Netflix in Content Crosshairs

Lost in Netflix’s strong third-quarter subscriber growth numbers was the streaming media giant’s surprise revelation about the ownership status of its original content.

With Netflix spending upwards of $12 billion on original content in 2018 – underscored by $18 billion in third-party content obligations – the service said its alarming negative free cash flow is about to level off.

To assuage naysayers, Netflix (on page three of the shareholder newsletter), disclosed the ownership status of original programing – a dynamic that will continue to change as the Walt Disney Co. pulls original movies and related content from Netflix for its own pending over-the-top video platform.

Netflix says it has three major categories of content: licensed non-first-window content, such as “​Shameless​”; licensed original first-window content, such as ​“Orange Is the New Black”(​owned and developed by Lionsgate), “Ozark” (Sony Pictures Television) and “Insatiable” (CBS); and owned original first-window content from its own studio, such as ​“Stranger Things​.”

The latter category also includes “Big Mouth,” “The Ranch​,” “​Bright​,” “Godless,”​“The Kissing Booth​,” ​“3%,”​“​Dark,”​“​Sacred Games”​and “Nailed It​.”

Within those categories there are lots of subdivisions and per-territory treatments, but those are Netflix big three content buckets.

Netflix claims the classification of content will help reduce its reliance on outside studios, provide greater control over content it creates in-house (i.e., long-term global rights), increase brand/consumer product tie-ins, and lower costs (avoiding third-party studio mark-ups).

“To do this, we’ve had to develop new capabilities to manage the entire production process from creative support, production planning, crew and vendor management to visual effects, to name a few,” Netflix management wrote in the letter.

At the same time, Netflix is staking its future largely on proprietary content, whose popularity is at the whim of an increasingly fickle consumer.

Indeed, with the exception of Emmy-nominated “Stranger Things” and “Godless,” most of Netflix’s award-nominated original content is third-party sourced. The rest is a “hot mess,” according to Wedbush Securities media analyst Michael Pachter.

“We think it is downright quixotic of the company to presume that it can produce compelling content that will replace the licensed content it currently displays from major studios,” Pachter wrote in a note.

Pachter believes that should Netflix somehow default on its mushrooming debt, creditors would be hard pressed to convert any of the content into cash, particularly any of the capitalized content that is owned by others.

“It is simply impossible to comprehend how Netflix has been able to capitalize over $18 billion of its content spending with so few compelling owned original television series and films,” he wrote.

‘Incredibles 2’ First Day Sales Set Record on FandangoNow

Pixar and Disney’s Incredibles 2 Oct. 23 posted the best-ever first day sales for an animated movie on streaming service FandangoNow, according to Fandango.

The first day sales surpassed first day sales for previous record-holder Disney’s Moana.

Fans buying Incredibles 2 on FandangoNow also get the Pixar short, “Bao,” and the new Edna Mode short, “Auntie Edna.”

Incredibles 2 is the kind of movie you want to bring home to your family and watch again and again,” said Fandango managing editor Erik Davis in a statement. “It’s no wonder that America’s favorite family of superheroes would smash the record for best first day sales of any animated movie on FandangoNow.”

Top Animated Films in First Days of Sales on FandangoNow

  1. “Incredibles 2”
  2. “Moana”
  3. “The Boss Baby”
  4. “Hotel Transylvania 3: Summer Vacation”
  5. “Coco”

 

Earlier this year, Incredibles 2 also broke the Fandango record for top advance ticket sales for any animated film in theatrical release.

Starz Joins Hulu Streaming Platform

Starz, a Lionsgate subsidiary, on Oct. 23 announced that its app is now available on Hulu, including the online TV service “Hulu with Live TV.”

Hulu, which is co-owned by 20th Century Fox, The Walt Disney Co., Comcast and WarnerMedia, said its 20+ million subscribers can now add the Starz app (for $8.99 monthly fee) and gain access to the network’s live Starz and Starz Encore pay-TV channels, in addition to on-demand current and past seasons of original series “Outlander,” “Power,” “Vida,” “Counterpart,” and “American Gods,” among others.

Movies include Sony Pictures Jumanji: Welcome to the Jungle and Spider-Man: Homecoming, among others.

Hulu with Live TV ($39.99) includes live and on-demand programming from more than 50 sports, news, entertainment and kids’ channels, including CNN, Fox News, ESPN, TBS and local ABC, CBS, Fox and NBC channels.

In a previously announced deal, Hulu has been the exclusive subscription streaming home to past seasons of Starz original series “Power.” Since “Power” launched on Hulu last year, subscribers have streamed nearly 50 million hours of the series.

All past episodes of the drama series through season four are currently available on-demand to all Hulu subs, and now with the Starz app, users can watch all episodes of “Power” – including season five – on supported devices.

