The Hollywood Reporter - 30.10.2019

Behind the Headlines

The Report

THE HOLLYWOOD REPORTER 16 OCTOBER 30, 2019

THEATER: ISTOCK. PARASITE: CJ ENTERTAINMENT AND NEON. WAITITI: STEVE GRANITZ/WIREIMAGE.

F

or new entrants to the

streaming wars, a clear

plan has emerged in the

fight to take on Netflix and its

158 million subscribers world-

wide (including 60 million in the

U.S.). The strategy? Go free.

On Oct. 22, Verizon unveiled

a deal to give Disney+ (priced

at $6.99) for free to unlimited

wireless customers. “It cre-

ates loyalty,” Verizon CEO Hans

Vestberg says of the deal. Apple

will offer a year of Apple TV+

($4.99) gratis to buyers of its

devices. WarnerMedia will give

HBO Max at no extra cost to

millions of AT&T and DirecTV

Of course, streamers that launch

with free offers are effectively

forgoing millions in potential

subscription revenue. Also, even

when the companies are being

paid, the unit economics are not as

favorable. Verizon is paying Disney

for its Disney+ subscribers, but at

a price far below Disney+’s $69.

per year rack rate.

While Verizon and AT&T’s

offers for Disney+ and HBO Max

could impact tens of millions of

people, Apple’s funnel for Apple

TV+ may be even more power-

ful. Bernstein’s Toni Sacconaghi

wrote in a research note that

Apple TV+ will “potentially reach

200 million-plus Apple custom-

ers in its first year of existence.”

That would be a lot of Morning

Show viewers.

Wanna Boost Box Office? Host a Q&A

F

ox Searchlight scored a coup when it secured

the Cinerama Dome in Los Angeles for the

limited release opening of Taika Waititi’s Jojo

Rabbit. But the Hitler satire was bumped from

the Dome for part of its Oct. 18-20 debut week-

end. Why? Robert Pattinson, Willem Dafoe and

director Robert Eggers showed up for a Q&A pro-

moting A24’s rival specialty film, The Lighthouse.

Spurred in part by small distributors looking

to up their crucial per-theater location aver-

ages on opening weekends, stars and directors

increasingly are being enlisted for public Q&As

tied to their films’ launch. While these in-theater

appearances are not new, in the past they were

largely considered part of a film’s

awards campaign, designed to woo

guild and Academy voters in L.A.

and New York. Now they are seen by

distributors with limited marketing

resources as a way to connect with

consumers and gin up revenue. “You have to do it,

no matter how big of a talent you are,” says Neon

chief Tom Quinn, who is releasing Parasite, which

opened to the best location average ($128,072)

since La La Land in 2016 thanks in part to director

Bong Joon-ho appearing at ArcLight Hollywood.

“Talent shouldn’t be reserved for the industry.”

In fact, as Jojo Rabbit was demoted from the

Dome, Waititi was mingling with the masses at

the Regal Union Square in NYC, another prime

destination for cinephiles. The Landmark in West

L.A. is another Q&A haven. “These shows sell out

immediately,” says Ted Mundorff, the outgoing

president of Landmark Theatres. “It’s as powerful

a marketing tool as it gets, even rivaling trailers.”

A Q&A creates good optics and a narrative,

particularly with a charismatic filmmaker like

Waititi. Jojo Rabbit successfully expanded into 55

theaters over the Oct. 25-27 weekend. Parasite

and The Lighthouse also are off to strong starts.

“I wish we could do more Q&As,” says Searchlight

distribution chief Frank Rodriguez. “It helps to

light a fire, even though a movie would probably

sell out anyway.” He adds, “It can be hard to open

a movie without them.”

Disney, AT&T and Apple are all leaning on

giveaways in order to bulk up quickly and avoid churn

BY ALEX WEPRIN

$0 Is Magic Number

For New Streamers:

‘It’s About Scale’

Indies are inflating location averages for fall contenders BY PAMELA MCCLINTOCK

subscribers. “It is about scale,

trying to make a big splash

quickly and get into the market

with as many users as you can to

start with, ideally without hav-

ing to pay to acquire them,” says

Jon Giegengack, principal at Hub

Entertainment Research.

In a world where every service

is starting from zero, these offers

give new streaming services

instant access to millions of

potential homes. That is reflected

in the subscriber estimates from

Disney (60 million to 90 mil-

lion Disney+ users by 2025) and

WarnerMedia (50 million HBO

Max subscribers by 2025).

UBS analyst John Hodulik says

that the Verizon deal “de-risks the

Disney+ subscriber story over the

next 12 months while creating a

more challenging environment

for other DTC players.” Indeed,

Disney CEO Bob Iger, in a CNBC

interview, said that the move

will “have a significant effect” in

jump-starting subscriptions.

But the offers aren’t all about

scale. There’s also the problem of

churn: the ease with which con-

sumers can cancel and switch to

a competitor. Extended free sub-

scriptions alleviate that pressure,

providing time to work out kinks

and expand thin libraries.

Free Giveaways

Company

Apple TV+

Disney+

HBO Max

Customers

222M

(Buyers of Apple products)

17M-18M

(Customers of Verizon)

10M*

(AT&T subscribers)

Source: Barclays; UBS; AT&T; *estimate

Waititi

The Lighthouse

(8 locations, 10/18-10/20)

Parasite

(13 locations, 10/11-10/13)

Jojo Rabbit

(5 locations, 10/18-10/20)

$384,

$349,

$427,

300K 350K 400K

Source: Comscore

Specialty Openings