How Businesses Thrive during Dangerous Times

Posted on February 14, 2021 by ddeal

The Covid-19 pandemic unleashed suffering on a global scale not seen in our lifetimes. As if waves of sicknesses and death were not bad enough, businesses everywhere were rocked to the core, resulting in job loss and economic hardship. And it’s not over. But amid the turmoil, some businesses are as strong or even stronger than they were before the pandemic changed everything. Here are their stories, and the lessons we may learn from them.

1 Take Care of Your People: Raising Cane’s Chicken Fingers Rallies through a Hard Times

Todd Graves saw the storm coming. Graves, the co-founder and CEO of fast-food chain Raising Caine’s Chicken Fingers, followed the spread of Covid-19 in China before the virus was news in the United States. He read about lockdowns happening to contain the virus. He quickly grasped the potential impact of Covid-19 on his business. So he and his management team went into crisis mode even though there was no crisis to react to yet.

The executive team canceled a scheduled management retreat to celebrate its five-year plan and started to change how the chain operated. Raising Caine’s quickly implemented CDC guidelines for social distancing and placed an “uber-intense focus” on sanitizing every location, as discussed in QSR magazine. Managers were trained on how to conduct team meetings in socially distanced fashioned so that operations would not be disrupted. Fortunately, most Raising Caine’s locations have drive-through service. So the company changed the focus of its marketing to put a full-court press on its enhanced safety measures and its drive-through service.

Almost all Raising Cane’s 500 locations stayed open and did a thriving business. Thirty-three non-drive-thru locations temporarily closed, but Graves kept employees in closed locations busy sewing masks and supplying local hospitals amid a mask shortage.

Raising Cane’s purchased sewing machines and supplies for the group. Two teams worked in shifts to comply with the company’s social distancing procedures. They created more than 600 masks in their first week and upped production to 100 a day. The mask sewing initiative gave employees in closed restaurants a sense of purpose as they gave back to the community. And beyond those efforts, Raising Cane’s launched fund raisers to help frontline workers in hospitals putting their lives on the line to fight the pandemic.

All the while, Graves refused to furlough or lay off any of the 23,000 workers.

“Our mantra then was no crew member left behind,” Graves told QSR. “I wanted the team that went into this pandemic to be the team we come out with. And so we’re going to work like heck to get through it.”

Initially, the chain suffered a hit as the pandemic upended our lives. Sales were down as much as 30 percent. But by late April, they had returned to pre-pandemic levels even as other restaurants struggled — a stunning turnaround.

This was a story we all needed to hear in the early days. Raising Cane’s gave us hope and put its people first.

2. Sense and Respond: Amazon, Target, and Walmart Ascend to Greater Heights

Some businesses prospered during the pandemic. You know three of their names: Amazon, Target, Walmart. All of them crushed their quarterly earnings announcements throughout 2020 and enjoyed all-time valuations on the stock market.

Why?

All three of them benefitted from the rise of the stay-at-home economy, in which people increasingly bought what they wanted from their sofas. Amazon already had a lock on ecommerce, and both Target and Walmart wielded an advantage with their curbside pick-up capabilities. People who preferred to order groceries, clothing, and housewares from their homes, then pick them up without leaving their cars, chose Target and Walmart. As a result:

Target’s curbside pickup service sales jumped by more than 700% during its fiscal second quarter.
Walmart’s eCommerce business jumped 97 percent year over year, partly because the popularity of curbside pick-up services.
Amazon just kept powering through, showing 37% year-over-year growth for the third quarter ended September 30, 2020.

Were they in the right place at the right time? No. They prospered because they know how to sense and respond.

Target and Walmart had been steadily building ecommerce services and curbside pickup over the past few years. They both saw the rise of a mobile consumer who preferred the immediacy of driving to the store but didn’t have time to go inside to make their purchase. When the pandemic made many people frightened to shop inside stores, curbside pickup served Target and Walmart well.

Amazon, building off its already strong ecommerce operation, had made a major investment in its own delivery capability, including its own air cargo fleet. The move triggered a war with FedEx and raised questions about whether Amazon had overreached. But as retailers struggle with maxed out supply chains in the 2020, Amazon seizing control of its own destiny now looks smart and forward-thinking.

