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 firstname.lastname@example.org, or on Twitter @DavidBloom.
It’s a new year (have a Happy One, everybody!), and time for my fearless yet peerless predictions of what we can expect from entertainment online and off in this shiny new annum. Or something like that. Regardless, it beats predicting we’ll be gobsmacked repeatedly by unforeseen events, left staggering like a punchdrunk fighter. Even if that is more likely to be accurate.
Anyway, here’s what’s likely to shape entertainment the next 12 months:
Traditional Hollywood gets smaller.
We won’t find out until at least March whether the courts allow AT&T to complete that $85 billion Time Warner deal. And regulators still haven’t weighed in on Disney’s $54 billion purchase of much of Fox. Expect both deals to happen, largely as proposed. And expect traditional Hollywood studios to shed several thousand jobs as cable cord cutting and a stumbling theatrical box office dog their finances. Indie producers will have two fewer places to shop projects, and it may get worse. I think more consolidation is coming.
For instance, what happens to Viacom and CBS when Sumner Redstone is truly gone? And what happens to smaller but significant mini-studios such as Lionsgate and MGM, both tempting acquisition targets with big libraries, effective distribution and hits such as The Handmaid’s Tale and Orange is the New Black. Verizon, Comcast, and others are looking. If AT&T and Disney get their deals done, expect more to come.
Non-Traditional “Hollywood” gets bigger.
Original content operations for both Apple and Amazon are expected to move next door to each other in the Los Angeles suburb of Culver City, down the street from Sony Pictures’ sprawling lot.
Perhaps more important is the symbolism of the moves. The Culver Studios lot, which turns 100 this year, has been home to such storied Hollywood names as Thomas Ince, Cecil B. DeMille, Lucille Ball, Howard Hughes, Grant Tinker, Alfred Hitchcock, Orson Welles, and David O. Selznick. Oscar Best Picture winners Gone with the Wind and Rebecca were filmed there, as were TV shows such as The Andy Griffith Show, Scrubs, Lassie and Arrested Development.
The lot has been part of traditional Hollywood since silent film. Now, the next generation of entertainment will move there. Expect more like this as other tech giants try to signal creators that they’re serious about entertainment.
Hollywood’s brain drain.
Signaling is important because the tech giants will keep poaching talent from traditional Hollywood. Netflix, which plans to spend $7 billion in 2018 on programming (or was it $8 billion?), in part to create a whopping 80 movies, is also skimming the cream of Hollywood TV producers.
The biggest deal so far involved Shonda Rhimes, whose company produces ABC’s Thursday night lineup (Grey’s Anatomy, Scandal, and How to Get Away with Murder). Rhimes’ departure whacked ABC a good one. Back in August, Amazon poached Robert Kirkman, creator of The Walking Dead. It was much smaller deal but Walking Dead is the highest-rated cable TV show in history.
And at year end, Bloomberg reported that both Amazon and Netflix are courting producer Ryan Murphy (Glee, American Horror Story). Murphy had been expected to re-sign at Fox, but the Disney purchase puts in question the continued presence of several Murphy allies. Is it possible Apple or a rebuilding Amazon might hire away those execs along with Murphy?
New Ratings, but No Matter.
And speaking of Netflix movies, Will Smith’s Bright, a buddy cop movie spliced into a magic-filled alternative Los Angeles, debuted over the holidays. Nielsen’s new streaming-video ratings estimated it was watched by 11 million viewers. Measuring those viewers will give traditional Hollywood something it has wanted for years, though Netflix always points out that it doesn’t care about ratings because it doesn’t sell advertising (yet). And it know, exactly, how many people watched Bright and everything else on its service.
More importantly, if the 11 million number is even remotely close, it’s huge. If it had sold 11 million tickets in a traditional theatrical release (admittedly a big assumption), the opening weekend would have grossed around $90 million. Looking at 2018, if people are busy watching those 80 Netflix movies on their home theaters or smart phones, how many will go to theaters at all, especially given most of what Hollywood is making now?
