What if TV Pulled A Kilar?
The movie business is doing it all for the fans. What about TV networks?
I know my previous/first newsletter post was supposed to be the ‘looking ahead to 2021’ list of questions - but it turns out, I had another big question before we head home for our various holiday superspreader gatherings.
My question is: what would happen if the TV industry ‘pulled a Kilar?’
Let me explain.
Like most of you, I plan on getting up with my kids at 5:45 on Christmas morning, spending hours using box cutters to release their toys from cardboard and zip strip prisons, put them together via instructions that were poorly translated from Hungarian, and then step on Legos repeatedly.
And then we plan on streaming the hell out of Wonder Woman 1984. Thank you Jason!
Personally, I’d much rather go see Wonder Woman on the big screen in a theater, even if that would cost me like $1,200 after getting everyone popcorn and Milkduds. But I’m glad that during this god awful year, we still get to enjoy some blockbusters.
If you haven't heard, Warner Bros. is planning to release Wonder Woman, along with 17 other mega movies next year, on HBO Max at the same time they arrive in a limited number of theaters that are open.
To say this caused an earthquake in Hollywood would be an Amazonian-sized understatement. Christopher Nolan hammered HBO Max, and loads of other big names slammed Warner Bros. and villainized the WarnerMedia CEO.
Kilar basically said - this one is for the fans. And btw, sorry about your windowing strategy and back end and the entire industry’s business model - I’m all in on HBO Max. Even if it’s going to cost WarnerMedia a bundle in the short term.
Which has got me thinking - what if the TV industry -with its long enviable dual revenue streams of advertising and carriage fees from cable systems - went Full Kilar?
That would mean not just investing in streaming while still protecting your large-but-declining traditional revenue streams. But going all in, partners be damned.
Would it work?
Would consumers react?
Would TV networks destroy themselves?
Let’s think some of this through.
1)We should put Disney+ aside. While Disney is putting the Pixar movie “Soul” on Disney+, it’s still holding its theatricals back for the post-pandemic world. That’s the movie business. I’m talking about TV
2)What if Disney started putting all of ABC’s originals on Hulu at the same time as on linear TV? Analyst Rich Greenfield has called for this.
What would happen? Would Disney be pushing more people to cut the cord? Would any cable providers revolt and start dropping Disney networks?
Would consumer care?
The thing is - right now it’s hard to tell if Disney cares all that much about Hulu to begin with. But they do care about ESPN and ESPN+
3)What if ESPN put all its marquee sports on ESPN+ - Kilaring the cable subscription business?
For starters, they most likely can’t contractually. ESPN gets roughly $9 a subscriber from the likes of Comcast, Alitce, etc. Part of those deals surely requires that ESPN has to show big college football games exclusively on its distributed networks over ESPN+ At least right now. Disney could try to negotiate changes to those deals or pull back rights in the next round of negotiations.
ESPN is estimated to pull in over $7 billion from affiliate fees in 2020, according to Kagan Research. Meanwhile, ESPN+ has just 10 million subscribers, mostly because it’s still a niche sports product. Do you put $7 billion on the line to make ESPN+ a thing? Would the cable distributors blink, and actually pull ESPN off their services?
WWJKD? (What would Jason Kilar do?)
4) Peacock and Paramount+
In NBCUniversal’s case, the company is making its huge bet on streaming with a slightly different approach than the would-be Netflix killers - it’s primarily going with a free, ad-supported strategy. (there is an ad-free premium version of Peacock available).
So NBCU’s calculus is different. Let’s say the company started streaming “This Is Us” and “Saturday Night Live” and Notre Dame Football, as well as shows from USA, SyFy, etc. at the exact same time they air on TV. Would that drive a huge spike in Peacock users? With Peacock’s limited ad inventory, would that generate enough ad revenue to offset any losses from cable distributors who suddenly decided to drop MSNBC as revenge? Would anything like that even happen?
In Paramount's case - the company already has a nice head start as it has nearly 18 million paying subscribers between CBS All Access and Showtime. The challenge here seems to be - does CBS have any must-stream content? Do the Viacom networks? My dad is a religious viewer of every NCIS version there is - I’m pretty certain he doesn’t know what an app is. Meanwhile, MTV, Comedy Central, etc have struggled to generate hits with their young demos for years. It’s hard to see a Kilar-like bombshell move here.
The closest thing I could imagine here is putting all of Nickelodeon’s first-run shows and movies on Paramount+ - since parents would pay up at their kid’s urging. But can the company put all those subs fees on the line? Talk about Paw Patrol getting canceled!
Anyway, just some questions. Happy holidays~