At present, Netflix and Disney are taking the road, almost all of them began to try one or two years in advance, and Youaiteng carried out the fierce competition of "volume" earlier, and also entered the stage of "cost reduction and efficiency increase" to chase efficiency and profitability earlier. Therefore, the situation of the domestic long video industry in the past two years is basically the development forecast of the international streaming media market in 2023.
Read Entertainment | yiqiduyu
Text | Zero One
When Robert Iger was reinstated as CEO last November, Disney was facing a difficult time. When he retired, Iger personally chose his successor, Bob Chapek, who has been Disney's CEO since 2020. However, during his term of office for more than two years, Chapek faced the huge impact of the epidemic on parks, film and television businesses, and Disney+, which he supported despite huge losses, was gradually in a dilemma in the competition in the streaming market.
Recently, Disney announced the performance report for the new fiscal quarter, Disney's revenue reached $23.51 billion in the quarter, a year-on-year increase of 8%, and the net profit attributable to the parent company was $1.28 billion, a year-on-year increase of 16%. Among them, the revenue of the media and entertainment segment was US$14.776 billion, an increase of 1% year-on-year, and the operating loss was US$10 million; Parks & Experiences & Products revenue was $8,736 million, up 21% year-over-year, and operating profit increased 25% year-over-year to $3,053 million.
The high-profile streaming loss of $1.05 billion narrowed sharply from the previous quarter, which was better than previous management forecasts. At the same time, Iger also announced a large-scale corporate restructuring plan, while laying off 7,000 employees to significantly cut costs. Now, Iger is indeed moving towards the goal of "profit", and the direction and initial results have appeared.
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The old boss has to do two things: return to the content and stop burning money
In "Why did Disney get its old boss back?" In the article, Reading Entertainment Jun interpreted the internal and external troubles that Disney faced when it changed coaches last year. In the past two years, Disney's content output has fallen into a trough, the reputation and popularity of the fourth stage of Marvel movies are not as good as before, and Pixar animations are mostly mediocre; After competing head-to-head with Netflix and others, Disney created a large number of exclusive content for Disney+, bringing Disney+'s total user size to 164 million in October 2022, at the cost of a huge loss of $1.474 billion in the streaming business in the quarter.
The failure of the new work to continue to win the love of the audience means that Marvel and other IPs have basically eaten the "old book" for two years, and the huge losses caused by streaming media have made Disney investors quite dissatisfied. In early 2023, activist investor Nelson Peltz, seeking a board seat at the April 3 annual shareholder meeting, argued that Disney needed better cost control.
So when Iger returns to the helm, he has two big things to do: regain content dominance in Disney Movies and Animation, and more quickly move Disney+ from "barbaric input" to "breakeven" mode.
After the recent earnings report and restructuring plan, Nelson Peltz has announced that he will no longer try to compete for Disney's agency rights. "Now Disney plans to do everything we want them to do. We extend our best wishes to Bob, the management team and the Board of Directors. We'll be watching closely, and we'll support you. The proxy battle is over. Disney reorganized into three divisions: the entertainment division of the TV and film business, the ESPN sports network division, and the theme park division. Disney will lay off 7,000 jobs and save $5.5 billion through restructuring plans.
The strong change in investors' stance obviously comes from the adjustment and clarification of Disney's development strategy after Iger returned. Iger's strategy can be divided into two points:
First, re-entrust the voice to creators in an attempt to stimulate the creativity of Disney content.
Iger believes it's critical that companies build on storytelling and empower storytellers to decide how to design and market films, and hand back the marketing and distribution rights back to the creative department. "Our new structure is designed to put more power back in the hands of creative leaders and hold them accountable for the financial performance of their content. The previous structure severed this connection and it had to be restored. ”
Disney's past success has been interpreted as the scale advantage of big IP industrialization, but its foundation obviously lies in the animation and movie content that can truly win the audience's love. If the content is not good enough, the characters and IP will not be able to impress the audience enough to affect all Disney's proud business, because good content is the power source of Disneyland, peripherals, games and other "money printer" business. For Disney, which has a deep IP background, the negative impact of the decline in content standards will not take effect immediately, but it is enough to make characters like Iger wake up and react early.
Over the past two years, Disney has spent huge budgets, with a plethora of TV series and movie projects, but the quality is far from what it used to be. Projects such as "Black Widow", "Lightyear", "Black Panther 2", "Thor 4: Love and Thunder", and "Eternals" have all achieved dismal results, and their influence in the film market is far less than that of the Avengers period, and Iger clearly believes that Chapek's behavior of divorcing budget power away from the front-line creative department is to blame, resulting in a huge cost that has not been converted into quality content.
On the earnings call, Iger announced that the three animation IPs of "Zootopia", "Frozen" and "Toy Story" will launch sequel movies. "Lightyear" suffered a word-of-mouth box office failure before, and "Zootopia" had only derivative dramas before, which will be the first sequel film of this IP, and the first two films of "Frozen" have achieved great market success, and the appeal of the new work is very large. In the past few years, Disney has made many original story attempts in the animation field, but has not formed enough impact of new IP, and Iger's strategy seems to be to hope to regain the industry spotlight through mature IP.
Second, take profit as the main goal, seek benign market relationships, and abandon streaming media investment and competition regardless of cost.
