Weekly Wrap: WarnerMedia Gets Hulu'd

This week saw a rare smart move by AT&T with the hiring of Jason Kilar to head up WarnerMedia.

It was smart not only because Kilar is a capable executive but because he seems to thrive in thankless jobs.

I first met Kilar when he was with Amazon, running its VHS and DVD business. When he was later picked to be head up the nascent Hulu I went on record to declare the job un-doable. But Kilar proved me wrong.

Not only did Hulu turn out to be a well-designed and well-constructed service, but Kilar managed to successfully navigate around an ungainly board of directors that included representatives from the three competing major studios that owned the joint venture at the time: Universal, Disney and Fox.

There were constant frictions over the strategic direction for the company, with Kilar wanting to chase the streaming future while its studio owners were really trying to hold back the streaming tide to protect their then still-lucrative DVD business.

The creation of Hulu, in fact, was driven in no small measure by the studios’ frustration with YouTube over the explosion of TV and movie content being uploaded to the platform. Before being christened Hulu, it was known jokingly in the industry as “Screw Tube,” “Me-too Tube” and “Fuck you Tube,” among other sobriquets.

Kilar also had to manage a persistent channel conflict between Hulu’s internal advertising sales team and those of the networks’ whose programming it was streaming, who shared sales duties (and sometimes clients).

He’s likely to find much that is familiar at WarnerMedia.

Though his hiring is a signal that AT&T is serious about WarnerMedia’s digital future, where Kilar had tried to steer Hulu, he will again be riding herd over multiple and not-always harmonious power centers, including Warner Bros. studio, under Ann Sarnoff, WarnerMedia Entertainment, under Robert Greenblatt, and WarnerMedia News and Sports under Jeff Zucker, all of whom have far more experience than Kilar in movie and TV production and distribution.

As I’ve written here before, AT&T/WarnerMedia is also an awkward amalgam of content and pipes, an arrangement that, for all the hype about “synergy” and scale, has historically destroyed more value than it has created.

Kilar has also been charged with launching AT&T’s big digital play HBO Max, on which it’s betting much of the company’s future, into the teeth of a catastrophic public health emergency and perhaps the steepest economic downturn since the Great Depression.

Meanwhile, his new parent company’s shares are getting downgraded, its balance sheet is heavily leveraged, and its pay-TV business is bleeding out.

Welcome to Hollywood, Mr. Kilar.

RightsTech Roundtable

This week’s RightsTech Roundtable featured a discussion of how industries based on rights and licensing and coping with the cancellation and postponement of rights fairs and festivals that fill the annual calendar.

Final Cuts

China rolls film (for now)

China’s film and television shows are back in production after a month’s long shutdown due to the coronavirus outbreak. Of course, China began re-opening movie theaters two weeks ago after a month’s long shutdown, only to shutter them again a week later. We’ll see how long this one lasts.

Movie madness

Movie theaters may be shuttered, and summer blockbusters are going straight to digital, but according to a new poll by analytics company EDO Americans are keen to get back to the bijou. Some 70% of respondents said they are “likely” to return to theaters once they’re re-opened, with a substantial 45% saying they are “highly likely” to go back.

Artificial evidence

The U.S. Patent & Trademark Office this week finally posted the public comments it collected as part of its inquiry into the intellectual property implications of works created in whole or in part by artificial intelligence systems. Comments cover copyright issues as well as patents and trademarks.

Midweek Mix: Dried Up Streams?

Since the Covid-19 pandemic has shuttered movie theaters and driven much of America into home-bound quarantine, Netflix has seen a huge increase in viewership in many areas. Recently launched rival Disney + has seen a huge spike in signups as cooped up families clamor for something to watch and to keep the peace at home.

Other streaming services, like Amazon Prime Video and Hulu have also seen viewership climb.

But the Covid-driven boom in streaming could dry up quickly as the pandemic continues to spread and economies around the world remain dormant.

