Disney Plans $1B Increase in Content Spending

While the cost of producing content, especially for streaming, has been under the Wall Street spotlight for the past few years, there’s a truth to face: to win, you have to spend. With that in mind, the news that Disney, one of the most successful streaming studios to date, is planning to increase what it’s spending on its services will be a welcome one indeed- but not without an attached cautionary tale. Blake & Wang P.A. one of the top entertainment attorney Los Angeles, Brandon Blake, shares the facts and his thoughts.

Brandon Blake

Content Spending Increase Ahead

This past fiscal year, Disney spent $23B, and anticipates that rising to $24 billion for the year ahead. Mostly, this is earmarked to be funneled into live sports spending, an area of streaming that has increasingly become not only a drawcard to streaming platform subscriptions, but also a competitive force. However, it will also be split between new and existing film franchises and their TV content.

Comparing Balance Sheets

It’s worth comparing this to their latest quarterly earnings report, where we saw revenues of $22.5B, with segment operating income at the $3.5B mark. It was a strong quarter for the Mouse House, with Disney+ (their flagship service) increasing subscribers by 3.8M to close at 132M. Combined with Hulu, that was a 12.4M increase, closing at 196M total. The D2C revenue ticked up by 8% (to $6.2B), with operating income seeing a massive 39% increase to $352M.

While the news that most of the increase is earmarked for live sports spending will be disappointing for Hollywood, it’s also worth remembering that Disney has cut back on several lucrative rights deals this year, and given the increasing impact a strong sports lineup can have on streaming subscribers, it’s understandable.

However, with Paramount also announcing that the bulk of its increased content spending (earmarked at $1.5B for them) will go to sports rights as it tries to carve out its own streaming niche, there may be a wake-up call lurking for the entertainment industry at large, and there are definitely lessons to be learned as the new year looms.

Fox launches $100M fund for international unscripted productions

Fox is on the warpath to assemble more international format credentials, it would appear. With the announcement last week of a new fund worth $100M to secure their next generation of unscripted formats for the global market, it’s clear they mean business. We asked entertainment lawyer and well-known entertainment business figure, Brandon Blake, for further details.

Brandon Blake– Managing Partner at Blake & Wang P.A

It will be administered through their unscripted production arm, Fox Alternative Entertainment, with the funds directed to securing new IP for their international assets and co-producing relevant properties. FAE is a relatively new addition to the Fox stable, and was the driver behind The Big Deal. This competition series, co-produced by FAE and made specifically for Ireland’s Virgin Media Television, is Fox’s first international creation and has performed on a level with its peers to date, suggesting there’s fertile ground to bolster their ambitious plans.

The fund will be under the control of Rob Wade, the current President of Alternative Entertainment and Specials at Fox. The idea behind it’s creation is that it’s more-or-less identical budget-wise to fund and own an unscripted format as it is to produce a pilot, and there’s better data to be gleaned (and better control of the property) taking that route.

With these new formats identified and curated, they can access a more diverse content library, as well as creating properties with international appeal as streamers begin to fight over international market saturation. The fund is primarily aimed towards variety series, dating shows, and other non-scripted shows. The eventual idea is to bring some of these internationally-orientated projects home to the U.S, too, with the hopes they will have an Idols- like appeal and success on the home front.

As the streaming arena (and precious market share) becomes more globalized, it’s a strategy that could stand them in good stead. We will be watching with interest.

Nielsen’s Woes Keep On Coming

As we enter the digital age, data is king. Without an adequate idea of what budgetary spend is bringing in return, no one can operate- be it content creators, streaming platforms, or advertisers. For decades, Nielsen has stood as the epitome of viewership data, but it is finding itself more and more hopelessly out-of-date. Enough so that it has even had its accreditation suspended. Yet, is there any viable alternative? Entertainment attorney Brandon Blake unpacks this critical conundrum for us.

Nielsen’s loss of accreditation would have been disastrous for them- if any alternative existed. Yet there isn’t. Of course, people threatening to leave Nielsen is hardly new, either- but for once, we’re seeing ongoing and sustained pressure, not a spat here and there. This is a new era, and it well could have been a move to a new service, if there wasn’t a notable gap in the market.

The main complaints against Nielsen are that they have underreported figures, and that the overall standards, size, and quality of their data has slipped. Big names, from Disney to ViacomCBS, have been quick to pile on the criticism in the wake of the accreditation loss.

On the practical side, however, nothing has changed. Nielsen will continue to gather and distribute data even past the September 20th loss of accreditation. We’ve seen no big names actually drop them, and no competitor has arisen to grasp at their legacy. Yet the overall marketplace, especially for ad-driven services, will demand better as time passes- a non-standardized solution will not do it.

