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From: Glenn Petersen11/12/2020 5:10:08 PM
   of 2018
Disney Plus blows past expectations for its first year with 73.7 million subscribers

Jessica Bursztynsky @JBURSZ


-- It’s been exactly a year since Disney+ launched, and the streaming service has far outperformed expectations.

-- Disney announced Thursday that its platform surpassed 73 million subscribers.

-- It’s remarkable growth considering Disney’s goal, at its launch, was to reach 60 million to 90 million subscriptions by 2024.

It’s been exactly a year since Disney+ launched, and the streaming service has far outperformed expectations.

Disney announced Thursday that its platform surpassed 73.7 million subscribers. It’s remarkable growth considering Disney’s goal, at its launch, was to reach 60 million to 90 million subscriptions by 2024.

Just a year in, and Disney+ is quickly creeping up on Netflix, which reported more than 195 million subscribers in its most recent quarter. Disney also joined the streaming wars at roughly the same time as Apple and a few months before Comcast’s NBCUniversal. Apple has yet to release subscription numbers for Apple TV+. NBCUniversal’s Peacock reported nearly 22 million sign-ups as of October, up 12 million from its July report.

It’s worth noting that some of those subscribers arrived at the service through bundles or one-time promotions, but Disney doesn’t break out those numbers. Still, subscribers flocked to Disney right off the bat: 10 million people signed up within the first day. In its first operating quarter, the service secured 26.5 million subscribers.

And it only shot up from there, as the Covid-19 pandemic kept viewers indoors — Disney+ jumped from 33.5 million subscribers in its second quarter to 57.5 million by its third quarter.

The company had its doubters: Some analysts predicted prelaunch that the service wouldn’t reach even 20 million subscribers by the end of 2020. But analysts widely and quickly changed their tune since the service’s launch.

Morgan Stanley on Thursday morning raised its streaming subscription estimates to 230 million by the end of 2025, and MoffettNathanson analysts in October upped their forecast to nearly 160 million subs worldwide by 2024.

“We expect Disney to further lean into streaming, implying higher spend and more original content that moves more quickly to its DTC platforms,” Morgan Stanley analyst Benjamin Swinburne said in a note to investors Thursday.

The strong subscriber numbers come as Disney pushes heavily into its streaming service. The company in October announced that it was restructuring its media and entertainment divisions, centralizing its media businesses into a single organization that will be responsible for content distribution, ad sales and Disney+.

“We are tilting the scale pretty dramatically [toward streaming],” Disney CEO Bob Chapek told CNBC at the time.

Disney’s next step? Proving to investors that it can retain subscribers as well as it can bring them in.

Disclosure: NBCUniversal is the parent company of Universal Studios and CNBC.

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From: Glenn Petersen11/16/2020 5:16:48 PM
   of 2018
Pluto TV CPO Shampa Banerjee explains why free video is booming

Video services have to get over their U.S.-centric thinking to succeed internationally, Banerjee says.

Janko Roettgers
November 16, 2020

ViacomCBS is on track to make $2.5 billion with digital video this year, and a growing part of that revenue stream is Pluto TV, the ad-supported video service the company acquired in early 2019. Pluto ended Q3 with close to 36 million monthly users and video ad dollars more than doubling year-over-year. "It's an amazing asset, and it's growing even faster than we had hoped," said ViacomCBS CEO Bob Bakish during the company's Q3 earnings call earlier this month.

A key part of Pluto's success has been its product design, which mimics the look and feel of cable TV, complete with linear channels and a traditional programming guide. To learn more about what makes Pluto tick, and what the service has in store for 2021, we recently caught up with Pluto TV CPO Shampa Banerjee.

Banerjee joined Pluto in early 2020 from Eros Now, an Indian streaming service that has amassed close to 200 million registered users to date. In our conversation, she talked about the Indian streaming market, her plans to attract new audiences to Pluto, and what it takes to build a global streaming service.

This interview has been edited and condensed for clarity.

Before joining Pluto, you led product for Eros Now, which primarily targets the Indian market. That's also where Disney+ is seeing a lot of growth these days, to the point where one in four Disney+ subscribers is now in India. Why is streaming seeing such a boom in India right now?

Indians love movies. They love entertainment. That's not new. But when I started with Eros in 2014, it was kind of a different world. People would go to work, download their movies, come home and watch offline. We had to give people a download feature. Now, all that has almost gone away. One of the big things that happened: Carrier prices have become very cheap. Jio had a huge role to play in it by making bandwidth so cheap, and they have also upgraded the network. I think that's really part of the reason for the explosive growth.

India is very varied. Every region has its own language. India has 22 official languages. People either watch Hindi, English or they watch their regional languages. Typically, somebody from one state will watch either English or Hindi, and their entertainment in their language, but not something from another region. People watch English entertainment, they watch a lot of Hollywood movies. A lot of the content that you see here in the U.S. is already popular. So the appetite is there.

What lessons did you learn from working for Eros and on a product targeting the Indian market?

One of the things I learned is that in Southeast Asia, people don't want to pay. I grew us from nothing to 150 million subscribers, but they were all freemium. When I left, there were around 23 million paying subscribers around the world in 135 countries. The interesting part was, 80% of our user base came from India, but 80% of our paying user base came from outside of India, primarily from the U.S.

So we were actually looking at a model very similar to Pluto: having linear channels, and we were going to monetize it with advertisements. We were looking at that because [we thought]: These people, they'll never pay us, [but] they want to watch us. Let's monetize it. That's actually what attracted me to Pluto, because it felt like, boom, this is the growth area.

Now that you are in charge of product at Pluto, tell us about its secret sauce.

I think it's partly the familiarity of the interface. The second thing is, someone has done the programming for you. You know, people are lazy. They just want to veg out in front of the TV set. [They] don't know what to watch because there's so much out there to choose. That choice is made for you by Pluto; the linear channels have that choice made for you.

And then our shows, it's familiar content people have seen before. And despite everything, even with Netflix originals, "The Office" and "Friends" were the two most popular shows on Netflix. People want to watch shows that they're familiar with, especially now with COVID. I think it's a safety thing. It's something I know, something I'm in control of. We just got that right.

Does having that familiar, cable-like interface limit what you can do to innovate?

No. We have a certain audience that is attracted to our service. It's a fairly large audience. But there's a lot one can do to get a new audience that did not grow up watching linear TV. At times, I want to watch a linear channel, maybe because I'm lazy. But sometimes, I want to figure out what I want to watch, or [get] recommendations, based on my behavior, versus something that's editorially curated. I think there's a lot one can do, keeping the same format, keeping the same interface, or similar interface.

And then there's advertising. That's a big thing we're working on, the ad experience. You know, we have the data, we have the intelligence. What can we do to keep them watching? Because I watch ads, it can be extremely useful if the right ad is targeted to me.

Other than these product improvements, what else is Pluto focusing on next year?

International is a big focus for us. We'll be going to different countries. That itself has its own nuances, understanding what works. Every region has its own nuance.

We're always very U.S.-centric. We think everyone is like us, with 500 devices. It's not [like that]. [If you are] launching in Latin America, for instance, casting is very important. That's how the family watches. Everyone, mobile is what they have. They have one big screen. That's it. And it may not even be a smart TV. So they buy a casting stick, and that's what they're using. Behaviors outside of the U.S., they're quite different.

