NATO Boss Chides Press for Streaming Video Focus

NEWS ANALYSIS — Helen Mirren may have gotten the most attention at this week’s CinemaCon confab in Las Vegas for her snarky, “I love Netflix, but f*** Netflix,” comment.

But for John Fithian, president of the National Association of Theater Operators, media attention to over-the-top video and home entertainment is no laughing matter. Fithian reportedly told reporters that continued attention to streaming undermines success at the global box office, which topped $41.7 billion in 2018 – up 32% since 2010.

NATO president John Fithian

“There’s no doubt that home entertainment consumption moves toward streaming [from disc] more with each passing day,” Fithian told attendees. “How does any given movie stand out among endless choices in the home? A robust theatrical release provides a level of prestige that cannot be replicated.”

He cited a study conducted by Ernst & Young that found consumers who frequent movie theaters consume more streaming video in the home.

“Streaming and theatrical don’t just co-exist, they reinforce each other,” Fithian said.

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Of course the executive was channeling Netflix, which didn’t attend CinemaCon, but whose looming industry presence continues to undermine the theatrical window releasing movies into streaming channels concurrent with any cinema exhibition.

The practice has roiled exhibitors in the U.S. and France, which have boycotted Netflix movies and challenged its award nominations, notably at the Cannes Film Festival. Regardless, the Motion Picture Association of America recently accepted Netflix among its studio members.

Indeed, Netflix is hardly the only streaming threat. With Disney, WarnerMedia and Comcast set to launch branded SVOD platforms, direct-to-consumer distribution and original content remains a threat — a reality Disney CEO Bob Iger has taken steps to address by insisting the perennial domestic box office leader will remain faithful to the theatrical window.

“We have a studio that is doing extremely well and a [release window] formula that is serving us really well in terms of its bottom line,” Iger said on last November’s fiscal call.

With Kevin Tsujihara out at Warner Bros., efforts to release studio films early into homes through premium VOD are likely over.

Tsujihara, who was forced out following a sex scandal, was initially promoted to the chairman position in large part because of his expertise advocating for alternative distribution channels while heading Warner Bros. Home Entertainment.

Media Play News Fast Forward 2019 Awards Luncheon

Media Play News honored four digital retailers with the publication’s second annual Fast Forward Awards for driving the home entertainment industry forward. This year’s awards included a luncheon and ceremony, held April 4 at the Universal Hilton in Universal City, Calif., and hosted by the Entertainment Merchants Association. Awards went to Cameron Douglas of FandangoNow, Jonathan Zepp of Google Play Movies & TV, and Galen Smith of Redbox, and the team at Apple iTunes. EMA used the event to launch its EMA Leadership Development Foundation, aimed at supporting professional training and development within the home entertainment industry, and particularly within the EMA membership.

Atom Tickets Seeks to Work with Exhibitors Rolling Out Subscription Platform

Online ticket platform Atom Tickets announced a new service, Atom Movie Access, enabling exhibitors to develop custom theatrical ticket subscription plans for consumers.

The move represents an effort to incorporate movie theaters with the consumer-popular concept of ticket subscriptions, while not alienating exhibitors as was done by subscription pioneer MoviePass.

MoviePass has cited fraudulent use of its $9.95 monthly subscription – not a flawed business model – for the service’s fiscal challenges.

App-based Atom Movie Access affords exhibitors the ability to offer subscribers reserved seating, pre-order concessions, invite friends via social media and check-in using portable media devices.

“We’ve always believed in being a valuable partner to exhibitors, starting with the core functionality of our app, which allows for marketing promotions at specific locations and integrating exhibitor loyalty plans,” Matthew Bakal, co-founder of Atom Tickets, said in a statement.

The service, which is co-owned by Lionsgate, Disney/Fox and Fidelity Management & Research Co., also offers backend support, including payment transactions, customer service and fraud detection.

“Atom Tickets is an innovative ticketing platform that enables exhibitors to reach and engage new and incremental audiences,” Bakal said.

