Netflix is spending hundreds of millions of dollars to produce big-budget films

Sunday, August 11th, 2019

Netflix is spending hundreds of millions of dollars to produce big-budget films:

Earlier this month, Netflix agreed to spend nearly $200 million to make the Dwayne Johnson action movie “Red Notice,” which will be filmed next year at exotic locations and also stars Ryan Reynolds and Gal Gadot, the people said. In addition, a person familiar with the matter said, Netflix plans to release later this year “6 Underground,” a Michael Bay-directed action film that is costing about $150 million, and Martin Scorsese’s “The Irishman.”

The latter film might be the company’s riskiest bet. “The Irishman,” a historical drama likely to appeal only to adults interested in serious subject matter, costs as much as some all-ages action-adventure movies because of cutting-edge visual effects that allow stars including Robert De Niro, Al Pacino and Joe Pesci to appear at different ages. People close to the picture said Netflix’s total commitment is at least $173 million, with some going above $200 million, making “The Irishman” the most expensive adult drama in recent history.

Netflix has previously said about one-third of its total viewing is movies, rather than television series.

[...]

Netflix has been picking up many film projects Hollywood studios didn’t see as commercially viable at the box office, at least at the same budgets. Recent examples include Sandra Bullock’s post-apocalyptic movie “Bird Box’” and the jungle-heist flick “Triple Frontier,” starring Ben Affleck. Neither was a standout with critics, but “Bird Box” drew 80 million viewers during its first month and “Triple Frontier” has been watched 63 million times since its March release, the company said, making them Netflix’s first and fifth most popular original films, respectively.

Netflix bought the rights to “The Irishman” after major studios passed because of concerns that it was too expensive for a drama, a genre that has struggled at the box office in recent years. The producers were in the midst of raising independent funds to make the film when Netflix entered. “Without Netflix, ‘Irishman’ would not have been made,” said one of the people close to the movie. “I just don’t see [other] studios wanting to dive into these projects any more. I think they are staying away from the riskier, more mature films, especially dramas.”

The dark side of Japan’s anime industry

Sunday, July 28th, 2019

According to this Vox piece on the dark side of Japan’s anime industry, animators there don’t make a living wage, despite being in great demand:

Shingo Adachi, an animator and character designer for Sword Art Online, a popular anime TV series, said the talent shortage is a serious ongoing problem — with nearly 200 animated TV series alone made in Japan each year, there aren’t enough skilled animators to go around. Instead, studios rely on a large pool of essentially unpaid freelancers who are passionate about anime.

At the entry level are “in-between animators,” who are usually freelancers. They’re the ones who make all the individual drawings after the top-level directors come up with the storyboards and the middle-tier “key animators” draw the important frames in each scene.

In-between animators earn around 200 yen per drawing — less than $2. That wouldn’t be so bad if each artist could crank out 200 drawings a day, but a single drawing can take more than an hour. That’s not to mention anime’s meticulous attention to details that are by and large ignored by animation in the West, like food, architecture, and landscape, which can take four or five times longer than average to draw.

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According to the Japanese Animation Creators Association, an animator in Japan earns on average ¥1.1 million (~$10,000) per year in their 20s, ¥2.1 million (~$19,000) in their 30s, and a livable but still meager ¥3.5 million (~$31,000) in their 40s and 50s. The poverty line is Japan is ¥2.2 million.

[...]

Anime’s structural iniquities stem back to Osamu Tezuka, the creator of Astro Boy and the “god of manga.” Tezuka was responsible for an endless catalog of innovations and precedents in manga, Japanese comics, and anime, onscreen animation. In the early 1960s, with networks unwilling to take the risk on an animated series, Tezuka massively undersold his show to get it on air.

“Basically, Tezuka and his company were going to take a loss for the actual show,” said Michael Crandol, an assistant professor of Japanese studies at Leiden University. “They planned to make up for the loss with Astro Boy toys and figures and merchandise, branded candy. … But because that particular scenario worked for Tezuka and the broadcasters, it became the status quo.”

How much work can a young animator produce in one year for $10,000? I’m tempted to come up with a project.

Fortnite’s dominance is ebbing

Wednesday, July 10th, 2019

The Wall Street Journal takes a look at the man behind Fortnite:

By age 30, Epic Games Inc. founder and CEO Tim Sweeney had a couple of successful videogames under his belt and was starting to make real money.