Any other trends you're seeing ahead for 2021?

I honestly think AVOD [advertising-based video on demand] is going to become much bigger in 2021. People do like to watch reruns. They do like to watch old shows.

Why do you think people are leaving cable? They're leaving cable because [they ask themselves], "Oh, my God, I'm paying all this money for what? To watch old shows. And if I can watch them for free, why should I be paying for it?"

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From: Glenn Petersen11/28/2020 3:44:37 PM
   of 2018
Hollywood’s Obituary, the Sequel. Now Streaming.

Brooks Barnes
New York Times
November 28, 2020

LOS ANGELES — “Hollywood’s like Egypt: full of crumbled pyramids. It’ll never come back. It’ll just keep on crumbling until finally the wind blows the last studio prop across the sands.”

David O. Selznick, the golden era producer, made that glum proclamation in 1951. A new entertainment technology, TV, was emasculating cinema as a cultural force, and film studios had started to fossilize into bottom line-oriented businesses. As Selznick put it, Hollywood had been “grabbed by a little group of bookkeepers and turned into a junk industry.”

Since then, Hollywood has repeatedly written its own obituary. It died when interlopers like Gulf + Western Industries began buying studios in the 1960s. And again when “Star Wars” (1977) and “Superman” (1978) turned movies into toy advertisements. The 1980s (VCRs), the 1990s (the rise of media super-conglomerates), the 2000s (endless fantasy sequels) and the 2010s (Netflix, Netflix, Netflix) each brought new rounds of existential hand-wringing.

Underneath the tumult, however, the essence of the film industry remained intact. Hollywood continued to believe in itself. Sure, we churn out lowest common denominator junk, studio executives would concede over $40 salads at the Polo Lounge. It’s how we make our quarterly numbers. But we can still generate the occasional thunderclap, with ambitious films like “ Get Out” and “ 1917” and “ Black Panther” and “ Once Upon a Time … in Hollywood” arriving on big screens and commanding the culture for months on end.

In one breath: All is lost! Big Tech is going to eat us alive.

In the next: Everyone still loves us. Just look at all those pinwheel-eyed fans buying tickets.

But the moment of crisis in which Hollywood now finds itself is different. In the 110-year history of the American film industry, never has so much upheaval arrived so fast and on so many fronts, leaving many writers, directors, studio executives, agents and other movie workers disoriented and demoralized — wandering in “complete darkness,” as one longtime female producer told me. These are melodramatic people by nature, but talk to enough of them and you will get the strong sense that their fear is real this time.

Have streaming, the coronavirus and other challenges combined to blow away — finally, unequivocally — the last remnants of Hollywood?

“The last nine months have shaken the movie business to its bones,” said Jason Blum, the powerhouse producer whose credits range from “The Purge” series to “BlacKkKlansman.”

The feel of a dismantled film set

Streaming, of course, has been disrupting the entertainment business for some time. Netflix started delivering movies and television shows via the internet in 2007. By 2017, Disney was trying to supercharge its own streaming ambitions by bidding for Rupert Murdoch’s 21st Century Fox, ultimately swallowing most of the company for $71.3 billion in an effort to expand its library of content and gain control of Hulu.

In recent months, however, the shift toward streaming has greatly accelerated. With more than half of the 5,477 theaters in the United States still closed, more than a dozen movies originally destined for big screens have been rerouted to streaming services or online rental platforms. Pixar’s latest adventure, “Soul,” will debut exclusively on Disney+ on Christmas Day. It will compete with “Wonder Woman 1984” (Warner Bros.), which will arrive in theaters and on HBO Max on Dec. 25, a crossing-the-Rubicon moment in the eyes of analysts.

Meantime, the owner of Regal Cinemas, the No. 2 multiplex chain in North America, just took on emergency debt to avoid insolvency. Trying to keep his own company afloat, Adam Aron, the chief executive of AMC Entertainment, the No. 1 chain, quoted Winston Churchill on his most-recent earnings call. (“We shall fight on the beaches!”) And the National Association of Theater Owners has found itself begging for a federal bailout. Deprived of one, the trade group warned, “movie theaters across the country are at risk of going dark for good.”

Without appearing on big screens, are movies even movies? Wrestling with that question alone has pushed Hollywood into a full-blown identity crisis. But the film industry is simultaneously dealing with other challenges. Outrage over the killing of George Floyd by a police officer has forced the movie capital to confront its contribution to racism and inequity. Coronavirus-forced production shutdowns have idled tens of thousands of entertainment workers. The two biggest talent agencies, Creative Artists and William Morris Endeavor, have been hobbled by the shutdown, resulting in a diaspora of agents, some of whom are starting competing firms, a once-unthinkable realignment.

There has been an abrupt changing of the guard in Hollywood’s highest ranks, contributing to the sense of a power vacuum. Nine of the top 20 most powerful people in show business, as ranked a year ago by The Hollywood Reporter, have left their jobs for one reason or another (retirement, scandal, corporate guillotine). They include the No. 1 person, Robert A. Iger, who stepped down as Disney’s chief executive in February, and Ron Meyer (No. 11), whose 25-year Universal career ended in August amid a tawdry extortion plot.

Retrenchments at Warner Bros. have also bruised Hollywood’s psyche. Over the years, as other film studios were lobbed between owners (Universal), downsized (Paramount) or subsumed (20th Century Fox), “Warners” remained virtually untouched, emerging as an emblem of stability and spending. In recent months, however, the studio has been streamlined by an aggressive new owner, AT&T, resulting in the departure of a startling number of executives who had been there for decades. For now, Warner Bros. has 10 movies on its 2022 theatrical release schedule, according to the database IMDbPro. Last year, it released 18.

The black icing on the cake: The shutdown has stripped Hollywood of its internal culture, the otherworldly (some would say silly) rituals that have long served as a magnet for so many. It has been a year without red carpets. There have been no see-and-be-seen power lunches at Chateau Marmont. Zoom is the new awards ballroom.

In a recent phone conversation that felt more like a therapy session, one Warner Bros. executive told me that “the town” felt like a dismantled movie set: The gleaming false fronts had been hauled away to reveal mere mortals wandering around in a mess.

Or perhaps, he continued, speaking on the condition of anonymity to avoid conflict with his employer, the proper metaphor was a movie — perhaps “The Remains of the Day,” the 1993 drama starring Anthony Hopkins as an English butler. As Vincent Canby wrote in his New York Times review, the Merchant Ivory film was about “the last, worn-out gasps of a feudal system that was supposed to have vanished centuries before.”

‘Normal wasn’t good enough’

Not everyone in Hollywood is walking around in a stupor. Some people even seem energized, especially those who have spent their careers wielding jackhammers against the Hollywood status quo. Ava DuVernay, for instance, has been outspoken about the need for studios to remake themselves — to dramatically diversify their upper ranks, which are overwhelmingly white and male, and to prioritize storytelling from a kaleidoscope of voices. Her production company, ARRAY, uses “change is ours to make” as its slogan.

“I see this as a time of opportunity,” Ms. DuVernay told me. “Sometimes you have to take it down to the studs and build something new.”