Starz joins HBO and Cinemax as premium add-on apps available to Hulu subs. Hulu subscription plans include its $7.99 per month “limited commercials” plan; $11.99 per month “no commercials” plan and the Hulu with Live TV plan.

Disney’s ‘Christopher Robin’ Coming to Disc and Digital Nov. 6

The family film Christopher Robin will come out on digital (including Movies Anywhere) and on Blu-ray and DVD Nov. 6 from Walt Disney Studios Home Entertainment.

In the live-action adventure, A.A. Milne’s characters from the Hundred Acre Wood — Pooh, Tigger, Piglet, Eeyore, Kanga, Roo, Rabbit and Owl —venture into mid-century London to help grown-up Christopher Robin (Ewan McGregor) and remind him to appreciate the simple pleasures in life.

The film made $98.3 million in theaters.

Bonus features on Blu-ray combo pack (Blu-ray, DVD and digital) and digital include: “In Which … A Movie Is Made for Pooh ,” a behind-the-scenes look at the making of the movie; “In Which … Pooh Finds His Voice,” featuring voice actors; “In Which … Pooh and Walt Become Friends,”  exploring the legacy of Walt Disney’s first encounter with Pooh; and “In Which … Pooh and Friends Come to Life,” about the special effects of bringing the stuffed characters to life. The digital release includes the exclusive bonus feature, “In Which … We Were Very Young,” about the original teddy bear given to Christopher Robin Milne 98 years ago. Bonus features may vary by retailer.

Apple, Amazon, Netflix, Google Among Top Brands in Survey

Apple, Amazon, Netflix, Google and Samsung placed among the top brands in a new survey from global consultancy firm Prophet.

The firm released its fourth annual Brand Relevance Index, in which it surveyed 12,694 consumers in the United States across 299 brands in 37 categories.

The top 10 in order were Apple, Amazon, Pinterest, Netflix, Android, Google, Samsung, Kitchen Aid, Spotify and Nike.

Among the top 25, media and entertainment companies included YouTube (No. 12), PlayStation (No. 13), Disney (No. 14), Pixar (No. 15), Sony (No. 21) and Xbox (No. 25).

“It’s clear that to be successful, brands need more than size and ubiquity,” said Scott Davis, chief growth officer, Prophet, in a statement. “They must create a product that people love enough to integrate into their everyday lives. The brands that inspire this level of loyalty will ultimately grow the fastest because they are relevant in the moments that matter most to consumers.”

Netflix and Pixar were among top brands that were most “customer obsessed,” according to the survey, while PlayStation, Marvel and Google were most “pervasively innovative.” Netflix was the category leader in the “Media” segment, PlayStation led in “Electronics & Gaming,” Apple led in “Computing & Software,” Amazon led in “Retailers” and Verizon led in “Telecommunications.”

Apple, Netflix, Pinterest, Amazon and Android were the top brands, in order, among females. Amazon, Apple, PlayStation, Spotify and Samsung, in order, were the top brands among males.

Among millennials, the top brands, in order, were Netflix, Amazon, KitchenAid, Apple and Google. Among non-millennials, top brands, in order, were Apple, Amazon, Pinterest, Android and Netflix.

Facebook (No. 205) was the “biggest mover” in the negative direction.

U.K. Regulator Eyeing One-Day Auction for Satellite TV Operator Sky

With an apparent impasse on competing acquisition offers accepted by Sky shareholders from 21stCentury Fox, Comcast and The Walt Disney Co., a U.K. regulatory agency is set to take the unusual step of authorizing a one-day auction between the competing suitors.

The Panel on Takeovers and Mergers Sept. 20 issued a statement declaring that after discussions with all parties involved, an auction for controlling interest in Sky would begin at 5 p.m. on Sept. 21 and end sometime on Sept. 22 after three rounds of bidding. The bids will not be made public during the auction but will reportedly be made available by Sept. 24.

“On the basis that neither offeror has declared its offer final, such that either offer may be increased or otherwise revised, a competitive situation continues to exist for the purposes of ‘Rule 32.5 of the Takeover Code’”, wrote the panel.

The Panel said that by 7.00 am (London time) on Sept. 24, each of the Sky suitors is required to make an announcement under “Rule 2.7 of the Code” of a revised offer in respect of its latest bid lodged in accordance with the auction procedure (or alternatively, if it did not lodge an increased bid during the auction procedure, a confirmation of its pre-existing offer).

To accommodate the auction, both Comcast, Fox (and Disney, which is acquiring 20thCentury Fox and Fox’s 39% stake in Sky for $71 billion) extended the merger deadline until Oct. 6.

With 23 million subscribers across the U.K., Italy and Germany, Sky is a lucrative pay-TV operator and asset to Comcast and Disney looking to expand their respective brands globally (Comcast) and thwart Netflix’s ongoing global reach (Disney). The company generated more than $12.9 billion in revenue in 2017.

