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Game of Thrones v Lord of the Rings: an account of old v new Hollywood

Half a billion dollars worth of swordplay, sorcery and sex is coming to a little screen in your area. On August 21st Warner Bros Discovery will launch House of the Dragon, a spin-off of its racy smash-hit, Game of Thrones, made at a reported cost of over $150m. Hot on its heels, on September 1st Amazon Prime Video will release The Rings of Power, a far more chaste but even pricier drama in line with the Lord of the Rings books. With a rumoured pricetag of $465m, Amazons offering would be the most expensive little bit of television available.

The near-simultaneous releases can make for an epic ratings battle. However they may also be section of a longer-running war that pits old Hollywood studios against new streaming upstarts. Warner Bros, among Americas most venerable film studios, will mark its 100th birthday next year. Amazon, making its money from e-commerce and cloud computing, launched its video sideline only five years back. Because the streaming wars intensify, each side believes it comes with an advantage on the other.

Lately the dragons of old Hollywood have gained ground. Investors flocked to streaming specialists through the lockdowns of 2020-21, but have lost interest as new subscribers have dry out. Netflix, which once talked of a potential market of 800m households, seems to have stalled at 220m and contains seen its share price fall by 60% this season. On August 10th old Hollywood claimed a symbolic victory when Disney announced that it had overtaken Netflix, with 221m streaming subscriptions. That figure double-counts subscribers to Disneys various services, and ignores the truth that most are in low-paying countries like India. But Disneys success has banished any doubt that ageing studios can play the streaming game.

Hollywoods old hands may also be refocusing on the business enterprise of earning money, after two expensive years of chasing subscribers. Disney says its main streaming service, Disney+, will dsicover its losses peak this season before turning a profit in 2024. A steep price rise, from December, can help. On a recently available earnings call David Zaslav, Warners new boss, bluntly criticised the old approach of spend, spend, spend and charge hardly any. Warner will shoot for its streaming business to create a gross operating profit of $1bn by 2025, he said. If we do this, I dont really care what the [subscriber] number isWe desire to make certain we receives a commission.

Old media formats will are likely involved for the reason that. Cinemas, whose worldwide takings fell by 80% in 2020, are open again. The box office continues to be not what it had been: Cineworld, the worlds second-largest theatre chain, is getting ready to seek bankruptcy relief, based on the Wall Street Journal. But Paramount, a 110-year-old Hollywood dragon, held back the release of Top Gun: Maverick through the pandemic and was rewarded in-may with a box-office run of over $1bn. Warner, which in 2021 released all its films on its streaming platform simultaneously they launched in cinemas, went back again to exclusive theatrical runs.

Theme parks are full again, too, with Disneys American ones generating record revenues and margins. Even broadcast and cable tv, long in decline, appear to be relative safe havens because the streaming business gets tougher. We effectively have four, five or six cash registers, Mr Zaslav told investors. And in a global where things are changing, and theres plenty of uncertainty and theres plenty of disruption, thats much more stable and much better than having one check out.

That could be a convincing argument against an upstart like Netflix, which depends entirely on streaming. The difficulty for old Hollywood is that a few of its new competitors have a great deal larger and much more varied cash registers. Whereas Warners way to profit calls for drastic cutsit has recently scrapped its streaming news service, cnn+, and canned unfinished productions including BatgirlAmazon shows no sign of tightening its belt. Aside from the lavish Rings of Power, it recently bought Metro Goldwyn Mayer, the studio behind James Bond, for $8.5bn, acquired rights to the Americas National Football League worth a reported $1bn per year, and expanded its international output using its first Nigerian originals. Morgan Stanley, an investment bank, estimates that Amazon will spend $16bn on media content this season, the majority of it video. That’s a lot more than Netflixs $14bn. Next year Amazons spending could reach $20bn.

Unlike the old Hollywood dragons, some new streamers dont even must make sure they receives a commission, in Mr Zaslavs words. Amazon Prime Video exists to help keep people registered to Prime, whose main benefit is free delivery of Amazon purchases. Apples steadily expanding tv+ service is intended for keeping customers in Apples ecosystem of phones and computers, where in fact the company makes its real cash. The video services from Amazon and Apple provide future property for advertising, a small business where both companies have ambition to cultivate.

Old Hollywood is fighting back, offering viewers bigger bundles of content at a lower life expectancy cost. Warner plans to mix its main streaming service, hbo Max, with Discovery+ next summer. Disney is tinkering with discounted packages of services like espn+ and Hulu; some wonder if entry to its parks could 1 day form section of a Disney mega-bundle.

Yet Hollywoods new rivals offer bundles of another sort. Apples video vault is far smaller than that of Disney or Warner, but its Apple One package includes not only tv but music, games, storage, news and fitness. (A subscription to the iPhone itself is reportedly in the works.) Amazon Prime includes a similarly eclectic couple of benefits. As households search for savings, all-media deals like these may prove tempting.

Which may be why some old Hollywood dragons are deciding to accomplish business with the upstarts. On August 15th Paramount announced a cope with Walmart, a huge retailer, where members of Walmart+, the stores response to Amazon Prime, are certain to get free usage of the Paramount+ streaming service. Like Amazon and Apple, Walmart sees media in an effort to keep customers loyal to its main business. It recently added music to the Walmart+ bundle, with a cope with Spotify, the best audio streamer.

As competition for viewers intensifies, the battle between old and new Hollywood is proving as bloody being an bout of Game of Thrones. For consumers, who’ve more choice and much more deals than ever before, it is in the same way entertaining.

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