She continued: “It’s not going to go back to the way it was, nor do we want it to. We want to move forward. I hear people saying that they can’t wait for Hollywood to get back to normal. Well, I really resist that. Normal wasn’t good enough. All of this change in such a short amount of time really lays bare how shaky the ground was to begin with.”

Ms. DuVernay, whose film and television credits include “Selma,” “Queen Sugar” and “When They See Us,” grew more pointed. “Some folks are scared, and I have sympathy,” she said. “But it’s mostly the folks who are clinging to the idea that Hollywood is theirs and it was built in their likeness, and they will do anything to cling to it, even if that means destroying it.”

She concluded by rolling her eyes at the Chicken Littles who fret that moviegoing is over.

“Talk about dramatic,” she said. “Theaters aren’t going anywhere, at least not all of them.”

In fact, multiplexes may get a post-pandemic bump. Because so many studios have pushed back their biggest movies, next summer’s theatrical release calendar looks like a blockbuster heaven: “Black Widow,” “Fast & Furious 9,” “The Conjuring: The Devil Made Me Do It,” “Ghostbusters: Afterlife,” “Minions: The Rise of Gru,” “Top Gun: Maverick,” Marvel’s “Shang-Chi and the Legend of the Ten Rings,” “Hotel Transylvania 4,” “Venom: Let There Be Carnage.” (To name a few.) With any luck, studio chiefs say, the newly vaccinated masses will come out in droves, in part because they won’t take the theatrical experience for granted anymore.

In Japan, where cinemas are fully operating again (the country’s response to the coronavirus has kept cases and deaths low), more than 3.4 million people turned out last month to see an animated movie, “Demon Slayer: Mugen Train,” on its opening weekend. One Tokyo theater scheduled a jaw-dropping 42 screenings in one day to meet demand.

Popcorn for everyone!

“There’s a reason that the Roaring Twenties followed the 1918 pandemic,” J.J. Abrams, the Bad Robot Productions chairman, said by phone. “We have a pent-up, desperate need to see each other — to socialize and have communal experiences. And there is nothing that I can think of that is more exciting than being in a theater with people you don’t know, who don’t necessarily like the same sports teams or pray to the same god or eat the same food. But you’re screaming together, laughing together, crying together. It’s a social necessity.”

Streaming services and theaters will settle into coexistence, he predicted.

“I think going to a theater is like going to church and watching a movie at home is like praying at home,” Mr. Abrams said. “It’s not that you can’t do it. But the experience is wholly different.”

Over? Hollywood? C’mon. “I’m working on and excited about and hopeful about a number of theatrical projects,” Mr. Abrams said.

His most-recent film, “Star Wars: The Rise of Skywalker,” took in more than $1 billion at the global box office. It was one of nine movies to reach that threshold last year, with “Avengers: Endgame” collecting nearly $3 billion. All told, ticket sales stood at $42.2 billion, with weakness in North America ($11.4 billion) offset by an increase overseas ($30.8 billion).

The hoary tradition of exhibiting movies on big screens, which dates to the 1890s, may have vast challenges — not the least of which is a 78 percent plunge in domestic ticket sales for the year to date. But a business of its scale, as Mr. Abrams and others will tell you, does not vanish forever in the span of a few self-quarantining months.

‘People change their habits’

But what happens in 2022, once the thrill of mingling together has burned off, studios have worked through their blockbuster backlogs and streaming services are stronger than ever?

Will young people — trained during the pandemic to expect instant access to new movies like “Hamilton” and “Borat Subsequent Moviefilm” — get into the habit of going to the movies like their parents and grandparents did? Generation Z forms a crucial audience: About 33 percent of moviegoers in the United States and Canada last year were under the age of 24, according to the Motion Picture Association.

Most young people will have gone a full year without visiting a cinema by the time vaccines are expected to be widely deployed.

“Yes, there is pent-up demand to see movies in a theater,” said Peter Chernin, whose Hollywood career has spanned four decades. “But people change their habits.”

Mr. Chernin, who oversaw the release of theatrical megamovies like “Titanic” and “Avatar” while running Mr. Murdoch’s empire from 1996 to 2009, has already voted with his feet. Last year, he aligned his Chernin Entertainment with Netflix, where he has more than 70 movies in development. The films in which he specializes — high-quality dramas like “ Hidden Figures” and “ Ford v Ferrari” — are a dying breed in theaters. It’s too hard to make money when marketing campaigns start at $30 million.

But the audience has also shifted. Sorry, film snobs: Most people seem fine with watching these films in their living rooms (sometimes, shudder, on their smartphones).

“Cinema as an art form is not going to die,” said Michael Shamberg, the producing force behind films like “Erin Brockovich,” “The Big Chill” and, rather appropriately, “Contagion.” “But the tradition of cinema that we all grew up on, falling in love with movies in a theater, is over. Cinema needs to be redefined so that it doesn’t matter where you see it. A lot of people, sadly, don’t seem to be ready to admit that.”

In other words, the art may live on, but the myth of big screens as the be-all and end-all is being dismantled in a fundamental and perhaps irreversible manner. Because of the pandemic, the film academy has decided for the first time to allow streaming films to skip a theatrical release entirely and still remain eligible for the Academy Awards, nudging the Oscars closer to the Emmys. (The academy deemed the move “temporary,” but some people, including Ms. DuVernay, one of the organization’s 54 governors, think it will be hard to backtrack .)

Imagine what that means to Hollywood’s sense of self. Since always, the film industry has swaggered into every room it has ever entered — Spielberg on line one, Scorsese on line two. Nothing less than “ensuring film’s legacy as the great art form of our time” is one of the stated goals of the soon-to-open Academy Museum of Motion Pictures in Los Angeles.

Mr. Abrams, as much a television wunderkind as a movie one, described the difference between small screens and big ones by summarizing something he once heard on National Public Radio. Television, he explained, is the child and the audience is the parent. It’s smaller than you. You can control it by changing the channel. With movies, the roles are reversed. You are the small one. You’re supposed to look up at them.

Exactly how does that work in the streaming age?

No wonder Hollywood has been experiencing, as the trade newsletter The Ankler recently put it, “a heart attack wrapped inside a nervous breakdown.”

Next week, the Oscar race will kick into high gear with the wide release of David Fincher’s “Mank.” Set mostly in the 1930s and filmed in black and white, the film focuses on Hollywood’s romantic heyday — back when pictures were pictures — by telling a story about the creation of “Citizen Kane.” (The Australian actor Toby Leonard Moore plays David O. Selznick.)

Critics have been transported. “Time-machine splendor,” wrote Owen Gleiberman in Variety. “A tale of Old Hollywood that’s more steeped in Old Hollywood — its glamour and sleaze, its layer-cake hierarchies, its corruption and glory — than just about any movie you’ve seen.”

You can find “Mank” on Netflix.

By Brooks Barnes

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From: Glenn Petersen12/2/2020 10:06:36 AM
   of 2018
Another streaming entrant:

Discovery to launch streaming service in January starting at $4.99 per month, Verizon customers get year free

Michelle Gao @MICHGAO


-- Discovery will launch its streaming service, Discovery+, in Jan. 2021.

