Movie Mondays - Max Meltdown

Movie Mondays - Max Meltdown

Jinkies... Streaming is in Trouble!

Happy Monday, folks.

To cut to the chase, this past week was probably not fun for those of you who have grown accustomed to watching the latest Hollywood hits from the comfort of your couch. As for those of you who actually enjoy spending $8 on a box of Sour Patch Kids? Don't you worry! It seems that there will be plenty of upcoming opportunities to swap lice with strangers in crowded, sticky theaters across the country.

Before we go into more detail, a quick recap of the box office numbers from this past weekend, courtesy of Box Office Mojo:

I fully anticipate taking my grandchildren to a double feature of Top Gun: Maverick and Fast and the Furious 68 at this rate.

And here are the biggest releases for this coming week:

• Sharp Stick (8/26 via Vudu; reviews were ⬇️ but my interest in anything Lena Dunham ⬆️)

• She-Hulk: Attorney at Law (8/17 via Disney+; consider this my official boycott of all things Marvel (excluding Black Panther) for the foreseeable future)

• Orphan: First Kill (8/19 via Paramount+ and select theaters; didn't see the first but apparently it was worthy of a prequel???)

• House of the Dragon (8/21 via HBO Max; #JusticeForDaeny)

Arguably the biggest headline of the year for the film industry has been the decision of HBO Max to can a couple of big budget films in Batgirl and Scoob, each a nearly completed project, despite roughly $120 million already poured into the duo. It seems that new CEO David Zaslav is hoping to reorient the company towards achieving box office prominence via theatrical releases rather than burning cash on streaming content meant to bump subscriber numbers. The company can now financially benefit by writing these scrapped titles off for tax purposes, but there are also rumors that initial critical reactions were... less than positive.

Lost in this news, however, was the fact that a couple of Max's streaming compadres in Netflix and Disney have released customer-unfriendly news by either bumping prices and/or giving timelines for their upcoming ad-supported tiers. Netflix is shooting for early next year for an ad-supported tier, and Disney is raising prices across its streaming services (D+, Hulu, ESPN+) and rolling out ads on December 8. I guess Bob is hoping that the extra $3 charge will get lost between your holiday purchases of your third pair of AirPods and the Snoop Dogg Presents Christmas in the Dogg House album.

Lost in this news, however, was the fact that a couple of Max's streaming compadres in Netflix and Disney have released customer-unfriendly news by either bumping prices and/or giving timelines for their upcoming ad-supported tiers. Netflix is shooting for early next year for an ad-supported tier, and Disney is rolling out ads AND raising prices across its streaming services (D+, Hulu, ESPN+) on December 8. I guess Bob is hoping that the extra $3 credit card charge will get lost between your holiday purchases of your third pair of AirPods and the Snoop Dogg Presents Christmas in the Dogg House album.

Taking a step back, it certainly seems that the streaming industry is at a turning point. Gone are the days when consumers flocked to offers of $8 access to endless content and Netflix adding 25M subscribers a year. That number even skyrocketed to a COVID-induced 41M in 2020 with many declaring the death of cinema. The few among us that had managed to avoid the convenience of streaming were forced to convert so that they could sound informed when discussing the latest Marvel release in their Zoom breakout rooms while the number of available services seemed to double every night, each pumping out hours and hours of mediocre content. This strategy only worked for so long, though. As Netflix's now DECLINING numbers show, there is a limit to the subscriber-growth-at-all-costs strategy. To continue to grow the top line, companies will have to raise prices, a strategy we are already seeing play out.

Further evidence supporting this strategic shift? An H1 2022 cinema recap from Cinelytics goes into detail on the total revenue performance of films from the first half of this year as compared to the latter half of 2021. Films were compared across theatrical window choices, grouped into day-and-date (released in theaters and on subscription services on the same day), the new 45-day window, and the traditional 90-day window. Movies in 2021 maximized revenues by streaming day-of (by driving growth in subscription numbers), while those released in 2022 thus far have been the biggest money makers when they have adhered to 45-day windows which have provided big theatrical revenues and increased interest once they have become available on VOD.

What does this mean? Believe it or not, it's hard to make money when you're funding mediocre $200 million movies while only charging people a few bucks a month.

In the coming months, I expect to see a streaming battlefield littered with the corpses of failed platforms (smart money is on Hulu being the next CNN+). Those that do survive will have done so through a larger emphasis on revenue rather than subscriber counts. To maximize those dollar bills, they will likely continue to lean into ads, prices increases, and box offices.

As for consumers, we can sleep well at night knowing that though we're now paying twice as much for our four streaming services as we were for cable, fewer are the days that we will have to sit through big budget catastrophes like Red Notice.

Cheers to another day,

Trey