Like much of the rest of the movie and TV industry, Netflix has halted production of all original programming, which could leave cupboards bare for months even after production resumes. Chief content officer Ted Sarandos told CNN recently that Netflix works plans “pretty far ahead” on original content so the taps won’t go dry immediately, but he acknowledged the shutdown has been a “massive disruption” for the streaming service.

Disney + is well-stocked with content from its deep vaults, but like Netflix, Disney’s many production arms have been idled and the impact will be felt eventually.

Hardest hit, however, could be NBCUniversal, WarnerMedia and new-comer Quibi. All were gearing up to launch their own streaming services in coming weeks, but may be forced to put those plans into quarantine.

NBCUniversal’s Peacock service is scheduled to launch in July, just in time for the 2020 Summer Olympics, for which NBC holds broadcast and streaming rights. The Games were supposed to be the main launch pad for Peacock, which would feature on-going live coverage. With the Games now postponed until 2021, however, that planned launch could be more of a damp squib.

WarnerMedia’s HBO Max service is being built around HBO’s premium original programming. But with production now shut down it could find itself quickly running out of fuel.

Quibi is designed to be a mobile-only service. But it may have far less appeal at launch if consumers are unable to be mobile.

Officially, all three services remain on schedule for launch. But they are launching into an already highly competitive market at a time when consumers are beginning show signs of subscription fatigue.

Worse, they will now be launching into what could be a very deep recession, with consumers badly strapped for disposable income.

What the streaming market will look like when the Covid pandemic has finally passed, moreover, is difficult to predict at this point. Production could remain disrupted even after it resumes as scheduled will have changed, locations may or may not be available, and laid off worked may not come back.

The in-home entertainment landscape may also have shifted. Online gaming is soaring, and the live music industry is working feverishly to turn live-streamed performances into real business. All of that could affect how consumers choose to allocate their time and entertainment dollars, once they have some again.

Given how much the companies behind the new services have riding on them — AT&T spent $85.4 billion to acquire Time Warner precisely to launch an direct-to-consumer streaming business, Quibi has raised nearly $2 billion — they likely feel they have no choice but to plow ahead. But it could end up being a much tougher row to hoe than they planned on.


Introducing the RightsTech Virtual Roundtable

The RightsTech Project is pleased to announce the RightsTech Roundtable, a weekly free webinar that will be part of the Digital Entertainment World Let’s DEW Lunch webinar series.

Each Thursday we will highlight the important news of the week and a deep dive into a critical topic or issue for the RightsTech community featuring expert speakers and presenters.

Stay tuned for launch information. Click here for more information on Let’s DEW Lunch, and on speaking and sponsoring opportunities.

Final Cuts

Twitch tunes

As we noted last week, the live music business is jumping on the live-streaming bandwagon as concert venues remain shuttered, and Amazon-owned Twitch is moving quickly to seize the reins. In just the past week, the gamer-focused live-streaming platform has struck up partnerships with both SoundCloud and concert notification services Bandsintown to enable musicians to quickly and easily become Twitch Affiliates, giving them access to the platform’s monetization tools.

No Hollywood handouts

Many parts of the creative industries have been clamoring for government help amid the coronavirus shutdown. But if the final bailout bill from Congress looks anything like the Senate negotiated version, it doesn’t look like much help is forthcoming.

The rich get richer

Now that we’re all stuck at home until further notice, working remotely and relying on streaming services for entertainment, the big winners coming out of the cornona crisis could be the major technology companies that already rule our lives, according to the New York Times.

Weekend Wrap: Prime Time

Today’s word is: “Quarantstreaming.”

It’s what a growing number of musicians are doing now that live concerts are being banned around the world due to the coronavirus pandemic: live-streaming their performances to an audience quarantined at home.

Indie artists, who depend heavily on touring to make a living, have become the most avid quarantstreamers, but even some major artists like John Legend, Miley Cyrus, Neil Young, and Diplo have gone virtual.

For now, it’s an expedient, born of necessity. But given some of the more dire predictions as to how long the current social-distancing mandates may need to last it could become a way of life for a lot of musicians.

