Preventing For A Half in Leisure’s Future

After last week’s Discovery and WarnerMedia news, one of the biggest questions is what happens next for everyone else?

The answer came quickly: Amazon bought MGM in a deal valued at $8.45 billion. Amazon’s intentions are to try and turn some of MGM’s most recognizable brands (Robocop, Rocky, etc) into better performing franchises. (How that affects James Bond is….complicated.) While critics, including some politicians, point to the acquisition as an example of Amazon having too much power — even if this merger doesn’t fall outside of antitrust practices — it’s a part of where entertainment is headed next. Consolidation comes for nearly everyone at some point.

Think of it like CEOs strapping an Infinity Gauntlet to their arm, trying to collect all the Infinity Stones so they can control the outcome of the future.

Understanding philosophies behind these massive mergers and acquisitions also helps us understand what the future of entertainment looks like. Netflix is looking to expand into video games, an industry that co-CEO Reed Hastings referred to as “a great and interesting area” back in June 2020. Now, the company is looking for an executive to oversee development in that area. Whether that means acquiring a studio or hiring an in-house team is unknown, but Netflix wants to build out its audience base, tackling one of its biggest competitors — Fortnite.


The big question is what does this mean for the future of entertainment? Is it more Discovery-WarnerMedia type mergers, or is it massive companies expanding into new markets to reach their audiences across multiple platforms? There are three different types of deals we’re likely to see, not all equal in strength:

  1. Complementary deals that rely on franchise strength to create an undeniable product

  2. “Free” bundling that strengthens a core product

  3. Totally new ventures outside a core business that drives a bigger ecosystem for customers to live in

King Shark Can Now Host Shark Week

The most likely mergers and acquisitions we’ll see over the next little bit are going to arrive as a direct result of what’s happened over the last few weeks.

WarnerMedia is with Discovery. Amazon has MGM. Univision merged with Mexico’s Televiva in a deal valued at $4.8 billion. All will give their streaming services and entertainment businesses a more appealing catalogue of content and potential franchises that can help scale — and that’s the word of the last few years. Companies want to grow; now, they need to scale (hitting wild numbers), as fast as possible. For example, HBO Max is a general-premium streaming service that wants to be in 200 million homes, and Discovery caters to more “niche” interests. Combining those two helps create a necessary product, not just an optional one.

Reality is hard to face sometimes. The majority of mergers fail, according to the Harvard Business Review. Roughly 70 to 80% of all mergers end up falling apart. (This reminds me slightly of a Grey’s Anatomy episode where George is optimistic about being on the code team until he learns that more than 90% of code patients die.) AT&T’s acquisition of DirecTV failed spectacularly. AOL and Time Warner failed. Vivendi’s complicated acquisition of Universal was an absolute disaster. News Corp., the company behind Fox News, bought MySpace in 2005 and, well, we know what happened with MySpace.

But, again, not all deals are equal, and where some fail, others succeed. Take Amazon possibly buying MGM. The bigger that acquisition is, the more obvious the high-growth potential (the $$ reason it’s being bought) needs to be. When AT&T agreed to spend more than $85 billion on WarnerMedia, it needed to prove that owning an entertainment conglomerate would help its core product or stand on its own as a lucrative business. The issue with AT&T, a phone company first and foremost, buying WarnerMedia at a time when Hollywood was going through a revolutionary moment, was that WarnerMedia didn’t fit into a high-growth potential category.

Justice League Snyder Cut: All the Hidden Easter Eggs and Clues in the Mother Box Origins Clip

Zack Snyder has shared a new Mother Box Origins Clip for IGN Fan Fest 2021, and it is filled with Easter Eggs and nods to the history of Superman, Batman, Wonder Woman, Aquaman, Cyborg, and The Flash. 
The imagery of this Mother Box resembles the Source Wall from DC’s Fourth World comics. The Source Wall is a giant barrier surrounding the universe and separating it from the cosmic energy field known as the Source. The Source Wall is littered with the bodies of countless dead gods from eons past. They’re all chained together and trapped in poses of pain and anguish, not unlike the Justice League characters seen here. Is this simply a reminder of Snyder’s take on DC’s heroes as godlike figures dealing with operatic tragedy? Or is it a tease that the Snyder Cut will delve deeper into the mythology of the New Gods than fans are expecting?
From the iconic Bat-Signal to what looks to be the Kent’s farmhouse where Superman grew up – to far deeper cuts – we’ve gathered each and every Easter Egg and clue in the slideshow below. <br />” src=”″ class=”jsx-2920405963 progressive-image image jsx-2126225085 expand loading”/></p>
<p>At least, not for many years. Think of it like this: AT&T executives’ entire philosophy was that WarnerMedia could help grow its broadband and mobile businesses through vertical integration. Basically, owning WarnerMedia and lining that up with a massive phone business would keep people on AT&T, or help bring new customers over. Core to that plan was launching a streaming service — HBO Max. </p>
<p>Except that streaming services take billions of dollars of investment, and even the biggest winners take years to reach real profitability. Executives were already staring down the barrel of massive debt load, jumping to <a target=more than $170 billion in debt with one purchase. WarnerMedia, even with its arsenal of strong franchises and a premium network like HBO, wasn’t Disney. It wasn’t a necessity for families, and at $15 a month, it was the most expensive of any streaming services. Plus, cable is a dwindling business and WarnerMedia was left trying to figure out how to cater to 90 million customers who were at risk of cutting the cord.

Successful mergers and acquisitions bring in complementary assets that will help drive considerable growth; Discovery and WarnerMedia make sense, AT&T and WarnerMedia don’t.