In addition, by building out its cloud computing service, Amazon Web Services, Amazon positioned itself well when stay-at-home living in 2020 caused a surged in online usage. Amazon Web Services is the backbone for digital platforms ranging from Facebook to Netflix — a $10 billion business.

Amazon, Target, and Walmart aren’t standing still. Amazon continues to expand in to industries as diverse as advertising and healthcare — both leveraging Amazon’s ability to mine its own customer data to deliver personalized services and products. Target is doubling down on its in-store experience by opening Ulta beauty stores within a number of Target locations, anticipating a return to more in-store shopping in 2021. Walmart is also stepping up its own healthcare services and recently announced the launch of a fintech startup.

Leaders always think ahead — during good times and hard times.

3 Act with Purpose: Netflix Invests in Racial Justice

Netflix put its money where its mouth is.

As the world erupted with protest over racial inequality in 2020, businesses sought to have a voice. Many responded with gestures of support on social media. Others took action, and Netflix was one of them. In early June, Netflix CEO Reed Hastings announced that he was donating $120 million to support scholarships at Black colleges and universities. On June 30, Netflix announced it was allocating up to $100 million of its cash holdings into financial institutions and organizations that directly support Black communities in the United States. As reported in The New York Times, the action would help Black-owned lenders inject more capital into Black-owned businesses.

It turns out Netflix had been planning the capital reallocation since April. The New York Times reports that the company’s decision makers were influenced by book “The Color of Money: Black Banks and the Racial Wealth Gap,” by Mehrsa Baradaran, a law professor at the University of California, Irvine.

Netflix’s financial commitment reflects the company’s culture in other ways. For example, Netflix’s marketing arm Strong Black Lead, is committed to hiring people of color and supporting their voices. (Read more about Strong Black Lead here.)

Netflix’s actions point to a bigger role that businesses have to be purposeful, a major news theme of 2020. Corporate accountability to society really took hold as the Covid-19 pandemic spread. In March, According to a recent Kantar study of the public’s attitudes about COVID-19, more than three-quarters (77 percent) of people surveyed said they wanted to see brands talk about how they’re helpful in the new everyday life. And 77 percent wanted to see brands to inform consumers about their efforts to face the situation. Meanwhile 62 percent of people around the world surveyed by Edelman said that their country would not make it through this crisis without brands playing a critical role in addressing the challenges. Then, in June, the conversation turned toward race. An Edelman survey revealed a widespread public outcry for businesses to take a lead tackling racial inequality. Sixty percent of Americans surveyed by Edelman said that businesses must speak out publicly against racial injustice. Sixty percent said that brands need to use their marketing dollars to advocate for racial equality and to educate the public on the issue.

But businesses were not always sure how to take a stand. After Nike published an ad condemning racism, economist Scott Galloway took the company to task for over-emphasizing a message over taking action. He called on more businesses to focus on deeds, not words. Netflix was all about both words and actions.

4 Be Nimble: Airbnb Rebounds

Airbnb was on the brink of collapse. Under CEO Brian Chesky, the company had built one of the most storied brands in the digital age by creating a network of property owners willing to rent homes to travelers. Airbnb had become so successful that it was threatening the established lodging industry without owning a single hotel. It’s no exaggeration to say that Airbnb helped invent the modern-day sharing economy, in which people profit by sharing their assets for a fee. But Airbnb was like traditional lodging industry in one important aspect: Airbnb and its network of entrepreneurs needed people to travel and book lodging. And as the pandemic took hold, travel had practically ground to a halt. Overnight, bookings plunged. By mid-March, Airbnb saw $1.5 billion in bookings vanish.

Airbnb’s stellar trajectory was halted. A planned initial public offering was out of the question. Chesky laid off a quarter of his staff, slashed expenses, and sought capital to keep the business afloat. Things did not look good as the weeks went by. Even as people emerged from lockdowns, traveling was not popular.

Or was it?