Will Nielsen fall out of favor, and who will take over, or will they manage to claw their way out of another loss of trust? Proprietary measurement tools like the ones Netflix is using could have a market, but that secretive atmosphere is unlikely to cut it for ad-based businesses, who will want new and transparent standards and a common measurement tool.

For now, hoping Nielsen can mend its ways may be the best way forward. But without major reform, it shouldn’t simply assume the industry will wait on it forever. All it needs is one viable competitor, and the marketplace is wide open for one right now. It remains to be seen what will happen from here.

ViacomCBS directly tackles the Disney+ Market with Paw Patrol: The Movie

Is ViacomCBS attempting a gentle turf war with Disney? With the new Paw Patrol movie hitting the big screen, we asked entertainment lawyer Brandon Blake to unpack the ramifications for us.

Paw Patrol will be accompanied by a marketing campaign that’s stretched into 8 figures and 1,800 TV ads. Partnerships with over 200 companies will come to fruition, be it through tie-in toys or other products, including free trials of Paramount+. And none of it is accidental. ViacomCBS is openly gunning to cut in on some of the childhood streaming market by leveraging franchises like SpongeBob, Teenage Mutant Ninja Turtles, and iCarly as well as, of course, Paw Patrol. To date, childhood is an arena heavily dominated by Disney.

ViacomCBS has been somewhat lacking in the streaming wards to date, avoiding the game-changing revolutions we’ve seen at WarnerMedia and Disney. In fact, this marks the first time they will have a film released to streaming alongside a theatrical release this year, citing worries around the Delta variant and their young audience. The Paw Patrol campaign represents one of the largest they’ve ever distributed, too. It’s also the first time they’ve aggressively positioned Paramount+, the streaming service they fused from the CBS/Viacom merger, as part of those efforts.

It’s ambitious, at a time when consumer buy-in is not guaranteed and parental concerns about venturing out the home will be the highest they have been in ages. Unlike Marvel and other pieces, there’s a very limited audience pool for Paw Patrol and most of them are not the familial decision-makers. ViacomCBS can also only front 42 million streaming subs, in comparison to Disney’s 174 million.

Yet it’s only part of ViacomCBS’s many-pronged attempt to carve itself a latecomer’s streaming niche. We’ve seen them actively pursue organic growth as well as partnerships to echo the Amazon/MGM and Discovery/AT&T assets over the last few months, too, as well as the launch of their joint streamer, SkyShowtime, with Comcast.

Will they be able to leverage Nickelodeon’s childhood appeal to secure some of the Disney+ market? Only time will tell, but we will be watching closely.

Disney+ heads into Asian territories

We’ve looked in greater depth at the stir surrounding the Quarter 3 Disney earnings this week, but with so much news for investors to drink in, one exciting addition to the Disney+ slate could be easily overlooked. Luckily, we have Brandon Blake’s expert eye watching the entertainment business news for us. Here’s everything you need to know about this new Disney development.

Disney+ will be expanding into Taiwan, Hong Kong, and South Korea as of November 2021. The existing Japanese streaming service will also be expanded with greater general content from October. Alongside their existing presence in Thailand, Indonesia, Malaysia, Singapore, and the Indian subcontinent, as well as New Zealand, this will catapult their Asia-Pacific market share to new heights.

What’s driving the sudden expansion? The existing Disney+ services have been incredibly well received by viewers seeking ‘diverse entertainment content’ who are ‘drawn to (their) portfolio of brands and franchises’, in the words of Luke Kang, the president for their Asia Pacific services. In hard figures, there’s been booming subscriber growth in the area. For Thailand, Disney+ has topped app store charts since its June launch. For Indonesia and Malaysia, it’s a leading SVOD service. Demand is high, and they would be foolish indeed not to leverage it.

While we don’t have any further firm facts on the matter, we’ve been promised full details will follow soon. Disney+ currently operates in 61 countries and offers services in 21 languages globally. In addition to the North American and European markets, it also has a thriving Latin American presence and the booming Asia Pacific division to capitalize on.

While Disney was a relative latecomer to the streaming market, in its short existence Disney+ has become a dominant part of both their balance sheet and brand strategy, with the company reforming around streaming and digital formats earlier this year. Expansion into the Asian market will doubtless serve them well over time. This entertainment lawyer will be keeping a careful eye on further news for the expansion. Of course, we’ll keep you in the loop when it does.

