Netflix Gets a Hollywood Makeover

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Netflix has just turned its back on the Silicon Valley tech firms in a move that signals a seismic shift in the entertainment business.

The streaming video giant pulled out of the Internet Association, which is the lobbying entity for web-based businesses, and locked arms with Silicon Valley’s nemesis, the Motion Picture Association of America (MPAA), Hollywood’s preeminent lobbying organization.

The Internet Association is a highly influential trade group that represents the biggest technology companies in the world, including Google, Facebook, and Amazon. The MPAA members are the six studio giants of Hollywood: Disney, Paramount, Sony, 21st Century Fox, Universal, and Warner Bros.

Although the tech firms of Silicon Valley and the entertainment companies of Hollywood have some common interests, they are on opposite sides when it comes to copyright protection and statutory immunities that are of benefit to Internet intermediaries.

Because of recent data scandals and charges of censorship by the largest tech firms, U.S. lawmakers are raising questions about two existing statutes: 1) Section 230 of the Communications Decency Act, which shields Internet concerns from liability for content published by their users; and 2) The safe harbor provision of the Digital Millennium Copyright Act, which helps to protect such firms from copyright claims.

Hollywood, via the MPAA, has been pursuing more severe anti-piracy measures in an effort to prod Internet intermediaries into taking steps to prevent and remove illegal content that has been uploaded by users.

Immediately after Facebook CEO Mark Zuckerberg made an appearance in Washington, D.C. before a congressional committee, MPAA head Charles Rivkin requested that Congress begin looking into the possibility of holding Internet platforms accountable, which, of course, raised the specter of government regulation.

Rivken’s rhetoric infuriated Internet Association’s Michael Beckerman, who characterized the MPAA leader’s calls to regulate Internet companies as “shameless rent-seeking.”

Netflix is looking to the MPAA to assist in helping the streaming company expand into markets that in the past have proven to be difficult, if not impossible, to penetrate, which has been especially true with regard to China and India.

Netflix gradually morphed into a different entity from what it was at its onset. In the beginning, Netflix was a streaming platform that hosted third-party content and served as an alternative to Blockbuster and other video rental stores. The Netflix of today, though, is a full blown mega-studio, having reportedly spent about $13 billion on content just last year. Its service seeks to actively pair up content with needs and preferences of its subscribers.

In a recent letter to investors, Netflix CEO Reed Hastings indicated that because of the company’s success in producing original content, it plans to move away from outside programming and make content production the company’s primary objective.

Once dismissed by the industry as an entertainment flash in the pan and a mere rerun platform, Netflix has reshaped the way in which the public consumes entertainment. The industry realized that Netflix had become a threat to traditional entertainment business models, so CEOs sought comfort in mega-mergers and the establishment of new streaming services.

AT&T acquired Time Warner, and the newly formed entity presently has plans to launch a streaming service later in the year. Disney is also set to launch a streaming service, following its pending acquisition of 21st Century Fox. And Comcast will reportedly get into the streaming service business as well, after its acquisition of NBCUniversal is completed.

Netflix recently shocked its subscribers with its biggest price increase ever. A recent survey by Streaming Observer and Mindnet Analytics reveals that Netflix might lose up to 27% of its subscribers due to the price hike.

Another factor that poses a threat to Netflix’s bottom line is that major streaming service competitor Hulu reportedly has plans to lower its monthly charge from $7.99 to $5.99, starting at the end of February 2019.

Netflix is likely to lose much of its licensed third-party content at approximately the same time that Disney’s much-anticipated streamer is launched, complete with entertainment fare from its “Star Wars,” Marvel, and Pixar catalogues.

The current corporate model of Netflix is predicated on rapid growth. However, it now looks as though Netflix will have the brakes applied as emerging competition from Hollywood causes the streaming business to go through a remake.

Box Office Down Again in 2017

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As 2017 draws to a close, the entertainment industry is discovering it has to deal with the reality that this year turns out to be the worst ever for the Hollywood brand.

