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Neil Peplow's Industry News Round-Up | 12-18 November 2018

A man and a boy sit next to each other outside
Still from "Moonlight" | Photo via The Hollywood Reporter

This week the streaming market saw global niche offerings continue to emerge as a strategy for creating sustainable businesses outside the gravity of Netflix. For instance, the Cinephile streaming service FilmStruck has been reborn as the standalone Criterion Collection, after protests from well-known Hollywood directors, including Steven Spielberg and Edgar Wright. Local company Madman Entertainment is already well-positioned in this space, having invested in two niche services, Docplay and AnimeLab. AnimeLab recently attracted an investment from Aniplex. Aniplex is a Sony-owned Japanese anime and music company that distributes in the US. With an annual turnover of $AU300m and an understanding of the audience, it is a perfect partner to help grow the AnimeLab platform.

Apple is continuing to develop its content pipeline with an announcement that niche US film distribution company A24 will produce a slate of films for its streaming service. Meanwhile, Disney unveiled the name of its much-anticipated alternative to Netflix (drum-roll): Disney+. Not necessarily the most exciting name, but Disney’s brand is one of its strongest assets, and as the service will be delivering family fare, so it makes complete sense. Disney shareholders should be pleased at the higher-than-expected earnings that were posted, as well a report that well-respected media executive Michael Wolf believes Disney will emerge as one of the few winners in the streaming wars. In contrast, billionaire ‘cable cowboy’ John Malone predicts a future of mergers and acquisitions, with the studios becoming smaller companies that will need homes. As the late great William Goldman would have said, ‘Nobody knows anything’.

However, in this case, Netflix agrees with John and has bought more prime real estate in Hollywood for its expanding team. Office space purchases can be a good indicator of a company’s growth ambitions. This year, Netflix has committed to 700,000 square feet in Los Angeles alone. That’s the equivalent of 12 football pitches. (It would be interesting to see how that compares to its square footage across the rest of the world.) Now that Netflix is moving physically into Hollywood, it is also having to start dealing with the same issues as the studios, particularly the demands of talent. This is creating a conflict between techies who want the company to be led solely by their algorithms and the creatives who want the Netflix executives to listen to their creative demands. This ego vs algorithm face-off is a new experience for the Silicon Valley company but well-known by Hollywood veterans. With deals being struck with studios like Paramount, it will need to work out a strategy that doesn’t involve coding or upset the creatives that are its life-blood.

Hollywood’s discontent is also starting to spill over into the Oscars run-up, as Netflix ‘four-walls’ cinemas to qualify films like Roma for Oscar nominations. The Hollywood community is up in arms as this tactic might result in some of the lowest-grossing Oscar winners in the Awards’ history. (In Italy, the government has even passed laws to stop Netflix’s day-and-date release strategies.) With all this uproar from their new neighbours, Netflix might wish it had stayed in Los Gatos. To fund this move into Hollywood, Netflix is currently trialling price segmentation to increase its user base through lower-priced mobile-only services.

YouTube has different problems to deal with. It is still concerned that the copyright laws currently being passed in Europe will have ‘unintended consequences’ including a increase in the number of videos it will have to block due to the difficulty of ensuring all copyright holders are identified and paid. (The recent settlement of the AWGACS, AWG and Screenrights dispute shows the substantial value of this IP.) Maybe in response to the growing lobbying for online creators to receive increased payments for their copyrights, YouTube has been exploring other business models, investing in bigger TV series like Origin and showing licensed movies with ad breaks. With other platforms like Portal popping up that promise creators a bigger share of revenue and an audience base that has been used to not paying subscription fees, YouTube may start to look like a more traditional broadcaster: wrapping ads around content that it has paid for.

This week, two of the three Australian networks published results at their AGMs. Seven West Media focused on stronger TV ratings, revenue and cost savings and hitting a younger demographic. Nine Entertainment’s AGM focused on the merger with Fairfax that has been approved by Fairfax’s shareholders. Meanwhile, Foxtel has signed a deal with Warner that includes some eagerly awaited titles, and Ten has recommissioned Playing for Keeps, hitting key demos and achieving record high catch-up numbers.

In tech news, Alternative Reality (AR) is already in trouble with Magic Leap’s apparently falling off a cliff (but that might just be the way it looks through its glasses). One of the issues is that no one is developing for it, as it’s clunky, slow and not selling. Its response is to give money to developers that will hopefully incentivise them to create interesting apps for it. It’s a great example of technology not being enough of a sell on its own. More than anything, you need creativity and storytelling that uses that technology to create engaging content if you want to have a business. Otherwise, it’s just a lump of plastic and electronics. Hopefully, the Army won’t use the Magic Leap platform to recruit soldiers, which is what they are doing in e-sports. Personally, the technology I’m most excited about is the mind-control TV set. I’ll never have to search for a remote again.

Neil Peplow, AFTRS CEO

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