The question is, what happens after the corona nightmare does finally end? Surely, live concerns will return to the boards, before live audiences. It’s in the nature of music to draw a crowd.

But if the ban on live shows goes on long enough it’s possible that live-streaming to an in-home audience could develop into a new musical outlet in its own right, reaching fans in places where a live tour doesn’t stop, and providing a new monetization opportunity for artists.

Some of the quarantstreams so far have been free to view, over Instagram, YouTube and other platforms. But many artists are gravitating to Amazon-owned Twitch, which has seen a surge in viewership since the novel coronavirus struck.

Twitch started in 2011 as a platform for gamers to broadcast their gaming sessions via live-streaming. Since then it has grown into one of the most heavily-trafficked platforms on the web. So far in 2020 it is averaging 1.41 million concurrent viewers, up 32% over 2019, and nearly 55,000 concurrent channels actively streaming.

There has long been a significant demographic overlap between avid gamers and music fans. Music is also an important component of many games, and games have become a significant source of synch revenue for music artists.

Apart from its large user base, though, Twitch has a well-developed took kit for direct fan engagement as well as flexible monetization strategies for live streamers. Fans can donate cash directly to performers and the platform also supports multiple subscription models.

Since acquiring Twitch in 2015, Amazon has gradually integrated it with other parts of its business, such as Amazon Prime. Prime subscribers can use their Prime account to “tip” their favorite Twitch content creators, for instance.

Amazon Music, meanwhile, is the third largest music streaming service behind Spotify and Apple Music. Should live streaming become a standard part of artists’ repertoires Amazon’s ability to integrate it with its music streaming service and Prime could make Twitch the platform of choice for artists looking to engage directly with their fans — and make Amazon a more potent threat to Spotify and Apple.

RightsTech Headlines

No Theater? No Problem. Plays and Musicals Switch to Streaming.

As bans on public gatherings have proliferated nationwide in response to coronavirus, shows and special programs are announcing streaming plans daily. Organizations across the country are scrambling to find ways to stream productions, working through copyright issues and coming to agreements with unions, such as Actors’ Equity and United Scenic Artists, to ensure the show goes on.

Source: No Theater? No Problem. Plays and Musicals Switch to Streaming.

Virtual Cannes Market Plans Begin Taking Shape Spurred by Agency-Led Initiative

An initiative led by Hollywood talent agency CAA to set up a virtual film market that would replace the Cannes Marché du Film in the event of its cancellation due to coronavirus is being welcomed by some European sales agents, and has prompted Cannes to announce its own virtual market. The initiative, which has widespread buy-in, comes as companies get antsy about the fact that the Cannes Film Festival and market won’t yet confirm whether or not they will cancel.

Source: Virtual Cannes Market Plans Begin Taking Shape Spurred by Agency-Led Initiative

Macmillan Abandons Library E-book Embargo

In a surprise announcement today, Macmillan abandoned its controversial embargo on new release e-books in libraries, effective this week. “There are times in life when differences should be put aside,” reads a brief memo from Macmillan CEO John Sargent addressed to librarians, authors, illustrators, and agents, revealing that Macmillan will return to the library e-book pricing model that was in effect on October 31st, 2019.

Source: Macmillan Abandons Library E-book Embargo

Katy Perry & Capitol Records Off the Hook for $2.8M ‘Dark Horse’ Copyright Verdict

It took much longer than expected but seven months after the conclusion of a copyright trial that stunned the music world, a California federal judge on Tuesday delivered a win to Katy Perry, Capitol Records, Lukasz “Dr. Luke” Gottwald and others who worked on the 2013 hit “Dark Horse.”

Source: Katy Perry & Capitol Records Off the Hook for $2.8M ‘Dark Horse’ Copyright Verdict

Final Cuts

No bailout for Hollywood

Few industries have been hit as hard by the coronavirus as the entertainment business, as theaters and concert venues go dark and productions have shut down. But it doesn’t look like any help will be coming from Washington. Despite pleas from the California delegation, there does not appear to be an appetite in Congress for an industry-specific bailout.


