That is partly the problem. You spend hundreds of millions to make blockbuster movies and then release it on Disney+ in a few months for free (or sometimes directly). That costs money. Add to that over reliance on only Disney content creates two problems:
1. You can’t have enough new content every month, subscribers therefore don’t keep the subscription year round.
2. You have to pay money to create content. Vs the ability to buy content for cheap or add it for a few months.
On top of that, Disney overseas also includes live sports in their packages which can get expensive.
I suspect that, in addition to ad-supported tiers, we'll see more annual subscriptions or at least subscriptions where annual is sufficiently cheaper on a monthly basis that it's essentially an offer a lot of people can't refuse.
I think they're already experimenting with things like that. I signed up for an annual subscription when Disney+ launched (I knew my wife and kid would love it) and when it came time to renew they offered a "Disney Drop Box" as a reward for signing up for another year. The box was a themed selection of Disney merchandise that they claimed was valued at ~$150, which is probably a stretch, but my kid loved it.
If previously Disney made Daredevil and 'sold' it to Netflix for $1m (hypothetically), but now you're holding that back to stream yourself, you've got to account for that missing $1m somehow.
If Studio A was like "we'll give you a 10% cut of whatever we then license it for for streaming" and Disney was like "we're gonna stream it on our own platform for free, sorry" that's a negotiation problem for Disney. So selling internally at market rate is a good thing for relationships with external creators and partners.
There are also revenue share agreements that are involved with actors. That are still taken into accounts
> You can’t have enough new content every month, subscribers therefore don’t keep the subscription year round
That’s not strictly true either for kids content. You can keep recycling content to kids for years and kids will rewatch the same thing.
Disney has been making money off the same animated content for over half a century. To a first approximation, no one cares about Netflix’s back catalog.
See here at 0:40ish: https://youtu.be/mR_Ui_3Iz2o
I can't stand many kid shows, but this one even I can love. It is incredible for me how Octonauts are not pretentious, like so many "science!" shows for kids are.
Furthermore, kids will complain if they lose access to frozen etc so disney+ has an exit cost. Like the admiral said, it's a trap!
I'm looking at you Netflix and your lack of new seasons of Octonauts and Cat in the Hat :-)
People would care more, if Netflix would stop cancelling everything. I'm not sure they realize how much they're killing their own backcatalog revenue by making everything a one/two season max.
Surprisingly similar to the old days of bugging my parents for the Disney channel (of course, didn't have on-demand selection back then).
And they keep pulling stuff down or putting stuff up. I don't need artificial scarcity, I want access, just as I want to listen to a song on Spotify when I really want to hear it without being told its no longer available with my subscription. I'm subscribing to the Disney library and most of the time half of it is unavailable.
For our household, this is true of all streaming services. We rotate them, or subscribe for short stretches. For example, I got Paramount+ for a couple of months, watched all of the Star Trek content, and then cancelled. Amazon Prime is the exception (because free(-ish) shipping.)
I wonder to what extent the big streaming services are aware of this phenomenon and how they hope to mitigate it.
I suspect that not many people do this.
It it becomes a problem, they can always bring back the old weekly episode model.
The services also know that the only thing they can do about this is release enough new content to keep users engaged, or bundle the subscription with other ones.
Obviously, we'd also need to have a few random catch-up blocks for older shows, maybe in the mid-afternoon. Perhaps we could even do it over the air wirelessly, with no ISPs involved.
Of all the competitors to Netflix, Pluto tv (owned by Paramount) is the most interesting.
Precisely because they built, and continue to optimize, their product around profit:user.
If they can get favorable licensing deals by broadcasting as linear programming... they do it.
If they can get good deals around on demand... they do it.
The end result seems to be that they have many more options to minimizing cost of licensing content, and therefore maximizing the amount of content they can offer a user, versus a pure-play on demand provider.
If Netflix added linear programming "channels", I'd buy their stock tomorrow.
Star Trek TOS was a very low budget affair, and produced excellent results, because they hired the best scifi writers. When they threw money at the Star Trek movies, they were all terrible.
It's the plot that matters. Nothing else.