-- The service will include a $4.99 per month ad-supported tier and a $6.99 per month ad-free tier.

-- Discovery is partnering with Verizon to give 55 million customers up to 12 months of Discovery+ for free, depending on their plan.

Discovery is the latest media company to jump into the ever more crowded streaming wars.

It will launch its streaming service Discovery+ in Jan. 2021, sources told CNBC’s David Faber. The service will include a $4.99 per month ad-supported tier and a $6.99 per month ad-free tier.

The lower $4.99 tier costs the same as NBCUniversal-owned Peacock’s premium tier with ads. The ad-free $6.99 tier is on par with what Disney+ costs. Both offerings are much less expensive than WarnerMedia’s HBO Max, which costs $14.99 a month, and Netflix, which raised its standard plan to $13.99 a month in Oct.

Discovery is also partnering with Verizon, which will give 55 million customers up to 12 months of Discovery+ for free, depending on their plan.

Partnerships will be key to Discovery’s success.

The company owns networks like the Discovery Channel, famous for its annual Shark Week, as well as home improvement channel HGTV and Food Network, among others.

But it is smaller and lesser known than its competitors which just launched their streaming services in the past year. In just one year, Disney+ has amassed 73.7 million subscribers, far exceeding the company’s expectations for 60 to 90 million subscribers by 2024. NBCUniversal’s Peacock, which launched this summer, has reached nearly 22 million sign-ups already. WarnerMedia reported more than 38 million domestic subscribers for HBO and HBOMax in October.

In early 2021, Paramount+ from ViacomCBS will also launch.

Discovery will hope its programming and partnerships can set its service apart as it joins a crowded field of competitors with leaders pulling away from the rest of the pack.

Discovery is expected to reveal more details on its streaming service during an event at noon ET Wednesday.

Disclosure: NBCUniversal is the parent company of CNBC.

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From: Glenn Petersen12/6/2020 11:42:47 AM
   of 2018
Inside AT&T’s WarnerMedia as it dismantles the old Time Warner to battle Netflix

Alex Sherman @SHERMAN4949

-- CNBC spoke with more than a dozen former and current WarnerMedia executives to gauge how John Stankey and Jason Kilar are progressing with HBO Max.

-- Many executives expressed concerns about rushed decision making and the disintegration of Time Warner’s creative culture.

-- While HBO Max’s launch has been bumpy, Stankey has proved to be out in front of big media reorganizations.

In December 2018, John Stankey sat down with HBO CEO Richard Plepler and his leadership team.

Stankey, the AT&T veteran running WarnerMedia at the time, was meeting with division heads to hear ideas on how to combat the threat from Netflix and the secular decline of cable television. This was the first time Stankey had heard from Plepler’s full team about their plan.

HBO was the crown jewel of Time Warner, which AT&T had recently acquired for $100 billion with debt. It took two years and a legal battle with the Trump administration to close the deal. It was the biggest media acquisition since the last time Time Warner was acquired in 2000, when America Online paid $162 billion. All that effort and money was a bit confounding to people. Why did a telephone company need to own a premium content business?

Stankey was the driving force behind the acquisition, and the clear favorite to take over as the next CEO of AT&T. Its success or failure would hinge on HBO, which already had more than 30 million subscribers and a sterling reputation in Hollywood and with consumers.

According to five people familiar with the meeting, Plepler laid out a simple path forward:

First, give HBO more money to spend on content.

Second, augment the Cinemax premium TV channel with more family-friendly original, library, and licensed children’s programming.

Third, sell HBO and Cinemax together for a couple dollars more than HBO — around $17 per month.

Fourth, hammer out a deal with Comcast, the largest U.S. cable company, allowing the broadband distributor to sell HBO Go directly to broadband-only customers.

Finally, and most importantly, don’t blow HBO up.

Plepler’s team estimated this plan would guarantee $7.5 billion in annual revenue plus future upside depending on the success of the new content.

Stankey heard them out. Then, he ignored their advice. Stankey had bigger ambitions for streaming video. Less than three months later, Plepler announced he was leaving WarnerMedia.

Instead, Stankey decided to use HBO as the centerpiece for a new mission: Build a true Netflix competitor, dubbed HBO Max. When Stankey took over as AT&T’s CEO this year, he passed that goal to new WarnerMedia CEO Jason Kilar, who previously launched Hulu. HBO Max launched in May.

Along the way, Stankey has dismantled the old Time Warner, spurring dozens of executives from all parts of the company to depart. He is attempting to funnel all of the company’s resources from cable, film, and HBO into HBO Max, as he told CNBC last year.

Disney, Comcast’s NBCUniversal and ViacomCBS are all going through similar changes now to prepare for a world where subscription streaming services overtake cable as the world’s primary form of television consumption. Stankey — the MBA-buzzword, deep-voiced phone guy — was ahead of the trend.

Still, his vision has irritated some veteran WarnerMedia executives, who question Stankey’s knowledge of media and feel ignored The execution of his mission, which Kilar has overseen since May, has so far been marred by strategic confusion and culture clashes, according to more than a dozen high-ranking WarnerMedia employees, about half of whom have left the company in the past six months.

For now, investors don’t like what they see. AT&T is trading near a 10-year low. Meanwhile Verizon, AT&T’s closest competitor, is trading near an all-time high. The most glaring difference between the two companies? Verizon didn’t spend $170 billion buying Time Warner and DirecTV in the past five years.

This is the story of the transition from Time Warner to WarnerMedia, and the bumps that have happened along the way.

Netflix envy
Alhough Stankey was new to media, he suffered the same disease as every other media executive: Netflix envy.

He thought Plepler was aiming too low. Plepler’s plan to generate $7.5 billion in annual revenue was 12% more than HBO’s eventual 2019 revenue. But it was a far cry from the $20 billion Netflix generated.

Stankey told Plepler he wanted a direct-to-consumer solution that could get to at least 60 million subscribers in five years, according to people familiar with the matter. HBO subscriptions had fallen from about 37.5 million in 2017 to 34.5 million in 2019. Over the same time, Netflix global subscriptions jumped 50%, from 111 million to 167 million.

If Stankey could convince investors that HBO Max would mirror Netflix’s growth trajectory, he might be able to capture a higher trading multiple for AT&T. This is the holy grail for media companies this decade — convincing Wall Street that streaming growth will make up for the decline of legacy businesses like cable TV and movie theater viewing. It’s also a strategy supported by AT&T’s most notable investor, activist hedge fund Elliott Management, which last year bet $3.2 billion that divesting non-core assets and focusing on streaming could lead to a surge in AT&T shares.

Stankey thought Plepler was attached to a fading distribution model — a wholesale approach where companies like Comcast and Amazon could sell HBO programming along with other linear networks or streaming services. Stankey viewed these companies as competitors more than partners. The battle would be keeping viewers in the AT&T ecosystem instead of Apple’s or Amazon’s or Comcast’s.

This difference in approach showed up last month, when WarnerMedia struck a deal to put HBO Max on Amazon Fire TV. As a condition of that agreement, HBO is pulling its content off Amazon’s Channels interface next year, people familiar with the matter told CNBC. Several WarnerMedia executives who worked on the deal blamed Plepler for previously giving Amazon too much control over HBO programming, making the new Fire TV agreement much harder to complete.