 

Analysts Split on Apple’s Streaming Impact on Netflix

The day after Apple’s media coup announcing plans for an enhanced Apple TV app and related services, Wall Street appears divided depending upon which side of the Netflix stock it sits.

With more than 1.4 billion iOS connections globally, the revamped Apple TV+ service would appear to be a major competitive threat to Netflix’s global base of nearly 150 million subscribers and future growth.

With a history of industry disruption and creating consumer markets through iTunes, the iPhone, iPad and Apple Watch, conventional wisdom suggests Cupertino, Calif.-based Apple could upend Netflix’s burgeoning growth and market dominance — despite its relatively late entry into the over-the-top video ecosystem.

Needham analyst Laura Martin contends Apple TV+ could be “poison” to Netflix by virtue of Apple’s 900 million existing connected consumers and its ability going forward to bundle original content, discounted third-party OTT services, music and video games.

In a note, Martin writes that if Apple is successful converting just 10% of its unique users to Apple TV+, it would be able to fund content with a budget nearly triple Netflix’s. The analyst is also bullish on Disney’s pending Disney+ streaming service, telling media it could generate 50 million subs.

Dan Ives, media analyst with Wedbush Securities, says Apple is separating itself from Netflix by catering to family-friendly content on a secure platform.

“[Apple] is trying to differentiate itself [from] competitors and flex its Apple brand muscles to get more consumers on this ‘trustworthy’ platform,” Ives wrote. “We continue to believe the company has the opportunity of capturing 100 million consumers on this streaming service over the next three-to-five years.”

On the flipside, Raymond James analyst Justin Patterson says Netflix market position is well-built to withstand the threat.

“Similar offerings already exist, suggesting this service is more incremental than revolutionary,” Patterson wrote in a note. “We believe Apple’s and Disney’s launches will not adversely affect Netflix’s competitive position.”

Longtime Netflix bear Michael Pachter, with Wedbush Securities, says that with Apple reportedly spending $2 billion on original content, including licensing content from Netflix’ studio contributors – in addition to offering third-party OTT services — the SVOD pioneer will have increased challenges finding compelling content to justify its standalone service.

“We expect Netflix to suffer the double whammy of seeing existing content migrate to competitive services at the same time that new domestic subscribers are more difficult to attract,” Pachter wrote in a March 26 note.

 

 

Sony Stopping Retailers from Selling Digital Video Game Codes

In another blow to packaged-media retail, Sony Interactive Entertainment is taking steps to stop retailers such as GameStop, Amazon and Best Buy from selling digital codes to its video games.

The move would hinder consumers from bypassing the credit card payment option at Sony’s PlayStation Network and purchasing codes to PS4 titles at physical and online retail.

“We can confirm that as of April 1, Sony will no longer offer full games through SIE’s Global Digital at Retail program,” the company told The Verge in a statement. “This decision was made in order to continue to align key businesses globally. To support full games and premium editions, SIE will introduce increased denominations at select retailers.”

The move will reportedly not affect pending releases of Days Gone and Mortal Kombat 11.

Sony said the new policy would not affect downloadable content, add-ons, virtual currency, gift cards and season passes. The publisher will also continue to offer third-party PSN credit options at select retailers.

Sony’s action mirrors efforts by Disney to stop Redbox from selling digital codes to its movies. That move resulted in litigation with a federal judge last summer granting Disney’s request for a preliminary injunction against Redbox.

That injunction only applies to newer “combo pack” releases with a revised disclaimer on the package. Redbox said it would continue selling digital codes to earlier Disney releases such as Frozen and older “Star Wars” movies.

An Ode to Old Hollywood Upon Its Possible Demise

It was a curious juxtaposition March 22. I was touring the old locations — some of which still exist and are recognizable — of the early Laurel and Hardy films — films from the very beginning of the motion picture industry. For the Blu-ray, DVD and digital release of Sony’s Stan & Ollie about the comedy duo, we looked at Main Street in Culver City where so many films from the Hal Roach studio were shot. We looked at the famous Music Box Steps, where the comic duo lensed one of their most memorable sequences.