Provably false by all the bad sequels which nonetheless made more money than the original¹. If plot were that crucial, movies would consist of a person sitting down reading a book, à la The Invention of Lying². Money matters to commercial success of a film above anything else.
¹ https://www.vox.com/2016/7/1/12070048/resurgence-independenc...
[1] I actually only showed them the first part so we could walk away enjoying it
I watched the La Brea show for a while. Lots of expensive special effects. But the dialog was just pablum. The characters each talked like they were the same person - using the same words and phrases. They behaved the same, too.
I expect the cost of a good writer is a pittance compared with the cost of the production.
For instance, the original version of Disney's The Three Little Pigs has the wolf disguising himself as a stereotypical Jewish merchant.
Or, integrate a feedback system and take down complained-about cartoons quickly. That's probably better since sensitivities change and some perfectly fine items today might be off-limits tomorrow.
Doing nothing is not a great option, even if it's the easiest to implement.
Maybe they did, and that's why the cartoons aren't available? If you have to cut X% of a show for content, maybe they make the call to cut the show entirely and pretend it doesn't exist, just so they don't have to answer awkward questions about why so much of the show is missing.
What’s the convincing reason for Disney to not simply do nothing? Sell me on Disney digitizing and releasing old cartoons with the salary of at least one person versus doing absolutely nothing.
You also have to sell me on that employee working on the Donald Duck smoking cigars and speaking in a Mid-Atlantic accent archive project versus working on something else. Why is that employee not instead working on The Avengers Versus Guardians of the Galaxy 2: Hulk We Groot Again!”
A complete multi-generational back-catalog that is always available to stream.
Netflix’s irrevocable back-catalog can only go as far back as their first Netflix original. Everything else is licensed.
Netflix hasn’t needed much of a back catalog to out-earn the competition.
The truth is that back catalogs have the potential to be basically worthless except for a select few “best of the best” classics.
The majority of Disney back catalog content is most certainly not at the level of Snow White or Cinderella. I think about many of their package (anthology) films as a great example of near-unwatchable garbage that only has non-profit historical value.
Media companies quite literally let their back catalogs rot (like the neglect and disinvestment that led to the Universal masters fire of 20008).
I have to admit though that the rest of the year is used up by the kids watching cartoons on D+
Didn't Disney's CEO talk about getting to the point of having a movie release a day or something like that late last year? The quality might be questionable at that rate.
But I'm almost certainly completely wrong, and I'm sure they have tons of data justifying their investment in new content. I guess I'm biaised since I pay for Disney+ so that my little sister can use it, and original shows weren't important to my decision to subscribe at all.
This feels like it should be illegal. You're certainly paying for D+, and it's not as though Verizon competes in a free market.
If you need to be on Verizon's network, you could go to Visible or another MVNO. If not, there's ATT and T-Mo and all of their MVNOs as well.
But I don’t think I’ve ever streamed any of them other than maybe to show a friend who hadn’t seen them.
Don’t know why that is, but it’s weirdly true.
Where as on streaming you have find it, sit through 2 or 3 studio logos, and then 5-15 minutes of exposition that even in most good movies isn't that good.
Seems they've backed themselves into a corner
I'm just going to throw this out there. What if these shows just aren't that good?
Now there is so much you need to pay attention or you'll miss it. People get sick of drinking out of a firehose.
There were four Star Wars series.
That's too much content.
Two movies a year that Marvel started with was perfect. It gave you tome to unwind, and get hungry for more.
What if they aren't that good in a very calculated, lowest-common-denominator way?
Any really big $$ production has to have really broad appeal to succeed. Maybe the safest way to do that is just to target some minimum threshold for ticket buying on a rainy thursday.
Somehow the branding has become severely distorted, so now these movies make me feel like the studio sees me as a barrier between them and my money.
If Disney can once again make me feel like they're producing content because it's what they love to do, and because they love how we enjoy it, then I'll go back to giving them my money.
Here let me get you caught up. Blue laser sword is good, red laser sword is bad.
Mandalorian reinvented the Western in the Star Wars universe.
Both are superb. The other Star Wars series are not.