Roku reached 55 million active users

This week we see Roku reveal that 1.5 million new active accounts have been added during the second quarter, bringing the overall total to 55.1 million active users. All the same, their balance sheet shows a slight decline in growth as we emerge into the post-pandemic landscape. Entertainment attorney Los Angeles Brandon Blake looks deeper into what these numbers could mean for future growth.

Overall net revenue for Roky topped out at $645M for Q2, with $338M of that as profit. Yet we also see player gross profit fall off badly, with a 180% year-on-year decrease and a $6.7M hole in their pockets. Streaming hours also lagged behind Q1 by 1 billion hours, although when the overall total was 17.4 billion, that’s not all that bad in context.

The driving factors for the decline are also logical. Out-of-home entertainment has been a big focus for people in developed countries as vaccine programs lead to the easing of pandemic restrictions. A broader dip in streaming and overall TV hours is being seen across the board, and even the Roku CFO noted this. Overall, streaming hours on active accounts appear to be leveling out at 3.5 hours a day, similar to Roku’s own pre-COVID levels and suggesting a solid entrenchment in the market that should continue to deliver well.

More positively for their bottom line, monetized ad impressions have doubled year-on-year, indicative that mainstream marketing has finally noticed the potential of streamers. Roku itself also added the Quibi library to their own, rebranded as Roku Originals, and Roku seem very happy with the acquisition. With 8 shiny Emmy nominations for Roku Original shows, it’s hard to argue. Intriguingly, stats suggest that many of the users coming on board for the new content are first-time viewers, too, suggesting a broadened market appeal through the acquisition.

Overall, while there is some slackening on the pandemic boom, Roku’s balance sheet and future profile are looking strong.

Universal Sends Films to Peacock Within 4 Months of Opening

This week, Universal Filmed Entertainment Group has announced a major development in how their film pipeline will work going forward. BLAKE & WANG P.A entertainment lawyer examines what we know.

Brandon Blake– Entertainment Lawyer

As of 2022, Universal released films will open on Peacock within four months of their theatrical opening. This is, of course, a considerable acceleration in the traditional pay-one home entertainment window, which would once have been at least 6 months. It’s not the first move like this we’ve seen, however, with Disney, Paramount, and WarnerMedia all planning early releases for their prime titles on their streaming services.

The Universal model is a little different, however. Its 18-month pay-one window is specifically designed to allow content distribution over several platforms. Peacock takes over the first 4 months and the last 4 months. However, the intervening 10 months will allow other partners- namely Amazon Prime Video and IMDb TV- to take over. Intriguingly, HBO, their current pay-one partner, does not seem to be taking a share of the cake. The deal will include not only Universal titles, but those from Focus Features, Illumination, and DWA as well.

Offered reasons for the intriguing pipeline include reaching the broadest possible audience and maximizing profit from their vast film library. As the Universal theatrical schedule for 2022 includes anticipated titles like Jurassic World: Dominion and Illumination’s Minions: The Rise of Gru, results could be interesting. Peacock has languished a little since its launch, primarily due to the surge of focus on streaming by industry heavyweights. Despite meeting 42 million sign ups in April, that covers only 10 million paid subscriptions. It was also hoped that the planned 2020 Olympics could be used to promote the service after launch, only to have the international sporting event delayed until this Summer. Of course, this may well be the boost the service needs.

Universal has, to date, been something of a ‘pioneer’ in seeking to collapse the traditional theatrical window. We’ve already seen them controversially create a ‘premium VOD’ window a mere 30-45 days after theatrical release. Warner Bros, too, have announced their entire slate for this year will debut on day-and-date only, with immediate HBO Max access.

Will this be the future for theatrical release? It’s tough to say. One thing is for certain, however. This interesting new release pipeline will be well worth watching.

Improved working conditions during the pandemic may have stalled union negotiations

This week we see IATSE and AMPTP fall into an awkward hiatus with no resolution in sight. While talks will resume on July 6th, far in advance of the 31st July contract expiration, it’s still a strained situation. BLAKE & WANG P.A entertainment law firms Los Angeles examines one potential factor behind the failure to meet common ground.

Union reps have stated that there seems to be no meeting in the middle on key aspects they wish to address, hence the reason for the deadlock. Our industry contacts suggest some of this could well be linked to the swift and decisive response to the pandemic that allowed many sets to reopen and continue working throughout the troubled past year.

This, it is claimed, demonstrated that safe and thoughtful workplace management is possible, and thus the union feels that key changes to what it claims are ‘dangerous working conditions’ can easily be made. Think meal breaks and rest periods, as well as better handling of ‘Fraturdays’, long shoots that extend late in the night on Friday and Saturday.