In fact, Airbnb’s data scientists noticed something happening: people emerging from lockdowns were traveling. But their preferences had changed. Instead of looking to fly to cities and stay in tony urban locations — a mainstay of Airbnb’s revenue — travelers were looking to rent homes in smaller locations within 200 miles of their homes. People were ready to get out of their homes and travel. But they wanted to rent entire homes instead of sharing them with other people (and risk contracting the Covid-19 virus), and they wanted to drive, not fly. So as reported in The Wall Street Journal, the company quickly changed. Airbnb redesigned its website and app so that its algorithm would showcase travelers interesting locations such as cabins.

Incredibly enough, by July guests were booked stays at the rate they were just before the pandemic crushed the travel industry. By December, Airbnb had recovered so fully that it launched a successful IPO after all.

“People are now discovering small towns, small communities,” Chesky said. “They’re discovering national parks, falling in love with the outdoors, and realizing they can go to all sorts of other places. This is an irreversible trend.”

And Airbnb was ready to capitalize on that trend.

Airbnb needed to do a lot more than reposition itself to short term travelers in order to survive the tumult of 2020, but listening to its customer data and adapting were essential. In 2021, Airbnb says it appeals to a new type of traveler — people redefining their staycations, traveling in small pods of families and friends, or visiting different towns with an intent to relocate permanently. You can be sure Airbnb is adapting to them, too.

5 Be Bold: Disney Saves Its Future

It’s quite possible that “pivot” is the most overused word in 2020, used to any business that adapted during the pandemic. But Disney really did pivot its business, and may well have saved it.

It has been painful to watch the COVID-19 pandemic crush Disney’s fabled parks and resorts. In September, Disney announced it would lay off 28,000 employees across its parks, experiences and consumer products segments. Disney blamed prolonged closures and capacity limits at open parks for the layoffs.

On November 12, Disney reported its first annual loss in 40 years, and declining attendance at its parks had a lot to do with that decline. Disney said that the pandemic cost it $7.4 billion in operating income in the fiscal year, and $6.9 billion of that loss came from theme parks and experiences division.

But by November, Disney had already made a very important move to change course. On October 12, Disney reorganized its media and entertainment divisions in order to focus on streaming content, namely its wildly successful Disney+ platform. Kareem Daniel, the former president of consumer products, games and publishing, would now oversee the new media and entertainment distribution group, responsible for content distribution, ad sales, and Disney+.

In an announcement, Disney said that its “creative engines will focus on developing and producing original content for the Company’s streaming services” — meaning that Disney’s creative teams, ranging from Pixar to Lucasfilm, will be all-in to support streaming, focusing on Disney+, Hulu, and ESPN+, all streaming brands owned by Disney. Meanwhile, a newly created Media and Entertainment Distribution group under Daniel would be responsible for monetizing and distributing that content.

Disney didn’t wait for its restructuring to change the way it operates, either. In September, Disney bypassed movie theaters in the United States and released its feature film Mulan on Disney+ (while distributing the movie in theaters internationally). Mulan received mixed reviews and lackluster box office receipts globally. But as Kay McGuire of Screen Rant discussed in an analysis of Mulan’s financial results, Disney+ was a lifeline for Mulan.

And on December 25, Disney skipped theaters and released Pixar’s animated movie Soul on Disney+.

These were big-time moves, but they did not emerge from left field. In 2019, Disney had already laid the groundwork for its newfound focus on digital content — first, by taking ownership of the popular Hulu streaming service, and then by launching Disney+. Hulu gave Disney an instant streaming audience of 28 million (at the time) and a prestigious content library with popular titles including The Handmaid’s Tale. Disney+ gave Disney an arm to unleash its powerful library of content, including the coveted Marvel franchise, as well as new titles such as the wildly popular The Mandalorian, which tapped into the eternal appeal of Star Wars.

Little did Disney know that a global pandemic would trigger a massive shift in people’s entertainment options, from going to the movies to streaming them. By the end of the 2020, Disney+ subscribers had grown to 86.8 million, and Hulu paid subscribers had grown to 36.6 million.

And the financial results reflect the increase in subscribers. In its earnings announcement, Disney said that its Direct-to-Consumer and International division, which includes streaming, had generated $4.85 billion in revenue, up 41 percent year over year.

Disney knows where its near-term future is: streaming. And so it doubled down. And its stock value, incredibly enough, increased even as its theme parks continued to struggle.

