Before we get started, I want to flag a couple items for the new and old readers of this newsletter/blog/column.
We crossed 50,000 subscribers this week, which is far more than I ever thought would read this thing. A few of you have been reading ever since I was copying and pasting my stories at TheWrap and sending them from my personal email, but most of you signed up in the last year and a half since we relaunched Hollywood Torrent as Screentime. You’re all part of the family now.
Second, I am taking on a new(ish) job at Bloomberg. I’ll now be running our entertainment, telecom, media and sports team. That won’t mean much to readers, at least not in the short term. I will continue to publish this newsletter every Sunday, and I will keep writing and reporting on top of that.
I will also be overseeing our coverage across the aforementioned industries, most of which we discuss here every week. In the months to come, you may see a few changes. Some of the folks on our team will contribute to parts of the newsletter, if I can convince them. We may experiment with storytelling in other mediums. I am open to fresh ideas, so bring them my way. (I am also looking to add talent, so let me know if you know of someone we should hire.)
But, all in all, this thing has been going well. More importantly, it’s fun to do. So the main thing is to keep the main thing the main thing. Thanks for reading. – Lucas Shaw
P.S. There is still a newsletter today.
Millions of people watched “Dune” on HBO Max starting this weekend. Millions more have watched the film in theaters.
That arrangement, unthinkable when the movie was greenlit, is happening because WarnerMedia executed one of the most controversial gambits in modern movie history last year. The company decided to drop 18 Warner Bros. movies on HBO Max at the same time they would appear in theaters.
Any casual reader of this newsletter knows that this strategy has been quite effective in drawing customers to HBO Max, and similarly effective in alienating some of Hollywood’s biggest agents, lawyers and filmmakers. (That anger has more to do with the manner in which the decision was made than the logic of the decision itself.)
The release of “Dune” has renewed the debate. The film’s director, Denis Villeneuve, was one of the biggest critics of the move. He made his movie for a big screen, and he’s likely unhappy that several of my friends watched it at home Thursday night.
So how’d it go?
Villeneuve’s adaptation of Frank Herbert’s 1965 novel grossed $40 million in North America and has eclipsed $200 million worldwide. (It opened in many territories overseas before its U.S. debut.) The movie is on track for about $20 million in China this weekend.
The domestic opening for the movie is soft, as is the China number. Most big movies will drop at least 50% in the second weekend, and the drops have been even more pronounced during the pandemic. “Dune” cost more than $150 million to produce, so it’s not looking like a winner by any traditional metrics.
As a result, there are still folks who say that Warner Bros. is losing money by releasing movies online and in theaters at the same time. Studios can make more money with a traditional theatrical release, and streaming will cannibalize some of the theatrical audience. These assertions are mostly true, in normal times.
But we’re still not in normal times. The recent experiences of “Dune,” “Halloween Kills” and “No Time to Die” underscore why movie studios have been smart to embrace streaming this year.
Because studios held on to so many titles, we have a logjam of big new releases this fall. In October alone we’ve had a new “Spider-Man” spin-off, a new James Bond movie, a new horror sequel and “Dune.” Huge new titles four weeks in a row.
There is also a certain segment of the population that still doesn’t want to go to a movie theater. That means most movies are going to make less money than their studios would have wanted in a traditional theatrical run.
Both “Dune” and “No Time to Die” fall in that category. But whereas “Dune” will at least draw customers to HBO Max, “No Time to Die” has no other option. It’s not helping MGM build up Epix. It’s just costing MGM money.
Warner Bros. did have to spend even more money to placate its partners. (Legendary, one of the main financiers of “Dune”, was paid like it was a hit.) But, again, that money at least advances WarnerMedia’s top strategic priority.
The same goes for “Halloween Kills.” That movie opened to more than $50 million. While its ticket sales plunged this weekend, it’s still going to make money because it only cost $20 million to produce. Universal Pictures got a win at the box office. Maybe not as big as it would have been pre-pandemic, but a win.
By releasing the movie on Peacock at the same time, it drove lots of new customers to its streaming service. A streaming service that needs a lift, by the way. That’s called a win-win.
The best of Screentime (and other stuff)
A few questions with the CEO of WarnerMedia
Most the praise and blame for WarnerMedia’s movie experiment has fallen at the feet of Jason Kilar, the company chief executive officer. I spoke with Kilar on Thursday about “Dune,” and the state of HBO Max.
HBO dropped out of Amazon’s channels program in the quarter, and lost 1.8 million customers in the U.S. Is that how many you expected to lose?
We made this decision a year and a half ago, last May. We anticipated a bulk of those customers would go away. It’s incumbent on us to earn the business of those same customers. They were Amazon customers. We don’t know who they are. We have no communication with them.
We just guided people to the high end of our year-end guidance, and you should interpret that as a sign of strength. It’s working.
You just launched in Latin America. How is that going? We just saw Disney warn people that growth there is a bit slow?
Wow, where’d you get that? We’re up 3.7M subs.
I said Disney, not you.
We’ve been at it a quarter and two days. We’ve added 3.7 million subs in that period. We feel really good about that.
Is that just in Latin America, or in total?
