Disney Readying ESPN OTT Video Service for Spring Launch

The Walt Disney Co. this spring is launching a standalone ESPN over-the-top video service, a $4.99 monthly platform powered by the media giant’s recent $3.75 billion BAMTech acquisition. Disney will also launch its first domestic OTT video in late 2019.

The move comes as Disney reported 11% drop in first-quarter (ended Dec. 30, 2017) ad revenue at ESPN. The company attributed the decline in part to the timing of the NCAA college football playoffs. ESPN broadcast six bowl games in Q1 last year compared to two games this year.

Speaking on the Feb. 6 fiscal call, CEO Bob Iger explained that the revamped ESPN app would feature live (authenticated) streaming, scores, highlights, news, stories, etc.

A third component, dubbed ESPN Plus, will feature on-demand content, including the entire library of ESPN’s award-winning “30 for 30” series.

“We plan to invest further in the direct-to-consumer feature, adding more live games and produce sports programming, along with even greater personalization in the years ahead,” Iger said.

Should Disney’s $52 billion acquisition of 20th Century Fox go through, it plans to incorporate movies from Fox 2000 and Fox Searchlight for OTT video – a strategic move Netflix follows.

“As a company, when combined, we’ll have far more production … to flow into our traditional distribution businesses, that being TV channels and the motion picture exhibition business, as well as the capability to create product for our direct-to-consumer businesses,” Iger said.

He said that with Disney, Marvel, Pixar and Star Wars brands, the studio won’t try and emulate Netflix’s 80 feature-film production goals.

The demand for those [Disney] brands, we believe, will give us the ability to spend less on volume,” Iger said.

Disney Ups Hulu 2018 Equity Loss to $250 Million

The Walt Disney Co. Feb. 6 revealed it expects more than $250 million in equity losses on Hulu in 2018. The revised projection is up from a previously disclosed loss of $100 million.

Disney co-owns (30%) Hulu, which has about 17 million subscribers, with 21st Century Fox (30%), Comcast (30%) and Time Warner (10%).

Disney would become majority owner of Hulu should its $52.4 billion acquisition of select Fox assets pass regulatory muster.

On the fiscal call, CFO Christine McCarthy said about a third of the loss ($82.5 million) would impact second quarter (ending March 31) financial results.

The executive said the increased losses are due to content licensing between Hulu’s equity owners. As a stake holder, Disney expects to recoup the loss through Disney-ABC Television Group content sales as well as various affiliate network revenue.

Disney is on the hook for about $450 million in capital contributions to Hulu in 2018, according to a regulatory filing.

On the fiscal call, Disney CEO Bob Iger said following the end of Netflix’s exclusive pay-TV distribution of its original Marvel, Pixar and Lucasfilm movies, all titles released in 2019 would be distributed through proprietary digital channels, including possibly Hulu.

“Hulu has an existing output deal with HBO that will last longer by a few years the deal we have with Netflix,” Iger said.

He said it remains Disney’s intention following closure of the Fox deal to grow the global direct-to-consumer business taking advantage of combined studios’ production output.

“We fully hope to expand our production of intellectual property under those [Fox, Disney] umbrellas — studio and television to feed multiple direct-to-consumer businesses that we own,” Iger said.

 

 

Hulu Unveils Super Bowl Spot for Series from J.J. Abrams and Stephen King

Hulu has unveiled its Super Bowl commercial for upcoming original series “Castle Rock” from J.J. Abrams and Stephen King. The series premieres this summer exclusively on Hulu.

A psychological-horror series set in the Stephen King multiverse, “Castle Rock” stars André Holland, Melanie Lynskey, Sissy Spacek, Billy Skarsgård, Jane Levy and Scott Glenn.

The “Castle Rock” Super Bowl spot can be seen here: https://youtu.be/fwmhiqUPa28

Sam Shaw and Dustin Thomason developed the project for television and serve as executive producers along with J.J. Abrams, Ben Stephenson and Liz Glotzer. “Castle Rock” is produced by Bad Robot Productions in association with Warner Bros. Television.

Studios, SVOD Win Court Injunction Against TickBox TV

Hollywood studios and subscription streaming video services have been granted a preliminary injunction against TickBox TV, the Atlanta-based company allegedly selling illegal access to myriad TV shows and movies through a proprietary set-top box.

U.S. Federal District Judge Michael Fitzgerald Jan. 30 in Los Angeles ruled TickBox must maintain changes it made to its user interface and marketing after Universal Pictures, Columbia, Walt Disney Studios, 20th Century Fox, Paramount Pictures, Warner Bros., Amazon and Netflix filed a lawsuit last October.

TickBox argues it merely sells hardware and cannot be liable for the actions of third-parties, i.e. its consumers.

Indeed, at the bottom of its website, TickBow said its hardware “should not be used to download or stream any copyrighted content without permission from the copyright holder.”

But Fitzgerald ruled that while TickBox had not necessarily “caused” users to illegally stream or download copyrighted content, it had sold them the means to do so.