“I had a Ferrari and a Lamborghini in the parking lot of my apartment,” he recalled. “People who hadn’t met me thought I must be a drug dealer.”

Today, Mr. Sweeney, at 48, is worth more than $7 billion, according to Bloomberg’s Billionaires Index. Epic was last valued at $15 billion, counting Walt Disney Co. and China’s Tencent Holdings PLC among its investors. And “Fortnite,” its blockbuster game, has racked up 250 million players and $3.9 billion in estimated revenue.

[...]

While the biggest U.S. videogame companies are clustered in Los Angeles, New York and the Bay Area, Epic is based in Cary, N.C., down the road from Raleigh. Mr. Sweeney said the location prevents Epic from being swayed by Silicon Valley groupthink.

[...]

Epic tried something different. It made “Fortnite” free and put it on every major device people use to play games — consoles, computers, smartphones and tablets. It put its own spin on a trendy new genre called Battle Royale, where a large group of players fight until only one person or squad is left standing. It constantly tweaked the game’s virtual world to give players something new to discover. And it took the popular shooter format and made it less violent and more playful, with colorful characters who compete with dance moves as well as firearms.

[...]

By erasing the barriers between players with different devices, Epic effectively turned “Fortnite” into a massive social network. Wearing headsets to talk to one another, groups of friends trade jokes and gossip while battling to survive.

[...]

Mr. Sweeney founded Epic in 1991 from his parents’ basement, at age 20, funding it with $4,000 in personal savings. He later dropped out of the University of Maryland a few credits shy of a mechanical-engineering degree. “I went from mowing lawns to being CEO of Epic,” said Mr. Sweeney, who got his diploma in 2018.

In its early years, the company had some success with a handful of games, including “Unreal Tournament” and “Gears of War,” that followed more traditional shoot-’em-up formats.

[...]

Today, “Fortnite’s” dominance is ebbing. Monthly revenue from sales of virtual perks such as costumes and dance moves for players’ avatars has fallen 56% since peaking at a record $372.2 million in December, according to Nielsen’s SuperData.

The top 20 most watched shows on Netflix include only a few “originals”

Monday, July 8th, 2019

I’m not sure I’d say that ‘Stranger Things’ helps illustrate the flaws in Netflix’s strategy:

Last year, Netflix shelled out more than $12 billion to purchase, license and produce content. This year, that figure will rise to $15 billion. It will spend $2.9 billion more on marketing. These costs come as Netflix is expected to report $20.2 billion in revenue in 2019, according to analysts surveyed by Refinitiv.

[...]

From 2012 to 2016, Netflix subscriptions in the U.S. grew about 5% each year and spiked by 10% in 2017. However, in 2018, domestic memberships only grew about 3.6%.

Internationally, Netflix has grown its subscriptions to nearly 81 million, up from just 1.86 million in 2011. Since 2015, the company has seen double digit growth in this area. Altogether, the company has just under 150 million subscribers.

Also, of the top 20 most watched shows on Netflix, six are “originals,” but only one of those are actually owned by the company, according to data from Nielsen and Pachter.

Top 20 Shows on Netflix in 2018 by Minutes

I knew I was odd, but I guess I don’t watch any of Netflix’s top shows.

Joe Rogan interviews the Angel Philosopher

Wednesday, June 12th, 2019

Joe Rogan recently interviewed Naval Ravikant (The Angel Philosopher):

Better than any national park

Saturday, May 25th, 2019

Jared Diamond is clearly liberal, but not orthodox:

There are also corporate interests because I’m on the board of directors for the World Wildlife Fund and I was on the board of Conservation International, and on our boards are leaders of really big companies like Walmart and Coca-Cola are their heads, their CEOs, have been on our boards.

I see that corporations, big corporations, while some of them do horrible things, some of them also are doing wonderful things which don’t make the front page. When there was the Exxon Valdez spill off Alaska, you can bet that made the front page. When Chevron was managing its oil field in Papua New Guinea in a utterly rigorous way, better than any national park I’ve ever been in, that certainly did not make the front page because it wasn’t a good picture.