Net neutrality rules in Europe make it illegal for ISPs to mess around with the bits flowing from any particular provider, but with the coronavirus forcing a massive shift to at-home work, Netflix, YouTube and Amazon have all voluntarily throttled their own streams to preserve bandwidth for other applications.

Don’t go to meeting

Media-related conferences, festivals and fairs continue to be corona-cancelled. This week’s losses: Music Business Association’s Music Biz conference in Nashville and Book Expo and NY Rights Fair in New York. Still on for now: the National Association of Broadcasters’ tradeshow in Las Vegas.

Protein tunes

My favorite story of the week: Researchers have figured out how to represent the chemical structure of proteins as musical scores, which can then be used to train artificial intelligence deep neural networks to devise new types of proteins. What will they think of next?

Midweek Mix: Tipping Points

Plus: RightsTech in the time of coronavirus; and live, online

Life comes at you fast.

With the global Covid-19 pandemic abruptly shutting down much of public for at least several months businesses that depend on or provide a venue for public activities may find a permanently changed world when the world comes out the other side.

That’s likely to be as true in the media & entertainment world as in any other realm.

On Monday, NBCUniversal announced that it will make upcoming films from Universal Studios, beginning with the scheduled April release Trolls World Tour available on demand at the same time they hit theaters, whenever that turns out to be.

Cinemas have already closed entirely in more than 30 markets around the world, and partially in a dozen or so more. Most theaters in the U.S. are expected to go dark by this weekend.

Universal is also making it films that are currently in theatrical release, The Hunt and The Invisible Man, as well as Focus Features' Emma, immediately available for $19.98 for a 48-hour rental period through multiple video-on-demand services.

Disney, meanwhile, announced it is moving up the planned streaming release of Frozen 2 on Disney + by three months to provide home-bound families “some fun and joy during this challenging period.”

Universal has not said whether its new day-and-date release policy will be permanent. Nor is it clear whether other studios will follow suit. Much is likely to depend on how quickly and enthusiastically moviegoers return to the cinema once theaters are able to open again.

The National Association of Theatre Owners put out a statement Tuesday blasting speculation that the closing of theaters due to the coronavirus signals, and Universal’s move to route around those closures heralds a permanent disappearance of the exclusive theatrical window.

“Such speculation ignores the underlying financial logic of studio investment in theatrical titles,” the NATO statement said. “To avoid catastrophic losses to the studios, these titles must have the fullest possible theatrical release around the world.”

Maybe. But as I’ve discussed here before, studios’ strategic priorities are shifting as they look to develop their own, streaming-based direct-to-consumer platforms. While Disney’s move with Frozen 2 won’t impact the theatrical window — the film was released last year — the studio clearly saw an opportunity, however unwelcome, to use the current circumstances to give a boost to Disney +.

There is also a question as to whether theaters themselves can weather the current storm. The industry was already coming off a down year in terms of attendance, and some chains in the U.S. and Canada are fairly heavily leveraged. A prolonged period without cash flow could push one or more over the edge.

The coronavirus may not bring down the curtain for good, but it could start a trend that becomes irreversible.

The traditional pay-TV business is also likely to suffer a serious blow from the coronavirus.

While overall viewing may increase in the near term as Americans shut themselves up at home, live sports has been the last thread holding together the linear pay-TV bundle. With nearly all major sports leagues and tournaments shutting down or postponing their seasons, that last thread may finally unravel, tipping the already significant cord-cutting trend into a terminal phase.

That would have major implications not just for pay-TV service providers but for the broadcast and cable networks that depend on live sports to provide them leverage with both advertisers and cable operators.