That’s in totality, but most of it is in Latin America. We are launching next week in six countries in Europe.
What is your biggest market outside the U.S.?
Look at any other streaming services, and Brazil and Mexico are the two biggest markets in Latin America. That is the case for us.
Many people expect ‘Dune’ will be a failure at the box office. You obviously can’t say that. What are you expectations?
I think it’s going to perform well. I say that based on the movie, which I’ve seen several times. When I first saw it, the thing that came to my mind was ‘wow people who saw ‘Lawrence of Arabia’ when it was first released… this must be what it felt like.’ It’s a scope and ambition you don’t see often.
That comment seems to reinforce Denis Villeneuve’s point that you should see it on the big screen and not at home.
It looks incredible on the big screen. That’s my choice on how I watch it. But the customer ultimately gets to decide.
It seems like releasing movies on HBO Max has helped drive subscribers. Why offer an apology of sorts over the past couple weeks?
I’m very proud of the decision we made. We committed 18 movies for global theatrical distribution in the middle of a pandemic. We’ve heard from exhibition, and they are thankful. We treated every movie as though it were a hit from an economic participation perspective. People, ultimately, after many conversations, felt good about that and well-treated. And for fans, it worked for them.
There’s still a lot of people, especially in older demos, that are not yet comfortable getting back into a theater.
The #1 song in the world is…
Adele’s “Easy On Me.” It was streamed almost 85 million times on Spotify last week.
Netflix ends a bumpy week on solid footing
The streaming service added 4.38 million customers in the third quarter, bringing its world wide total to 213.6 million. It forecast it will add 8.5 million customers in the final three months of the year.
The good news: “Squid Game” is providing a huge boost to the company, and the recent controversy over Dave Chappelle’s stand-up special didn’t do much damage. (Matt Belloni and I discussed Netflix’s damage control this week.)
The challenge: Netflix is on pace for its slowest year of subscriber growth since 2016, and is increasingly reliant on Asia and Europe for new customers.
Discovery cuts back on big stars
Discovery is already changing strategies for Discovery+, the streaming service it introduced in January. It’s killing a lot of projects with A-list stars (like Kevin Costner and Lupita Nyong’o) as it cuts back on its budget.
The company hasn’t been great about communicating why it’s changing course, but we’ve heard two dominant narratives:
- Discovery+ isn’t setting the world on fire. Discovery expanded the types of programs it usually makes to draw in customers for its streaming service. The company known for treasure hunts and food programming made more expensive shows, partnered with more big-time celebrities and made things that veered into documentary and lifestyle. But it’s not seeing the results from those shows, so it decided to stop spending so much money on them.
- The merger. Discovery is in the midst of buying WarnerMedia, a much larger company with an already popular streaming service (HBO Max). Discovery will either shut down Discovery+ and fold it into HBO Max, or offer Discovery+ in a bundle with HBO Max. Either way, HBO Max makes a lot of good high-end unscripted programming and won’t need Discovery+ making them as well.
Snap’s advertising shortfall
Shares in Snap Inc. fell as much as 27% this week after the company issued a tepid forecast for its current quarter. It blamed changes to Apple Inc.’s data collection policies and a backlog in the global supply chain were hurting its advertising sales.
From Kurt Wagner and Naomi Nix:
Earlier this year, Apple started requiring all apps on its iOS platform to get iPhone users’ permission to be tracked for advertising purposes. Device holders have opted to give apps the ability to monitor their behavior just 25% of the time …
At the same time, Snap said its advertising partners across a variety of industries are facing supply chain disruptions and labor shortages.
The fourth quarter is supposed to be the best quarter for companies like Snap and YouTube. It’s looking worse than expected, but we’ll know a lot more next week when both Facebook and Alphabet report results.
The other streaming wars
We talk a lot about the competition between Netflix, Disney+ and HBO Max – the so-called streaming wars – but we spend far less time talking about the competition between the companies that distribute those services.
Roku, Amazon, Google, Apple and Samsung are all competing to be the dominant sellers of set-top dongles, smart TVs and other streaming devices. Comcast, the cable and internet provider, is now selling its own smart TVs as well.
It’s a far less sexy, but equally significant competition. And Jessica Toonkel of The Information has a very good overview of the battle of the streaming gatekeepers.
Deals, deals, deals
- Concord, an indie music company home to Action Bronson and Elvis Costello, is exploring a sale that would net at least a couple billion dollars.
- BTS is leaving Columbia Records (Sony) for Geffen/Ingrooves (Universal), a rare defection among major music acts. (It’s a little different in that it’s a distribution deal.)
- Google updated its algorithms “in an effort to promote more racially diverse results in image searches.”
- YouTube was sued for hosting animal abuse videos, which are against its policy.
Weekly playlist
Brazilian musician Rodrigo Amarante has been one of Brazil’s biggest singer-songwriters for nearly two decades, primarily as a member of the group Los Hermanos. His music reached international audiences in 2014 with his first solo record, followed by his work on the theme song for Netflix’s show “Narcos.”
He played in front of a packed house in Los Angeles Friday night, grinning ear to ear. For those unfamiliar, start with his Tiny Desk concert.
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