creators can make work in their own countries in their own language, and if the storytelling is good and the quality is there, they can reach a global audience,” he said. “This is a major game changer.”

Vision come to life

The increased expectations are apparent throughout Netflix’s high-rise office in Seoul. The meeting rooms are named after its prominent Korean movies and shows. In the canteen, a human-size replica of the doll from “Squid Game” looms over a selection of Korean snacks and instant noodles.

Ms. Kim’s vision of creating a diverse slate of Korean shows has come to life. “Physical: 100,” a gladiator-style game show in which contestants fight for survival and a cash prize, was in the Top 10 of non-English shows for six weeks. This year, at least three Korean shows have been among the top-10 foreign language shows every week.

“It’s exciting, but I’d be lying if I said I didn’t feel the pressure,” said Don Kang, Netflix’s vice president of content in South Korea, who has succeeded Ms. Kim in overseeing South Korea.

Mr. Kang, who is soft-spoken with a baby face, joined in 2018 after heading international sales at CJ ENM, a Korean entertainment conglomerate. When he started, Netflix was still operating out of a WeWork office.

He said that before Netflix, he thought there wouldn’t be much international interest in Korean reality shows or shows that weren’t romantic comedies.

“I was very happy to be proven wrong,” Mr. Kang said.

Netflix’s slate of Korean programs runs the gamut from romantic comedies to dark shows like “Hellbound,” an adaptation of a digital comic book about supernatural beings condemning people to hell. Yeon Sang-ho, the director of “Hellbound,” said such niche content wouldn’t be made by Korean broadcasters because the audience wasn’t big enough to justify the budget.

“Netflix has a worldwide audience, which means that we can try more genres and we can try more nonmainstream things, too,” Mr. Yeon said. “Creators who work with Netflix can now try the risky things that they wanted to do but they weren’t able to.”

Netflix’s success has reshaped South Korea’s entertainment industry. TV production budgets have increased as much as tenfold per episode in the last few years, said Lee Young-lyoul, a professor at the Seoul Institute of the Arts, and there is growing concern that domestic broadcasters will struggle to compete.

Production companies need Netflix’s investments to hire top writers, directors and actors, creating a “vicious cycle of dependency,” according to “Netflix and Platform Imperialism,” an academic paper published in The International Journal of Communication this year.

The extraordinary success of “Extraordinary Attorney Woo” highlights the tensions.

AStory, the show’s production company, rejected Netflix’s offer to finance the entire second season, because of its previous experience with the service. AStory made “Kingdom,” a hit Korean zombie period show, as a Netflix original, meaning Netflix owned all the show’s intellectual property rights in exchange for paying the full production costs.

“While it’s true that Netflix helped the series get popular, our company couldn’t do anything with that,” said Lee Sang-baek, AStory’s chief executive. “There are lots of regrets there.”

Mr. Kang said that Netflix had a good relationship with AStory and that the situation was complex. He said Netflix had been “very, very generous” in compensating creators and actors but emphasized the need to grow in a “sustainable” way.

“You do sometimes hear those types of concerns: Is Netflix taking too much from our industry? But you can’t be in this business and operate that way,” Mr. Kang said.

‘Too Hot to Handle’ around the world

One by one, Ms. Kim rattled off the unique traits of audiences around the region. Korean audiences prefer happy endings in romance. Japanese dramas tend to portray emotion in an understated way. Chinese-language viewers are more accepting of a sad love story. (“The Taiwanese staff always says a romance has to be sad. Somebody has to die.”)

Ms. Kim understands that local stories share universal themes, but the key to Netflix’s work is to understand these cultural differences.

When Netflix’s “Too Hot to Handle,” a tawdry reality dating show with contestants from the United States and Britain, did well in South Korea and Japan, the company decided to make its own shows in the respective countries. But instead of programs replete with sex and hooking up, Netflix’s versions in South Korea (“Singles Inferno”) and Japan (“Terrace House”) were more suited to local sensibilities: only hints of romance with minimal touching or flirting.

Storytelling can also differ. Impressions of the first episode of “Physical: 100” were divided by geography. Ms. Kim said she found that in general, American audiences thought the extensive back stories about the contestants slowed the show. Korean audiences liked the back stories because they wanted to know more about the contestants.

Ms. Kim recalled how Netflix’s U.S. executives asked her why the first Squid Game contest did not come until the last 20 minutes of the first episode. She was puzzled, because this was fast for Korean audiences — but not fast enough for American sensibilities. In South Korea, the action often does not start until the fourth episode because shows often follow the cadence of a story arc suited to a 16-episode broadcast TV schedule.

Ms. Kim said she thought that audiences would tolerate work that defied their expectations or values when it was foreign, but that it must be authentic when it was local.

So far, that philosophy has been successful. “Squid Game” proves that. But it also shows the new challenge that awaits Netflix — once something is a global hit, there are global expectations.

Leonardo DiCaprio is a fan, and Mr. Hwang, the writer-director, even teased that the Hollywood A-lister could join the “games,” a boost that most people chasing global domination might find hard to resist. But Netflix did manage it — for now.

Last month, when the cast was announced, it featured all Korean actors.

The post How Netflix Plans Total Global Domination, One Korean Drama at a Time appeared first on New York Times.

How Netflix Plans Total Global Domination, One Korean Drama at a Time – DNyuz

[Glenn Petersen] NFLX has won the streaming wars..for now.

Glenn Petersen — 7/10/2023 3:25:21 PM