Stankey initially wanted to keep Plepler at HBO, but the relationship started to fray around the end of 2018, said people familiar with the matter. Stankey set up an L.A. meeting with Casey Bloys, then president of HBO programming, without inviting or notifying Plepler. Plepler felt disrespected and told Stankey as much. Stankey saw Plepler as stoking an unnecessary turf war.

Around the same time, Stankey held a meeting with senior executives at the Time Warner Center boardroom in New York.

An outside consultant, Peter Cairo, who had spent the last few months interviewing 65 WarnerMedia executives, presented a number of problems with Time Warner’s siloed approach. Many of the senior leaders in attendance thought the presentation was doctored to support Stankey’s view that the company’s leadership was standing in the way of progress. Cairo, who had a history of working with Time Warner’s leadership team, told the group HBO was particularly resistant to working with other parts of the company.

Several veteran executives, including Bernadette Aulestia, head of HBO’s global distribution and Donna Speciale, president of WarnerMedia’s ad sales, spoke up to defend Time Warner’s history of success while questioning the way AT&T was handling staff morale.

The meeting ended tersely with Stankey cutting off dialogue early, three of the people said.

When the presentation ended, Plepler held a private meeting with Stankey. Soon after, Plepler revealed to a small group of people he was leaving HBO. He made his departure public in Feb. 2019.

Both Plepler and Stankey declined to comment for this story. A WarnerMedia spokesperson added, “As CEO of WarnerMedia and now CEO of AT&T, John Stankey has made it a habit to visit with talented employees throughout the company. That’s what good leaders do and is a common practice at well-run companies.”

HBO Max: Bumpy start

HBO Max launched in May at a cost of $14.99 a month — the same as HBO — and an ambitious tagline: “ Where HBO meets so much more.” It combines 31 new originals with library programming, including DC Comics content, from cable networks like CNN, TNT, Adult Swim, and the Warner Bros. studio. Stankey also licensed popular TV series including “South Park,” “The West Wing” and “The Bachelor.”

AT&T’s grand plan is to pair HBO Max with its wireless service — AT&T customers with premium plans already get HBO Max for free today. Wireless service has become a commodity in most markets, with AT&T, Verizon and T-Mobile all offering similar speeds and pricing plans. HBO Max is meant to help AT&T stand out from the pack and reduce churn while giving the wireless company viewership data for marketing and targeted advertising.

Since taking over, Kilar has accelerated Stankey’s burn-it-down strategy to boost HBO Max. As part of the restructuring, WarnerMedia has conducted several rounds of layoffs, including more than 1,000 employees in November. Kilar has even dismissed employees Stankey brought in, including Bob Greenblatt, who took over as chairman of WarnerMedia entertainment in March 2019.

He ended Conan O’Brien’s late night show on TBS and moved it over to HBO Max exclusively. He’s making the blockbuster Warner Bros. film “Wonder Woman 1984” available on HBO Max the same day it hits theaters on Dec. 25. This week, he announced every Warner Bros. movie slated for release in 2021, including “Dune,” “Matrix 4,” Lin-Manuel Miranda’s “In the Heights,” and “The Sopranos” prequel “The Many Saints of Newark,” will launch on HBO Max at the same time they’re released in theaters.

In an interview, Kilar told CNBC that killing the decades-old theatrical window, where movies got exclusive runs in theaters before coming to home video platforms, would make customers happy, even if it hurt the movie theater industry.

“The best way to find success in business, and certainly with the Internet, is to start with the customer,” Kilar said. “If we start our days and end our days focused on the customer, we’re going to lead the industry.”

Almost all of the executives who spoke to CNBC — including several still at WarnerMedia — felt the HBO Max experiment isn’t going particularly well so far. Only 8.6 million people have signed up to activate the service since it launched in May. Compare this to Disney, which has signed up 73.7 million people for Disney+ in less than a year.

“Jason’s belief is — wrongly — if any piece of content available anywhere other than HBO Max, it cheapens HBO Max,” said one recently departed executive. “Jason is forgoing billions in revenue by turning his back on licensing to preserve content for HBO.”

By pricing HBO Max the same as HBO, Stankey seemed to assume HBO users would simply switch to HBO Max over time. But the transition has been slow, as pay TV and streaming distributors — once HBO’s needed partners — have little incentive to market HBO Max to the millions of people who already get HBO.

“The risk here is that they end up pouring all of their Warner Bros. Studios content into HBO Max only for it to continue to be a premium service that serves only the top third of households,” said MoffettNathanson analyst Craig Moffett. “There’s a real risk that 1+1+1=1 here, and that all that will be left of Warner Media when they are finished is an HBO division that is more or less the same size as it was when they started.”

One problem is HBO Max has no tent-pole original series to jumpstart subscribers, like Disney+ has with “The Mandalorian.” That’s partly because, after the delay from the battle with the U.S. government, Stankey wanted to get the service out fast, according to people familiar with the matter. The coronavirus pandemic lockdowns in 2020 also delayed the creation and filming of new material.

The rushed launch has also affected distribution. WarnerMedia held out on a streaming distribution deal with Amazon for months to get friendlier terms and still hasn’t reached a deal with Roku. Kilar’s decision to release the 2021 Warner Bros. slate of movies on HBO Max concurrently with theater distribution could put more pressure on Roku to reach a deal. (Spokespeople at WarnerMedia and Roku declined to comment.)

Then there’s the confusing branding around HBO Max, which initially joined a plethora of similarly named services, including HBO, HBO Go, and HBO Now. Although WarnerMedia finally got around to retiring HBO Go and changing HBO Now to simply ‘HBO’ in June, several employees in charge of marketing and branding acknowledged the changes should have come much sooner, before HBO Max ever launched.

Kilar may also roll out separate streaming products, such as a CNN-related product and a free entertainment service featuring content from TNT and TBS, The Information reported.

There’s even been talk internally of changing the name of HBO Max — either internationally only or globally — once it rolls out worldwide in 2021, according to three people familiar with the matter. Executives have batted around several names with “Warner” as the title brand, rather than “HBO” — which makes even more sense if the service builds brand equity around having films the day they hit theaters. A WarnerMedia spokesperson said that a name change isn’t being actively considered at this time.

Passing on divestments

Elliott, which sold $150 million in AT&T shares at a loss last month, has pushed Stankey to divest assets. Still, CNBC has learned AT&T recently passed on a couple deals that could have brought in billions of dollars for the debt-laden company.

Just as Kilar was taking over WarnerMedia in May, DraftKings floated the idea of acquiring Bleacher Report from AT&T. The Bleacher Report executive team was privately hoping Stankey and the board would approve a deal, because it was clear AT&T’s focus would be on HBO Max, according to people familiar with the matter. But AT&T never seriously considered the sale, these people say. A DraftKings spokesman declined to comment. Since then, a number of high ranking Bleacher Report executives have left WarnerMedia, including CEO Howard Mittman.

Kilar also decided to keep Warner Brothers Interactive Entertainment, the company’s video gaming unit, after AT&T fielded bidders earlier this year.

