H $1 billion $1 billion in swordsmanship, witchcraft and Sex is turning it on to a small screen near you. On Aug. 21, Warner Bros. Discovery will unveil House of the Dragon, a spinoff of its smash hit Game of Thrones, which reportedly cost more than $150 million. This will be followed by the September 1st, Amazon Prime Video release of The Ring of Thrones, a purer but pricier TV series based on the Lord of the Rings books. With a rumored price tag of $465 million, Amazon’s product will be the most expensive TV product ever made.
An epic ratings battle. But they’re also part of a long war pitting old Hollywood studios against new streaming upstarts. Warner Bros., one of America’s most respected movie studios, will celebrate its 100th birthday next year. Amazon, which makes money from e-commerce and cloud computing, launched its video sideline only five years ago. As the streaming wars intensify, both sides see themselves as having an advantage over the other. Lately, the dragons of Old Hollywood have taken hold. Investors flocked to streaming specialists during the 2020-21 lockdown, but lost interest as new subscribers dried up. Netflix, which has talked up a potential market of 800 million households, appears to have stalled at 220 million this year, with shares down 60%. Old Hollywood declared a symbolic victory on Aug. 10 when Disney announced it had surpassed Netflix with 221 million streaming subscriptions. That number double-counts subscribers to Disney’s various services and ignores the fact that many are in low-income countries like India. But Disney’s success has dispelled doubts about the ability of established studios to play streaming games.
The Hollywood veteran is also refocusing on the money-making business after two expensive years chasing subscribers. Disney said losses on its main streaming service, Disney+, would peak this year before turning around in 2024. A sharp rise in prices from December will help. On a recent earnings call, Warner’s new boss, David Zaslav, was outspoken in his criticism of the old approach of “spend, spend, spend, and then charge little.” Warner aims to have a combined operating profit of $1 billion for its streaming business by 2025, he said. “If we do, I don’t really care what the [subscriber] number is… We want to make sure we get paid.”
Old Media Formatting will come into play here. Movie theaters that saw an 80% drop at the global box office in 2020 are reopening. The box office is still not as good as it used to be: According to reports, the world’s second largest theater chain Cineworld is preparing to file for bankruptcy The Wall Street Journal . But Paramount, the 110-year-old Hollywood dragon, delayed the release of “Top Gun: The Maverick” during the pandemic and raked in more than $1 billion in box-office awards in May. Warner, which released all of its films on its streaming platform in 2021 with simultaneous theatrical releases, is now back with exclusive theatrical releases.
Theme parks are also full again, with Disney’s US theme parks generating record revenue and profits. As the streaming business gets tougher, even long-fading broadcast and cable TV looks like a relatively safe haven. “We actually have four, five or six registers,” Mr Zaslav told investors. “In a world where things are constantly changing, with a lot of uncertainty and chaos, it’s much more stable and better than having a cash register.”
This could be a compelling argument against an upstart like Netflix, which is totally dependent on streaming. The trouble with Old Hollywood is that some of its newer competitors have larger, more diverse cash registers. Warner’s path to profitability will involve deep cuts — it has dropped streaming news services, cnn+, and future titles including “Batgirl” Finished work – Amazon shows no signs of tightening the belt. In addition to its lavish “Ring of Power,” it recently bought Metro Goldwyn Mayer, the studio behind “James Bond,” for $8.5 billion, garnering $1 billion-a-year rights to the NFL and expanding its international output Its first Nigerian original. Investment bank Morgan Stanley estimates that Amazon will spend $16 billion this year on media content, much of it video. That’s more than Netflix’s $14 billion. Amazon’s spending could hit $20 billion next year.
In the words of Mr. Zaslav, the old Hollywood Dragons, some new streamers don’t even need to make sure they get paid. Amazon Prime Video exists to get people to sign up for Prime, and its main benefit is free delivery of Amazon purchases. Apple’s steadily expanding tv+ service is designed to keep customers in Apple’s ecosystem of phones and computers, where the company makes real money. The video services of Amazon and Apple also offer a future for advertising, and both companies have ambitions to grow. Old Hollywood is fighting back, offering viewers a larger “bundle” of content at a lower cost. Warner plans to combine its main streaming service hbo Max with Discovery+ next summer. Disney is experimenting with discounted packages like espn+ and Hulu; some wonder if access to its parks will one day be part of Disney’s super bundle.
However, Hollywood’s newer rivals offer different types of bundles. Apple’s video library is much smaller than Disney’s or Warner’s, but its “Apple One “The package includes not only tv, but also music, games, storage, news and health. (Work is reportedly underway to subscribe to the iPhone itself.) Amazon Prime brings an equally eclectic array of benefits. When households are looking to save, an omnimedia deal like this can be tempting.
This may be the reason why some Hollywood veterans decide to do business with upstarts. On Aug. 15, Paramount announced a deal with major retailer Walmart in which members of Walmart+ (the store’s answer to Amazon Prime) will receive the Paramount+ streaming service for free. Like Amazon and Apple, Walmart sees media as a way to keep customers loyal to its main business. It recently added music to its Walmart+ bundle through a deal with leading audio streamer Spotify. As audience competition heats up, old and new Hollywood is proving to be as bloody as a Game of Thrones episode. It’s also entertaining for consumers who have more choice and more deals than ever before. ■
