Welcome to another round of behind-the-scenes insights (for a longer version, check out my hollywood101.substack.com newsletter, which comes out every Wednesday and is now available to subscribers with archive access and bonus content!), or what’s up took place behind closed doors in Hollywood last week.
Mouse plans
Disney can celebrate because last quarter was one of the strongest in its history. This was mainly contributed by the premieres of In the Head 2 and Deadpool & Wolverine, which injected fresh blood into two of the three most valuable IPs. We can speculate how much of this is more of a short-term effect, like pumping a few thousand volts into a failing heart, but with a second Moana on the horizon, a Christmas prequel to The Lion King (Mufasa) and the premiere of the aforementioned Deadpool on a stream that celebrated another million new subscribers , Bob Iger can afford a little victory dance.
It may be premature to beat your chest about the results of the studio section, as next year’s line-up is far from certain, but that’s how it goes in Hollywood. Tomorrow is always far away, so you need to pour the champagne as fast as possible. Bob Iger can celebrate regularly after two years since his return. Disney+ has retained subscribers despite several waves of price hikes and boosted by four million new souls and higher advertising revenue, so it’s not just the name that’s in the plus. In the future, it will be sustained by the fight with black passengers, but also by the merger with Hulu and ESPN. Especially in the USA, Disney wants to combine all three brands in a convenient package as much as possible. Subscribers of the advantageous package will thus have access to all content in their application from a single interface through thematic tiles.
A potential scare for Disney is its television and cable businesses, where profits will quickly thin. Iger solved it with mass layoffs, but when negotiating with the operators, it can be seen that his position is no longer as strong as before. Maybe that’s why Disney is trying to expand elsewhere and uses its deep pockets. We have to remember that he has a settlement with Comcast/Universal for Hulu (nine billion dollars at best) as well as extensive investments in theme parks.
Fortunately, Iger succeeded in his hussar piece and is currently finishing the Indian merger with Reliance, when Myšák got rid of the hot potato in the form of Star India. The effort to massively expand in India at dumping prices did not work, but thanks to the connection with Reliance, Disney will maintain a strategic position in the region and will still earn 8.5 billion, which will cover the upcoming bill for Hulu.
Iger is satisfied that all these deals are in place and he won’t have to buy or sell anything during Trump’s second term. At least that’s what he expressed in an interview with the media on the occasion of the announcement of the results for the past quarter. Meanwhile, at other studios and media houses, bounty hunters are impatiently trampling over what they will try to buy cheap and sell high. Iger has two and a half years left until the end of the shift. With a bit of luck, he will also see the premiere of the next Avatar!
The Warners are racing against time
David Zaslav, on the other hand, can’t wait for mergers and moves on the show business board. Hopefully the new administration will be kind to him. It should not be forgotten that the Trumps lie in the stomach of CNN, which falls under Warner Bros. Discovery. Last time, because of this, he delayed the merger with AT&T so much that the whole deal quickly soured in the mouth of the telecommunications giant. Hopefully history won’t repeat itself, because Warners is to some extent dealing with the same thing as Disney. Their streaming platforms aren’t growing nearly fast enough to match the downward trend of traditional TV and cable. John Malone, head of Liberty Media, one of the main shareholders of Warner Bros. Discovery (and a million other companies and brands), keeps a protective hand over David Zaslav, but he himself admits in a current interview that he was a little afraid of the growing debts after the acquisition. Now he says he can see the light at the end of the tunnel.
There is a certain condescension to Trump and Musk from his answers. Not when Warners want to buy and sell to improve their market position. With Malone behind him, Zaslav will once again make economic decisions, so let’s not expect the Warners or Max to be driven forward by the courage to create and experiment in the short term. Aggressive debt reduction suggests Warners will be for sale. First, however, Malone and Zaslav would have to divide them in some attractive way. And for such butchery, they will need lenient politicians.
Netflix Live!
In just a few hours, Netflix will launch its most ambitious live show so far – the fight between Mike Tyson and Jake Paul. We’ve seen tennis, golf, the SAG-AFTRA Screen Actors Guild Awards, and currently even a cooking show (Dinner Time Live With David Chang), but boxing is one of those pay-per-view events tens of dollars. It can be expected that technically everything will take place without any problems, Netflix has already successfully tested the live broadcast several times after some somersaults. In our country, it will be broadcast at two in the morning, which is roughly the time of the Oscars, with a shift of six, or nine hours versus both US coasts.
