A reminder that I will be taking time off over the next two weeks. This will will be last mailing will be Thursday, July 5th. That mailing will have the key trends for Q3 2023.
If anything significantly newsworthy happens between now and early July — unlikely but one never know — you will be hearing from me!
I spent much of the weekend writing and editing my monthly Medium Shift column. It will be published this Wednesday or more likely next Wednesday.
So, today's mailing is less essay, more observations built around a theme. I thought the events of the weekend reflected exactly what The Medium newsletter offers: Deep insight and analysis of the media marketplace as the business models for "premium content" are redefined by creators, tech companies and 10 million emerging advertisers.
So what happened over the week?
"Elemental" from Disney's Pixar took in $29.5 million at the box office, the worst opening in the storied studio's three-decade history
"The Flash" from Warner Bros. disappointed with $55 million at the box office.
Variety reported that advertisers are pressing for rollbacks, or declines in the rates they pay for reaching TV viewers, in early “upfront” talks with TV networks.
The Wall Street Journal reported Netflix is in talks to live-stream its first sporting event this fall: a celebrity golf tournament featuring professional golfers and Formula One drivers.
And, last but not least, global soccer superstar Lionel Messi plans to sign a contract with Inter Miami, the Major League Soccer team partially owned by David Beckham, and will get a share of the Apple TV-MLS deal.
I could be accused of being selective with the evidence, but were there any other headline stories from the past week?
Total words: 1,000
Total time reading: 4 minutes
"Elemental"
I thought this quote from Pete Docter, Pixar’s creative chief officer, on releasing Pixar titles on Disney+ was particularly notable:
In the long run, there’s been a bit of a mixed blessing because we’ve trained audiences that these films will be available for you on Disney+. And it’s more expensive for a family of four to go to a theater when they know they can wait and it’ll come out on the platform.We’re trying to make sure people realize there’s a great deal you’re missing by not seeing it on the big screen.
His point is that Disney+ has made Pixar's premium content more accessible, and the box office results suggest that in doing so Disney has trained audiences to expect premium content at a discount. The bigger implication is that these audiences cannot be un-trained in the streaming era.
"The Flash"
Newly appointed DC Studios co-chief James Gunn and Warner Bros. studio executives worked hard up until the to convince the public that the "The Flash" is “one of the greatest superhero movies ever made." Audiences disagreed.
Both "The Flash" and "Elemental" cost around $200 million to make and another $100 million to market. Perhaps most notable for The Flash, the surprise ending of this film was re-shot in the past six months, the "3rd ending for the movie that faced 3 separate regimes with 3 separate agendas, something few movies have ever faced."
The turmoil at Warner Bros. Discovery may have taken its toll on the company's ability to deliver . The outcome also raises more questions at a time when investors are asking questions about management's failed attempt to pivot CNN.
Rollbacks at Upfronts
There is a complicated set of factors at play at Upfronts, as Variety's Brian Steinberg wrote last week:
One-time couch potatoes have a dizzying array of choices when it comes to enjoying their video favorites, and many of them pull crowds away from watching a drama or comedy at a specific time and date. Getting the masses of viewers advertisers and cable distributors crave has become an onerous task, and it is affecting the economics of the TV business in marked fashion. The strike threatens to make things worse; Madison Avenue has little clarity at present if media companies like Paramount or NBCUniversal will have new scripted originals to showcase come autumn.
In short, there *is* premium content out there, but cable and broadcast are becoming less likely destinations for consumers. There is also a bit of the Q2 2023 trend at play: "The definition of scarcity is continuously evolving away from linear and towards walled gardens". But even Netflix and Amazon are having trouble delivering the volume ad buyers typically seek at Upfronts.
Netflix sports live-stream
Netflix Co-CEO Ted Sarandos told investors in January, “We aren’t anti-sports, we’re pro-profit.” Securing live-sports broadcast rights could present a new opportunity for its emerging advertising business. But sports run into the billions of dollars and tend to be for longer windows — the recent NFL broadcast deals were all 10 years — making them risky and expensive to narrow profit in the long-run.
Netflix has recently tested familiar formats in livestreaming with a comedy special with Chris Rock and a reality show reunion for contestants of “Love Is Blind”. The celebrity golf tournament is a familiar format for audiences. But it is not considered either premium content or audience draw by advertisers, certainly when compared to NBA games.
Lionel Messi, MLS & Apple TV
2023 is the first year in a 10-year broadcast agreement with Apple. Every league match is broadcast on MLS Season Pass, a streaming service contained within Apple TV+. Apple management have said they are happy with the performance so far, but we have no objective evidence for that.
Assuming Messi will indeed get a share of the deal — reported to be share of Apple TV+ sign-ups post-deal — the future of Apple TV+ seems to have changed and at a significant cost. It has invested in a growing list of premium content productions like "Ted Lasso" and "See", but that increasingly seems less like a roadmap to profits and more like a roadmap to becoming the new "free money" for Hollywood.
Messi, alone, has proven to be premium content for viewers globally. Apple TV+ is betting that inserting Messi into MLS Season Pass, which is distributed in over 100 countries globally, will change the league's fortunes. The MLS has struggled to capture viewers in the U.S. — average MLS regular season viewership fell six percent on the Fox family of networks to 198,000 per game last year. Also, Spanish-language telecasts on the Univision networks dipped 14 percent to 244,0000 from 2021.
The question now is whether audiences will consider MLS "premium content" going forward with Messi. That seems unlikely, but it will be entertaining.
Must-Read Monday AM Articles
* Viaplay was until very recently the poster child for European streaming, with what seemed to be a winning strategy for expanding internationally with a mix of compelling entertainment content and well-judged sports rights acquisitions, came spectacularly unstuck last week.
* By exploring the audience demand, sentiment and affinity of "South Park", Parrot Analytics' Brandon Katz explored whether or not all the fuss surrounding the animated comedy is justified
* The long-suffering WWE/Twitch saga has come to an end, as the two companies agreed to terms on a multi-year extension. Not only will individual Superstar Twitch channels return, but a main WWE channel will also debut with new live and exclusive content.
* The language-learning app Duolingo now relies more on memes on TikTok than on traditional video advertising, helping it climb to 20 million daily active users
* It looks like the evolution of free ad-supported TV services (FASTs) is headed towards more customized, discoverable, and available services.