As Barclays analyst Kannan Venkateshwar wrote in a research note this week, “With every major sports event either suspended or canceled, we are likely to see almost a large-scale experiment that is likely to lay bare the economics of the legacy television business”

RightsTech in the Time of Coronavirus

In 1604 and into 1605, London was ravaged by Plague, forcing much of the city into what today we would call lockdown: Many types of public gatherings were banned, theaters were shuttered, and houses that had been touched by the disease were marked with red crosses and the occupants told to stay indoors.

William Shakespeare used his forced downtime to write “King Lear” and “Macbeth.”

Some 60-odd years later, during another outbreak of Plague, Isaac Newton worked out the laws of motion and invented the calculus while self-isolating away from London.

Hoping for another Newton or Shakespeare to emerge from the current Covid-19 pandemic might be setting expectations a bit high. But with virtually the entire media and entertainment industry mothballed until further notice, it’s not out of the question that the extended downtime and forced isolation could become an important, if unwanted, engine of innovation, leaving a changed business in its wake.

The most immediate impact of the current calamity is being felt by the live and location-based entertainment sectors: Concerts and music festivals have been cancelled or postponedmovie houses and Broadway theaters have gone dark; theme parks have been shuttered.

Billions of dollars are likely to be lost before it’s all done and much of that lost business is not likely to be recovered.

The longer term impact, however, could be felt in less visible ways…(read more).

Final Cuts

Going virtual

Speaking of new ways of managing licensing and content acquisitions, industries are moving rapidly to set up virtual marketplaces and showcases to replace the in-person fests and festivals shuttered by the coronavirus. After cancelling the brick-and-mortar version, MipTV organizer Reed Midem is launching a digital version of the international TV marketplace, while plans for a virtual Marché du Film are quickly coming together in the likely event that the Cannes Film Festival is cancelled.

Live, online

With hundreds of concert tours and music festivals being shut down, many indie artists who depend on performing to reach their audience are jumping onto live streaming platforms in lieu of live venues. Live theater companies are also getting into the live streaming act as marquees go dark.

Below the line bloodbath

With hundreds of movie shoots and TV productions shutting down due to the coronavirus, the International Alliance of Theatrical Stage Employees, which represents below-the-line workers, reported this week that its 150,000 members have lost 120,000 jobs so far.

Below the belt blowout

With Hollywood shutting down because of Covid-19, North Hollywood could be next. The Free Speech Coalition, which represents the adult film industry, is urging a voluntary shutdown of porn shoots at least through the end of March.

Weekly Wrap: Mouse Droppings

Also: RightsTech headlines, plus the upside of pandemics

Pity Bob Chapek. Head down, beavering away at Disney for 27 years, making neither headlines nor waves, and when he finally gets the keys to the castle the roof falls in.

The coronavirus has shuttered Disney’s theme parks in Shanghai and Hong Kong for at least two months, and now Disneyland Tokyo is shutting down for at least two weeks. Other Disney parks and resorts are likely to suffer a slowdown due to fears of contagion, and no one is likely to be booking cruises for a while, which could leave Disney Cruises high and dry.

Last year, Parks and Experiences, Chapek’s old division, took in over a third of Disney’s total revenue.

Meanwhile, Chinese movie theaters remain on lockdown due to the virus, forcing Disney to postpone the Chinese premier of “Mulan.” China represents the second largest box office market in the world so a prolonged shutdown there could be devastating to Hollywood, but particularly for Disney, which more than any other studio has tailored its film business strategy around worldwide franchises, such as Marvel and Pixar movies.

Movie theaters around the world, in fact, are suffering a slowdown at the turnstiles as audiences avoid crowds.

But the coronavirus isn’t Chapek’s only challenge. After a fast start, there are signs that the much-hyped Disney + may not be quite the runaway success it seemed.

According to a new report by DecisionData, interest in the new streaming service may have peaked early. The highlights:

  • We have found in our research that search interest for Disney+ has plummeted over 80% in the past two months.

  • Netflix search interest has remained steady, even seeing a small increase following the Disney+ launch.

  • It is being reported that trends on social media have turned negative for Disney+, with increases in the number of people claiming to cancel their subscriptions.