The Music Box Steps, famed for their appearance in a Laurel and Hardy film, still exist in the Los Feliz neighborhood in Los Angeles.

At the same time, the venerable studio Fox was being subsumed and forever changed by an acquisition deal in which Disney would take over the studio’s content and Fox retain the lot — to whatever purpose it wanted. Who knows what will happen to that historic lot?

And thousands of Fox employees had either already learned, or were awaiting, their fate, as the studios combined and got rid of personnel in duplicative departments.

The next Monday, March 25, Apple announced its entry into the content production business, with no less than Steven Spielberg, J.J. Abrams, Oprah — and Big Bird — backing its entry.

Looking down the Music Box Steps.

The old studio system is, if not dead, under attack. The new studio system is likely to include tech companies keen to leverage their distribution power to deliver content. Instead of Disney, Fox, Universal, Sony, Paramount and Lionsgate, will the new order be dominated by Apple, Amazon and Netflix?

“We feel we can contribute something important through great storytelling,” said Apple CEO Tim Cook.

It remains to be seen. Since when have Apple and the other tech companies been storytellers? For now, they are buying great storytellers with Wall Street money.

Near the end of the Laurel and Hardy tour, we saw a small plaque that recognized the Hal Roach studio that produced the comic duo’s films. The studio lot had been torn down, but had been remembered on this one small plot of land via a plaque. It made me think about what studios would be plaques 100 years from now — and what venerable names would be reduced to engraved remembrances.

Disney’s Iger Cites ‘Historic Day’ Closing Fox Acquisition

Following the official completion of the Walt Disney Co.’s $71.3 billion acquisition of 20th Century Fox Film Corp. and related businesses at 12:02 a.m. ET March 20, Disney CEO Bob Iger sent out an internal memo to combined staff calling the deal “a historic day for our company.”

The histrionics of the merger are just beginning in what could reportedly result in the elimination of more than 4,000 positions.

“I wish I could tell you that the hardest part is behind us; that closing the deal was the finish line, rather than just the next milestone,” wrote Iger. “What lies ahead is the challenging work of uniting our businesses to create a dynamic, global entertainment company with the content, the platforms, and the reach to deliver industry-defying experiences that will engage consumers around the world for generations to come.”

Aside from the previously reported high-profile departure of 20th Century Fox Film chairman/CEO Stacey Snider, studio vice chairman Emma Watts, Elizabeth Gabler, head of Fox 2000, and Steve Gilula and Nancy Utley, co-heads at Fox Searchlight, are transitioning to Disney.

Other senior executives making the move include Andrea Miloro and Robert Baird, co-presidents, Fox Animation, and Vanessa Morrison, president, Fox Family. All report to Alan Horn, chairman Walt Disney Studios, and Watts.

In his memo, Iger called for patience during the integration process, which he said would impact some businesses more than others.

“We may not have answers to all of your questions at this moment, but we understand how vital information is and we’re committed to moving as quickly as possible to provide clarity regarding how your role may be impacted,” he wrote.

The deal includes 20th Century Fox, 20th Century Fox Home Entertainment, Fox Searchlight Pictures, Fox 2000 Pictures, Fox Family and Fox Animation; Fox’s television creative units, 20th Century Fox Television, FX Productions and Fox21; FX Networks; National Geographic Partners; Fox Networks Group International; Star India; and Fox’s interests in Hulu, Tata Sky and Endemol Shine Group.

As part of the deal, Disney has agreed to sell 21st Century Fox’s Regional Sports Networks.

Disney’s $71B Fox Acquisition Effective After Midnight

The Walt Disney Co. announced that its $71.3 billion purchase of 20th Century Fox Film Corp. officially goes into effect at 12:02 a.m. ET on March 20.

The deal includes 20th Century Fox, 20th Century Fox Home Entertainment, Fox Searchlight Pictures, Fox 2000 Pictures, Fox Family and Fox Animation; Fox’s television creative units, 20th Century Fox Television, FX Productions and Fox21; FX Networks; National Geographic Partners; Fox Networks Group International; Star India; and Fox’s interests in Hulu, Tata Sky and Endemol Shine Group.

