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.

Disney Lawsuit Settles Before Reaching Courts

Walt Disney Co and Scarlett Johansson have officially resolved the legal dispute stemming from the Black Widow release and claimed breach of contract. While the exact terms of the settlement have not been released, we asked Brandon Blake, entertainment lawyer and resident entertainment business expert, to break down what we do know.

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

Johansson moved to sue Disney in July this year, citing breaches in contract regarding the hybrid release of the film. Primarily, the fact that it was not given an exclusive theatrical window, but instead had a simultaneous release on their streaming service, Disney+.

The crux of the complaint was that the dual release affected her agreed compensation, calculated with profits from the expected theatrical run in mind. Business as usual? Not quite. This lawsuit was also quite notable as one where we saw Disney hit back with unexpectedly personal references in their statements through social media. Despite this, there’s been amicable statements on the resolution from both parties with promises of future collaboration.

The dispute is part of a key overall trend currently being tested, as we run into the issue of how to reshape star’s contracts in an era where studios are releasing films with an eye on creating premium content to lure subscribers to their streaming networks, not necessarily for traditional theatrical runs.

With that in mind, it’s probably a key reason the suit was not allowed to see the inside of a courtroom. We’ve seen in a recent news break that Disney is, in fact, revisiting how it formulates contracts with its stars in the post-pandemic era to reach a fairer resolution to this exact issue. A court’s opinion (and precedent) on what was and wasn’t a breach of content in the Johansson case could have considerably weakened their bargaining position in the matter.

As it stands, it will be interesting to see how these matters are handled going forward. We will, as always, be watching closely.

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.

HBO Max Headed for EU Debut

As of October 26th, HBO Max will roll out through six key European territories, with 14 other anchor territories scheduled to receive the service from next year. As the U.S subscriber boom slows, we’re seeing more and more streamers turn to international markets to bolster their balance sheet. Entertainment lawyer Brandon Blake looks at the announcement in greater detail for us.

Entertainment lawyer- Brandon Blake

For now, HBO Max is headed to Spain, Andorra, Norway, Denmark, Finland, and Sweden. Existing HBO España and HBO Nordic customers can sign over alongside new customers, as can those still enjoying the HBO Go service. There’s direct billing and partner subscriptions (mainly for the smart device market) on the table, too. We will only see detailed programming and pricing details revealed at the virtual launch event in October, however. This builds on the international expansion we’ve seen for HBOMax since June this year, when the service moved into Latin America and the Caribbean territories.

HBO has a long history of relationships with pay-TV and third-party distributors that may now hamper them as they transition to direct-to-consumer operation. Italy, Germany, and the UK will stay off the cards even through the extended 2022 expansion, for example. There’s a distribution deal with Sky in place which predates WarnerMedia’s entry into direct streaming. It’s scheduled to expire only in 2025, although rumor has it that HBO is currently seeking an earlier exit. Whether or not they can secure this may determine their European saturation and market reach at a time when almost every other streamer is also pushing for domination here.
The service will entice its European viewers with content like Harry Potter, Game of Thrones, and TheBig Bang Theory, which could prove strong draw cards in the competition for subscribers. We will be watching the rollout carefully, and continue to report back on key developments as they emerge.

HBO Max and YouTube partner with Spectrum TV

Spectrum Guide will be rolling out both YouTube and HBO Max on eligible devices throughout their service areas, allowing them to be accessed centrally from the Spectrum TV platform. It’s yet another sign of the evolving digital landscape we now produce entertainment in, so we sought out Brandon Blake, entertainment lawyer Los Angeles at Blake & Wang P.A, to break the implications down further for us.

Customers will now be able to tune directly to both streamers through eligible Spectrum Devices using Spectrum Internet. The HBO Max side of the deal alone will allow Spectrum customers access to well over 13,000 hours of WarnerMedia content, including subsidiaries like Adult Swim, Turner Classic Movies, and, of course, HBO. A subscription to the streamer will still be needed for viewers, but they can organize this directly through Spectrum if interested.