“Any chart about gaming usage is up and to the right,” said Kilar. “It’s one of the most impressive trends in U.S. consumer behavior in the last 20 years. When we take a look at the next 5, 10 or 15 years with WarnerMedia, I’m very excited with the role gaming will play in our future.”

DirecTV dread

Most of the WarnerMedia executives CNBC spoke with for this story agreed that Stankey and Kilar’s bolder strategy makes more sense than Plepler’s more conservative alternative.

But many of the same executives, who still own a lot of AT&T stock, are scared that Time Warner’s path will mirror DirecTV’s.

In the years after acquiring DirecTV, Stankey eliminated most of the company’s top leaders, changed the satellite TV strategy to digital-first, and ended marketing campaigns touting the advantages of legacy technology.

The results have not been good.

AT&T ended the third quarter with about 17 million legacy TV subscribers (both DirecTV and U-Verse), down more than 16% from a year earlier. While all pay-TV distributors have lost customers in recent years, AT&T has lost the most — about 8 million video subscribers since early 2017. For comparison, Comcast has lost about 3 million residential video customers over the same period, dropping from 22.5 million to 19.2 million.

The digital product has been a non-starter. Last quarter, the company reported an anemic 683,000 customers for AT&T Now — the new name for DirecTV Now. That’s a drop of 40% from last year.

AT&T is currently in late-stage sale talks with private equity firms to sell a minority stake in the company’s pay-TV distribution business for a valuation that could be less than $15 billion, people familiar with the matter told CNBC.

Some of this decline may be a strategic choice. Stankey has purposefully steered AT&T’s business away from DirecTV, realizing that selling a bundle of linear channels — even digitally — isn’t the future of television. It’s possible DirecTV will serve as template of what not to do, even though Stankey has refused to call the DirecTV deal a mistake.

‘Culture eats strategy for breakfast’

Even if Stankey can learn from the strategic errors AT&T with DirecTV, many former executives feel the damage to HBO’s internal culture is irreparable.

HBO has churned out critically acclaimed material for nearly two decades. Series like “The Sopranos,” “Sex and the City,” and “Game of Thrones” are credited with sparking a new golden age of television and supplanting movies as the most prestigious form of video storytelling.

This run of success has convinced many of the world’s most popular and glorified creators to work at HBO.

“Culture eats strategy for breakfast,” Plepler would frequently say to co-workers, quoting legendary management consultant Peter Drucker, according to people familiar with the matter.

Some employees fear Stankey and Kilar don’t appreciate how long it took to build those relationships. Several noted that Kilar and his deputy Andy Forssell have technology backgrounds that don’t always mix with the established creative culture.

Kilar said any employees harboring that concern shouldn’t be worried.

“I don’t define culture,” Kilar said. “You’re talking about a culture that ultimately goes back 97 years.” (Warner Bros. was founded in 1923.) “That’s not going to change because a few individuals are no longer present. Culture is the decisions we make when no one else is looking. If you think that’s going away, you’re not giving enough credit to culture.”

Kilar has retained some key HBO executives from the past two decades, including Bloys, who is now in charge of HBO Max content. Meredith Gertler, a 16-year HBO veteran, is executive vice president of content strategy. Amy Gravitt, who joined HBO in 2004, heads up comedy programming. Nina Rosenstein remains an executive vice president of programming after more than two decades with the company.

But former executives point to Stankey’s push to add advertising to HBO Max, slated for the second quarter of 2021, as potentially ruinous, according to people familiar with the plans. Would brands have been comfortable associating with “Game of Thrones” beheadings or rape scenes in “The Sopranos”? HBO never wanted to find out and risk having to compromise its content to keep advertisers happy.

“If HBO stood for anything, it was making a product for the customer, not the advertiser,” said one former HBO executive. “It’s not as though John is unpleasant. He doesn’t throw stuff. He just knows much less about television than he thinks and won’t be debated.”

Both present and past employees are optimistic that Bloys and his team can keep churning out original programming hits for HBO Max. Bloys is moving beyond the classic HBO tropes and trying to turn series that revolve around DC Comics characters or reboots like “Gossip Girl” into hits.

Still, many of those people predict AT&T will eventually sell off WarnerMedia, either in pieces or together, because legacy media assets will continue to weigh on AT&T’s stock rather than help it. Several said AT&T’s board will ultimately balk at giving Kilar the money he needs to compete with Netflix, Amazon and Disney.

‘Why put the two companies together?’

The day after AT&T announced its deal for Time Warner in 2016, then-CEO Randall Stephenson appeared on CNBC to explain the deal’s logic.

“Why put the two companies together?” Stephenson said. “The world of distribution and content is converging, and we need to move fast, and if we want to do something truly unique, begin to curate content differently, begin to format content different for these mobile environments — this is all about mobility. Think DirecTV Now, the new product we’re bringing to market. What can you do with Time Warner content really fast and very uniquely for our customers? Can you begin to integrate social into that content? Can you give the capability to...I’m watching content, I want to clip it, I want to send it via social media to my friends. Can we iterate on that quickly, and can we give a unique experience to our customers?”

Whatever Stephenson was talking about in that answer, it hasn’t happened. There’s a sense — even among top executives still at the company — that AT&T’s WarnerMedia transformation is about making lemonade from assets in danger of becoming lemons.

But no one forced AT&T to buy Time Warner in the first place. The same can be said for DirecTV. Stephenson and Stankey made those decisions.

It will take at least a year or two more to judge HBO Max as a success or failure. In that time, WarnerMedia could develop a culture and a product that breed loyal employees and make the gripes of the old-timers seem petty and irrelevant.

To borrow a line from “The Sopranos,” ”‘Remember when’ is the lowest form of conversation.”

Then again, it’s concerning to hear the same anxieties from so many WarnerMedia executives. To use a different “Sopranos” line, “One thing you can never say is that you haven’t been told.”

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From: Glenn Petersen12/11/2020 9:29:10 AM
   of 2018
Disney+ emerges as an early winner of streaming wars, expects up to 260 million subscribers by 2024

Jessica Bursztynsky

-- Disney hiked its five-year streaming subscriber estimates on Thursday, expecting Disney+ to continue to post remarkable growth.

-- The company now forecasts 230 million to 260 million subscribers to Disney+ by 2024.

-- Upon its launch 13 months ago, Disney said it expected the platform to reach 60 million to 90 million subscriptions by 2024.

Disney said on Thursday evening it’s forecasting Disney+ will have 230 million to 260 million subscribers by 2024. It shows the rapid growth of Disney+ and that Disney is emerging as one of the early winners of the streaming wars.

Disney shares were up more than 8% in the premarket.

When Disney+ launched 13 months ago, Disney said it expected the platform to reach 60 million to 90 million subscriptions by 2024. Then the streaming platform quickly took off. As of Thursday evening, it had already closed in on the high-end of that projection, with 86.8 million Disney+ subscribers.

It’s an impressive goal, especially since competition in the space has only increased. Apple TV+, Netflix, AT&T’s HBO Max, Comcast’s Peacock, ViacomCBS’s Paramount+ and AMC Networks’ AMC Plus are all competing for eyeballs. Discovery CEO David Zaslav, who recently announced Discovery’s premium service Discovery+, recently told CNBC the winners and losers of the streaming wars will emerge in the next 12 to 24 months.

