Release Date Shuffle Shows Streaming Confidence

It’s all about what cards you’re holding.

The state of the theatrical feature film release seems rosier than it has in a good long while following two of the strongest weekends of the pandemic era thanks to Godzilla Vs. Kong. The gross domestic box-office for that movie is now $69.5 million, an impressive total, especially given the film is also available on HBO Max. Adding to that success is that downloads of the HBO Max app hit an all-time high in advance of its release.

It’s a validation, at least for the time being, of WarnerMedia’s 2021 strategy of day-and-date distribution to both theaters and streaming. Things will go back to relative normal in 2022, when big releases will head to theaters exclusively for at least 45 days before becoming available to streaming subscribers.

WarnerMedia’s strategy was uber-controversial several months ago but now seems common, so much so that it wasn’t surprising when Disney announced Black Widow would do likewise on Disney+ but via its Premier Access payment tier.

Some studios aren’t feeling quite as sure about things, though. Just recently Paramount announced a handful of release date changes, notably moving Top Gun: Maverick out to November from July. That has been seen as a sign the studio can’t afford to have a Tom Cruise blockbuster be anything but just that. (Though the shifting of Snake Eyes from October back to July then would say the opposite, right?)

Tom Cruise GIF by Top Gun - Find & Share on GIPHY

The difference in approaches – continuing to play the release date shuffle versus coming up with a streaming/theatrical hybrid model – indicates how good the respective studios are feeling about their streaming positioning.

Reading the tea leaves above, it would seem that:

  • Paramount doesn’t yet think the newly-rebranded and relaunched Paramount+ is a suitable outlet for new releases. That’s understandable given it doesn’t have the market penetration of some of the other players. Still, the studio announced in February that a number of upcoming films will be available there 45 days after theatrical release, so it’s getting there.
  • NBCUniversal doesn’t have a dog in this fight. Peacock is an entirely adequate streaming service, but if there’s a strategy it’s unclear what it might be. And it certainly doesn’t seem to be factoring into conversations about new releases or anything else.
  • Sony knows it hasn’t even anted up. That’s why it just signed a deal that replaced Starz with Netflix as the studio’s first post-theatrical streaming outlet.

Warner and Disney are out in front of this pack, pushing new models and doing what makes the most sense given all the craziness of the last year while also working to build something sustainable for the future. That confidence is borne, to likely a great extent, by the strength of their brand, something the other studios are still struggling with.

The Streaming Wars Are Being Fought on More Fronts Than Many People Think

Never fight a war on two fronts. Never get involved in a land war in Asia. These are solid, reliable maxims for those going into battle. You never want to find yourself overwhelmed and overstretched as you attempt to create supply lines to multiple locations and divert your attention.

The Streaming Wars feature dozens of fronts, all of which require the full attention of the various combatants. In the last few weeks, armaments and strategies of more parties became clear. Apple+ recently announced its pricing and original content lineup, Disney+ did likewise and NBCUniversal unveiled Peacock, coming soon and sporting a lineup of classic and new movies and shows. Netflix scored “Seinfeld” and Quibi unveils new shows every three hours.

If the battlefield is beginning to seem ridiculously crowded, you’re not alone.

As media commentator Mathew Ingram said,

Someone – possibly Ingram – pointed out that media was never really supposed to work like this, meaning a separate channel or platform for every media production company or distributor. NBC has always aired NBC programming (though that material used to be produced by a more diverse array of companies), but the television signal coming into your house wasn’t only delivering NBC shows.

Maybe this works better: If you wanted to buy DVDs of the shows you like, you didn’t have to go to the Fox store to get “Buffy, the Vampire Slayer,” the Warner Bros. store for “Friends” and the ABC store for “Lost.” You could get them all at Best Buy.

This Used To Be Their Playground

At various times many of these companies have run their own retail operations. The Warner Bros. Store was great counter-programming to The Disney Store. The Viacom Store never expanded beyond Chicago. All offered media and goods specific to that company, but that’s what was expected. And, importantly, you didn’t need to pay a cover charge just to get in the door.

The one time media did work like that was when studios owned movie theaters before the 1948 consent decree that such vertical integration was unfair and unlawful.

Netflix CEO Reed Hastings has said it will be a “whole new world” come November when both Apple+ and Disney+ are scheduled to launch, and there may indeed be a price-based shakeout in the landscape not too far in the offing as people decide how many of these are actually affordable. It’s going to be a bit sad if it comes down to who has the more attractive premiere classic sitcom to act as its differentiator.

For as exhaustive as the list above might be, what’s notable is that it’s actually incomplete. At the same time NBCUniversal and others were solidifying their strategies, Instagram announced a new Jonah Hill-produced documentary would be hosted on that platform. Facebook continues to expand its Watch programming with original series featuring big name talent. Twitter isn’t participating in this particular game at the moment, but it has a number of deals with media companies for news programming. Snapchat has found success with original material.

