A highlight from (Bonus) Peter Kafka on Media, Hollywood, Substack and TikTok
To another weekend. Bonus episode of the tech. Maim ride home. I'm brian mccullough as promised. Here's recode peter kafka the dean of the media reporters someone we should have had on this podcast a long time before this do. Check out his podcast. It's excellent. he's the best in the business. It's called recode media with peter kafka but we have a ton to talk about so. Let's not waste any more time peter. We were saying that this is perfect. Timing we delayed talking yesterday because the news actually broke. But just when. I was ready to be like you idiots. You destroyed that tiffany brand of hbo to what you know an also ran in streaming. They go and do a thing like this. And basically guarantee i'm going to be a subscriber so Did you see this coming. I mean someone was going to do this at some point but them and now. I don't know that someone was going to do this at some point. I know that all the studios have been spending since march a lot of time figuring out. What the hell can we swear on this sherman spot. What's absolutely they're gonna do and all of them basically punted at the beginning but they're all trying to model out. What is this mean Well but i mean this is inside baseball stuff. But for the last couple of months there's been all sorts of people being fired essentially and that sort of pointed towards everyone getting the streaming religion as their main business model right. I don't know some of this was announcing you know like disney announced a reorganization. I think there's less there than meets the eye. It certainly important for all the big media companies to tell wall street that is streaming is very important to them And they all want to be rewarded for sort of adopting a netflix strategy. Wall street hasn't really rewarded most them for it You know we could say that this this move has been inevitable the last decade time. I've got a movie studio person in in a room router stage. We asked them about that. And with the exception of disney all said look. We'd like to change the model a little bit but they haven't been able to do it until the pandemic well let me ask it this way. Are you surprised that they went with the fool. Slate right 'cause they sort of tease this a little bit with with the wonder woman movie like that's pretty radical that they would all twenty twenty one releases it is radical. That said. if you're gonna do it do it. Right makes the marketing. The idea sound much better. Easy all the movies every movie reporting out. You don't have to worry about caveats. don't have to say yes but it's also gonna cost thirty bucks extra makes much more sense for the consumer. It gives you a brand which they didn't have before we were just referencing. Hbo prior to hbo plus friends and other stuff. That wasn't good enough to be on hbo. it didn't right. That's why this is so ballsy. They've automatically made themselves a major player. The flip side is if you're going to get granular about it. There's not a lot of movies. That are guaranteed blockbusters. Here i mean among the people who are listening this podcast. They're all gonna go see dune right deal. But the last The last big remake that any villain you did was blade runner and that that was underwhelming. Not guaranteed You know there's a couple suicide yeah again. Like suicide squad. One is famously. Shitty movie Which again people want to see Then the rest of it's like there's like sopranos prequel for stuff that i might watch but it's not stuff that wouldn't necessarily be be lining up to see. Let me ask you this. Do others have to match. this now. Does does disney to match this. That is a big question. there disney has an investor meeting next week which they're going to focus on streaming. There was a a video circulating last month. That is supposedly a leak of that presentation. Which sort of suggested that disney was gonna do some collapsing of its window as well. No one knows if that's real or not disney has always been the studio that said most strongly. We love theaters. And it's not a coincidence. They have movies that everyone goes to see in theaters Everyone else's kind in the middle but most other most of the other big studios are not part of vertically integrated media company that has its own subscription video thing. We're getting in the weeds here. But sort of if he's if you stop and think about it for a second it actually makes sense. That warner would be the one to do this. And the other ones haven't maybe won't let me ask you to dumb questions from me. Not understanding the space as well as you. I'm assuming everyone's done the math on this right. Like they're gonna make more money in the end if they have a successful streaming product. Then let me ask it in this way no okay. We are doing the math and they can't figure it out. Ok analysts notes this morning and saying wait a minute. You're giving up a ton of money entrance thing the theaters and plus there's all these knock on effects And how are you going to justify it. And if the answer is we get a lot more. Hbo max subscribers than the answer is well. How many do you need to make up for this you know and again eighteen. T has its own particularity so The math year is a big big question right because we've heard forever. It's a hits based business. This is the definition of a hits based business. Where if you can get a film to do a billion and a half dollars at the box office that makes up for your twenty other movies. That didn't make back their money. I suppose if they're successful and they have seventy five million subscribers two years from now that's several billion dollars every year guaranteed in revenue right so There's that there's also you know if wall street decides to credit you for owning your own net flicks And it pushes your stock up Accordingly you know. That's worth a ton of money right So there's there's a couple of different ways to skin it and you know i find it. I think most people find it impossible to believe they of go back to normal in twenty twenty two The the approved line is where this is a one time. Only thing we were not planning for the future but It seems like they are setting a precedent in. It's not just this year's slate of movies and not just this year's money it's it's a lot of money in the future there therefore going my other dumb question is can they do this in the sense. That doesn't this blow up a ton of existing contracts like a back end participation contracts labor contracts residuals like. They're just sort of taking the leap off the cliff but they're grabbing other people's hands as they're doing that can they do that. They they think they can do it. Ask jason cuyler specifically about sort of how the back end stuff works here. He's like look. I mean you know if you're if you if you were going to get paid based on box office receipts in two thousand twenty one. You didn't get anything. We'd put movie out And if we put your movie out next year conventionally it'll be a lot less anyway because people aren't going to be going to the theaters until maybe you know late spring middle of the summer And what we are going to do is. Hbo is gonna play. Pay warner brothers studio.