Here’s a quick rundown of Disney+’s rapid growth: Ten million people signed up within the first day, with a total of 26.5 million subscribers in its first operating quarter. Disney+ jumped from 33.5 million subscribers in its second quarter to 57.5 million by its third quarter. By the fourth quarter, the company said it surpassed 73.7 million subscribers.

Some of those subscribers arrived at the service through bundles or one-time promotions, like a partnership with Verizon that offered one year of Disney+ to customers, though Disney doesn’t break out those numbers.

By comparison, Netflix reported 195.15 million subscribers in the third quarter. Earlier this week, AT&T CEO John Stankey said there are now 12.6 million HBO Max subscribers.

Disney has invested heavily into its direct-to-consumer business, as the Covid-19 pandemic continues to keep millions of people at home and in need of entertainment. The company will continue to push into original content, with new shows and movies likely being able to bring in even more subscribers.

CEO Bob Chapek said at Disney’s investor day Thursday of the roughly 100 projects that were announced, about 80% will go directly to Disney+. Disney will allow users to opt-in for more mature content, which will enable older audiences to watch titles like “Atlanta” and “Modern Family.” That could also helps attract more subscribers.

As it expands content, Disney said it plans to increase the cost of the service to $7.99, up $1.

Disney added that it expects its family of streaming services, which includes Disney+, Hulu and ESPN+, to hit 300 million to 350 million total subscriptions by fiscal 2024.

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From: Glenn Petersen12/26/2020 8:35:10 AM
2 Recommendations   of 2018
Into the Spider-Verse is leaving Netflix, and it plays into 2020’s biggest streaming problem

End-of-year turnover is always rough, and it’s going to get worse

By Julia Alexander
The Verge
Dec 23, 2020, 12:22pm EST

Two of the biggest movies people want to talk about this week are Wonder Woman 1984 and Pixar’s Soul, but there’s another film that can’t be missed: Spider-Man: Into the Spider-Verse.

Sony’s critically acclaimed 2018 animated superhero movie, which saw Miles Morales step into the web slinger’s suit and save the world with the help of a few other Spider-beings, is leaving Netflix on December 25th. That’s two days from now. It’s also unclear where Into the Spider-Verse will end up. Sony doesn’t have a major streaming platform, and none of the other big streamers — HBO Max, Disney Plus, Peacock, Apple TV Plus, or Amazon Prime Video — have announced that it’s arriving.

Streaming shuffles aren’t new. Movies and TV shows leave Netflix (or Hulu, or HBO Max) every single month. Ephemerality has defined streaming for years. It’s why sites like JustWatch have found massive success, helping people who flock to Google to find out where the movie they watched on HBO Max has wound up, or why tweet threads about the importance of physical media pop up every single week. (This is where I plug buying Blu-rays if possible, especially because streaming also coincides with impermanence, and titles can seemingly be edited at whim.)

Year endings also tend to see more titles leave likely because more licenses expire. This is where 2020 becomes especially interesting; it’s the beginning of big, noticeable exclusivity plays. Before HBO Max, Disney Plus, and Peacock launched, the rights owners were prepared to license their titles to the major streamers.

It’s a lucrative business — if you don’t have your own streamer. Netflix paid a reported $300 million for first-run Disney movies in 2012 (although the deal didn’t kick in until 2016). It was a major milestone moment; Netflix beat out Showtime and Starz for that premium window offering. That “Pay 1 window” becomes a bidding war; think of how movies go from theaters to Blu-ray / digital retailers, and then wind up on HBO before they’re played on broadcast networks like ABC. Netflix signed a similar deal in 2013 with DreamWorks Animation. Back in the early days of the streaming bonanza, it was also fantastic for subscribers. With new mega deals, and one of the biggest TV libraries available that included shows from every major network, Netflix had basically everything people needed.

Everything’s changed now. Netflix is far from the only streamer on the block, and in the United States specifically, it’s facing several waves of new competition. In 2019, television research group Ampere Analysis noted that about 20 percent of Netflix’s library included titles from NBCUniversal, Fox, Disney, and WarnerMedia. Three of those companies have since publicly announced the importance of building their own streaming services, taking back much of the content they’ve licensed out to Netflix and other streamers and adding it exclusively to their own products. (The fourth company, Fox, got swallowed up by Disney.) It’s not just Netflix, but Netflix remains the quintessential example. Netflix’s library is literally shrinking — something executives have effectively shrugged off as Netflix pushes into making more original series and films than ever before.

That change is as clear as day when looking at Netflix’s list of titles leaving by the end of the year. All seasons of The West Wing? Gone. You’ll have to sign up for HBO Max to view those. The Office? Going to need a Premium Peacock subscription to watch any episode from season three through its finale. Ralph Breaks the Internet: Wreck-It Ralph 2 is about to become a Disney Plus exclusive, while Dexter and Nurse Jackie will likely find their way to Showtime’s OTT service or whatever Paramount Plus is going to be. (More details on that in the new year.) For those doing the math at home, that means instead of spending $14 a month to watch all of those shows, it’ll now cost approximately $45 a month.

Movies and TV shows from content owners may still end up on Netflix. NBCUniversal and ViacomCBS have spoken about the importance of licensing while setting up their streaming businesses. But the biggest titles, the ones that executives think people will sign up for, will remain exclusive.

For companies like Disney and WarnerMedia, it makes sense. I’m sure people are watching Friends on HBO Max; whether it’s driving subscriber growth remains to be seen. Other titles that WarnerMedia doesn’t need exclusively get sold off somewhere else — like Rick and Morty, which is also on Hulu. It’s a similar deal with ViacomCBS, which licensed South Park to WarnerMedia (it now streams on HBO Max) for more than $500 million. Eventually, the rights will revert back to the original content holders, and they’ll do another calculus as to where South Park can make them the most money.

What’s impossible to ignore, however, is how much our streaming experiences have changed in less than a decade. It used to be that if you wanted to watch something, there was a 90 percent chance Netflix had it. If Netflix didn’t, it was probably on Hulu. Now, it practically takes a college degree in content ownership.

All of which is a long way of saying, “Who knows where Into the Spider-Verse will end up?” So, if you want to watch it on Netflix, do it now.

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From: Glenn Petersen1/7/2021 5:12:30 PM
   of 2018
A New Service Seeks to Streamline Your Streaming

Struum aims to give customers à-la-carte access to content from hundreds of lesser-known platforms

By Lillian Rizzo
Wall Street Journal
Jan. 7, 2021 8:00 am ET

As the streaming landscape keeps getting more crowded, a new entrant is looking to help declutter it.

Struum, a streaming service co-founded by former Discovery Inc. and Walt Disney Co. executives, won’t offer its own slate of original programming when it launches this spring. Instead, it will aim to give customers à-la-carte access to all content from hundreds of niche streaming services, offering users a way to stream individual shows and movies from various platforms without having to subscribe to each plan separately.

Co-founder Paul Pastor said Struum would give more visibility to lesser-known services, which he said have “fantastic content” but have trouble “being part of someone’s daily habit,” because there is only so much money households will spend on streaming services every month.