Sky investors have long eyed a bidding war for the company, which is why the stock is trading significantly higher (£15.78) than Comcast’s $34 billion (£14.75 per share) offer compared to Fox’s £14 per share bid.

Indeed, neither offer has resonated with Sky shareholders, with less 30% of stakeholders tendering Comcast’s offer compared to 0.07% for Fox’s offer.

A timeline on the Sky acquisition is as follows:

On Dec. 15, 2016, Fox announced a cash offer for the shares in Sky it did not already own at £10.75 per Sky share.

On Feb. 27, 2018, Comcast announced that it was considering making an offer for Sky. On April 25, Comcast announced a cash offer at £12.50 per Sky share. Later that day, the independent directors of Sky announced that they were withdrawing their recommendation of the Fox offer.

On July 11, Fox announced an increased cash offer for Sky at £14.00 per Sky share. Later that day, Comcast upped its cash offer for Sky at £14.75 per Sky share.

‘Incredibles 2’ Home Video to Include ‘Auntie Edna’ Mini Movie

Walt Disney Studios Home Entertainment will release Pixar’s Incredibles 2 digitally Oct. 23 and on Blu-ray, DVD and 4K Ultra HD Blu-ray Nov. 6.

The sequel, which picks up directly after the events of the 2004 original film, finds Helen (voiced by Holly Hunter) recruited to be the face of a public relations effort to restore the legal status of superheroes, leaving Bob (Craig T. Nelson) to deal with keeping track of their super-powered children, including the emerging powers of baby Jack-Jack.

In his Twitter feed Sept. 5, director Brad Bird announced the in-home release of the hit animated superhero film will include the short film Auntie Edna, detailing the events of the night Edna Mode babysat Jack-Jack.

“Many of you have suggested we show what transpired the night E babysat Jack-Jack. Well, we were WAAAY ahead of you!” Bird tweeted.

The new short, which will be available with the Blu-ray and digital versions of the film, would parallel a mini-movie called Jack-Jack Attack that was included with the DVD of the first Incredibles in 2005, which chronicled the baby’s night with a babysitter during the events of that film.

Incredibles 2 has earned more than $602 million at the domestic box office and $1.17 billion worldwide.

The Blu-ray, DVD and digital versions of the film will include audio commentary and the short film Bao.

In addition to the Auntie Edna short, the Blu-ray and digital releases will also include 10 deleted scenes with introductions outtakes; a collection of mini-documentaries about the film’s heroes and villains; the featurette “Super Stuff,” about the design of the “Incredibles” world; a profile of production designer Ralph Eggleston; the featurette Strong Coffee: A Lesson in Animation With Brad Bird,” a profile of the director and his history with Pixar;”Paths to Pixar: Everyday Heroes,” a featurette that focuses on the parents who worked on the film and their personal connections to it; “SuperBaby,” a hybrid of documentary and music video that looks at how Jack-Jack came to life onscreen; a “SuperBaby” music video; character theme songs; vintage toy commercial TV spots; a toolkit montage; global Incredibles 2 trailers; and a behind-the-scenes featurette about the making of Bao.

Digital bonus materials may vary depending on the retailer.

Digital versions of the film will include two exclusive extras: “The Coolest Guy in Show Business,” a partially illustrated documentary about Samuel L. Jackson’s love of comic books; and two “SuperScene Breakdowns,” an in-depth examination of the making of two scenes in the film.

Redbox Says It Will Still Sell Codes to Disney Movies — Just Not the New Ones

A federal judge on Aug. 30 granted the Walt Disney Co.’s request for a preliminary injunction against Redbox selling digital codes to Disney movies.

However, the ban only applies to newer “combo pack” releases with a revised disclaimer on the package. Redbox says this means it may continue selling digital codes to earlier Disney releases such as Frozen and “Star Wars” movies.

Judge Dean Pregerson ruled that Disney’s amended language accompanying packaged media combo retail releases (which include digital codes) sufficiently prohibits private parties from selling copyrighted content without permission.

“Because Redbox did not obtain an ownership right to any digital content when it purchased combo Packs, Disney has adequately shown that it is likely to succeed on its claim that Redbox encouraged Redbox customers to infringe Disney’s copyrights by redeeming codes in violation of the license terms set forth on the redemption sites,” Pregerson wrote.

In February, a federal court denied Disney a preliminary injunction against Redbox after the studio alleged the kiosk vendor committed copyright misuse on 19 of its most recent movies. Disney and subsidiaries Lucasfilm and Marvel Studios in April filed an amended complaint against Redbox, including changing user-guidelines on its packaged-media releases, beginning with Black Panther.

