Insights is a weekly series featuring entertainment industry veteran David Bloom. It represents an experiment of sorts in digital-age journalism and audience engagement with a focus on the intersection of entertainment and technology, an area that David has written about and thought about and been part of in various career incarnations for much of the past 25 years. David welcomes your thoughts, perspectives, calumnies, and kudos at email@example.com, or on Twitter @DavidBloom.
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The negative reaction to Netflix last week after Disney’s announcement that it would pull back its films and series after 2018 was both swift and severe. Within hours, Netflix lost $3 billion in valuation, and plenty of hot takes opined that Disney’s decision was the most momentous but hardly the only one by Hollywood studios now scared to license content to the big red N.
Certainly, the Disney announcement includes lots of interlocking pieces that are well thought out and promise big shifts in Hollywood’s halting embrace of digital media. The announcement heralds two big new streaming services (ESPN and Whatever Disney calls the other one) next to the dozens of over-the-top services already out there. More choice for consumers! More high-end subscription-only stuff you get to track down, connect to and pay for! Yay! Act happy!
At the same time, let me suggest that you shouldn’t cry too hard for Netflix. Let’s just take a look at what’s happened in the 10 days or so since Disney walked away. Among other announcements, Netflix:
- Acquired Millarworld, the UK-based comics company whose intellectual property has already spawned films Wanted, Kick-Ass, and Kingsman, which collectively have grossed nearly $1 billion. Founder Mark Millar isn’t Stan Lee (yet), but during the eight years he did work at Marvel, characters he developed were turned into movies that have generated $3 billion in box office. One analyst called Millar “an IP factory.” Expect Netflix to start spinning off Millar-based Marvel-like cinematic universes with films, series, and kids’ shows. This feels like a big, big thing, and it’s Netflix’s first such acquisition. I can’t believe it will be the last.
- Announced a talk show with David Letterman. Yes, he’s been off the scene for three years, and yes, his fans are aging. But they’ll show up Dave. As with Chelsea Handler, it should be a perfect Netflix audience/show marriage.
- Announced a deal with the Coen Brothers for The Ballad of Buster Scruggs. As with Letterman, the Coens (Fargo, The Big Lebowski among much else) have an ardent fan base, critical acclaim and plenty of awards.
- Renewed two hit series for second seasons: GLOW, a comedy starring Marc Maron and Alison Brie and loosely based on 1980s women’s pro wrestlers, and Ozark, featuring Jason Bateman as an accountant for a Chicago drug cartel trying to launder millions of dollars in a Missouri backwater. Meanwhile, the boss of The Crown told media he could imagine the pricey, soapy bio series about Queen Elizabeth II running for six seasons (she’s been queen for 65 years; there’s lots of material). At a reported $14 million an episode, that would be quite a commitment.
- Renewed political thriller Fauda for a second season and ordered a second, untitled political thriller from co-creators Lior Raz and Avi Issacharoff.
- Ordered Best Worst Weekend Ever, a teen comedy series with showrunner Jeremy Garelick (The Wedding Ringer, The Breakup), and an untitled series from a UK-based team, New Pictures. The company also announced three more notable actors joining the remake of The Haunting of Hill House, produced by Amblin TV and Paramount TV.
- Closed in on a final deal for a series from Chuck Lorre, the man behind CBS hits Two and a Half Men and The Big Bang Theory. Lorre will make The Kominsky Method, featuring Michael Douglas and Alan Arkin, for Netflix and Warner Bros. TV, the Hollywood Reporter said, though it cautioned the deal isn’t yet final. That’s code for “the deal is done but the network wasn’t quite ready to announce before the reporter got a tip.”
- Signed a bombshell of a long-term deal with Shonda Rhimes and her Shondaland production company. Rhimes shows comprise the entire Thursday night programming block for Disney-owned ABC: Grey’s Anatomy, How to Get Away with Murder, and Scandal. With her deal ending in a year, and ABC wanting other kinds of programming, difficult negotiations were just ahead. Then the negotiations got very easy, because Rhimes went Netflix. Rhimes fans should love what she does on Netflix, where she’ll have fewer restrictions on adult content and more creative flexibility. The deal might have been Netflix’s ultimate riposte, signing away the most successful producer from Disney’s biggest entertainment property.
- Netflix content chief Ted Sarandos said the company plans to spend $7 billion in 2018 on content of all kinds. That’s after spending $6 billion this year, and $5 billion last year. And yes, it’s the only rational (if expensive) response if defensive Hollywood studios decide they need to keep their content for their own apps and services instead of just cashing checks from Netflix.
- And even Disney and Netflix aren’t done, in a corporate version of “I can’t quit you.” Amid all the hubbub over the Disney announcements, there was plenty of uncertainty about Disney’s Marvel and Star Wars blockbusters. Would they get their own streaming service too? Possibly not yet. Disney and Netflix are in “active discussions” over the films, said Sarandos.
For Disney, realizing the value of standalone apps for ESPN and for its shows and movies, as well as another big investment in BAMtech, will depend on, as always, how well Disney executes the pivot to a business it doesn’t know well.
I won’t dwell on Disney’s spotty history with its tech investments (Go.Com, Disney Interactive, Maker Studios, etc., etc.), but holding judgment awhile on their latest big digital initiative seems prudent.
Sarandos called Disney’s move “a natural evolution,” and said that the company’s subscription service would be “complementary” to Netflix. That sounds about right. When the Disney-Netflix original agreement was first announced several years ago, it felt to me like a smart and profitable stopgap for the Mouse House while it figured out its next move. Now it’s moving forward.
Even back then, however, Netflix knew this deal wouldn’t last forever. As Sarandos told Reuters, “We got into the originals business five years ago, anticipating it may be not as easy a conversation with studios and networks” to license their content.
So let’s review: Disney is about to embark on the ambitious process of creating another online business for which it has relatively little experience (though partner BAMtech has plenty of success here). Meanwhile, Netflix, as seen above, will keep doing the things it’s been doing for half a decade.
Remind me where that $3 billion in lost valuation went again?
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