The Mandalorian is Western + Ronin / Samurai.
And yes, they're both great.
It was truly excellent. For a complete surprise, do not watch Rogue One first.
I did enjoy the Mandalorian series because at least it had the comic relief of Grogu, if the rest was a bit of a slog.
As far as the jailbreak, I had trouble getting emotionally invested in the outcome, as I found Diego Luna's character to be one-dimensional. Again, the approach was simply shoot your way out.
With Star Wars, creators can ignore the tired Skywalker storyline, plus there's no genre expectations tying creators down (IMO sci-fi is not a genre so much as a meta-genre or motif). At least in theory--they've been pretty reluctant to spread their wings until recently.
pure dogshit for children
I consider myself an ardent Star Wars & Marvel fan and I just couldn't keep up anymore, so I axed Disney+.
Netflix still drops enough documentaries that I keep it around.
FTFY.
But yes, as a guy in his 30s, Disney+ provides nothing compelling to me. I do pay for Hulu though
Contrast that with HBO Max that has never had a sale of any kind except for a single free trial week.
I also think that people underestimate the cost of serving streaming entertainment. It's very compute- and data-intensive. If you architect your systems badly, which I assume Disney did, you will be paying a LOT of money for this service.
And I think you could be right about D+ architecture, they went from zero to a streaming service very quickly.
Disney basically bought MLB's streaming service and used that for Disney Plus.
A company as big as Disney has to be able to look at its different subsidiaries and analyse how they're performing individually. So maybe Walt Disney Animation Studio spends money making movies and earns money selling the rights to those movies, and so Disney+ gets exclusive access to streaming rights, but it still has to pay for them.
Disney+ is also a very specific fan-oriented service. Don't like Star Wars or comic books? Not a child? Good luck finding something worth watching that isn't a documentary.
A grandparents single account is used in the households of all their grandchildren.
I have a feeling it might be that they don't have enough established TV shows. But this is the problem of pretty much everyone but Netflix, and this will most likely change in the next 2-3 years.
Never the less, that would be a massive acquisition, they carry alot of debt.
Honestly an animated Zelda would be better. You could even do each season in a different art style as a callback to the games.
HBO Max is great, but it's tied to a terrible management/company anchor. Rumor is now they are going to drop the trusted HBO brand smh.
Netflix is well positioned, but a player like Disney is also setup to acquire other streamers as they fall over from cost structure issues. I think we're about to see mass consolidation.
Finally, I'm kind of sad that I think the content 'golden era' is likely coming to a close. Cheap money and the fighting for subs led to more money being spent on content relative to what subs paid than at any other point in history. If nothing new was ever made again, I think the list my wife and I already have to watch is longer than time we have left living.
Its been very hit or miss for me with HBO Max originals. HBO (they do brand them differently) originals are still stellar, for the most part.
If the new Velma show is any indicator of what HBO Max wants to do as run of the mill content though, I'm wondering how long it'll hold up as a premium streaming service.
Warner didn't even unlock their entire backlog of Looney Toons cartoons on their own streaming service, which would bolster its brand and make it more sticky
Even though I benefit, I think it was also dumb for them to give away HBO to any AT&T subscribers (maybe internet only?). HBO was something I used to pay for.
It seems Disney+ isn't scarred by this at all (it definitely doesn't dominate the public conversation around it), so perhaps there is a lead in here?
"In June 2020, it was announced that the U.S. versions of the ride would be receiving a new theme based on Disney's 2009 film The Princess and the Frog.[2][3] The new ride, which will be titled Tiana's Bayou Adventure, is scheduled to open at Disneyland and Magic Kingdom in late 2024"
The stuff that WB removed from HBO Max is more comparable to Song of the South (which is completely unavailable) than to Dumbo (which has disclaimers).
With Netflix's low debt load and free cash flow, they should actually be in a better position for buying up competitors.
Avatar 2- a movie that came from its Fox acquisition has already made over $2 Billion
So Avatar 2 has earned Disney a profit of at least $250m and it still has several more weeks without any competition. And Avatar 3 will have a far lower break-even point.