The coronavirus pandemic has been a boon for major streaming services, including Netflix Inc., Disney’s Hulu and Inc.’s Prime Video, whose subscriber base soared last year in the midst of growing demand for content from shut-in customers. Some 95% of U.S. households subscribe to at least one of these three services, according to Parks Associates, a research firm.

Former Disney Chief Executive Michael Eisner, whose Tornante Co. is Struum’s main financial backer, told The Wall Street Journal that the decision to invest was a no-brainer.

“When I heard about this idea of an aggregation platform that would pick up smaller streaming services that don’t have brand awareness particularly like Netflix does have, I thought this was a great idea,” he said.

Struum declined to name any of the services whose content would be available on its platform at launch, but said it has already struck deals with nearly three dozen services—accounting for more than 20,000 TV series, movies and shorts.

Subscribers will get monthly credits that can be used toward watching shows and movies, the company said. Its co-founders—who also include Lauren DeVillier, formerly of Discovery, and Eugene Liew and Thomas Wadsworth, formerly of Disney—said there would be multiple packages to choose from. A likely one, they said, would cost subscribers $9.99 a month for 100 credits, which should allow them to watch about one program a day.

Struum co-founders Thomas Wadsworth, Paul Pastor, Lauren DeVillier and Eugene Liew.PHOTO: MARQUETTI PHOTOGRAPHY

The co-founders said Struum would sort out the economics—for example, how many credits should a hit show or movie be worth compared with more run-of-the-mill programming—on a case-by-case basis with each streaming partner, depending on demand. The company will share subscription revenue with the streaming services.

Ms. DeVillier said the idea behind Struum materialized while she was consulting on the launch of Disney+ in 2019 alongside Mr. Liew. The two often discussed how niche services were underserved and ways to change that. A user of the workout-class subscription service ClassPass—which lets customers attend specific classes at different gyms without being members—Ms. DeVillier thought of applying that business model to the streaming market.

Major industry players are looking to make all streaming content available on a single platform, including Apple Inc.’s TV app and Amazon Channels. But opting to watch a rival show from one of these platforms will prompt users to subscribe to the entire service, unlike the à-la-carte option that Struum is championing. Struum said its users would also be able to subscribe to streaming services directly from its platform, in which case it would get a cut of the subscription revenue.

Nancy Tellem, executive chairwoman of the video-technology company Eko and a former president of CBS Entertainment, said she first learned of the idea behind Struum from Mr. Pastor last year—when she was interviewing him for a job at Eko—and told him to go for it rather than take the job at Eko. A few months later, when he told her Struum was under way, she signed on as an adviser and investor.

Ms. Tellem said that as the growing field of high-profile streaming services competes for customers, it is getting harder for smaller streamers to successfully market their platforms and widen their audience.

“The big guys have the money and all they need to fight with one another, but there’s still a lot of content producers out there in need of that support because their content is good if not better than what the bigger companies have,” she said. “I like that Struum is in the position to support the little guys.”

Write to Lillian Rizzo at

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From: TimF1/17/2021 3:53:10 PM
   of 2018
Quibi's Decaying Library of Content Will Soon Be Free on Roku

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From: Glenn Petersen1/19/2021 8:12:00 PM
1 Recommendation   of 2018
Netflix shares rise on strong subscriber growth, considers share buybacks

Lauren Feiner @LAUREN_FEINER


-- Netflix reported fourth quarter 2020 earnings Tuesday that beat analyst expectations on revenue and net subscriber additions but fell below EPS estimates.

-- The company said it is close to being free cash flow positive and will consider returning cash to shareholders through buybacks.

-- Netflix said it would no longer need to raise external financing for its daily operations.

Netflix reported earnings for the fourth quarter of 2020 after the bell on Tuesday, announcing it is “very close” to being free cash flow positive and is considering stock buybacks. This year, it expects to be around break even on cash flow.

The stock was up about 12% after hours.

Here are the key numbers:

Earnings per share (EPS): $1.19 vs $1.39 expected, according to Refinitiv survey of analysts

Revenue: $6.64 billion vs $6.626 billion expected, according to Refinitiv

Global paid net subscriber additions: 8.5 million vs 6.47 million expected, according to StreetAccount

The service surpassed 200 million paid subscribers for the first time in the fourth quarter. It passed 100 million in 2017.

Netflix’s expectation of soon becoming free cash flow positive would bring to life the bull case for the stock. Netflix said it would no longer need to raise external financing for daily operations and would even explore returning cash to shareholders.

Netflix hasn’t made such a move since 2011, a pivotal year in the company’s shift from DVDs to streaming.

Netflix CFO Spencer Neumann said the consideration of buybacks would not represent a retreat from bold investments.

“We put a premium on balance sheet flexibility, so we’re going to continue to invest aggressively into the growth opportunities that we see and that’s always going to come first,” he said. “But beyond that, if we have excess cash, we’ll return it to shareholders through a share buyback program.”

The company said it intends to pay down more of its debt as well. It’s raised $15 billion in debt since 2011 and currently has $8.2 billion cash on hand.

Netflix has been free cash flow positive for the past three quarters, though executives mostly credited that as an effect of postponed production during the pandemic. Free cash flow for Q4 was negative as predicted due to production restarts in some regions, but not as significant as expected. Free cash flow for full year 2020 was +$1.9 billion versus -$3.3 billion in 2019.

In Q4, Netflix had to contend with several new competitors in streaming including Apple TV+, Discovery+, Disney+, HBO Max from AT&T’s WarnerMedia and Peacock from CNBC parent NBCUniversal. Still to come is ViacomCBS’s Paramount+.

Executives said in their letter to shareholders that 2020 was a “testament” to the company’s approach of improving the platform for subscribers’ satisfaction to stand up to competition.

“Disney+ had a massive first year (87 million paid subscribers!) and we recorded the biggest year of paid membership growth in our history,” executives wrote.

Netflix executives spoke in depth about competing with Disney, much more so than in previous earnings interviews. Co-CEOs Reed Hastings and Ted Sarandos said that Disney’s early success in streaming shows subscribers are willing to pay more for great content.

VP of Investor Relations Spencer Wang noted that about 30% of those 87 million subscribers, however, are from Hotstar, a streaming platform Disney offers in India, which has a lower average revenue per user (ARPU).

The company shared details of some of its biggest hits from the quarter, like “The Queen’s Gambit,” which 62 million member households watched in the first 28 days on the service. In addition to becoming the “biggest limited series in Netflix history,” Netflix boasted its cultural impact, prompting chess board sales.

“The Midnight Sky,” starring and directed by George Clooney, was the biggest original film of the quarter, Netflix said, with 72 million member households watching in the first four weeks.

Netflix said production is “back up and running in most regions.” It previously announced it would plan to release one new original film per week in 2021.

While the executives said theaters are not core to their business, they’re eagerly watching changes to the industry’s status quo, which typically requires films to stay offline during an exclusive showing window. Hastings said he’s interested to watch Warner Bros.' experiment of releasing its films both in theaters and on HBO Max in 2021. But, he said, the full effect of that strategy won’t be clear until after the pandemic.

-CNBC’s Alex Sherman contributed to this report.

This story is developing. Check back for updates.

Disclosure: NBCUniversal is the parent company of CNBC.

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