In the tropics this was beyond price

Monday, April 29th, 2019

One of the officers Dunlap served with in the Philippines was a good trader and had done some “advantageous business” with navy and CB forces in the Admiralties:

A jeep had turned into a huge generator, much larger than our regular authorized one, and another jeep into — prize beyond words — an ice machine. It only made slush ice (a snow-like product), but we had cold stuff. It required water constantly running through it to cool the machinery, so it was never used at all while we were in Leyte. Long before, the boys had picked up a refrigerating unit and built a water cooler, running cooling pipes through a tank set on a small trailer. Two G.I. cans set on top were filled and the power turned on. When the tank cooled off, ice-cold drinking water was available at both a faucet and a homemade fountain spout. In the tropics this was beyond price. The trailer was easy to set up and could be in operation within a few hours after stopping. A large oven had been accumulated along the line somewhere and as the company had a good baker we had more than the usual run of bread, pie and cake. I appreciated these things, having been on C, K and 10-in-1 rations for the past five or six weeks, most of the time.

Skillfully alternating largess and spreading out surpluses

Wednesday, April 3rd, 2019

Dunlap’s QM job, working on the fruit delivery truck, turned into a gravy chain:

I usually had a good extra supply, which of course became the highest grade of trading stock. I was the mess sergeant’s friend, “The Man With The Stuff.” Steaks, pies, etc., came my way as long as I had a couple of extra crates of oranges to put out to whatever cook or mess sergeant was in line for promotion or just wanted to take good care of his boys. By skillfully alternating my largess and spreading out the surpluses everyone was happy and convinced he was doing better than the next outfit, so I did OK. Even after I lost the job I was welcome at most of the mess halls at any time, which is a record of some kind, mess sergeants being notoriously unfriendly to everybody below the rank of full colonel between meals.

There were more useless high-ranking officers in Egypt than in England

Tuesday, April 2nd, 2019

There were more useless high-ranking officers in Egypt than in England, Dunlap thought, in 1943:

When we were working, we had to clean up the shop and get everything in order for one of these fast-walk inspections, taking at least two hours’ time and knocking about a half day’s work out of production. We really hated that, and for a couple of days after one of those exhibitions no one felt like working, feeling that there was really no point in extending ourselves if the officers could waste our time.

That management lesson might apply more generally.

Point-to-point rocket flights could be a $20B market

Sunday, March 24th, 2019

In a decade, high speed travel via outer space could represent a $20 billion market:

Long haul airplane flights that are more than 10 hours in duration would “be cannibalized” by point-to-point flights on rockets, UBS said. The firm pointed to SpaceX’s plans to use the massive Starship rocket it is building to fly as many as 100 people around the world in minutes. SpaceX said that Starship would be able to fly from New York to Shanghai in 39 minutes, rather than the 15 hours it takes currently by airplane.

UBS estimates that there are more than 150 million passengers a year that fly routes longer than 10 hours. Last year, those routes saw 527,000 routes on airplane that had an average of 309 seats, UBS said.

“If we assume that 5 percent of these flights in the future are serviced by space at $2,500 per trip, the revenue opportunity as of today would be more than $20 billion per year as of today,” UBS said

You don’t have to be curing cancer

Thursday, March 7th, 2019

Charles Duhigg — Pulitzer Prize-winning journalist and author of The Power of Habit — went to Harvard Business School and found that most of his classmates were pretty miserable 15 years later:

What I found was that my classmates were hardly unique in their dissatisfaction; even in a boom economy, a surprising portion of Americans are professionally miserable right now. In the mid-1980s, roughly 61 percent of workers told pollsters they were satisfied with their jobs. Since then, that number has declined substantially, hovering around half; the low point was in 2010, when only 43 percent of workers were satisfied, according to data collected by the Conference Board, a nonprofit research organization. The rest said they were unhappy, or at best neutral, about how they spent the bulk of their days. Even among professionals given to lofty self-images, like those in medicine and law, other studies have noted a rise in discontent. Why? Based on my own conversations with classmates and the research I began reviewing, the answer comes down to oppressive hours, political infighting, increased competition sparked by globalization, an “always-on culture” bred by the internet — but also something that’s hard for these professionals to put their finger on, an underlying sense that their work isn’t worth the grueling effort they’re putting into it.

