| The second season of Wednesday is going to be very expensive for Netflix. Jenna Ortega is negotiating a pay bump — likely pushing her north of $1 million an episode — as are the creators Alfred Gough and Miles Millar. Director Tim Burton wants more resources if he's going to come back and direct episodes. All told, the cost could eclipse $20 million an episode, which would make Wednesday one of the most expensive shows on TV. MGM will do its best to manage the costs, but doesn't care too much. That added expense is passed on to Netflix, which licenses the show. (Netflix declined to comment, while representatives for the aforementioned participants either declined to didn't respond to requests for comment.) Netflix will try to bring the cost down, but it is going to pay what's needed to get a second season. Do you know why? Because it's a hit — and everyone knows it. Netflix says Wednesday is the company's most-watched English-language original series ever. Nielsen said it was the 12th most-watched streaming series in the US last year — and the third-biggest original. (Their metrics are slightly different.) We don't have as much data about viewership as we used to, and it has become popular in the press to say that we don't know what anyone watches. Unions have used the relative lack of transparency to argue streaming services disguise viewership so as not to share in their success. There is just one problem: This isn't true. Streaming services, talent agents and TV studios know when something is a big hit. It looks like Ted Lasso on Apple TV+, Only Murders in the Building on Hulu or Euphoria on HBO. While we don't have as much information as we did when broadcast was king, there are plenty of ways to determine something is a hit. Some are data driven: Nielsen and Netflix release weekly lists of the 10 most popular titles. Others are more anecdotal, like sales of Halloween costumes and social media activity. There is one surefire way to know if a show is popular: The streaming service wants to make more of it. The people who make these hits get paid. The creators of Friends, The Office and South Park are making more money now than when shows were first on the air. You don't hear Shonda Rhimes complaining about her streaming payday, or concerns about whether the cast of Stranger Things is getting paid. This doesn't mean everyone gets paid or that everyone shares in the riches equally. There have been many stories in recent weeks chronicling people who feel cheated by streaming, including a piece in the New Yorker about actors from Orange Is the New Black and another in the Los Angeles Times reporting the creator of Squid Game didn't get royalties from the first season of the megahit. Neither one of these stories is shocking if you follow the business of Hollywood, where stars get paid way more than anyone else, and salaries increase with success. People can negotiate for higher salaries and shares of future revenue after something is a big hit. (More on that in a moment.) Nor are pay inequality and exploitation of cheap labor unique to streaming or Hollywood. The average CEO is paid more than 100 times more than their average employee. The average professional baseball player doesn't cash in until he is years into his career. This doesn't make it right; there's a reason so many labor unions have been striking. The unions in Hollywood are negotiating to create stronger protections for the average worker — not the stars. The middle class has suffered in the transition to streaming. But while increased transparency is one of their big requests, it might not benefit all creative people. The current lack of transparency doesn't allow streaming services to disguise their biggest hits; it allows them to hide their failures. Consider the hundreds of new shows produced each year that never appear on any top 10 lists. And yet, streaming services treat these shows like they are hits. They film full seasons. They buy out the rights ahead of time, inflating the cost of production. That means that even though most shows fail — especially in the age of peak TV — people involved get paid as though they were modest successes. That has distorted the market, as producer Jason Blum has long argued. It convinced a lot of people that their shows were more popular than they really were. The echo chambers of social media can convince anyone their show is popular. But shows get canceled because not enough people watch. While streaming services may order second seasons of shows to please talent or to avoid admitting failure, they don't cancel big hits. More importantly, this means that companies are spending a lot of money on shows people aren't watching. Wall Street encouraged them to do so. These companies are now all changing their approach, becoming more cautious about their spending. That's bad for the creative class. Cutting back on spending isn't enough and streaming alone isn't enough. That's not because streaming is a bad business. Netflix is going to report a profit of more than $5 billion this year. After years of people saying Netflix would never make money, it is now one of the most profitable entertainment companies in the world. Other streaming services can also turn a profit. Give them time. Hollywood has always made money by taking a product — be it a TV show, movie or song — and selling it in a bunch of different ways. Disney released a movie in theaters, then sold it on DVD or for download, then rented it and then licensed it to Netflix or Starz. If you can take one product and charge for it in five different windows, you make more money. Movies that lose money in theaters can still be profitable in the long run. In their haste to compete with Netflix, many companies soured on content licensing, advertising and movie theaters. Netflix grew up without any of those businesses or the costly infrastructure that goes along with them. It didn't need them; it had no library. It's now expanding into advertising and video games — and may one day get into syndication and theme parks. Media companies can't rely on streaming to replace all the money they made from cable TV and movie theaters. They need to find other sources of revenue — new windows — be they video games, syndication or something else. Talent will root for media companies to fix they mess they've made. Should Hollywood studios find new ways to exploit a TV show or movie, unions will make sure their members get paid extra. More than 550 million people now use Spotify. It is bigger than Twitter and Snapchat. It has almost as many subscribers as Netflix. It just posted its best quarter of user growth ever. And yet, Wall Street isn't pleased. The shares plunged more than 13% last week. While the company added way more customers than Wall Street expected, its sales were a modest disappointment. Spotify missed analysts' revenue targets by about 30 million euros. Investors saw that as a bad sign. Spotify, like Netflix, is adding lots of customers in places where people don't pay a lot of money to use the product. The average Spotify customer now pays a little more than $4 a month. You can see this as good news: Spotify is getting more people to try its product and will eventually get many of them to pay (either through subscriptions or advertising). Better they use Spotify than YouTube. Or, you can see it as bad news: Spotify is adding a bunch of people in poor countries with immature advertising markets. It may never generate much revenue from those users. While it waits to make money from listeners in India, Spotify is already trying to make more money from people who already pay to use the service. It is raising prices in the US, its largest market. While raising prices will boost revenue, it will have only a marginal impact on profit since Spotify must still pay out the majority of each extra $1 in royalties to music rights holders. Disney succession dramaKevin Mayer and Tom Staggs, both of whom used to be contenders to replace Bob Iger as the CEO of Disney, are now advising Iger on his plans for ESPN. On the one hand, of course Iger is asking his former colleagues to give him some advice. On the other, juicy! Iger has failed time and again to identify a successor. The two former lieutenants are still active in media and are running a company, Candle Media, that they would love to sell to someone (or take public). Let the speculation run wild that Iger wants to bring one of them back to run Disney. (There is no evidence of this.) The No. 1 TV show in the US is…Suits. The legal drama, which originally aired on US network, was the most-watched streaming title in the US last week. It is the most-watched library title (aka rerun) in the brief history of Nielsen streaming ratings. People spent more than 3 billion minutes watching it last week. The show is available on Peacock and Netflix. But we know most of that viewership is on Netflix. I guess Meghan Markle gave Netflix a big hit after all. Deals, deals, deals - Toy company Funko fired about 200 people, or 13% of its staff, due to sagging sales. Moguls Bob Iger and Peter Chernin invested in the company a couple years ago.
- The CW acquired the rights to the NASCAR Xfinity Series, the racing league's second-tier package. The CW is paying about $115 million a year.
- Netflix is cutting the price of its ads.
- TikTok is launching an e-commerce business in the U.S. to sell made-in-China goods to consumers.
I am going to see Portugal The Man and Chicano Batman at the Hollywood Bowl Sunday. Do I dare see Taylor Swift as well? | 
No comments:
Post a Comment