Disney demonstrated an eternal truth about industry leaders: when times are tough, the make bold moves. Disney’s digital-content first approach was reflected elsewhere in the entertainment world, too, most notably when Warner Brothers said it would release its entire slate of movies on the HBO Max streaming platform as well as in movie theaters.

These are hard times. Businesses that want to survive them can learn from Disney.

Hope in 2021

Weeks into 2021, we see glimmers of hope for a sustained rebound from the ravages of the pandemic. The travel industry as a whole is showing some signs of life. The live events business, crushed by the pandemic, could return as early as the fall of 2021. Initial public offerings area actually booming. Much uncertainty and hardship remains. But new stories will be told and lessons learned. Stay tuned.

Photo by Jake Ingle on Unsplash

How Hollywood Is Betting on Wonder Woman

Posted on November 21, 2020 by ddeal

Wonder Woman is changing with the times. When she squares off against Maxwell Lord and the Cheetah in Wonder Woman 1984 (aka WW84) on December 25, she’ll do so in movie theaters and on streaming service HBO Max. That’s right: streaming services have been promoted to first-run status. Or maybe it’s the other way around: movie studios are crawling to the streaming services.

Welcome to the rise of New Hollywood during the pandemic.

Old Hollywood Is in Trouble

Old Hollywood studios are in a terrible bind. Going into 2020, they’d scheduled their usual slate of big-budget blockbusters for global release in theaters around the world. Those titles included tentpole films such as Warner Brothers’s WW84 and MGM’s No Time to Die, the latest James Bond thriller and the last to star the ever-popular Daniel Craig as Bond. Hopes were high for both: WW84 followed 2017’s lucrative Wonder Woman, and James Bond movies are perennial cash cows. These were also costly undertakings, with $500 million budgets between them.

That strategy depended on saturating movie theaters, the dependable cash-cow distribution system for Old Hollywood. True, going into 2020, movie theaters comprised a distribution system that was showing cracks in the seams, but it was still effective and dominant. Then the COVID-19 pandemic disrupted everything.

During the pandemic, movie theaters have experienced closures and dramatic declines in attendance. They’re struggling to stay alive, thus denying Old Hollywood its essential revenue source. To put things in perspective:

Cinemark, one of the world’s largest movie chains, reported third-quarter 2020 attendance of 1.9 million patrons — compared to 73.3 million for the third quarter of 2019. Revenue for the same period fell from $821 million to $35 million.
Rival chain AMC Theatres reported that attendance had dropped from 87.1 million in the third quarter of 2019 to 6.5 million in the third quarter of 2020. Revenue fell from $1.3 billion to $119.5 million.

Meanwhile, the New Hollywood entertainment companies, whose businesses depend on streaming, are flourishing.

New Hollywood Rising

New Hollywood business such as Amazon Video, Hulu, and Netflix were already gaining considerable power by creating their own original content, winning Academy Awards, attracting visionary talent, and gaining subscribers. Some Old Hollywood brands such as Disney and WarnerMedia noticed and acted. Disney took an ownership stake in Hulu and launched its own vaunted streaming service, Disney+, in 2019, two moves that might have saved the company. WarnerMedia, through its ownership of HBO, launched HBO Max in 2020, thus creating a streaming outlet for the movie catalog from Warner Brothers (owned by WarnerMedia).

Disney acted just in time. In 2020, as people got used to staying home more during the pandemic, subscriber totals for streaming services skyrocketed, including an astounding 73 million for Disney+ in less than a year. The jury is still out for HBO Max. The service hit the market late, and it’s hampered by a confusing brand extension problem (to wit: how exactly does HBO Max differ from other HBO offerings available?).

Hard Choices for Old Hollywood

So what’s an Old Hollywood movie studio going to do with its movie inventory?

One option is to take your chances and distribute your films through movie theaters, which means taking the plunge now or postponing your release until audiences feel safe to return to theaters. Warner Brothers adopted the former approach by releasing Christopher Nolan’s latest film, Tenet, in theaters on September 3, and the movie is on pace to lose $50 million to $100 million.

But waiting until audiences feel safe to return to theaters presents a huge question mark: when will that date arrive? No one knows.