This wave of dissatisfaction is especially perverse because corporations now have access to decades of scientific research about how to make jobs better. “We have so much evidence about what people need,” says Adam Grant, a professor of management and psychology at the University of Pennsylvania (and a contributing opinion writer at The Times). Basic financial security, of course, is critical — as is a sense that your job won’t disappear unexpectedly. What’s interesting, however, is that once you can provide financially for yourself and your family, according to studies, additional salary and benefits don’t reliably contribute to worker satisfaction. Much more important are things like whether a job provides a sense of autonomy — the ability to control your time and the authority to act on your unique expertise. People want to work alongside others whom they respect (and, optimally, enjoy spending time with) and who seem to respect them in return.

And finally, workers want to feel that their labors are meaningful. “You don’t have to be curing cancer,” says Barry Schwartz, a visiting professor of management at the University of California, Berkeley. We want to feel that we’re making the world better, even if it’s as small a matter as helping a shopper find the right product at the grocery store. “You can be a salesperson, or a toll collector, but if you see your goal as solving people’s problems, then each day presents 100 opportunities to improve someone’s life, and your satisfaction increases dramatically,” Schwartz says.

One of the more significant examples of how meaningfulness influences job satisfaction comes from a study published in 2001. Two researchers — Amy Wrzesniewski of Yale and Jane Dutton, now a distinguished emeritus professor at the University of Michigan — wanted to figure out why particular janitors at a large hospital were so much more enthusiastic than others. So they began conducting interviews and found that, by design and habit, some members of the janitorial staff saw their jobs not as just tidying up but as a form of healing. One woman, for instance, mopped rooms inside a brain-injury unit where many residents were comatose. The woman’s duties were basic: change bedpans, pick up trash. But she also sometimes took the initiative to swap around the pictures on the walls, because she believed a subtle stimulation change in the unconscious patients’ environment might speed their recovery. She talked to other convalescents about their lives. “I enjoy entertaining the patients,” she told the researchers. “That is not really part of my job description, but I like putting on a show for them.” She would dance around, tell jokes to families sitting vigil at bedsides, try to cheer up or distract everyone from the pain and uncertainty that otherwise surrounded them. In a 2003 study led by the researchers, another custodian described cleaning the same room two times in order to ease the mind of a stressed-out father.

To some, the moral might seem obvious: If you see your job as healing the sick, rather than just swabbing up messes, you’re likely to have a deeper sense of purpose whenever you grab the mop. But what’s remarkable is how few workplaces seem to have internalized this simple lesson.

Meanwhile, it’s getting harder and harder to focus audiences’ attention on the movies that Hollywood deems most important

Saturday, February 23rd, 2019

Warner Bros. found that viewers with myriad options tend to retreat to the programs most familiar to them:

It’s an experience any Netflix user can identify with: Sitting down to pick out a movie, scrolling through choices for an hour — only to settle, finally, on an old episode of “Friends.”

I must admit that I do find myself scrolling through options for far too long — especially for someone who ends up watching so little — but I definitely do not find myself settling on something old and familiar very often. (Another admission: I did enjoy the original Terminator a few months back, though.)

Just under 500 new TV series premiered last year — compared to 182 new shows in 2002, according to an annual report released by cable network FX. Netflix plans to release nearly 100 original movies and documentaries this year.

Nearly three-quarters of U.S. households already have more than one streaming service like Netflix or Hulu, up from 59% two years ago, according to market-research firm Ampere Analysis; of these households, nearly 42% subscribe to three separate streaming services. And the two biggest Hollywood studios, Walt Disney Co. and AT&T Inc.’s Warner Bros., are preparing their own streaming services, set to launch by the end of this year.

Three-quarters of U.S. households have more than one streaming service? Wow.

Meanwhile, it’s getting harder and harder to focus audiences’ attention on the movies that Hollywood deems most important. On Sunday night, Hollywood will gather to honor the most prestigious movies of the year at the 91st Academy Awards. On Monday morning, executives in Hollywood will likely wake up yet again to the news that fewer people cared to tune in to their big night—just as they did last year, when the telecast lost 6.4 million viewers, or about the population of Indiana.

I don’t normally approve of Schadenfreude

They also can appear at the top of search results

Tuesday, February 12th, 2019

To build a big line of exclusive products, Amazon is having other brands do most of the work:

The online retail giant is asking consumer-goods companies to create brands exclusively for Amazon after finding that developing them on its own is too costly and time-consuming, according to people familiar with the strategy.