“TickBox may be held responsible for the instances of infringement that would not have otherwise occurred in the absence of the Device,” Fitzgerald wrote.

The judge ordered TickBox and plaintiffs to iron out technical safeguards that protect the latter’s copyrighted content, in addition to implementing software updates that could reset devices already sold.

The Alliance for Creativity and Entertainment, which represents studios and digital companies such as Amazon, Netflix and Hulu, hailed the judge’s decision.

“This is an important step, particularly given the court’s conclusion that the ACE members are likely to succeed on the merits of their case,” spokesperson Zoe Thorogood said in a statement. “We look forward to further developments in this case.”

SVOD, Studios Ready Super Bowl LII Ads

Amazon Studios will showcase its first Super Bowl ad for a TV show or movie when it airs a trailer for episodic series, “Tom Clancy’s Jack Ryan,” starring John Krasinski (“The Office”) – the fifth actor to play the title character after Alec Baldwin in The Hunt for Red October in 1990.

Amazon will also run a humorous ad for voice-controlled Alexa losing her voice, with baffled CEO Jeff Bezos asking, “How is that even possible?”

“People are aware of Prime video, but they’re not always aware that they get this award-winning programming as part of the membership,” Mike Benson, head of marketing for Amazon Studios, told The Los Angeles Times.

The Big Game, which boasts a domestic TV audience of 100 million, again promises to be a showcase for Hollywood studios and subscription streaming video mainstays spending upwards millions per spot.

Few studio ads have been confirmed, but online speculation is rampant.

Paramount Pictures has myriad options, including spots for Krasinski’s horror thriller, A Quiet Place, in addition to Tom Cruise’s Mission: Impossible – Fallout, among others.  Universal Pictures has spots for Jurassic World: Fallen Kingdom, Dwayne Johnson’s Skyscraper and Fifty Shades Freed.

Walt Disney Studios could run ads for Black Panther and Avengers: Infinity Wars, among others. Warner Bros., Sony Pictures and 20th Century Fox reportedly are not airing ads.

Hulu, which aired a 2017 Super Bowl ad for original series, “The Handmaid’s Tale,” undoubtedly will run another spot considering corporate co-owner Comcast (NBC Sports) is broadcasting the game.

Netflix might air an ad for a Cloverfield sequel. The third installment in the franchise originally was set to be distributed by Paramount, until it wasn’t. Scuttlebutt at the Sundance Film Festival had Netflix acquiring global rights.

Netflix, Amazon, Hulu Ramping Up Original Content Spend

Netflix, Hulu, and Amazon Prime Video are switching from content licensing to content creation in a major way. By 2022, the investment in original movies and TV shows will triple to $10 billion annually, according to new data from The Diffusion Group.

“The Big-3 SVOD players own 60% of TV streaming time,” Brad Schlachter, senior advisor at TDG, said in a statement. “They are looking to maintain if not grow this share by creating compelling originals that serve both to attract new users and retain existing subscribers even as subscription rates increase.”

Indeed, among Netflix subscribers, 21% rate originals as “absolutely critical” in their decision to keep using Netflix, while 41% rank them “very important.”

“The data is unequivocal,” said Schlachter.

Netflix, Prime Video and Hulu – through sophisticated user data – have a much better understanding of the limits of licensed content versus the benefits of original fare.

TDG contends that as studios like Disney pull their most compelling content from SVOD platforms, the necessity of a strong slate of originals becomes all the more obvious.

But the Big-3 are not the only players eyeing a larger slice of the originals on-demand streaming market. In fact, companies such as Facebook and Apple are investing in original TV-quality programming to distribute directly to consumers.

“Of course, not all originals find an audience or generate a huge buzz,” said Schlachter. “But when they do, it can change the fortunes of a company. Just look at what ‘The Handmaid’s Tale’ did for Hulu, or what ‘House of Cards’ did for Netflix.”

TiVo: Average Global Viewer Watches 4.4 Hours of Video Daily

Fueled by more than $130 billion investment in programing globally, the average person watches more than four hours of video on a daily basis, according to new data from TiVo.

The United States tops all countries with 5.1 hours spent per day on average consuming video. Other documented regions included the Brazil (4.7 hours), United Kingdom (4.2), Columbia (4.1), Mexico (4.1), France (3.7), and Germany (3.3).

TiVo said the average person spends 28 minutes daily searching for video content, based on online survey of 8,500 pay-TV and over-the-top video respondents.

“Viewers, content owners, new streaming services and devices have created a feedback loop where both supply and demand have grown exponentially,” wrote Jocelin Lee, senior manager, strategic research & market insights, and co-author of the report.

While 87% of U.S. respondents said they subscribe to pay-TV, 64% also pay for streaming video, including 44% using a streaming media device.

Not surprisingly, Netflix dominates among SVOD services with 82% penetration in the U.S., followed by Amazon Prime Video at 47% and Hulu at 32%.

Netflix’s highest regional penetrations include Mexico and Brazil at 91%, respectively. By comparison, Netflix has 65% penetration in France.