Another option, which some studios are choosing, is selling distribution rights of movies to streaming services such as Apple TV+, Amazon Prime Video, and Netflix. Meanwhile, Disney is in the unusual position of being able to release its own movies on a platform with a growing subscribership, Disney+. That’s what Disney did with the release of Mulan in September, which turned out to be a smart strategy, financially speaking. And that’s how Disney will distribute its latest Pixar film, Soul, on December 25.

But for studios without their own streaming service, selling distribution rights isn’t an easy choice — not if you have already sunk millions into film costs and were relying on movie theaters to make a profit. MGM had originally slated No Time to Die for a May 2020 release. But as the pandemic worsened, MGM delayed the release of the movie to November 2020 — and then to April 2021. Meanwhile, as reported in Variety, MGM shopped No Time to Die to streaming platforms such as Apple TV+ and Netflix. But the film has a staggering $301 million budget, and to recoup that cost, MGM offered a price between $600 million and $850 million, which was unacceptably high to Apple and Netflix.

Now MGM is like a homeowner who sinks a fortune into improving the house only to find no buyers on the market. And James Bond is left cooling his heels unless MGM lowers its sale price or some sort of miracle happens in 2021 to convince people to go to theaters again. It should be noted that the stock for AMC and Cinemark rose after Pfizer announced a vaccine breakthrough — a glimmer of hope.

The WW84 Saga

Warner Brothers faced a similar dilemma with WW84. Warner Brothers originally planned to release WW84 as a summer tentpole movie in 2020. There was talk of a potential $1 billion gross in ticket sales. As the pandemic worsened, Warner Brothers moved the release date to Christmas Day. Deadline reported that Warner Brothers would postpone the movie release again until 2021. But Warner Brothers had already moved the release date five times going back to 2019, raising the question of whether further delays might cause audiences to lose interest completely. As Variety reported:

[T]he studio couldn’t delay the release of “Wonder Woman 1984” indefinitely. The movie was filmed and completed in 2018, which seems like an eternity ago given everything that’s happened in the last few months. There was a sense that sequel would get stale if they waited until summer or next fall — four years after “Wonder Woman” premiered. Even with several promising vaccines, there’s no guarantee that the world will return to some kind of normal in a matter of months.

Instead, Warner Brothers pulled the trigger with a hybrid approach for Christmas Day. The film will debut theatrically in international markets that do not have HBO Max on December 16, 2020. Instead of banking on WW84raking in $1 billion, Warner Brothers is counting on the movie to drive sign-ups for HBO Max, whose 8.6 million current subscribers pales in comparison to rivals such as Netflix (196 million subscribers), Amazon Prime (150 million), and Disney+ (73 million as noted). HBO Max also counts a potential 28.7 million HBO pay TV customers who are eligible to subscribe to HBO Max but have not activated their membership. Perhaps the movie will inspire them in addition to attracting more.

As for movie theater distribution, Warner Brothers will need to bank on international sales with half of all U.S. movie theaters closed — and who knows how many more will by December 25 as the pandemic worsens? As a sign of how desperate theaters are, AMC Theatres CEO and President Adam Aron said he supports WW84’s hybrid strategy, which normally would have been a slap in the face to theaters depending on the revenue from a first-run:

For many months, AMC has been in active and deep dialogue with Warner Brothers to figure out how best this cinematic blockbuster could be seen at AMC Theatres in these unprecedented times . . . Given that atypical circumstances call for atypical economic relationships between studios and theatres, and atypical windows and releasing strategies, AMC is fully onboard for Warner Brothers’ announcement today.

Indeed, earlier in 2020, in the early days of the pandemic, AMC Theatres refused to play any of Universal’s films when Universal opened Trolls World Tour via video on demand and in theaters simultaneously. Universal made the right move, though: amid widespread closures of movie theaters, the video rental revenue saved the movie financially.

Now movie theaters are not only onboard with the studios — they’re also forging new relationships with them. Universal has struck deals with both AMC Theatres and Cinemark to shorten the theatrical windows of Universal releases to 17 days, with Universal sharing video-on-demand sales with the theaters. These agreements are highly unusual. But desperate times call for new thinking.

What’s Next?