These social media companies aren’t implementing the same model as Netflix, Hulu, Disney+ etc, but are competing for the same hours in people’s days. They want to be a go-to-destination for the significant number of hours people spend each day watching television and other video. And those social channels come with the advantage of not requiring paid access along with the fact the habit of checking them for updates, Stories and more is already baked into the audience.

The DTC Media World Won’t Last

Yes, these media companies are in many ways chasing the same direct-to-consumer model that has popped up in the last few years, one that’s evident to anyone who’s listened to more than eight minutes of any given podcast. But there’s a big difference between subscribing to a shaving accessory service and one that delivers original movies and shows. It’s fairly unlikely someone is going to subscribe to three shaving services, mostly because doing so would represent a significant and unnecessary overlap of features.

That’s going to hit streaming as well as people realize that one show they setup a trial account to check out isn’t worth the monthly fee given they don’t watch 75 percent of the other content available. If that sounds familiar, it’s just about the same reason given when people ditch their cable subscription.

I have to wonder how many of these companies are considering the sheer volume of competition they’re up against, including Instagram, Snapchat and more. Goodness knows that people in the audience know exactly how much time to spend on video and will make choices taking that into account, along with which shows/platforms have the attention of their peers.

More Streaming Services Entering the Market

The entertainment media has been awash in the last couple weeks with one announcement after another of another company making or adjusting their plans for a streaming subscription service. CBS Films will be absorbed by CBS Entertainment Group and tasked with finding or developing original features for CBS All Access. NBCUniversal has revamped its executive team around an anticipated “low key” streaming launch in 2020. Amazon’s IMDb has launched Freedive, an ad-supported service offering free TV shows and movies. Sinclair, tired of restricting its disinformation campaigns to broadcast, will debut STIRR, including all its libertarian propaganda.

All that comes just as Netflix announced a price hike for all subscribers, a move seen by analysts as a sign of confidence its membership will gladly continue to pay the increased fee in exchange for access to its growing catalog of original content.

All of these companies are competing for a piece of a pie that’s seen as growing, which is why there are a whole slate of serviced primed to launch in 2019. The Digital Entertainment Group just reported that spending on home entertainment had risen to a record $23.3 billion in 2018, growth driven almost exclusively by streaming platforms. Video on demand and digital purchases also rose, while physical disc sales were the only category that fell.

So if the consumer spending is gravitating to streaming that’s where media companies want to be. It’s a movement driven not only because of demand but because by offering their own platforms they can capture more of the audience data generated by usage instead of sharing it with Netflix or other aggregators. That’s particularly important when you consider AT&T and other companies are using such platforms as expansions of their advertising targeting capabilities, which is why it was big news that Nielsen will begin including OTT and mobile viewing in its measurement reporting, offering a more complete picture of audience size to advertisers.

The belief seems to be that people will keep on adding new subscriptions, driven by the perceived value of the content available. So NBCUniversal’s will undoubtedly be what finally grabs “The Office” from Netflix just as WarnerMedia’s will eventually have an exclusive on “Friends.”

Price is going to be the biggest factor in just how successful these ventures are. While a recent report revealed 56 percent of respondents prefer streaming platforms as a way to watch their favorite shows and movies an earlier study from last year claimed the spending ceiling most people identified $20 as the most they’re willing to pay for such subscriptions. If Netflix, the dominant player in the market, eats up $13 of that there isn’t much left over for others. That may be one reason why the idea of streaming bundles as an alternative to cable is being floated as it would replace five smaller recurring charges with just one.

The fight being mounted against Netflix isn’t coming cheap, though. AT&T acquiring Time Warner, Disney acquiring Fox…those moves and others like them are meant to counter the streaming giant, which is seen as a clear and present danger to the business model of studios, networks and other entrenched players. They’re being financed with massive amounts of debt, though, and the financial servicing of that debt is a major drain on cash flow and other resources. So, as Variety points out, not only are these companies taking on shattering organizational changes to play in the streaming market, but they have to walk the line between charging enough to keep paying down debt while not honking off subscribers.

The margin for success, then, is thin.

Just ask those in the retail industry, which is facing a debt crisis of its own. After all it was private equity, not shopper apathy, that did in Toys ‘r’ Us. Sears couldn’t invest in its stores and operations because it was busy financing its debt. And Gymboree, bought by a private equity firm nine years ago, just filed for bankruptcy a second time.

While the entertainment media industry may want to believe it’s immune from whatever economic downturn may be coming, the leveraged debt being taken on by corporate America is increasingly worrisome to investors, who smell a recession coming. If and when it does, consumers will be cutting back on discretionary spending, a category that includes entertainment.

Eventually the camel’s back will be broken and there will be a significant shakeout in the streaming platform market. Whether that comes as the result of consumer preferences – they signal they’d rather watch the fifth season of “One Day At a Time” on Netflix over rewatching “The Good Place” on NBCUniversal’s service – or because corporate debt becomes unmanageable and a service is shut down matters only to those who track such things for a living. For the audience it just means they will have to adjust which subscriptions they are managing.