Streamers' Spending Spree the Talk of UCLA Entertainment Symposium
Analysts, lawyers and a film studio exec — keynoter Andrew Gumpert, COO of Paramount — described a business shifting under their feet.
Anxiety and consternation over the impact of free-spending streaming services — notably Netflix — pervaded the annual UCLA Entertainment Symposium on Friday and Saturday to an unprecedented degree, with about half the sessions devoted to the topic to one degree or another.
The defensive-sounding conference title, “Progress is Paramount — Why Hollywood Will Always Matter,” might be enough to prompt a visit to a psychiatrist, while one of the session subtitles, “Can the Broadcast Nets and Cable Survive the Juggernaut of Internet TV?,” suggests that the doctor is likely to order a course of intensive therapy.
As usual, analyst Tom Wolzien provided comprehensive statistics on Friday. One-third of adult TV viewing is now on non-linear platforms, but for those 18-29, the figure is 60 percent. Netflix now has over 50 million domestic subscribers (55 million, according to company data) — and 114 million worldwide — while the comparable Amazon figure is about 26 million domestic and for Hulu, 17 million. (For comparison, the venerable HBO is at 54 million domestic subs and 142 million globally.)
That reach, and markets more concerned with tech company growth than profit, have brought the new entrants fistfuls of cash. On Saturday, a panelist, Needham & Company analyst Laura Martin, laid out the plans for several of the FAANG companies: Netflix is set to spend $8 billion on original content this year, Amazon $5 billion (some say $4.5 billion) and Google and Facebook $3 billion each. (The other “A,” Apple, is reportedly at about $1 billion.)
That loot has enabled SVOD services to spend $5 million to $7 million per hour-long episode, significantly greater than the $3 million to $5 million that networks spend, according to Wolzien. Those SVOD numbers are lower than HBO’s expenses for its marquee Game of Thrones, at $15 million per episode, however.
As the once-clear lines between TV and movies evaporate like the morning dew, digital growth raises hard questions for film studios, too. The movie business continues to slump, with domestic theatrical admissions (attendance) slipping 6.2 percent last year, according to Wolzien — and continuing a 15-year downward trend — while only a 3.0 percent rise in ticket prices kept domestic box office from falling as sharply, at minus 2.7 percent.
A case study in discomfort came in the keynote session, which featured top entertainment attorney Ken Ziffren of eponymous Ziffren Brittenham interviewing Paramount COO Andrew Gumpert. Given the studio’s faltering state, Gumpert — a respected dealmaker just 15 months into his tenure on Melrose Avenue — found himself describing an institution effectively in turnaround.
“You’re our last stop” is how he described the message the creative community sends to his organization, which has seen its market share slip from last among the majors in some recent years to seventh among the six majors in 2017, a feat it managed by falling below Lionsgate. The revenue and profit pictures are equally dire.
But “the report card has not been written yet,” Gumpert, who was filling in as keynoter for his boss, Paramount chairman and CEO Jim Gianopolous, said optimistically. The latter, who was home with a cold, according to Gumpert, replaced Brad Grey, who hired Gumpert but was out 60 days later.
Gumpert wouldn’t discuss ongoing exploration of a merger by CBS and Paramount parent Viacom that would reunite the two Sumner Redstone assets. When the companies were split in 2005, reversing a 1999 merger, CBS was viewed as most likely to underperform, but as it turned out, Paramount and the Viacom networks captured that crown.
Today, you have to look at Paramount “as a startup,” Gumpert said Gianopolous offered, albeit a 106-year-old one with employees and a library. Almost every department head has been replaced, several deals were renewed or extended (Skydance, Hasbro, J.J. Abrams) and some new ones signed (Graham King, Neal Moritz).
Although a billion-dollar Chinese slate financing deal slipped from the studio’s grasp — on the verge of being signed, said Gumpert — due to capital restrictions imposed by the country’s government, the exec suggested that the loss of financing was in some ways a good thing, since it meant Paramount wouldn’t have to share ownership, and upside, on small movies.
He likewise defended the studio’s controversial decision to offload Abrams’ The Cloverfield Paradox to Netflix as a “fiscally prudent” move that also brought the movie to “many more millions” of fans.
But Gumpert offered only regret that Jordan Peele, who became famous as half of Key & Peele on Viacom’s Comedy Central, made his breakout directorial hit, 2018 Oscar nominee Get Out, at Universal. He attributed that to siloing that the company has worked to eliminate.
Other sessions, on sexual harassment in Hollywood and on substance abuse in the legal profession, rounded out the portrait of a business in need of an intervention. Only a panel on the theater business offered some respite from the storm. On Broadway alone, live stage was a $1.4 billion business last year, and that’s ignoring off- and off-off-Broadway, roadshows and foreign, regional and school productions. The Lion King has grossed $8 billion to date, and Wicked $4.5 billion.
It’s a cheery picture, if you ignore the figures offered by producer Sue Frost: Development of a musical typically takes about seven years, and seven of 10 shows don’t recoup their investment. Still, there are enough angels willing to pony up that the show not only must, but can, go on.
Call it a funny thing that happened on the way to the Symposium: The century-old film industry and half-century old television business both find themselves reeling at the hands of decade-old digital upstarts, but a format invented two millennia ago is doing just fine, thank you. Give my regards to Broadway, indeed.