The sex scandals surrounding movie mogul Harvey Weinstein and other major Hollywood players certainly did not help matters. Neither did the vitriolic politics that routinely spewed from left-wing celebrities’ mouths and wound up alienating folks from coast to coast.

This year the movie box office, once the primary gauge of the entertainment business, suffered yet another decline. Despite the fact that over the last twenty years or so gross box-office revenues saw an increase, for the last decade and a half actual ticket sales have consistently taken a dive.

The final 2017 tally for the North American box office appears as if it will be in the range of 2 to 4 percent less than the previous year, somewhere slightly above $11.1 billion.

It is only the third year that the domestic box office has ever made it over the $11 billion level; however, the number of tickets sold turns out to be the lowest amount since 1995.

Basically, a smaller audience is paying a higher price to see movies at the multiplex, and although the price increase is somewhat tied to inflation, it is a combination of factors that is responsible for a shrinking theater-going audience.

Big studios have been relying on existing franchises, and the creation of new ones, to fill the seats. However, the annual revenue performance was down, in part because of some underperforming sequels and remakes.

Additionally, some of the old film franchises are beginning to fade, as seen in the following examples:

— “Alien: Covenant,” Ridley Scott’s installment in the “Alien” series, came in far below expectations.

–“Transformers: The Last Knight” produced the lowest revenue of the franchise so far.

— The attempt to create a DC version of Marvel’s “Avengers” with “Justice League” essentially fizzled.

— Universal released “The Mummy” in order to launch a new “Dark Universe” franchise, but it was dead on arrival.

— “King Arthur: Legend of the Sword,” “Valerian,” and “The Dark Tower” were all produced and released with the hopes that they would each result in a stream of sequel progenies, but the hopes failed to materialize.

The sequels that fared well created new variations on the super-hero theme. “Spider-Man: Homecoming,” yet another in a series of reboots in the franchise, used a high school setting to insert universal teen angst into the storyline. Similarly, “Thor: Ragnarok” surprised fans of the god of thunder, involving him in a comedic romp.

The horror and comedy genres still have the power to pack the traditional movie setting, thanks to a reliance on the shared audience experience. Unfortunately, the current comedy formula of potty humor laced with profanity produced a series of bombs in “Baywatch,” “The House,” and “ChiPs.”

On the other hand, it is a safe bet that Hollywood will release more films in the horror genre. “It” was a blockbuster, and the box office successes of “Split,” “Get Out,” and “Annabelle: Creation” produced large profit margins due to relatively inexpensive production costs.

Just prior to the start of the summer season, studio heads were taking heart in the early releases that did do well, including “Beauty and the Beast” and “The Fate of The Furious.” In June, the singular DC success “Wonder Woman” ended up scoring well enough at the box office to create a valuable new franchise.

Still, by summer’s end it was clear that the movie business would have to overcome a season splattered with non-performing releases. The summer of 2017 produced the lowest box-office totals in a quarter of a century, placing studio executives under a deep dark cloud.

It was clear that executives were in a box-office hole as a result of the disappointing performances of installments that were previously proven franchises, including “The Mummy,” “Pirates of the Caribbean: Dead Men Tell No Tales,” and “Transformers: The Last Knight.”

There was, however, a pleasant summer surprise that arrived in the form of “Dunkirk,” a World War II epic and one of the best films of the year. Director Christopher Nolan demonstrated how one can create a film experience that is exquisitely dependent on theater attendance. He used IMAX cameras in the filming of the movie and promoted the need for filmgoers to view the movie on wide screens as opposed to streaming it on a device.

Hollywood insiders were waiting for the anticipated galactic revenue flow from “Star Wars: The Last Jedi” to rescue the year, but here, too, the numbers did not hit the high mark.

No doubt Hollywood’s image has taken a beating in fly-over country and beyond, due to the sexual harassment and assault allegations, outrageous celebrity political posturing, late-night’s unfunny agenda-ridden routines, and the like.

Perhaps the movie business, like the NFL, is simply reaping what it sows.