Brandon Blake– Managing Partner at Entertainment Attorney Blake & Wang P.A.

The news isn’t all gloomy, however. IATSE leaders have told members that good progress has been made on diversity and inclusion matters. The primary hitch seems to lie in economic matters, including funding for the Motion Picture Industry Pension and Health Plan. Companies want greater cost-sharing from workers, while the union is pushing for funding from streaming residuals.

Overall, it’s not been looking good, and it’s easy to see why the talks have stalled to the extent they have. Let’s hope that with the break until July 6th, cooler heads can come back to the negotiating table and a better set of compromises can be found. As the contracts in question expire on July 31st, there will be time pressure to consider when talks resume. BLAKE & WANG P.A one of the best entertainment lawyers in Los Angeles will, of course, be watching the situation carefully.

Recap of the Disney 2020 restructure

Brandon Blake– Entertainment Lawyer

This week we’ve seen Bob Chapek, CEO of The Walt Disney Company, reiterate their intention to focus most efforts towards their booming Disney + streaming service and overall direct-to-consumer business. Here’s a recap from BLAKE & WANG P.A Entertainment Lawyer on where Disney stood coming out of 2020.

The major purpose of the reorganization begun last fall is to solidify the creative aspects of the global giant on content for direct-to-consumer resale, although legacy platforms will still get a nod. The then-newly created ‘Media and Entertainment Distribution Group’ took charge of the monetization of this process, from distribution to sales, under the wing of Kareem Daniel. He stepped into this role from his former position as President for Consumer Product, Games, and Publishing. Additionally, we saw 3 other content creation groups: Studios, General Entertainment, and Sports. These were headed by Alan F. Horn, Alan Bergman, Peter Rice, and James Pitaro.

There was no restructuring (at the time) among the live-action parks and experiences arm of the company. We did see former Disneyland President, Rebecca Campbell, move to Chairman, International Operations and Direct-to-Consumer. Bob Iger, Executive Chairman, continued to oversee the creative process.

What did this mean for the content arms, then? Content was created under the ‘Studios Content’ banner as franchises for Disney +, theaters, and other direct-to-consumer services. This covers Lucasfilm, Pixar, Walt Disney, Marvel, and Searchlight. General Entertainment took over episodic content and long-form content for cable and broadcast as well as streaming, covering 20th TV, ABC Signature, and Touchstone with ABC News, Disney Channel, FX, National Geographic, and Freeform. Sports, obviously, centered on ESPN, live sports, news, and non-scripted related content. Most cable presence ended up nesting here.

Just this week, we’ve seen further major developments, with the creation of the Disney Media and Entertainment Distribution Technology Group. With this comes an entirely new structure, with better tech incorporation, to help address the goals laid out last Fall. Stay tuned for our take on these new developments!

The Golden Globes Takes A Knock

Brandon Blake– Managing Partner at Blake & Wang P.A

With a disappointing Oscars behind us, it seems there’s more dismal news from the Awards Ceremony plate. BLAKE & WANG P.A entertainment lawyer Los Angeles takes a look at why the Golden Globes is now seeing its plans come under fire.

Diversity has been the watchword of the year, and we’ve seen many reforms and proposed legislations come into play across the entertainment landscape. That’s anything from individual studios promising action, to country-wide legislation and, yes, a host of promises from institutions in the industry, awards ceremonies included. This week, we’ve seen the Hollywood Foreign Press Association savaged for these same promises, however, calling them “window dressing platitudes”.

We’ve seen NBC pull their 2022 prizes, dissatisfied that the HFPA can ‘do it right’ without longer reforms. We’ve also seen Tom Cruise return his golden globe, and others are threatening to follow. What on earth happened?

There’s been decades of controversy around the Globes, let’s be honest. With zero black members, the HFPA’s many gaffs, snubs, and look-overs suddenly seem a lot less strange. While (of course) reform has been promised swiftly, it seems unlikely to be forthcoming in anything other than promises, and several heavy-hitters (including Amazon, Netflix, and celebs) have lined up to take a swing at the institution.

That’s not to say all of the HFPA necessarily feel chagrin. Many are confused as to why the firestorm erupted as it did, expressing bafflement that their lack of diversity was ‘suddenly’ a problem. There’s even been cries of foul play, suggesting much of the controversy is being generated by people wanting to jump on the bandwagon and earn their own 10 minutes in the spotlight.

Political maneuvering, or genuine concern? Only time will tell. Still, we see the HFPA dedicated to an astonishingly swift program of reforms set to culminate on August 2nd of this year. BLAKE & WANG P.A one of the best entertainment law firms Los Angeles will be watching with interest.