You can’t say the same about Netflix. Netflix is completely dependent on streaming revenue.
I'm curious whether that total box office number includes taxes on the tickets as well.
https://www.quora.com/How-are-ticket-revenues-shared-with-th...
HBO has broken the core contract of branded services (i.e. you get access to everything they make), making the value of a subscription much more difficult to understand. I can go back and watch 7 seasons of Arli$$ from 1996, but not the West World episodes released last year?
I will say I am curious how they plan to market a service where you can't use recent hits in your advertising, because they are no longer available...
The Kool-Aid right now seems to be WBD is pure evil but from my perspective they're making smart and necessary moves precisely to avoid what the OP article is predicting.
And say what you will about Discovery, their frugality or their content, but at least they're a media company. I will still take that any day over a telco, especially AT&T who has done the most "evil" historically of any telco.
It's quite funny to see so many people donning rose-tinted glasses for the short-lived AT&T era. As I remember it at the time, you had near-weekly articles lambasting AT&T higher-ups as being out-of-touch baffoons. A revolving door of executives. Existential dread over resolving debt. (Sound familiar?) Pretty much the only consumer goodwill came from Project Popcorn, and that made Jason Kilar persona non grata in Hollywood.
You can't please everyone, least of all when Wall Street gets involved. I think WBD will be fine, they traded under $10 last week which is insane to me considering their assets and what I believe their trajectory to be in 3-5 years' time. And people like DC and Cartoon Network. People like Euphoria and The White Lotus. And people seem to really like trashy reality shows. HBO Max will be fine.
PS- On the rumored topic of HBO Max changing its name to just "Max," it's a good call. Tying the HBO name to a service which is only 50% HBO at best did not make sense at the time and still doesn't make sense today. "HBO" and "Home Box Office" mean nothing internationally, either. Save the "trusted HBO name" for the prestige content which actually deserves it.
At this point, I think HBO Max has become known enough that just calling it "Max" won't cause tidal waves of confusion, and will correct their original naming mistake for the service. Plus, it's cleaner[1]. Yes please.
It's important to note that those numbers are very juiced. For example, my HBOMax comes for free with my AT&T internet (still). I've never paid them a dime directly. When they first started they were basically giving away accounts like crazy to get growth. I think they also gave free accounts to their cable subscribers.
So while their numbers look really big on paper they aren't getting a lot of income from those subscribers.
I have 6 lines on my ATT Unlimited Premium Plan (the most expensive retail plan), and the monthly cost dropped by $60 by removing HBO max and switching to the new plans.
It is probably cheaper just to buy directly at HBOMax.com
See the “new” ATT prices, all without HBO Max (couple years old now maybe?)
Interestingly, we're not on Magenta but one of the earlier plans so the OnUs benefit is for the HD teir of Netflix. As I said above, T-Mobile becomes the payment processor on the account so when I upgraded to 4K my T-Mobile bill went up a couple bucks to account for the difference.
When Disney creates a movie. It can monetize the movie across its entire “flywheel” - movie theatres, video on demand, licensing to third parties, toys, theme parks etc.
It’s streaming content has already made a billion in the box office before it ever hits streaming. Streaming is additive.
Netflix paid millions of dollars just for the rights to the “Knives Out” sequel for instance only to make a pittance in limited release and then go to streaming.
The same is true for the other players.
That’s not even to mention Apple, Amazon and Google who are playing a completely different game.
Google is playing a slightly different game.
Then everyone has 3 channels on their TVs and we start the explode/aggregate cycle again, just like what happens to banks and telcos.
Good summary. Worth noting as well that he spends a lot of time in the article drawing the historical parallel to Blockbuster. The lesson is that Netflix has been in this situation before, of waiting for its competition to punch themselves out.
Personally, I think it's impossible to really predict the future for stuff like this, but it's an interesting read.
This is a bit off. They had 1.6 billion in FCF in 2022 & project 3 billion for 2023:
https://s22.q4cdn.com/959853165/files/doc_financials/2022/q4...