E-sports, and Twitch.TV, take the next step.
E-sports has been something of a 15-year “overnight success,” but the sector has finally arrived. Interest from players, sponsors and fans is huge and globe-girdling. Opportunities in events, merchandise, licensing and lifestyle products are taking off. All that means Amazon’s Twitch.TV is perfectly positioned to keep growing like the Blob, even as it continues experimenting with non-gaming content. Now, if only Amazon could figure out an overall video strategy for 2018.
Google will be doing just fine, but still won’t figure out YouTube Red.
As with Hulu, there’s a reason they’re not releasing subscriber numbers, but it won’t matter. Step Up won’t make anyone step up to a Red subscription, but expect more and more deals with Hollywood types you’ve heard about. Meanwhile, Google will still devour three-fourths of online ad growth and make tens of billions of dollars. So, even with all its missteps over the past 18 months. even minus the retiring Eric Schmidt, even after all that, if Google wants to dent its business, it’s going to have to really try.
Red-hot Nintendo still won’t catch Sony.
In 2017, Nintendo mattered again, selling 15 million units of its Switch console. But in 2018, the empire strikes back. PlayStation’s advantages include a bigger game library, more exclusives, the biggest-selling virtual-reality headset, a big digital distribution network, Sony’s film, TV and music operations, and its own skinny bundle. Microsoft and Sony both released a powerful, backward-compatible update to their console in 2017, ensuring their platforms remain technologically superior to the Switch. That only cements PlayStation as front-runner.
CES is still a launchpad, but hardware matters less and less.
The Consumer Electronics Show remains the place to be for trend sniffers. The vast annual gathering of tech, media, advertising and online companies starts on January 9, with something close to 200,000 attendees and 4,000 companies expected to descend.
Companies will be touting all kinds of gadgets from smartphones to super high-resolution TVs to audio to aftermarket car gear to a zillion devices running Amazon’s Alexa and Google Home digital assistants, said Karen Chupka, who heads CES. But here’s the thing: all that hardware is going to matter less and less, and the software inside those devices, the software that creates highly personalized, targeted and powerful experiences, will matter more.
Those Alexa/Google Home devices are a good example. Electronics makers are adding the digital assistants in such profusion that having one or the other has become a checklist item, a feature your product must have but one that no longer differentiates it because everyone else has it too.
TVs, meanwhile, are seeing all their internal smarts externalized to separate boxes or out to the cloud. Those vast, beautiful screens have been carved down to anorexic thicknesses, while all their smarts now sit in a soundbar and a Roku or Apple TV (Apple, by the way, won’t be at CES again this year). A lot of the real smarts is even further away, with AI-fueled services such as Netflix targeting programming and ads.
One increasingly important part of CES is C Space, the show within the show based at the Aria Hotel, far from the convention center. In just a few short years, C Space has become the CES week’s nexus for non-hardware companies from Hollywood, Madison Avenue and Silicon Valley.
C Space has tripled its participating companies from 2017, Chupka said, and added music-related event tracks on streaming services and “using tech to drive their brands.” The rapid rise of C Space, which is all about content and advertising instead of hardware, says a lot about the broader shifts we’re seeing.
The show will highlight numerous companies in augmented and virtual reality, artificial intelligence and more, Chupka said. But part of what will make those technologies really go are the declining costs of enabling equipment and platforms.
For less than $10,000, for instance, you can now build your own supercomputer capable of a staggering 270 teraflops of compute power. In car talk, that’s a lot of horsepower. A decade ago, IBM had supercomputers around that level of power that cost $2.6 million, filled a large room and needed a large support team. Now, you can stow a supercomputer under your desk. Imagine what people will begin doing with that this year, for both good and nasty purposes.
Once you’ve done that (bargain bitcoin mining, anyone?), remember my opening line about being whacked on the head by unexpected events this year? So, that, using these new technologies is the best bet for any prognosticator in 2018. Stay safe out there.
Fortune Teller photo by Josh McGinn.