WarnerMedia Gets Hulu’d

This week saw a rare smart move by AT&T with the hiring of Jason Kilar to head up WarnerMedia.

It was smart not only because Kilar is a capable executive but because he seems to thrive in thankless jobs.

I first met Kilar when he was with Amazon, running its VHS and DVD business. When he was later picked to be head up the nascent Hulu I went on record to declare the job un-doable. But Kilar proved me wrong.

Not only did Hulu turn out to be a well-designed and well-constructed service, but Kilar managed to successfully navigate around an ungainly board of directors that included representatives from the three competing major studios that owned the joint venture at the time: Universal, Disney and Fox.

There were constant frictions over the strategic direction for the company, with Kilar wanting to chase the streaming future while its studio owners were really trying to hold back the streaming tide to protect their then still-lucrative DVD business.

The creation of Hulu, in fact, was driven in no small measure by the studios’ frustration with YouTube over the explosion of TV and movie content being uploaded to the platform. Before being christened Hulu, it was known jokingly in the industry as “Screw Tube,” “Me-too Tube” and “Fuck you Tube,” among other sobriquets.

Kilar also had to manage a persistent channel conflict between Hulu’s internal advertising sales team and those of the networks’ whose programming it was streaming, who shared sales duties (and sometimes clients).

He’s likely to find much that is familiar at WarnerMedia.

Though his hiring is a signal that AT&T is serious about WarnerMedia’s digital future, where Kilar had tried to steer Hulu, he will again be riding herd over multiple and not-always harmonious power centers, including Warner Bros. studio, under Ann Sarnoff, WarnerMedia Entertainment, under Robert Greenblatt, and WarnerMedia News and Sports under Jeff Zucker, all of whom have far more experience than Kilar in movie and TV production and distribution.

As I’ve written here before, AT&T/WarnerMedia is also an awkward amalgam of content and pipes, an arrangement that, for all the hype about “synergy” and scale, has historically destroyed more value than it has created.

Kilar has also been charged with launching AT&T’s big digital play HBO Max, on which it’s betting much of the company’s future, into the teeth of a catastrophic public health emergency and perhaps the steepest economic downturn since the Great Depression.

Meanwhile, his new parent company’s shares are getting downgraded, its balance sheet is heavily leveraged, and its pay-TV business is bleeding out.

Welcome to Hollywood, Mr. Kilar.

Distance Learning

In 1604 and into 1605, London was ravaged by Plague, forcing much of the city into what today we would call lockdown: Many types of public gatherings were banned, theaters were shuttered, and houses that had been touched by the disease were marked with red crosses and the occupants told to stay indoors.

William Shakespeare used his forced downtime to write “King Lear” and “Macbeth.”

Some 60-odd years later, during another outbreak of Plague, Isaac Newton worked out the laws of motion and invented the calculus while self-isolating away from London.

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WIPO: How to Train Your A.I.

The World Intellectual Property Organization (WIPO) last week published the comments it received as part of its public consultation on the impact and implications of artificial intelligence technology on intellectual property policy and practice.

It received over 200 submissions, from individuals, industry groups, companies, legal and technology experts and member states, so it’s a lot to go through. But from an initial sampling of comments from primarily copyright-focused groups it’s pretty clear where the early policy battle lines will be drawn up: Does/should the use of copyrighted works in A.I. training data sets require a license, and do policy makers need to create a legal framework for the use of copyrighted works in training data?

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The Real News on Blockchain

The NY Times last week released results from its preliminary research into whether and how blockchain might be useful in combating the problem of misinformation and disinformation spreading on social media platforms. It also released a proof of concept of how a blockchain-based network for photojournalism could work, which it built in partnership with IBM Garage.

Called the News Provenance Project, the work is being conducted by the Times’ R&D Lab, with the help of IBM technologists and input from other news organizations. The goal, according to a post by the Times’ Sasha Koren, was to see if technology can be used to solve some of the problems technology has created, such as the production of ever-more convincing deep-fake videos and the easily manipulation of photographs to create false narratives.

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Box Office Blues

Total movie admissions in the U.S. fell 4.6% in 2019, to 1.24 billion, making last year the second worst through the turnstiles since 1995, according to the National Association of Theatre Owners.

The worst year was 2017, when only 1.23 billion tickets were sold.

The decline comes as theaters face growing competition from streaming services, not only for consumers’ time and entertainment dollars, but for their first-in-line position in the movie distribution system.

Two of 2019’s most high-profile releases, for instance, Netflix’s “The Irishman” and “Marriage Story,” which together helped the streaming service rack up an industry-leading 24 Oscar nominations, received very limited exclusive theatrical runs.

One reason for those limited runs, of course, was the reluctance by many theater owners themselves to book the films at all because they did not like Netflix’s proposed terms — a policy that increasingly looks self-defeating.

A recent survey by The Hollywood Reporter and Morning Consult found that a plurality of U.S. adults — 48% — prefer to watch new release movies via streaming service, compared to only 37% who would prefer to see them on the big screen.

Preventing movies from being more widely available on the big screen seems likely only to fuel consumers’ preference for in-home viewing.

It is a policy that also seems likely to grow increasingly untenable. As the major studios aggressively pursue their own direct-to-consumer initiatives, launching streaming services of their own and adopting increasingly proprietary distribution strategies for their content, pressure on the exclusive theatrical window will only increase.

If theater operators cannot find a way to accommodate themselves to the new strategic landscape, missing out on a few Oscar nominees will be the least of their problems.