Equal sweeteners and nutrition brand GNC are among the first to launch products through an accelerator program Amazon launched last year to outsource the work. Mattress maker Tuft & Needle also recently created a new brand called Nod exclusively for Amazon.

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In exchange, brands get help launching their products on Amazon.com, faster customer feedback when testing new products, marketing support and revenue from the sales. They also can appear at the top of search results — a big draw, given Amazon’s platform lists an estimated 550 million items.

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Amazon, on its own, also has been quietly growing the number of its in-house brands in recent years. Analysts estimate they now have more than 100. Those include the more obvious AmazonBasics brand, which makes everything from suitcases to batteries; the Happy Belly brand of foods; and the Mama Bear baby products brand. Amazon sometimes promotes its own brands higher in search results, like “Amazon’s Choice” and sponsored items, or default results in voice searches using Amazon’s Alexa virtual assistant.

[...]

Amazon is increasingly important for consumer product manufacturers. It now accounts for roughly half of all sales online, according to eMarketer.

It’s not a passive income; it’s a ton of work

Friday, January 11th, 2019

Apparently the secret to getting rich on Amazon is still safe:

In late 2016, McDowell and Bjork stumbled across a podcast hosted by Behdjou and Gazzola, normal guys who claimed they were making thousands of dollars working less than two hours a day on Amazon. The pair promised that anyone could do the same — all they needed to do was pay $3,999 for three months of coaching that would teach them everything they needed to know about the business. They’d learn how to source and ship a product from China, how to list it for an attractive markup on Amazon’s third-party marketplace, how to advertise it to consumers, and how to get them to leave good reviews. Amazon would take care of the logistics of storing and shipping, for a fee, through its Fulfillment by Amazon program. Behdjou and Gazzola even provided class participants with a manufacturing contact in China, and organized paid tours of Chinese merchandise markets.

At the time, the couple was living in a tiny New York apartment, struggling to make rent. McDowell was working a job she hated. Behdjou and Gazzola were offering a way out, and they seemed credible. They even posted screenshots showing the money they had made from selling supplements on Amazon. Bjork emailed a few people who had taken the class, all of whom said they were happy with their experience.

So the couple put the class fee on their credit card, started attending Monday night webinars, and picked their first two products: a glass wine decanter and plastic wine aerator, both sourced from China. Following Behdjou and Gazzola’s advice to purchase the minimum mass order possible, they ordered 3,000 decanters and 1,500 aerators and had them shipped directly to Amazon warehouses across the country, from which the company would send them directly to consumers.

Six months later, they had sold only about 100 decanters and a few hundred aerators. Customs taxes and shipping costs were starting to add up. The aerators kept breaking, and so Bjork and McDowell had to pay for returns. Amazon charged a seller fee of $39.99 a month, a per-piece fulfillment cost of a few dollars a unit, and a storage fee of 70 cents per cubic foot that increased during the holiday season. Then there was the cost of advertising, which they needed to actually get their product noticed amid the thicket of other people also selling wine accessories, also bought cheap from China, also on Amazon.

Maybe worst of all, the couple told me they were left alone to deal with all these headaches: Though their payment guaranteed them three months of coaching, they couldn’t reach Behdjou after the first few days, they say. (Behdjou disputes that he and Gazzola disappeared, writing in an email that all students get a response within 24 hours Monday through Friday.)

Within six months, McDowell and Bjork had spent nearly $40,000, with almost nothing to show for it. So they auctioned off what inventory they could, paid Amazon to destroy the rest, and got out of the business. “It’s not a passive income; [it’s] a ton of work,” McDowell told me. “We lost all our savings — everything we had.”

45.3 million of Netflix’s 137 million accounts watched Bird Box

Thursday, January 10th, 2019

Netflix rarely releases data on viewership of its content:

But in the case of “Bird Box,” a tale about a resourceful mother protecting her children from a homicidal force, the company said a record-setting 45.3 million of its 137 million accounts watched at least 70% of the movie in the first week of its release.

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The movie’s budget is modest by Hollywood’s standards: about $30 million, according to a person familiar with the matter. Controlling costs while delivering content that lures in subscribers could become more important for Netflix. Its content spending has ballooned rapidly and reached an estimated $12 billion last year, according to industry analysts. Netflix hasn’t disclosed its 2019 programming budget yet.