  • A substantial number (at least 20%) of Disney+'s reported new signups are from partnership agreements that include free trials (Verizon offering their customers one free year of the streaming service).

Other analysts see similar warning signs.

“Disney+ has probably already achieved its peak absolute net adds in the first quarter of its existence,” Bernstein analyst Todd Juenger said in a recent research report. “In other words, there will probably never be another year where Disney+ adds as many subscribers as it did in the first year, or frankly in its first quarter.”

LightShed Partners analyst Richard Greenfield (a long-time Disney bear) added, “If you haven’t signed up now, what’s the catalyst? The single biggest question is, can they grow that US subscriber number from here? Or, have they largely maxed out in the US in weeks from launch?”

It’s starting to make Bob Iger’s sudden departure look more like a bug out.

RightsTech Headlines

Top headlines from the week at our RightsTech blog:

Smithsonian Releases 2.8 Million Images Into Public Domain

For the first time in its 174-year history, the Smithsonian has released 2.8 million high-resolution two- and three-dimensional images from across its collections onto an open access online platform for patrons to peruse and download free of charge. Featuring data and material from all Smithsonian museums, research centers, libraries, archives and the National Zoo, the new digital depot encourages the public to not just view its contents, but use, reuse and transform them into just about anything they choose. Read More (Source: Smithsonian Magazine)

YouTube Not Bound by First Amendment, Appeals Court Rules

A federal appeals court in California ruled that privately operated internet platforms are free to censor content they don’t like. Though not unexpected, the unanimous decision by the Ninth U.S. Circuit Court of Appeals in San Francisco marks the most emphatic rejection of the argument advanced in some conservative circles that YouTube, Twitter, Facebook and other giant tech platforms are bound by the First Amendment. Read More (Source: Wall Street Journal)

Streaming TV’s Boom Is a Mixed Blessing for Some Hollywood Writers

The rise of streaming has fattened the wallets of superstar writer-producers like Shonda Rhimes and Ryan Murphy, while also giving chances to unproven writers. But the medium’s shorter seasons and unpredictable cadences have made it harder for writers in Hollywood’s middle class to plot out a year’s work in a way that doesn’t leave them nervous when mortgage payments are due. Read More (Source: The New York Times)

Whitney Houston hologram tour fan reaction: ‘What a mind f–k’

“An Evening With Whitney: The Whitney Houston Hologram Tour” premiered Tuesday night. But judging from fans’ reactions, it’s not right — and it’s definitely not okay. One Twitter commenter recently suggested the tour “reeks like a desperate money grab” and added that “her estate should be ashamed,” while another wondered, “How dare people profit from such nonsense!” Read More (Source: New York Post)

Final Cuts

COVID and chill

The coronavirus may be hurting Hollywood but some analysts see a (slightly ghoulish) upside to the outbreak for in-home services like Netflix. Netflix “is an obvious beneficiary if consumers stay home due to coronavirus (COVID-19 virus) concerns, and this has been reflected in considerable stock price outperformance this week,” BMO Capital Market analyst Dan Salmon wrote in a research note Friday.

In the game

Online video game hub Roblox raised $150 million in new financing this week, pegging its overall valuation at $4 billion. The free platform features millions of games, all built with tools provided by the company, and 115 million active monthly users worldwide. Lead investor this round was Andreessen Horowitz, who were early investors in Facebook and other tech giants.

Thou Shalt Not Copy

The Vatican Apostolic Library has been digitizing its collection of more than a million volumes, many dating back centuries, but it’s not following the open-access path of many of its secular fellow archives. The digital collection is now available online, but the front page carries the commandment, “Copyright © Vatican Library. All rights reserved. The contents of this site are protected by copyright. Neither the text nor the images may be reproduced, in any form, without the authorisation of the Vatican Library, 00120, Vatican City”. That presumably includes the Vatican’s illustrated manuscript of Virgil’s “Aeneid” dated to AD400.

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