YouTube, of course, is a little different from the average streaming service. It won’t carry a separate subscription cost by default, although there are premium tiers people can consider. It will instead allow users to access the hottest aspects of ‘social media video’ through their TVs, as well as allowing them to stream it in 4k through their TVs.

With Roku and YouTube still sitting very uneasily with each other, this does offer Spectrum TV a unique chance to gain some extra traction in the market. YouTube, particularly, has been a drawcard for the smart device industry, and is loosely considered an essential by many in the market. HBO Max has become an attractive on-demand service as well, with WarnerMedia finally able to play at the top tiers of streaming society alongside Netflix and Disney. As with Netflix, they’re also trying to further expand their originals market with new content, all to gain extra market position in a crowded environment

It’s a neat two-for-one deal from SpectrumTV, and one that will doubtless prove enticing for shoppers looking for great deals on compatible devices as we head into the year-end frenzy of gadget buying. Will it gain extra traction as an OTT internet TV service? That remains to be seen.

Oscar Digital Screening Room Now Open

While the Oscar season is once again coming up fast, we’ve yet to slide the delta variant and its many concerns into the rearview mirror. While last year’s need to swiftly adapt the Academy Award season to a world gone abruptly digital may have been slightly rushed, this year the Academy goes into planning a hybrid awards season with a wealth of experience. As the Emmy votes wrap up and Oscar season kicks off, we see the launch of the Academy Screening Room to help voters choose their picks. One of the best entertainment lawyers in Los Angeles and Oscar’s expert, Brandon Blake, lets us in on the details.

To the surprise of no one who weathered the shaky waters of 2020 and 2021 with us, the first 4 films to have their moment in the bright lights of the brand-new screening room are all from streamers. Namely:

Netflix’s The Mitchells Vs The Machines
Amazon’s Anette
The Tomorrow War(also an Amazon title), and
Coming 2 America (Again for Amazon, directly from Paramount)

This makes this year’s Oscar season the first to skip physical screeners altogether. Anyone looking to enjoy the AMPAS contenders for this year will have to head over to the digital screening room to take them in. It’s a feature of last year’s Oscar season that was well-received among Academy voters, and it nets the Academy at least $12500 (as of last season) per title from studios and distributors, too, so it’s easy to see why it looks set to become an integral part of the Oscar hype train going forward.

Where to from here for the digital screening room? Documentary contenders, which will not have entry charges, will be shown in a different section. Likewise, International Feature entries and special sections will be expanded on as the season heats up. We will, as always, be keeping a careful eye on developments as we get nearer to crunch time.

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.

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.

Netflix Dominates Golden Globe Nominations

In one of the strangest years for TV and movies ever seen, it can hardly be surprising that the applecart was completely upset when it came to Golden Globe nominations. In an ironic twist of fate, this year’s entire award season is heavily influenced by what didn’t get made last year, as well as what did.

Specifically, many Big Name studios put Oscar-anticipated projects on the back burner. With the field left wide open, it was inevitable we’d see smaller studios and projects shine. Netflix has been gunning for some recognition from major awards ceremonies for a good few years now, and this year the Golden Globes delivers. BLAKE & WANG P.A Entertainment Lawyer Los Angeles dive deeper into Netflix’s nomination domination.

Somewhat unsurprisingly, Mank, following the story of the screenwriter for Citizen Kane, came out swinging. It earned six nominations, closely followed by 5 for The Trial of the Chicago 7, an in-depth look into the trial following the 1968 Democratic National Convention protests.

Having two key films dominate must be exciting for the streamer, but it was far from their only success. In TV, they scored 20 more nominations, 6 going to season 4 of The Crown alone. It’s close to a full sweep for the cast, there. Ozark, a darker drama focusing on money-laundering, also picked up some seriously heavy nominations with 3 actors and Netflix’s first drama series nomination.

Of course, being nominated doesn’t mean you won (yet). All the same, this represents a massive jump up the nomination’s ladder for Netflix, and we’re sure execs are smiling ear-to-ear as they finally get some big-ticket recognition for their content. With the channel focusing on higher and higher budgets and compelling content, these nominations (and some inevitable wins) will seal the deal for moving Netflix productions, especially its feature films, into the big leagues for good.