Volume 7: It's Called "Home Box Office" for a Reason

Got a new Roku Ultra this weekend, which these days qualifies as a fairly significant life upgrade. We'd been puttering along for too long with an early-generation Apple TV device, and as its bugs grew more frequent we found ourselves constantly toggling over to the Samsung TV OS to use most streaming apps.

A couple takeaways: first, that we tolerated the imperfect setup for so long is a reminder that the replacement cycles on streaming devices, like TVs, is a lot longer than the 2-3-year standard for the smartphone industry, which should help Roku and Amazon's early market share advantage remain fairly stable in the near term. Second, the immediate benefits of Roku were obvious: seamless onboarding, intuitive UI, helpful personalization. It's clear which of these companies views TV OS development as its core business.

So, I'll be spending a lot more time in the Roku interface, although we are still switching back to Samsung to watch one favorite platform: HBO Max, which has yet to reach a distribution agreement with Roku. Perhaps that may change soon, however, especially if WarnerMedia's seismic announcement last week can provide the service the boost it's hoping for.

News Feed

HBO Max + In Theaters (link)

WarnerMedia announced on Thursday that it would premiere the entire 2021 Warner Bros film slate on HBO Max and in theaters at the same time. So much has already been written about WarnerMedia's decision and its major implications for the entertainment industry (including deeply reported pieces by CNBC and Bloomberg), but I've been equally interested in the reaction by theater chains like AMC, for which this development is not the culmination of a carefully planned self-disruption strategy but an abrupt industry landscape shift to which it must now adapt.

I've never met AMC CEO Adam Aron, but the former journalist in me recognizes a Grade A quotable subject when I see one. My first glimpse came three years ago, when he issued this delightfully cavalier statement about MoviePass, the late, great, financial kamikaze mission on behalf of consumers: "From what we can tell, by definition and absent some other form of other compensation, MoviePass will be losing money on every subscriber seeing two movies or more in a month... It is not yet known how to turn lead into gold." In April he accused Universal of attempting to "have its cake and eat it too" during a dispute about the release of Trolls, and he quoted liberally from Winston Churchill on a recent earnings call. So, after WarnerMedia's announcement last week, it was obvious Aron would not mince words. "Clearly, WarnerMedia intends to sacrifice a considerable portion of the profitability of its movie studio division, and that of its production partners and filmmakers, to subsidize its HBO Max startup," he said. As ever, Aron's argument is as valid as it is entertaining, but as the pandemic brings his company to the brink of bankruptcy, it's not clear what leverage he has.

Floyd Mayweather (50-0) vs. Logan Paul (0-1) (link)

The sport of boxing is having a bit of a moment, although it doesn't seem to be benefitting any active professional boxers. A week after a Thanksgiving weekend bout between former legends Mike Tyson and Roy Jones Jr. – with an undercard that featured former NBA slam dunk champion Nate Robinson and YouTuber Jake Paul – former world champ Floyd Mayweather and Paul's brother Logan announced they would stage an exhibition match February 20. Most notable in both cases are the media partners: Triller, the TikTok-like social app, distributed Tyson-Jones, while Fanmio, an obscure startup that sells access to video chats with celebrities, is behind Mayweather-Paul.

Exhibition boxing spectacles are nothing new, but they used to require traditional media companies to deliver them to audiences. Now stars like Mayweather and Paul bring their own vast (and probably fairly complementary) social followings, and any outfit with a resilient concurrent live-streaming solution can call itself a broadcaster. At a time when every major media company is spending aggressively to attract subscribers to its new streaming service – including, of course, WarnerMedia, which exited the boxing business in 2018 – it's notable that these events are instead introducing millions of consumers to an altogether new class of digital media upstarts.

Discovery + OTT (link)

In other OTT news, Discovery detailed plans for its own forthcoming streaming service, Discovery+, which it bills as "the definitive non-fiction, real life subscription streaming service." Discovery should be credited for going to market with a clear content value proposition – its assets have given it a more coherent portfolio than many peers – but there is an obvious question of whether its niche is already being sufficiently served by Netflix, which has for years made reality programming a central part of its originals strategy.

Walgreens + Ad Sales (link)

Walgreens has become the latest retailer to launch an advertising platform to better monetize its first-party data, joining a rapidly growing list of Amazon-envious companies that includes Walmart, Target, Kroger and CVS. Dismissing these platforms as merely a reexpression of in-store placement spend (i.e., PLAs instead of endcaps) misses the opportunity ad sales gives retailers to broaden their relationships with CPG manufacturers. For example, I wrote recently about the growing trend of retailers like Kroger partnering with video media suppliers like Roku to provide full-funnel solutions for CPG brands. As more and more retail media platforms based on proprietary first-party data proliferate, one challenge for Walgreens and its peers, which echoes a similar complaint ad buyers harbor about the advanced TV ecosystem, will be to create a common view of consumers across different retailers' environments.

Balenciaga + Video Game (link)

Five years ago, at the peak of the VR bubble, I remember talking with a fashion designer friend about her idea to stage a runway show in VR. During Covid, this should've been an obvious use case for the industry, but with headset adoption still extremely low, fashion houses are resorting to two-dimensional virtual environments instead. Cue "Afterworld: the Age of Tomorrow," a self-guided digital tour of Balenciaga's lookbook branded as a video game. I'll leave the fashion commentary to more qualified sources (Times critic Vanessa Friedman has a write up here), but the thought of high fashion and video games makes me wonder: has anyone managed to build Cher's virtual style assistant app from Clueless?

Content Recommendation Algorithm

I'm going all-in on reading suggestions this week (will catch up on things to watch once I have a chance to properly explore that Roku library).

• Read: Profile of Barnes & Noble CEO: The Wall Street Journal has a great look at Barnes & Noble CEO James Daunt's attempt to revitalize the struggling chain by borrowing from the strategy of local indie bookstores, whose un-Amazon approach has made them surprisingly resilient in recent years (pre-Covid, at least; now they could use your help).
• Read: Under the Cover: the Creation, Production and Reception of a Novel. If you ever want to dig deeper (n.b., really, really deep) on the subject of the book industry, sociologist Clayton Childress wrote an exhaustive account of the process of bringing a single novel to life, from initial author idea to ultimate reader reception. It's admittedly dry at times but my goodness is it comprehensive; imagine the few paragraphs of a business school case study that provide an overview of industry structure stretched to 300 pages.
• Read: The Social Life of Forests. A beautiful New York Times Magazine feature on how trees communicate with each other. Warning: you may feel a sudden urge to start planning a camping trip (or at least figure out how you're going to recycle your Christmas tree).

Note: This is the seventh edition of the Strange Bedfellows newsletter. You can find the others and a link to subscribe here. If you enjoy it, please consider sharing it with someone you know.