Every three decades, or a generation or so, Hollywood suffers a devastating earthquake. The transition from silent to sound cinema in the XNUMXs. The rise of television in the XNUMXs. The cable boom of the XNUMXs. Now it happens again. The long-heralded streaming revolution was here like a meteorite, to stay.
Streaming services, of course, they will upset the balance of Hollywood For years. Netflix is its major agent. It has been streaming movies and TV shows since 2007. At first, it was a simple morning-after service. Today it has grown into a behemoth investing $12 billion in originals. It entertains more than 158 million subscribers worldwide.
The spring of streaming
In the USA, the leading country in the cultural industry, 271 online video services are active: there is something for all tastes. put it for telenovelas, AeroCinema for aeronautical documentaries, Shudder for horror films, Horse Lifestyle for content dear to fans of the equine world.
While this was happening, the three major media companies of the old guard – Disney, NBCUniversal and WarnerMedia – stood by the window. The rebroadcasting rights that Netflix and streaming services poured into their coffers seemed to satisfy them. Since Zuckor's time manufacturing and distribution had been two distinct industries and streaming seemed to be nothing more than an interesting new distribution channel to complement theaters and cable.
For the incumbents, getting into streaming meant starting a migration into unknown territory. Above all billions of dollars in revenues were at risk of existing cable networks such as USA, Disney Channel and TBS. Building video platforms to rival Netflix and Amazon also required entering high-tech terrain, a land littered with excellent cadavers.
La tactic of the cunctator
For traditional organizations, mastering technology as a digital native of technology required a new mindset. It also required a steep learning curve like the peaks of Huashan. Better to wait. Fabius Maximus also waited to face Hannibal's technological army in the field.
When it would become clear that protect the existing business model it would have been more dangerous than starting the climb of the future, then they would act. And it happened, and we're just getting started.
Disney Plus has arrived. It costs as much ($6,99 a month) as a single tub of popcorn offered by movie theaters in big cities. It allows anyone with a broadband internet connection to instantly access Disney, Pixar, "Star Wars" and Marvel movies. There are also other series and movies, 30 seasons of the “Simpsons” and 7.500 episodes of old Disney-branded TV shows. “We are all in agreement,” Disney chief executive Robert A. Iger said at the service's presentation event in April 2019.
Eventually they all arrive
The day after the launch of the service, Disney communicated that more than 10 million people have already subscribed to the service. Analysts were hoping to reach eight million by the end of 2019.
In May 2019, WarnerMedia will introduce HBO Max ($14,99 per month): 10 hours of entertainment at your fingertips. There will be the complete series of “Friends” and “South Park”. There will be hundreds of Warner Bros. movies, all of Batman, the HBO library, 50 years of “Sesame Street” episodes and CNN documentaries. “We are all in agreement,” WarnerMedia chief executive John Stankey said at the launch of HBO Max on October 29, 2019.
Peacock, an NBC Universal streaming service starting spring 2020, will offer 15.000 hours of screenings. The complete seasons of “The Office” and “Frasier”, films produced by Universal like “The Fast and the Furious” and so much more. Peacock, unlike Disney Plus and HBO Max, will have commercials. NBCUniversal is expected to unveil the rate plan shortly.
Meanwhile in Silicon Valley
As the three biggest entertainment groups roll out their video platforms, competition from Silicon Valley companies is mounting. Apple launched Apple TV Plus on November 1, 2019. Facebook and Snapchat are determined to become carriers of video. Not to mention YouTube, which is part of the Alphabet family.
Are there also the new formats that streaming makes practicable to add confusion and adrenaline? Among them is which, a start-up led by Meg Whitman and Jeffrey Katzenberg. Quibi will offer quality video streaming in 10-minute episodes to be consumed exclusively on the monitor of a mobile phone or device. I am designed to work ergonomically both vertically and horizontally. Dozens of episodes have already been in the works since April 2020.
This army of competitors is unraveling Hollywood's established business model.
An epochal change in the Hollywood model
Instead of relying solely on third parties (cable operators, multiplex chains and other distributors) to bring their content to audiences, studios have decided, for the first time, to sell them directly to consumers. In fact, they are giving cinemas fewer films. For example, WarnerMedia announced that “Superintelligence,” a Melissa McCarthy comedy scheduled for a December 2019 theatrical release, will debut in Spring 2020, directly on HBO Max.
With originals leapfrogging the big screens to debut on the small screens, the line between TV and cinema is blurring. Something that raises many questions and many worries, like that voiced by Martin Scorsese.
Studios have always employed separate executive teams to oversee the development and production of motion pictures and television series. This approach will certainly end as the difference between the two media is disappearing. There is even some to suggest the unification of Emmy and Oscar.