Among streaming devices, Roku (29%) enjoys a slight lead over Google Chromecast (21%), followed by Apple TV at 18% market penetration. Google Chromecast enjoys superiority in Columbia, Brazil, Mexico and France – all countries Roku is not sold.

Amazon Fire TV Stick ranks No. 1 in the U.K. and Germany – two strong Amazon ecommerce markets.

Season One of ‘Handmaid’s Tale’ Due on Disc March 13

Season one of “The Handmaid’s Tale” will be released March 13 on DVD and Blu-ray Disc from MGM and 20th Century Fox Home Entertainment.

“Handmaid’s Tale” became the first show from a streaming service to win an Emmy for Best Drama Series. The show ended up winning eight Primetime Emmy Awards, two Golden Globes and three Critics Choice Awards.

The three-disc set of the first season includes two new featurettes that take viewers deeper into the world of the dystopian society of Gilead.

Based on Margaret Atwood’s best-selling novel, “The Handmaid’s Tale,” which begins streaming its second season on Hulu April 25, is the story of life in a totalitarian society in what was formerly the United States. Facing environmental disasters and a plunging birthrate, Gilead is ruled by a twisted fundamentalist regime that treats women as property of the state.  As one of the few remaining fertile women, Offred (Golden Globe- and Emmy-winner Elisabeth Moss) is a Handmaid in the Commander’s household, one of the castes of women forced into sexual servitude as a last desperate attempt to repopulate a devastated world.

Extra features include “From Script to Screen,” in which viewers can go inside the premiere episode’s harrowing scene where Handmaids violently participate in the execution of an alleged attacker, and “Hope in Gilead,” which examines the reasons why the book and series has captivated millions and become a cultural phenomenon.

It’s a Netflix World

NEWS ANALYSIS – Netflix hit another fiscal home run Jan. 22, reporting record 8.3 million subscriber growth in its most-recent financial period. The SVOD pioneer now has more than 117 million subscribers globally.

And it’s growing, with no end in sight. The company forecasting 6.4 million new subs in the first quarter, ending March 31.

Oh yeah, Netflix is profitable too – generating $186 million profit on revenue of nearly $3.3 billion – in 90 days! That’s nearly 33% year-over-year growth from the same regulatory period at the end of 2016.

The same day, CNBC reported that online TV competitors “Hulu With Live TV” and YouTube TV had generated 450,000 and 300,000 subscribers, respectively, since launching last year. They trail Dish Network’s pioneering Sling TV with 2 million subs and DirecTV Now with 1 million.

While Hulu, which is co-owned by Disney (Fox), Comcast and Time Warner (AT&T), and Google-owned YouTube haven’t officially revealed sub data, the numbers are telling.

When combined with HBO Now (2 million subs), Showtime OTT and CBS All Access (4 million), the entire online TV universe (including PlayStation Vue) barely edges Netflix’s most-recent quarterly sub growth.

“It actually shows you how poor the value proportion is for live TV,” BTIG Research Rich Greenfield told CNBC.

That’s an understatement.

Hulu’s original SVOD service has 17 million subs, which trails significantly to Netflix’s 55 million domestic subs. Amazon Prime Video, which is bundled with the Prime membership, reportedly has more than 40 million U.S. members – although it is unknown how many Prime members stream video.

Critics suggest Netflix’s domestic sub growth is waning, but CEO Reed Hastings disagrees, arguing the service’s U.S. market remains unchanged from management projections five years ago in the 60 -90 million range.

“So, we’ve got a way to go just to cross into the bottom of our expectation range,” Hastings said on the webcast.

In other words, it’s a Netflix world, everyone else is just living in it.

Hulu Tops 17 Million Subscribers

Hulu, the over-the-top video service co-owned by Disney, Comcast, Time Warner and Fox, Jan. 9 revealed it ended 2017 with more than 17 million subscribers.

The tally is surprising considering Hulu reported 15 million subs in 2016, and rival Netflix ended 2017 with 54 million domestic subs.

In the intervening months, Hulu has upped marketing and content spend significantly, in addition to winning industry awards, including Emmy and Golden Globes wins for “The Handmaid’s Tale.”

Regardless, the SVOD service said it generated $1 billion in ad-revenue for the first time. It now has more than 75,000 episodic programs on-demand across 1,700 titles.

In addition to a separate standalone online TV service called “Hulu With Live TV,” the Hulu SVOD service could figure prominently in Disney’s future OTT video plans when its $52 billion acquisition of 21st Century Fox’s film and select TV assets is approved by regulators. Indeed, Disney would become majority stake holder in Hulu.

Interestingly, the median age of a Hulu consumer is 31 with a median annual household income of $92,000. By comparison, the median age of a TV household is 55.

“2017 was a momentous year for Hulu. We took several major steps to become a 21st century direct-to-consumer media company, evolving into both an aggressive SVOD business and a formidable new live TV provider,” CEO Randy Freer said in a statement.