60 Day Windows
Netflix v. Theaters, Readers v. Ads, Hastings v. Streamers, Facebook v. Time, Apple v. AR
Nicole Sperling with the details inside the battle between Netflix and the movie theater chains around the distribution of The Irishman:
After negotiations between major chains and Netflix ended in a stalemate last month, “The Irishman,” opening Friday, will have a 26-day run in a limited number of theaters before it starts streaming on Nov. 27. A sticking point in the talks was how long the film would play in theaters before being made available to Netflix’s 158 million subscribers.
The major exhibitors typically insist on a 72-day period of exclusivity for the films that play on their screens. During the monthslong talks with Netflix over “The Irishman,” representatives of two major chains agreed independently to lower that number to around 60, according to two people familiar with the negotiations who were not authorized to discuss them publicly; Netflix signaled that it would not go above 45. And that’s where it ended.
15 Days. Two weeks and one day. That was the chasm too big to cross. It seems silly, but it’s all about precedent:
If Netflix had agreed to an exclusive 60-day run for “The Irishman,” other studios would have most likely demanded the same for their films. A new industry standard would have been set in a business that has clung to the belief that you close the theatrical window at your peril.
And so if they had agreed to 45 days, that would have been the new precedent. At that point — just a month and a half — we’re probably pretty close to the point where a lot of people who are going to the theater in weeks 2 through 6 might decide instead to “wait it out” (there will always be super fans who need to see a movie week 1, of course). That’s just a guess, but I’m assuming that’s the main hold-up here.
Of course, there’s a bigger issue:
Mr. Fithian seemed flummoxed by Netflix’s stance. He wondered aloud why the company would not want to add a revenue stream — box office — given the competition in streaming that’s on the way from Apple TV Plus, Disney Plus and HBO Max, among others.
“Netflix is leaving significant money on the table,” Mr. Fithian said. “Think about ‘The Departed,’ in 2006. That Scorsese movie made $300 million globally. It garnered Scorsese the best director Oscar. It won best picture. It played for a long time in theaters and made a ton of money. Why wouldn’t Netflix want to monetize that before it went to Netflix? It can still be exclusive on Netflix. It can still draw subscribers. It would still be the only place you can see it at home.
“Mr. Fithian” is John Fithian, the president of the National Association of Theater Owners. And he seemingly does not get it. We all understand why theaters want the latest Scorsese movie — box office and prestige aside, it’s the status quo — but Netflix’s model is not to take a cut of box office receipts (splitting it with said theaters, of course). The only reason to do that is 1) to keep talent happy and 2) marketing.
Netflix’s model is to sign up subscribers and to keep them happy and subscribed. That has worked so far. See also: 158 million subscribers.
Ultimately, this will work itself out. Unless Scorsese refuses to go with Netflix next time, they have all the power here. And even if Scorsese changes his mind, there are a dozen of the “next” Scorseses who will not care nearly as much about the theater prestige. This ball is rolling and it’s not stopping. The theaters need to realize that — and the good ones do! — and figure out what their true value proposition is now.
It’s there, but it’s different than what Mr. Fithian thinks it is. Which is sort of scary given his title. (This is also seemingly the perfect movie for Netflix to hold this line over as it really seems to be a must-see. And given the length of the film — 3.5 hours — many will want to must-see it at home, I suspect. Could you imagine going to the theater with the previews and ads beforehand? That’s a four hour commitment.)
Speaking of crappy ads injected in front of a captive audience, here’s Sahil Patel on the Deadspin shitshow:
After failing to hit ad impression targets within the first few weeks of the campaign, G/O Media decided to start playing videos with the sound on as soon as pages loaded, according to people familiar with the matter. That included stand-alone video ads for Farmers inside article pages as well as preroll ads before editorial videos.
“The ads are performing incredibly well against target reach and engagement with the audience,” said the G/O Media spokesman, referring to metrics such as clicks.
You don’t say?
Back to Netflix and theaters, here’s Dade Hayes covering Reed Hastings keynote at the New York Times’ DealBook conference:
Advertising is still not in the forecast, the founder said in response to an audience question wondering if Netflix could pursue a dual strategy of offering both ad-free and ad-supported versions. “It’s a funny thing,” he said. “Disney’s on the board of Hulu. Disney then bought [control of] Hulu. And yet when they go to launch with Disney+, no ads. When you’ve got a lot of insight into the model, you make certain choices. We feel very comfortable doing no ads, like Disney+.”