As part of the deal, Disney has agreed to sell 21st Century Fox’s Regional Sports Networks.

Disney is also acquiring approximately $19.8 billion in cash and assuming approximately $19.2 billion of debt of 21st Century Fox in the acquisition. The deal price implies a total equity value of approximately $71 billion and a total transaction value of approximately $71 billion.

“This is an extraordinary and historic moment for us — one that will create significant long-term value for our company and our shareholders,” Disney CEO Bob Iger said in a statement. “Combining Disney’s and 21st Century Fox’s wealth of creative content and proven talent creates the preeminent global entertainment company, well positioned to lead in an incredibly dynamic and transformative era.”

 

 

Netflix’s Ted Sarandos Says Apple, Disney ‘Very Late’ to SVOD Ballgame

Having invented the subscription video-on-demand business (with Roku) more than 10 years ago – with service in more than 190 countries, Netflix doesn’t appear to be worried about pending streaming competition from Apple and Disney.

Speaking March 18 at a media event at Netflix’s Los Angeles headquarters on Sunset Boulevard, CCO Ted Sarandos said he would “reserve comment and judgment” on the March 25 Apple announcement and separate Disney+ streaming media platform rollout later this year “until we see it.”

Netflix’s Los Angeles headquarters on Sunset Boulevard

Indeed, Netflix has long welcomed streaming competitors, including the rollouts of HBO Now, Showtime OTT, Amazon Prime Video and Hulu — characterizing the services as validation of the OTT video market in a pay-TV ecosystem.

Yet, Disney and Apple are not niche brands. Disney in recent years has dominated the box office through its Marvel and Lucasfilm (i.e. “Star Wars”) subsidiaries.

Disney last year ended its landmark movie distribution deal (and more than $300 million in annual license fees) with Netflix in part to solidify movie content offerings for its subscription streaming service.

Apple, which literally created markets for consumer electronics through  iTunes, the iPhone, iPad and Apple Watch, among others, has been slow to enter SVOD in large part because the late Steve Jobs considered streaming video a hobby.

“We’ve been competing with 500 channels of cable and penetrated nearly every household in the world for a long time,” Sarandos said, as reported by Deadline. “So, it’s the same stable of competitors; just very late to the game.”

Cindy Holland, VP of originals, who has been around Netflix about as long as Sarandos, said Netflix’s strategy to think locally and act globally when it comes to mining and distributing original content such as “Casa De Papel” and “Delhi Crime” underscores the streamer’s evolving subscriber.

“We are trying to reflect our audiences around the world,” said the pragmatic Holland. “We have a long way to go. You can’t rest on your laurels too long.”

Disney+ Is a Safe-Cracker

Walt Disney CEO Bob Iger’s announcement that the studio would abandon its long-standing “vault” strategy for its upcoming subscription streaming service is perhaps one of the most shocking shifts in an industry rocked by change.

At the March 7 shareholder meeting in St. Louis, he said that the studio would pull movies from its vault and offer them all on the pending Disney+ service.

“At some point fairly soon after launching, [Disney+] will house the entire Disney motion picture library,” Iger said. “So, movies that have traditionally been kept in the vault, and basically been brought out every few years, will be on the [streaming] service.”

The vault strategy, exploited by Walt Disney Studios Home Entertainment for decades, involved putting select movies, mostly animated classics such as BambiThe Lion King, and The Little Mermaid, on retail moratorium for several years to wait for a new crop of children to come along. Oft termed “treasures” or “platinum” or “gold” editions when they emerged after seven years or so for a re-release, they were snapped up at $20 to $30 apiece by eager parents, purchases made all the more urgent by the studio warning that they would soon go back into the vault. When these classic films came out, often in a new format, they shot to the top of the sales charts.

It took the digital entertainment revolution to finally crack the Disney vault — but is it a heist? If enough subscribers sign on to Disney+ at a high enough subscription price, offering a panoply of content may be a lucrative investment, but it could also devalue some of the studio’s most valuable jewels.