Hollywood Tales: Game of Thrones vs

Hollywood Tales: Game of Thrones vs

“Game of Thrones” versus “Lord of the Rings” or how the battle between the old and the new plays out today. The 100-year studio of Warner Bros. declares a mega-budget war against its much younger rivals in the video streaming segment.

More than half a billion dollars poured into sword fights, sorcery and sex have hit the small screen recently. On August 21, Warner Bros. Discovery launched on HBO and HBO Max “House of the Dragon”, a spin-off of the hit “Game of Thrones”, produced with more than 150 million dollars. Blowing their necks, on September 1, Amazon Prime Video released “The Lord of the Rings: The Rings of Power”. With a production cost, according to sources, of 465 million dollars, Amazon thus offers the most expensive piece of television ever produced, comment the British from The Economist magazine.

The near-simultaneous releases obviously also involve an epic battle for the audience. Subsidiarily, there is another battle, longer term this time, that pits the old Hollywood studios against the productions of the new streaming platforms.

Warner Bros., one of the most respected American film studios (part of the so-called Big Five of American film production – Universal Pictures, Warner Bros., Paramount Pictures, Walt Disney Pictures and Columbia Pictures), will turn 100 next year for years. In the opposite corner of the ring we have companies like Amazon, the giant that makes money from online commerce and cloud services, and which only launched its video streaming platform five years ago. As the battle for streaming services intensifies, each camp believes in its own strengths over the competition.

The battle of the generations

Lately it seems that the dragons of old Hollywood have won. Investors flocked to video streaming companies during the 2020-2021 pandemic, but tempered their momentum as new subscribers stagnated. Netflix, which once talked about a potential market of 800 million subscribers, seems to have stagnated at 220 million. Moreover, the share price has fallen by 60% this year.

On August 10, old Hollywood claimed a symbolic victory over the younger gaming camp when Disney announced that it had surpassed Netflix to reach 221 million users. The total, in fact, double-counts Disney subscribers, who offer various services, ignoring the fact that a large number of them are in countries that pay cheap subscriptions (see India). Even so, Disney’s success has erased any doubt that traditional studios can play in the video streaming service market.

Fun and profit

After two years of spending heavily to keep growing its subscriber base, Hollywood is once again focusing on its favorite business – making money (read profit). Those at Disney say that their streaming service, Disney+, will reach a loss peak this year, and from 2024 it will turn a profit. One driver will be the increase in the price of season tickets, starting in December.

In a recent report, the new chief executive officer (CEO) and president of Warner Bros. Discovery (in April, Discovery and AT&T completed the transaction to combine the WarnerMedia business with Discovery), David Zaslav, bluntly criticized the old strategy: “Invest, invest, invest and then ask for very little.” Warner’s goal is for its streaming service to achieve a gross operating profit of $1 billion by 2025, Zaslav also said. “If we can do that, I don’t care how many subscribers we have. But we want to be sure that the subscribers we have are paying.”

In turn, old media formats also play a role in this whole story. Cinemas, whose global receipts fell by 80% in 2020, have reopened. Even so, the box office isn’t what it used to be. Cineworld, the second largest international chain of cinemas, is preparing to declare bankruptcy, according to information from the American publication The Wall Street Journal. But Paramount, the 110-year-old Hollywood “dragon”, struck with the release of the film “Top Gun: Maverick”, announcing in May receipts of over 1 billion dollars.

Warner, which in 2021 released all its films on the streaming platform simultaneously with the theatrical release, has now returned to premieres that run exclusively in theaters as before.

The theme parks are taking it by storm again – Disney is generating record revenues and profits to match. Moreover, while the business is getting tougher for streaming platforms, even cable television, which has been in decline for some time, is doing better: “Specifically, we have four, five or six revenue centers.” In a world where things are changing, there is an enormous amount of uncertainty and a great potential for innovation, it is more stable and better that way than having a single revenue center”, Zaslav also told investors.

Business models

It could be a compelling argument against a young company like Netflix that depends entirely on the streaming service it offers. The problem for old Hollywood is that some of its new rivals have even more and more varied revenue centers. While Warner’s path to profitability will have to go through a tough period of drastic cutbacks — it’s already shut down streaming news service CNN+ and shelved unfinished productions (“Batgirl”), Amazon isn’t showing any signs of austerity. In addition to the huge-budget film “The Lord of the Rings: The Rings of Power”, Amazon recently bought the legendary studio Metro Goldwyn Mayer (on the sets of which, among other things, the “James Bond” series was filmed) for 8.5 billion dollars, but also the rights of televising NFL games (American football league) for the amount of 1 billion dollars per year.

US investment bank Morgan Stanley estimates that Amazon will spend $16 billion on media content this year, mostly video productions. That is, over the amount of 14 billion dollars invested by Netflix. It seems that Amazon could reach the threshold of 20 billion dollars next year with these investments, adds The Economist.

Unlike the old Hollywood dragons, young streaming platforms don’t even need to make sure they’re paid by subscribers, Warner’s Zaslav notes. Amazon Prime Video exists to keep subscribers connected to Prime, with the main benefit being free shipping on Amazon purchases. Apple is constantly expanding its TV+ services, aiming to keep consumers in the ecosystem of Apple phones and computers, where the giant makes most of its money. The video services offered by Amazon and Apple also offer a future place for advertising services, a business in which both have great ambitions.

To all this, old Hollywood is fighting back by offering its audience larger packages of content at a reduced price. Starting next summer, Warner will try to combine its main streaming service — HBO Max — with Discovery+. Disney is also experimenting with some discount packages, like ESPN+ and Hulu.

Pact

However, old Hollywood’s new rivals offer packages of a different kind. For example, Apple’s video offering is much smaller than Disney’s or Warner’s, but the “AppleOne” package includes not only movies, but also music, games, storage, news and fitness (it works at a such subscription directly from the iPhone). Amazon Prime also comes with an equally varied offering of benefits, and for a household looking to save, such packages may prove extremely tempting.

It could be why the dragons of old Hollywood are about to make a pact – to do business with the young. On August 15, Paramount announced a deal with retailer Walmart, a partnership in which members of Walmart+ (the retailer’s answer to Amazon Prime) will receive free access to the Paramount+ streaming service. Like Amazon and Apple, Walmart sees media content as a way to keep customers loyal to its core business. Moreover, it recently also introduced music content to the Walmart+ package, following an agreement with Spotify, the leading audio streaming service.

As one can easily see, the battle for viewers’ attention is intensifying, and the clash between old and new is proving to be as bloody as an episode of Game of Thrones. For consumers, who have more choices and more deals than ever before, all this cramming is just fun.

ALLIANCE

As the streaming service battle heats up, rivals are pulling out all the stops.

THE FUSION. In May 2021, AT&T and Discovery entered into a definitive agreement, a merger. The new company combines WarnerMedia’s premium entertainment, sports and news assets with Discovery’s leading international entertainment and sports companies (Discovery Channel, Discovery+, Warner Bros. Entertainment, CNN, CNN+, DC, Eurosport, HBO, HBO Max, Food Network, Investigation Discovery, Travel Channel, MotorTrend, Animal Planet, Science Channel, Cartoon Network, Turner Classic Movies, etc.). PARTNERSHIP. Walmart has agreed to an agreement with Paramount Global to offer the Paramount+ streaming service to customers of the Walmart+ subscription program. This subscription costs almost $13 a month – it includes free shipping on orders and discounts on fuel, as well as six months of free access to Spotify’s premium music service. Walmart has also negotiated partnerships with Disney and Comcast.

This article appeared in issue 147 of . magazine.

PHOTO: Getty