Movie theaters were already in decline before the pandemic hit. In 2019, ticket sales in North America totaled $11.4 billion, down 4 percent from 2018. As Brooks Barnes and Nicole Sperling of The New York Times reported in March,

Looking at the last 20 years of attendance figures, the number of tickets sold in North America peaked in 2002, when cinemas sold about 1.6 billion. In 2019, attendance totaled roughly 1.2 billion, a 25 percent drop — even as the population of the United States increased roughly 15 percent. Cinemas have kept ticket revenue high by raising prices, but studio executives say there is limited room for continued escalation. Offerings in theaters may also grow more constrained. Even before the pandemic, major studios were starting to route smaller dramas and comedies toward streaming services instead of theaters.

Now theaters might be dead. The questions for Warner Brothers and WW84now are: is there enough life left in movie theaters, and will WW84 deliver a breakthrough for the fledgling HBO Max? The answers will shape the future of the film industry.

Apple TV+ Needs Cultural Relevance — and “Dickinson” Delivers It

Posted on November 27, 2019 by ddeal

Disney+ has The Mandalorian. Netflix has Stranger Things. What does Apple TV+ have to capture our imaginations and light the internet on fire?

Well, nothing approaching Stranger Things or The Mandalorian-level of widespread excitement. But the Apple TV+ show Dickinson is quickly building momentum and delivering what Apple TV+ needs: cultural relevance.

Why Cultural Relevance Matters

Cultural relevance is essential for any entertainment company to succeed in the long run. Brands become culturally relevant when they connect with an audience through their attitudes, beliefs, and behaviors. Sometimes cultural relevance means shaping attitudes, beliefs, and behaviors, too. When brands achieve cultural relevance, they become so inextricably linked with our lives that we become lifelong members of their tribes.

Disney Masters Cultural Relevance

Disney is the master of cultural relevance. Mickey Mouse is more than a popular animated character. Mickey Mouse is an international symbol of childhood. Frozen is a pop culture phenomenon. The Lion King introduced the words “Hakuna Matata” to millions of people. The Little Mermaid inspired cosplayers for generations to come. And now, Disney+ is having a culturally relevant moment with The Mandalorian.

Almost immediately, The Mandalorian sparked passionate conversations on social media about Baby Yoda, Boba Fett, and Star Wars lore. I’ve not seen social media explode with such ferocity over a pop culture phenomenon since Pokémon GO hit. The Mandalorian did something else: it became the most in-demand original streaming TV show in the United States, unseating Netflix’s Stranger Things. Is it any surprise that Disney+ achieved more than 10 million subscribers on launch day? And all this excitement hit in time to unleash related merchandise for the holiday shopping season.

Netflix Defines Cultural Relevance

Netflix, meanwhile, released Season 3 of The Crown on November 4. Here is a wildly popular show that connects with American audiences by tapping into Americans’ longstanding fascination with the Royal Family. The Crown inspired a wide range of commentary, some connecting the show to contemporary American politics, others offering insight into the importance of Welsh language. And the Royal Family itself commented on the opening episode.

This is what culturally relevant shows do. They inspire conversation that transcends the show itself. Among the streaming companies, Netflix has created the gold standard for cultural relevance (although Disney may catch up and then some). Stranger Things has become a pop culture sensation by tapping into 1980s nostalgia (and arguably engineering that nostalgia). Tidying up with Marie Kondo connects with an American materialism (and its consequences) so profoundly that the show actually created a spike in donations to thrift stores. This is the entertainment company that changed how we watched TV and is responsible for vernacular such as “Netflix and chill.”

Along Comes Apple TV+

Now, what about Apple TV+, which launched on November 4? Well, the results are mixed, and Apple TV+ has been outflanked by The Mandalorian. The much hyped The Morning Show has failed to catch fire. Apple has delayed the release of theatrical film The Banker amid allegations of misconduct against one of the movie’s producers. But on the other hand, a lesser known series, Dickinson, has been steadily building a fan base.