That said, to me Netflix feels like it is lagging. Not enough to really hurt subscriber numbers yet. But feels like it's stuck in a local minima of A/B testing. Like they've driven me to the line of canceling. Which is good for them because I haven't yet but risky because Netflix is more a habit/default for me these days. Pretty close to canceling and not sure what would draw me back if I did.
Between the ads and the complete inability to let a show run more than 2 seasons unless it's a global hit... I'm no longer interested.
I've had a kid - and my viewing habits have changed. I can't always watch a show right when it drops. The reality of my life is that I have other things going on, and I rarely have 10+ hours of uninterrupted time.
But now... by the point I have time to watch a show, more often than not Netflix has already announced its cancellation, and I have zero interest in a catalog of dead shows. None. Nadda.
My take is that Netflix is hot fucking garbage at determining the quality of their own shows, and that really - they don't have the creative side down at all. It's too much focus on the stats, and timelines that are too short.
Some of the most widely watched shows in history had fairly lackluster first seasons (see: Parks & Rec, The Office, Friends). Netflix is busy killing off everything that's not a sizzle in the pan. But those flare up and burn out. They need the slow burn shows that grow into their own - and they've ruthlessly slaughtered them all because the numbers aren't great at first.
The cancellation of 1899 was a big blow for me. It’s the kind of show you can’t really binge watch as it requires focus to really follow what’s going on. And I think it would have grown its audience organically over time.
It just needs to be a slight success. If the show is cheap to make they'll keep it running forever. The only things that seem to get canceled are expensive or complete failures. I'd be interested if you have any examples that this doesn't ring true for.
> My take is that Netflix is hot fucking garbage at determining the quality of their own shows, and that really - they don't have the creative side down at all. It's too much focus on the stats, and timelines that are too short.
Most TV shows are canceled very few keep going forever.
> Some of the most widely watched shows in history had fairly lackluster first seasons (see: Parks & Rec, The Office, Friends).
Go look at the viewership of those even at the start they were good enough and cheap enough for a second season. Shows almost never grow after the first season. This idea that so many shows just need to get there legs under them is bullshit.
I don't expect them to go forever - I expect them to END. Ending is a (hugely) different proposition than being canceled.
A show that wraps up the plot (even if not executed particularly well) is a-ok.
A show that starts a story and then dies is not.
One of them has value in watching, one is a complete waste of time.
I also don't really care how they work out the budget - A show getting a mini-series as the final season because they don't want to invest in a full one? Fine - just resolve the fucking plot.
Personally - I don't even care if the show is only one season (or two) as long as it wraps up. What I do mind - quite a bit - is the start of a story that we know will never end.
If netflix wants to be so axe-happy, that's fine. Buy freaking mini-series and wrap them in a season.
Or set a more strict budget if the creators want to run multiple seasons.
My whole point about them being garbage at this is that I don't really care all that much how the wrap their shows. I just want a story to consume.
Personally - I really think production budgets are set far too high in an attempt to make them global hits, and it's really, really not panning out for them.
Also what about (live) sports coverage? Does Netflix have a strategy there? For many subscribers it is appealing if their streaming service carries sports coverage.
There are reports that Netflix is doing badly in India, for example, which is a massive potential market.
Profit - no
Now you are going to say, but doesn't "The Walt Disney Company", the parent of Disney+, then pay all the taxes?
No, because this company is located in Delaware, which means it's virtually exempt of taxes as long as it makes only money from activities outside of Delaware. Which is does, since it's only selling IP to other companies, like the entity managing Disney+ which has it's headquarters in California.
NO ONE has subscribed to all of Disney+, Apple+, Paramount+, Peacock, etc. in the new everyone-built-their-own-netflix era.
They're all either making do with less content or sailing the high seas mateys yo ho. In many cases they've even DROPPED Netflix.
I don't see how the current over a dozen streaming media provider status quo stands for much longer. Some (many?) are going to have to fail before everyone gets pissed off and goes elsewhere for their entertainment.
I have Hulu as part of my Spotify subscription.
I have Peacock Premium as part of Xfinity internet.
I have Paramount+ as part of Walmart+.
I have Amazon Prime Video as part of Amazon Prime.