Consumer disorientation
This change is happening so quickly, so fast and with such supply that viewers are overwhelmed. They are in a dangerous way, say the studios. There is the paradox for many viewers: the cable television bundle is starting to be more manageable than the streaming offer.
A Colorado consulting firm, the Langston Company, presented a consumer behavior study confirming this their disorientation due to sudden changes in the way of using the media. There's the concern of fragmentation, loss of investment value, and an unwillingness to manage an uncontrolled number of streaming accounts to access your favorite shows.
In a white paper of August 2019, Fluent, a digital marketing company, highlighted the growing frustration of consumers with seeing the content they would like to see distributed on different streaming services, each of which requires a subscription.
The agony of the cable
Analysts predict, as a first consequence, that the flood of new streaming services will lead more and more consumers to cancel their subscriptions to traditional cable services. Cable television is the goose that lays the golden egg of the entertainment industry, even though millions of customers in the United States have already cut the cord. A recent report by Moffett Nathanson recorded that the decline in cable subscribers in the second quarter of 1919 was 5,4 percent.
For traditional companies like Disney and NBC Universal, each of which operate vast cable networks, that means a slump in ad sales and harder terms to get distributors. All signs are that the subscriber hemorrhage won't stop. Thus, every major TV show is meant to be offered on the streaming platform first. Cable TV is left with crumbs.
Big cable channels like ESPN and Fox News can pull it off, but smaller, less-reported channels will have a hard time staying in business, analysts say. In America it has already happened with Esquire, Pivot and Al Jazeera America. Others will pull the plug shortly.
The War of the Talents
Some of the biggest changes, however, concern the competition for the best talent in the industry.
Netflix and other tech firms, including Apple and Amazon, have been chasing screenwriters from established studios and TV networks, offering them stellar pay. Kenya Barris (“black-ish”), Ryan Murphy (“American Horror Story”), Shonda Rhimes (“Grey's Anatomy”) and David Benioff and DB Weiss (“Game of Thrones”) have all signed on to Netflix, following the example of stars like Adam Sandler and David Letterman.
But the Hollywood establishment has begun to respond to the challenge. To keep Greg Berlanti, the TV whiz behind shows like "The Flash" and "Riverdale," Warner Bros. came up with a bundle of cash. Warner itself struck a similar deal with JJ Abrams in September 2019. It involves fees to people, ideas and scripts that they have never seen each other in Hollywood.
The soaring cost of production
Netflix is starting to feel the pressure. Ted Sarandos, the company's chief content officer, told analysts in an October 2019 conference call that Cutthroat competition is driving costs through the roof for “elite” content. He estimates a 30% increase compared to 2018.
Surely, money streaming is starting to impact the Hollywood economy. There is now a high demand for niche content such as children's television. Mid-level screenwriters are driving brand new luxury cars. Also easy money for florists, caterers, set decorators, chauffeurs, hairdressers, headhunters and other troopers.
The Hollywood Ecosystem it's running full steam ahead. To keep their content assembly lines revving (495 original series aired in 2018, an 85% increase from 2011) companies are pushing workers to breaking point. It also happens that if the viewership of a series is lower than expected, streaming services cancel the series forcing the writers to change jobs with an unknown frequency.
The new contractual conditions
There is also a fundamental change in the existing employment contracts. Disney, for example, has adopted new contractual conditions for television programs. According to the old model, which has been in place for decades, the author of a piece of content received a large advance. But the most interesting part of the proceeds came from the royalties on the subsequent rebroadcast earnings. Disney, following a model popularized by Netflix, now it offers higher upfronts but little or no after the fact. Other traditional companies are introducing the same principle. This policy allows them to have maximum distribution flexibility within their corporate ecosystems (broadcast, cable, streaming).
The change has alarmed members of the Writers Guild of America (VGA), which represents about 13.000 screenwriters. There is already talk of a possible strike. WGA's contract with the studios expires May 1, 2020. The studios' contracts with two other Hollywood unions, SAG-AFTRA (actors) and the Directors Guild of America, expire June 30, 2020.
Courtney Kemp, creator of the Starz drama “Power”, campaigned on the issue of contracts during the election, of September 2019, to re-elect the West Coast board of directors of the Writers Guild. Kemp issued a press release that reads as follows: “Companies are trying to liquidate us early, so as not to share the profits with us and not have to pay us for the reuse of our content so as to hide the truth about its actual value. They will own our intellectual property absolutely and forever. And this is a problem worth fighting for.”
Revolutions are not known for their tranquility.
Information and quotes are taken from the Brooks Barnes article entitled The Streaming Era Has Finally Arrived. Everything is about to change, published in the New York Times on November 18, 2019.