In a statement to Media Play News, Redbox said, “In a second attempt to obtain a broad injunction against Redbox regarding the sale of digital codes, Disney asked the court to retreat from its prior ruling that Disney abused its copyright on some 19 Disney, Pixar, Lucasfilm and Marvel titles. The court previously found that Disney’s copyrights for these titles were unenforceable against Redbox.

“Nothing disturbs that prior ruling in favor of Redbox. Redbox remains free to sell codes for those prior titles. This morning’s ruling is limited to digital codes for certain titles, like Black Panther, that contain new disclosures, but were distributed after the 19 titles listed in Disney’s complaint. Redbox has never attempted to sell, and had no plans to sell, digital codes for Black Panther. Disney, therefore, has not been damaged by Redbox’s business practices, and the ruling compels no change in Redbox’s business practices.

“The same isn’t true for Disney. In addition to having been forced to change misleading language on its packaging and its websites, Disney now must offer consumers the ability to return digital codes or combo packs for a refund if they disagree with digital license terms. In fact, the court’s order expires in 90 days unless Disney ‘clearly and prominently indicates’ that consumers can obtain a refund if they do not agree with Disney’s restrictions.

“The court’s decision once again maintains Redbox’s stance as an advocate for the consumer. We look forward to finalizing our victories in court.”

Disney is the only studio that won’t sell discs directly to Redbox, forcing the company to buy them at retail. Last year, Redbox also began offering for sale the digital codes that come with its purchased Disney discs, citing the First Sale Doctrine to federal copyright law, which provides that someone who lawfully acquires a copyrighted work is allowed to sell or dispose of it however they want. Video retailers in the early 1980s successfully argued that First Sale gave them the right to rent videocassettes they had legally purchased and pocket the rental fees.

Facebook, Disney/ESPN+ Up Soccer Streaming

Soccer may be the world’s most-popular sport that has yet to generate mainstream appeal in the United States. But that isn’t stopping major domestic over-the-top video platforms from inking distribution deals with international professional leagues.

Disney’s recently launched OTT service ESPN+ signed a multi-year media agreement for three more top-division soccer leagues – Australia’s Hyundai A-League and Westfield W-League, the Chinese Super League and the Dutch Eredivisie.

In all, more than 300 matches per season from the leagues will be streamed live exclusively in the United States on ESPN+.

“This agreement further boosts the position of ESPN+ as the leading new platform for live soccer matches in the U.S.,” Burke Magnus, EVP of programming and scheduling at ESPN, said in a statement. “These leagues join a lineup of hundreds of top-division live matches from Europe and North America, along with a strong lineup of original and studio soccer programming.”

Last week, ESPN+ announced a new multi-year agreement with Serie A TIM that includes more than 340 Italian soccer matches per year. The streaming service is also home to MLS Live – a collection of more than 250 Major League Soccer out-of-market matches, as well as local market media home for the Chicago Fire.

ESPN+ will carry more than 100 live matches from the UEFA Nations League (UNL), a new tournament among the 55-member nations from the Union of European Football Associations played on FIFA international match days beginning in September. In addition, ESPN+ subscribers have access to hundreds of English Football League (EFL), the United Soccer League (USL) matches.

The service also streams “ESPN FC”, ESPN’s daily global soccer news, information and analysis program.

Separately, Facebook signed a deal with Spain’s La Liga soccer league to stream matches in Asia. The €90 million agreement will live-stream 380 matches in India, Pakistan, Bangladesh, Afghanistan, Maldivas, Nepal, Butan and Sri Lanka.

This summer Amazon Prime Video announced it would live-stream 20 Premier League soccer matches beginning in 2019.

 

New Facebook AR Mask Lets Fans Experience ‘Avengers: Infinity War’

Potential spoilers for Avengers: Infinity War ahead.

A new augmented reality enhancement for the Facebook mobile app is giving fans a chance to experience a key moment in Marvel Studios’ Avengers: Infinity War.

The Avengers: Infinity War custom Facebook AR mask is timed to celebrate the film’s release on Blu-ray, DVD and 4K Ultra HD Blu-ray Aug. 14. The movie is available now through digital retailers.

In the film, the Avengers must come together to stop an intergalactic warlord named Thanos from gaining the six Infinity stones, which when combined will allow him to achieve his goal of eliminating half the population of the universe with the snap of his fingers, a move he believes will alleviate the burdens of limited resources.

The AR mask’s camera effect allows fans to see themselves turn to dust as if they were a victim of Thanos’ snap.

To use the mask, fans simply log into their Facebook app with a mobile device and go to http://www.facebook.com/fbcameraeffects/tryit/258281704903067/ to load the AR effect. With the camera in selfie mode, users can implement the effect by opening their mouths. The video can be saved and posted to Facebook with the caption THANOS IS HERE! @Avengers #InfinityWar.

The effect is designed to work on iPhone devices 5s or newer and Android devices from 2012 onwards. The effect does not work on desktop computers.