The problem so far is that most Netflix subscribers have no idea the service offers live streaming. If you don’t know about the upcoming event and you’re not on Netflix at the right time, the recording usually merges in the carousel with a lot of other series and movie news. Netflix wants to change that, because live shows are a major step forward for it.
Why? Because thanks to the purchase of sports licenses, American football or wrestling are also coming to the platform. And during these live streams, Netflix plans to sell lucrative advertising slots. So lucrative that even those who subscribe to the most expensive ad-free subscription possible will see ads on live streams. Shocking? Ted Sarandos will surely explain it somehow.
It is a question of how it will be in markets where advertisements have not yet been introduced at all. Are we going to be looking at hard-embedded American blocks? Or will Netflix manage to implement the offer in time? It has newly introduced subscriptions with advertisements in several markets, and currently 70 million users are using this affordable variant, which is almost double compared to the first half of 2024.
Numbers like that naturally incentivize the competition to take a bite out of the ad pie too, so let’s expect streamers to sell us the next wave of price hikes with a Band-Aid in the form of a brand new core ad offering.
The living dead actors attack
Over the weekend, I offered some thoughts on the advancing digitization of actors in Hollywood, and a pleasant article with a somewhat apocalyptic headline appeared on the News List. I probably won’t get rid of those dark predictions, but if you missed this topic in the commentary of last year’s strike of actors and screenwriters, or if you want to read it quite clearly in one pile, you have a chance. We are still waiting for the first big star to have a digital replicant work for him. But it’s probably around the corner, I just can’t guess whether it will be someone old, poor, or desperate.
FAST is hot, but no one makes money from it
A year ago, everyone was talking about FAST platforms (Free Ad-Supported Streaming Television) and saw them as a way to hunt for customers in parallel to SVOD/AVOD and ping them between individual services. But as soon as FAST players began to produce their own content in addition to recycling already existing content (endless reruns of successful series), they immediately ran into their limits. No one was interested in new content, and the costs of its creation were much higher than the meager profits from the sale of advertisements, which were barely enough to run the data servers.
Even Amazon praised its FAST Freevee service, even premiering several exclusive programs on it. But even the fabulously rich Jeff Bezos quickly understood that some things are expensive for free, especially when it statistically inhibits the use of paid Prime Video. As part of the consolidation, Freevee will end by the end of the year, its employees will be integrated into the Amazon MGM studio, and all content will become part of the Prime catalog.
An interesting fact is that the mentioned produced titles will also be available to those who do not pay for Prime. Amazon is offering content for non-subscribers on the Prime website. If you want a taster, you’ll get, for example, the first season of The Summer I Turned Pretty, the first three episodes of The Boys, a couple of documentaries, etc., etc. The rest comes when you subscribe to Prime Video. Now the existing Freevee content will be added to the free canapés, which sounds like a fairly effective strategy in an attempt to attract more video content not only to random passers-by, but also to American Prime users, who often have no idea that they can watch video content for a fee.
In addition, Prime Video also benefits from people looking for a movie on TVOD three weeks after its premiere. They’ll pay twenty dollars for a hot new item, but then maybe stay in and watch an episode of an interesting series. And then another. Eventually they find out that the Prime is pretty cool (eh) and there’s a new regular customer in the world.
In one sentence…
In Louisiana, they voted to end generous incentives for filmmakers ($150 million annually), so expect no Hollywood blockbusters to be set in New Orleans for years to come.
The Warners are trying to pay off their debt at any cost. They will now be selling an official, functional and mobile replica of the Tumbler from Nolan’s Batman. Three million dollars apiece and it won’t even have jet propulsion. On the other hand, you can use it on normal roads. And it pays off!
Hwang Don-hyuk, the creator of the South Korean hit Squid Game, gives interviews ahead of the December premiere of the second season, in which he is very honest and reminds again that he made the sequel primarily for the money. He received a pittance from Netflix for the first season and never received any bonuses for the unprecedented success of the series (that’s how it goes). He negotiated fabulous conditions for his return to the game, but at the same time he admitted a year ago that he actually had no idea what it would be about this time. At the same time, the fear of poverty probably didn’t have to think much about the scenario.
The famous studio where Charlie Chaplin filmed his greatest hits and the headquarters of the Jim Henson Company (Muppets et al.) has new owners. Singer John Mayer and director McG want to preserve the original purpose of the building and keep it as studios, a recording studio and facilities for artists. Well, at least somewhere in Los Angeles it will still be created!
