Netflix Film Lifecycles, Vaccine Implications and Profit Casualties
|Entertainment Strategy Guy||Nov 18|| 2|
Welcome to the Entertainment Strategy Guy Newsletter! My favorite reads, listens, socials and more to keep you informed on the business of entertainment, with the links to my recent writing on my website and elsewhere.
The last few weeks felt slow for news on the entertainment industry, but jam packed with news everywhere else. (An election! A vaccine! Another vaccine!) And that could really have an impact on the streaming wars, Hollywood and entertainment in general.
The Best of the Entertainment Strategy Guy
For a long time I’ve been searching for another data source (or several) to pair with Google Trends and Netflix’s quarterly datecdotes, and we finally have it. Nielsen’s Top Ten steaming lists provide a wealth of data that reveal how the top Netflix films and movies perform in the US. I have their data going back to April, and this is the first visualization I made to show how their films rapidly lose viewership after their opening weekend, not unlike how films perform at the box office. (I’ve been saying “the decay is real” going back to Bird Box.)
Few things are genuinely surprising in the streaming wars, but this one may be. Netflix hinted they would look at a price increase in the United States sometime in 2021, then went ahead and did it immediately! Why? As its user base matures in the United States, it needs to keep growing revenue to offset a lack of subscriber growth. (This pairs well with my take a few weeks back that Netflix is “entering middle age”.)
If the Covid-19 virus is the most important story of the year—it is!—then a potential vaccine is too. Could this announcement have a big impact on entertainment? Absolutely. After travel, leisure and dining, entertainment is arguably the industry most impacted by lockdowns. Read my latest for very initial predictions on how 2021 could unfold, with plenty of caveats. That plus Sony potentially buying Crunchyroll, the Wonder Woman 1984 question, and more.
Like most of my readers, I spent the week of the election glued to the television watching journalists press buttons on a map. It led me to a mini-treatise on how we consume data, draw conclusions from data, and, most importantly, make decisions.
The week of the election I spent so much time discussing polling that I ran out of room for the other stories of the week. (Believe it or not there were some.) Read this to get my takes on the Judge Judy to IMDb TV deal, Disney’s Globo partnership and more.
My best thread of the last few weeks was a deep dive into Disney’s earnings report:
The Best Content of the Last Two Weeks
(These are the best reads, listens, newsletters, or social conversations I came across last week.)
Long Read of the Week - “One Clear Casualty of the Streaming Wars: Profit” by Doug Shapiro
The highest compliment I can pay an article is that I wish I had written it. This article dives deep into the financials of entertainment to prove an hypothesis I’ve been floating: while streaming may be disruptive, it’s not profitable. Traditional entertainment conglomerates didn’t have a choice to launch streaming services of their own, but the valuations they used to hold may never return. (I’d go further than Shapiro, though, and think that Netflix’s share price may be at risk too.) Warning; This is a long one.
(For my closest article not this, see my take on Disney back in June.)
Other Long Read - “Media executives are finally accepting the decline of cable TV as they plot a new path forward” by Alex Sherman at CNBC
This article is actually recommended in Shapiro’s above, and together with Julia Alexander’s below makes a good “trilogy” for exploring the potential collapse of the cable bundle and whether streaming can replace that lost revenue. The key number, in my opinion, is that the cable bundle will likely see big losses again next year and hopefully will stabilize around 50 million subscribers.
Other Long Read - “Streaming was part of the future — now it’s the only future” by Julia Alexander at The Verge
If Alex Sherman’s article sets up that entertainment conglomerates are realizing the reality of streaming, Alexander’s great article explains what they are doing about it, taking us through the various re-organizations at the four big streamers
Other Long Read - “A Definitive Look at the Popularity of ‘The Mandalorian’ in Season 2” by Brandon Katz at Observer
Here’s another one I wish I had written. Katz probes the results of Mando’s second season using Parrot Analytics, Antenna, Reelgood and Samba TV to figure out how popular it is.
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(If this email was forwarded to you, and you’re wondering who I am, The Entertainment Strategy Guy writes under this pseudonym at his eponymous website. A former exec at a streaming company, he prefers writing to sending emails/attending meetings, so he launched his own website. You can follow him on Twitter or Linked-In for regular thoughts and analysis on the business, strategy and economics of the media and entertainment industry.)