That comment aligned with others during the session, when Hastings seemed to gloss over Apple TV+ when he was asked about it, while emphasizing Disney as a competitor of note. “I’ll subscribe” to Disney+, Hastings said. “They have great shows.” When Sorkin asked if he was “long Quibi,” meaning bullish on the new Jeffrey Katzenberg mobile streaming service, Hastings shrugged and asked, “When is that launching, next year?” He said he hadn’t looked at it closely enough to render an opinion.
These answers sound a bit flippant, but Hastings has earned some level of trust with regard to this market, obviously. If he dismisses Apple TV+ and Quibi so casually…
Also, recall what I said above about Netflix’s model:
“We’re not in the business of theaters. We’re in the business of pleasing our members,” he said. Honoring the traditional three-month lag between the big screen and the small would deprive Netflix subscribers of what they want, he reasoned.
That’s a pretty simple, good answer. It does make you wonder how much of the long negotiations with theaters was just to placate Scorsese himself, who clearly cares about such things!
In the life of physical cities, the attraction of being close to others can lead to remarkable durability. Industrial towns sprouted along the Great Lakes in the 19th century because of the advantage of being close to water transport—especially once canals linked the lakes to the Atlantic. Great Lakes shipping is not the economic force it once was, yet millions of people remain in cities like Chicago and Detroit, Cleveland and Buffalo. Interpreting that durability is tricky. Suppose a team of researchers were to approach a few thousand midwesterners and ask them, for the sake of experiment, to spend a month in southern California. The subjects of the experiment might find the experience surprisingly enjoyable, yet nonetheless return home because of the friends, family and professional contacts who remain in the Midwest. The choice to return could reflect the unique value created by midwestern cities. But it might instead mean that midwesterners are stuck in a bad equilibrium: that well-being would go up if only they could agree, collectively, to decamp to sunnier climes.
This excerpt caused a bit of a stir on Twitter — there are obviously other reasons to live in these old industrial cities rather than simple inertia! I’m from one of these cities! — but there’s something in here that’s worth thinking about: how Facebook will likely linger long after the era of Facebook is over because of the strong ties it built and those that have built it.
Wayne Ma, Alex Heath, and Nick Wingfield:
Apple’s headset, code-named N301, will offer a hybrid of AR and VR capabilities, according to people familiar with the device. It resembles the Oculus Quest, a Facebook virtual reality headset released earlier this year, but with a sleeker design, these people said. Cameras will be mounted on the outside of the device, allowing people to see and interact with their physical surroundings, they said. Apple wants to make heavy use of fabrics and lightweight materials to ensure the device is comfortable to wear for extended periods of time, executives said in the presentation in October.
The headset will have a high-resolution display that will allow users to read small type and see other people standing in front of and behind virtual objects. The technology will be able to map the surfaces, edges and dimensions of rooms with greater accuracy than existing devices on the market, executives said at the meeting. To illustrate these capabilities, attendees at the October meeting were shown a recording of a demonstration in which a virtual coffee machine was placed on a real kitchen table surrounded by people in a room. The virtual coffee machine obscured people standing behind it in the room.
Apple is planning to reach out to third-party software developers as early as 2021 to encourage them to build apps for the new hardware, the company told employees at the October meeting.
In contrast, Apple’s AR glasses, code-named N421, present bigger technical challenges than the headset and are further from release. They are meant to be worn all day, and current prototypes look like high-priced sunglasses with thick frames that house the battery and chips, according to a person who has seen them.
Certainly, 2022 and 2023 seem to be more reasonable timetables for Apple’s entrant in the space just given the current state of the art — which is to say, it sure feels like it’s going to be a while before anyone makes anything actually good here. Even Apple. Thinking that they could release something next year that they could be proud of was probably always a stretch (but I do believe that was an original goal).
I’m still trying to square a few circles here though. First, the original reports talking about next year for a headset eventually morphed into Apple working with third-parties on the hardware. Again, this didn’t make a lot of sense, but that plus the notion of this N301 headset (the 2022 hardware above) makes it seem as if Apple really does intend to do some sort of MVP before the actual product, the glasses (N421).
This makes sense in the context of trying to seed a content ecosystem ahead of time for such a device/space. But it sure feels like that is what Apple has been trying to do with the iPhone/iPad AR toolkits already. So maybe the N301 headset is just 2022-era iPhone/iPad components strapped to your face as a way to more explicitly signal intent and to get developers thinking truly three-dimensionally? Unclear!
A more personal 500ish words
Some thoughts upon turning 38…