Some T-Mobile plans include Netflix and Apple TV+.
I'm no fan of Disney, but you have to give it to Bob Iger. He just paid out the nose to buy every piece of valuable IP: Pixar, Lucasfilm, Marvel, Fox, even Jim Henson.
The amount of content they now own is insane. Everything from Sunny in Philadelphia to the Muppet show to Alien to Avatar to The Simpsons to Starwars. It's nuts... you can't throw a dead cat in Hollywood without hitting Disney IP.
Meanwhile Netflix makes something worth streaming every year or two, if that.
People say this often, but I have never seen it manifested in a viewership chart. Just using Nielsen data as an example, Netflix absolutely dominates the Top 10 chart, with 7/10 of the programs:
https://www.nielsen.com/top-ten/
Anecdotally, when traveling outside the US, Netflix & Disney are really the only providers I have seen have any kind of footprint.
Is there any data to back up the "content quality" complaint, or is it just a personal preference?
It seems to me that Netflix still has the most generally appealing content. Yeah Disney has some of the biggest names, but unless you 1. have young kids or 2. are a huge, not burnt-out Star Wars or Marvel fan, Disney+ is a pretty poor service. Most of the other services fall somewhere else in the middle of that spectrum.
I feel the opposite. Marvel's content are getting really tiring now. Superheroes with superior technologies choosing primitive societal and political structures really turned me off. Not enough great action flicks, or binge-worthy dramas like Oz and Strange Things. Not enough international hit shows. Not enough old catalogs.
Much as they did with Blockbuster as he described in the article, correct?
It seems like at some point they'd rally behind whoever has the best interface and willing to accept deals - probably Hulu. Just charge for access to the content and forget about doing your own CDN and app dealings?
You mention Hulu which I think is a great example of that model failing. Hulu was originally a intended to be that kind of platform, and has at times included investment from ABC, NBC, FOX, and Time Warner. Now Disney owns a majority share in it and it's a brand under Disney's streaming services, and I think would like to just fold it into Disney+, but they'd need to make some sort of deal with Comcast for their minority share.
He said 2 things really:
* he thinks that content will beat out distribution every single time. And Disney has content Netflix doesn't and cannot get (think of Disneys huge catalogue and IP collections)
* he said when he went to the board and proposed that they (a) give up a huge revenue stream and (b) spend a tonne of money building their own streaming service, he expected it to be a hard battle. He thought it would be very hard to convince investors to look at anything beyond the effect on the next quarter financials. Instead, once they heard the case, they demanded he actually go faster, spend more and be more aggressive. He said (I have not checked) that when they announced the move, the stock price went UP...
https://podcasts.google.com/feed/aHR0cHM6Ly9mZWVkcy5zaW1wbGV...
Personally I think he made a pretty good case that content distributors were basically commodities and were priced as such (you get low margins). Bit content creators/owners were in a non-competitive position and so had much higher margins and better long term prospects.
I guess in a way, we are back to "Netflix has to become HBO before HBO can become Netflix". Can Netflix use it's huge cash pile to build/acquire enough content to become Disney-like before Disney can build enough infrastructure/customer base to be Netflix?
- Netflix has 5-6 Billion USD free cash flow, and because they got what debt they do have under favorable terms, they are positioned to retain most of that free cash flow
- Disney, Comcast (Peacock), CBS/Viacom and other media corporations are saddled with debt, and are all losing money on their own independent streaming businesses. Likely untenable in their shareholder model
- Therefore, Netflix needs to do what it can to retain / attract subscribers, but essential can wait until the other services have to give up due to cost
In a nutshell, Netflix is posed to just play more long game, due to cost structures of their competitors.
so fair, sounds good, but it assumes the boards / leadership of these companies won't also play a long game, seeing some sort of profitability horizon is they cannibalize their existing businesses for sticky services (like streaming). I could see Disney doing this, to some extent, with their cable TV channels and movies. I'm less bullish on Comcast/NBC, CBS/Viacom or really any other media company being able to do this, simply because they don't have the "staying power" Disney does.
This also fails to account for the strength of HBO Max (very strong sub numbers)