Verizon and T-Mobile Want to Give You Shit for “Free”

What we’re likely to see much more of is distributors like Verizon and T-Mobile working with content groups like Disney or The Athletic to offer “free” subscriptions as part of mobile, internet, and cable packages.

Like amenities that credit card companies offer, this makes sense for telecoms. They don’t want to buy and run Disney, nor are they trying to get into the digital media business with companies like The Athletic or the New York Times. What they do want to do, however, is use those streaming services to drive their broadband and mobile usage. It’s complementary, like a merger, but there’s little financial risk from the telecoms.

Unlike major players in the main entertainment space, distributors like Verizon and T-Mobile can also take advantage of complementary services across a wide spectrum of interests. Music, news, entertainment, media, and more become a benefit to telecom giants who want their customers to stay and use more of the broadband or wireless access they’re paying for.

Alex Sherman, a reporter at CNBC, has an excellent breakdown on this:

As part of Verizon’s unlimited data packages, $35 per month (plus taxes and fees) gives customers six months free of Disney+, Apple Music, and Discovery+.

Bump up to $45 a month, and Verizon offers Disney+, Hulu and ESPN+ as part of the package for as long as customers stay with the wireless company, along with 12 months of Discovery+. At $60 per month, Apple Music is included indefinitely. For 5G customers with select unlimited plans, Verizon also offered 12 months of PlayStation Plus and PlayStation Now late last year.

As Sherman points out, this seems like the most logical step forward. Telecom giants get the best advantages of partnering with a highly sought out media partner without the financial risk. Use Verizon as a case study. The company bought a bunch of digital media properties (Huffington Post, Tumblr) and even launched its own streaming service of sorts — Verizon Go90. All of those failed to generate meaningful revenue for Verizon, and Go90 is now a meme in certain circles.

These deals make sense for everyone involved. The content companies get additional sign ups (crucial for keeping Wall Street happy), and the distributors see an increase in usage and potentially new happy clients on the 5G side. It doesn’t cost $100 billion, and if the partnership doesn’t work out, there’s an expiration date in sight.

Netflix Makes Games Now

Just as I was sitting down to write this column, a report suggested that Netflix was trying to get into gaming.

This is the third type of move we’ll see — and arguably the most important. Companies that really want to lean into the audience-first, multi-platform strategy. Netflix’s co-CEO Reed Hastings has long said that its biggest competitors are Fortnite and YouTube. In turn, Netflix is now looking to create a mini, more controlled YouTube Lite app (N Plus) and is reaching out to potential gaming industry veterans who can oversee a push into gaming.

Another example of this is Apple and Amazon. Apple TV+, Apple Fitness+, Apple Music, Apple News+, and Apple Arcade are meant to reach audiences wherever their interests lie. Apple wants to meet them on their TV set, on their phone, in their stereo, or on their tablet, and give them everything they need all within one company. The company even created a bundle — Apple One — to make it slightly cheaper, accessible, and more appealing. Amazon has Prime Video, Twitch, Prime Music, and others to effectively do the same thing.

Apple and Amazon want your monthly payment — and your attention — so it’s not going elsewhere.

Best Apple Arcade Games

This strategy is largely referred to as ecosystem driving. If a customer is in the ecosystem, it’s much harder to leave it. Apple created Apple One not only in an effort to drive its services business, one that chief financial officer Luca Maestri spoke to as being key to the company’s future back in 2017, but also to ensure that when iPhone or iPad customers go to update, they stay using Apple products. Amazon is all about Prime; even Amazon Film Studios head, Jen Salke, has publicly spoken about initiatives within their own program to drive Prime subscriptions.

If done right, every part of the ecosystem will eventually drive enough revenue to create substantial profit for the company. Apple TV+ would drive subscriptions that pay for the films and TV shows being made, for example. Amazon Prime Video would drive a good amount of Prime Video subscriptions — something we don’t know if it currently does because Amazon doesn’t release breakdowns of its subscriptions.

Until that starts to happen (Apple TV+’s lineup of shows and films is getting better all the time), if the ecosystem just prevents people from switching over to a competitor, Apple and Amazon can start to build a stable foundation for recurring revenue. For this to work, however, it takes companies with sizable revenue, meaning they can take the initial cost hit that comes with acquiring, launching, and maintaining a new product.

Another great example is Facebook. Whether it’s Facebook Gaming or Facebook Watch, a big part of Facebook’s strategy is trying to keep you engaged on the site. The more engagement the company has, the more attractive it looks to advertisers, which means the more revenue it brings in. Facebook wants to steal attention (and advertisements) away from competitors like Twitch and YouTube, owned by Amazon and Google respectively, who alongside Facebook control nearly all advertising on the internet.

Ecosystems can be lucrative. Amazon’s various entities seem to work for driving and keeping Prime subscribers. But ecosystems require big spending. If it works, the result can be extremely rewarding. If it fails, the consequences can be devastating.

Why Does This Matter?

Mergers and acquisitions are fun “what if?” games to play. They don’t always come to fruition (more often than not, they don’t), but it’s amusing to think about what the next wave of entertainment and media can look like.

If you’re a comic book fan, the idea of Disney owning both Marvel and DC is a fun thought; if you’re a Nickelodeon fan who likes to watch a lot of shows on Netflix, the concept of ViacomCBS merging with Netflix is pretty cool. If you’re a Bond fan and want to watch a lot of it on Amazon Prime Video, well, you’re likely in luck.

These moves have a direct impact on how and where we watch what we do. That’s the simple gist of it. Understanding who controls that, and why they’d want to control it, is vital.