Compared with Bob Chapek's statement that "even if there is no Chinese market, it will not hinder Disney's success", Iger is obviously the more cautious and pragmatic one. Although not necessarily actually related, after Iger re-ascended, Disney movies did enter the Chinese mainland market more smoothly: "Avatar 2" was successfully released in the mainland market and North America simultaneously, Marvel movies that have been separated for more than Chinese mainland years were set again, "Black Panther 2" was released on February 7, and the opening work of Marvel's fifth phase "Ant-Man: Quantum Frenzy" has also been scheduled to be released simultaneously with North America on February 17.
As for Disney+, a gold-swallowing business, Iger clearly wants to adjust it faster to a more breakeven model like Netflix. According to Bloomberg, Disney is exploring selling more movies and TV shows to competitors to unlock more commercial value from its own content library. In the past few years, Disney's Marvel, Star Wars, Disney animation and other dominant content have almost all been exclusively broadcast on Disney+, which is the basis for the exponential growth of users of this streaming platform.
Iger also said that Disney will no longer release the guidance data of Disney+ enrollment numbers, and has plans to increase the price of Disney+ membership business.
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The international streaming media market has also entered a period of "cost reduction and efficiency increase"
The development process of international streaming media can be basically summarized as:
1. In the early days, Netflix shifted from DVD rental to streaming to fill the gap in the online market;
2, Prime Video, hulu and other streaming media groups, since around 2013, Netflix began to produce a large number of self-made content and create multiple IP, one became the leader in the streaming media industry;
3. From around 2017, Disney and other film and television giants stopped distributing film and television copyrights to Netflix and began to build their own streaming media platforms;
4, from 2019 to 2022, open the era of international streaming "arms race". Disney+ rose with a low price and a large number of Disney exclusive content, and Warner debuted all its movies on HBOMAX in 2020, with a large loss in exchange for a large increase in membership. Now Disney seems to be giving up exclusive content and liberalizing copyright distribution, which basically means the end of the "arms race" era.
In 2022, when facing the decline in subscriber scale due to emerging streaming competition such as Disney+ and HBOMAX, Netflix co-CEO Salados said in 2022: "It is difficult to build a large-scale and profitable streaming business, and we expect all other competitors to lose money on the streaming business." While the entire streaming industry will lose more than $10 billion this year, Netflix is able to achieve an operating profit of $5 billion to $6 billion. ”
2022 can be said to be a turning point in the competition in the international streaming market. This is the end of the era of high-speed growth for Disney, Warner and other film giants with huge losses, and the way to consume competitors in a short period of time is no longer sustainable, and almost all streaming media platforms have adjusted their focus from "user scale growth" to "profit" this year: strategies such as raising prices, joining advertising packages, and cracking down on account sharing have been frequently reported.
Disney began to save costs and increase membership prices, and Netflix's commercialization pace accelerated greatly under the influence of competitors. Netflix, which used to adhere to a pure membership subscription system, joined a low-cost membership package with ads in 2022, and announced that it will launch anti-account sharing activities in more countries and regions.
As mentioned before, the development path of the international streaming media market is actually very similar to the domestic long video industry, the starting point is different, but the results are similar.
The difference in starting point is that the growth environment of international streaming media represented by Netflix is different, Netflix grew up from the soil of the era of DVD rental and paid TV stations in Europe and the United States, and from the beginning, users accepted the consumption method of paid subscription very logically; The domestic Youaiteng grew up from the soil of the PC Internet era, and almost did not form a normal copyright content environment in the early stage, and the market basically did not have a paid subscription basis, but a typical PC Internet business model represented by the advertising click model.
And the results are similar, Yoyujun believes that the key lies in the "role change" of the streaming media industry. With the increase in the weight of online channels in the entire film and television media industry, the online media market cake has become larger, and content has always been the cornerstone of everything in this industry, which has led to upstream content associations significantly increasing copyright distribution prices, helping streaming media platforms to no longer maintain the identity of simple "broadcast channels" and choose to invest heavily in self-made content, and since then enter a model of "increasing content investment - expanding user scale - continuing to increase content investment".
In this model, users' loyalty to the platform itself will become more and more weak, because as the number and investment of competitors increase, high-quality content often comes from different platforms, and users will selectively subscribe according to the situation of popular programs and TV dramas, or subscribe to multiple platforms at the same time.
Therefore, it is inevitable that the capital market will enter a cooling-off period after the competition is intense, and streaming media will gradually find that their competitors are actually YouTube and short videos, and it is impossible for the top players of streaming media platforms to completely defeat their opponents. Netflix is still strong, Disney+ has its own advantages, there is no point in continuing to burn money, and everyone can only accept the existing market structure to pursue real profits.
At present, Netflix and Disney are taking the road, almost all of them began to try one or two years in advance, and Youaiteng carried out the fierce competition of "volume" earlier, and also entered the stage of "cost reduction and efficiency increase" to chase efficiency and profitability earlier. Therefore, the situation of the domestic long video industry in the past two years is basically the development forecast of the international streaming media market in 2023:
On the one hand, focus most resources on creating enough high-quality and sufficient high-quality content to stand firm; On the other hand, the scale figures piled up with low-price competition and losses have no long-term significance, and the platform needs to try to open source and reduce expenses from the business side such as advertising and membership, as well as the market side such as IP development, with the goal of making money pragmatically.
In 2023, streaming is no longer a new thing. Finding your own irreplaceability and fine water may be the main theme of the industry in the future.