On the surface, Dickinson focuses on the life of poet Emily Dickinson. But what makes Dickinson culturally relevant is that it’s more than the story of a poet. It’s a perfectly timed statement about female and LGBTQ+ empowerment. In addition, the casting is smart. For instance, Hailee Steinfeld, who portrays Emily Dickinson, connects effectively with Gen Z and the LGBTQ+ community. Wiz Khalifa, who portrays a personification of death, is highly relevant to music, fashion, and weed culture. And the show’s soundtrack, featuring artists ranging from A$AP Rocky to Billie Eilish, is a Millennial’s dream. As such, Dickinson is rapidly creating a fan base who call themselves “Dickheads,” and the show has inspired the term “Sexy Dickinson.” Now this is what cultural relevance looks like:

Dickinson has already been renewed for another season.

Keep an Eye on Apple TV+

Creating cultural relevance requires an insight into consumer behavior, the agility to rapidly create content that taps into this behavior, and a platform to share that content at scale. Apple has the platform for Apple TV+ through Apple TV (and a new Apple TV app). As a media brand, Apple is getting better at tapping into consumer behavior and creating the right content. We all remember how Apple stumbled badly with its ill-fated forced download of U2’s Songs of Innocence album in 2014 – a miscalculation of consumer behavior (streaming was overtaking downloading, and people resented being forced to download music they did not ask for) and taste (U2 was out of fashion). But since then, Apple has adapted by launching a streaming service that now dominates the industry along with Spotify.

Apple played catch-up and then became a leader in music streaming by becoming more culturally relevant with content that connects to millennial tastes, such as the Up Next program for developing artists and first-look album drops by artists such as Chance the Rapper and Drake. Original content alone was not the answer to the rise of Apple Music – culturally relevant content that connects emotionally was.

Apple TV+ has a long way to go before it attains cultural relevance. But Dickinson is a clear win. In addition, Apple has plenty of cash – and a lot of patience. You can be sure Apple is figuring out how to create its next Dickinson.

Old Hollywood Loses Its Grip while Netflix Soars

Posted on March 9, 2019 by ddeal

Steven Spielberg has seen the future, and he doesn’t like it one bit.

At the 91^stAcademy Awards, Netflix took home four Oscars including three for Roma, which had been nominated for Best Picture. In addition, Amazon Studios and Hulu both achieved Oscar nominations. Spielberg dislikes the notion of the Academy of Motion Picture Arts and Sciences nominating movies from companies that stream movies in homes. So he reportedly wants to change the rules to block Netflix and its streaming competitors from nominating movies for the Oscars.

And Steven Spielberg is dead wrong.

Spielberg believes in the purity of the big screen and the joy of experiencing a movie in a theater. He wants to keep a sharp distinction between movies shown in theaters and movies made by streaming services. As he told British TV network ITV News in 2018, “Once you commit to a television format, you’re a TV movie. I don’t believe films that are just given token qualifications in a couple of theaters for less than a week should qualify for the Academy Award nomination.”

With Amazon Studios, Hulu, and Netflix landing multiple nominations at the 91^stAcademy Awards, apparently he’s feeling threated. A spokesperson for Spielberg’s Amblin Entertainment told IndieWire’s Anne Thompson, “Steven feels strongly about the difference between the streaming and theatrical situation. He’ll be happy if the others will join [his campaign] when that comes up [at the Academy Board of Governors meeting]. He will see what happens.”

Defenders of Old Hollywood believe the Academy’s nomination rules are too lax. A movie need not be distributed exclusively in a movie theater to qualify; a movie simply needs to appear in theaters. In addition, Hollywood studios follow an unwritten rule that movies should appear in theaters for at least 90 days before becoming available on video or streaming. Netflix doesn’t play be those rules. For instance, Netflix’s Roma appeared exclusively in theaters for only three weeks. A rule change could, say, require Oscar nominees to make movies available for a minimum period of time.

Reports of Spielberg wanting to change the Oscar nomination rules have been disputed, but the controversy has drawn attention to his opposition of streaming services – an opposition is on the wrong side of history for a number of reasons, including:

Viewing Habits Are Changing

There’s a reason Netflix has become one of the biggest brands in the world. Audiences want the flexibility of seeing movies on their own terms: at home, on the go, and in theaters. Streaming services are accommodating them. When recently I moderated a discussion about Old Hollywood versus Netflix on my Facebook page, Facebooker Brian Schultz summed one of the reasons why viewers want choice:

The theatrical experience isn’t what it used to be. Projection quality differs from theatre to theatre, too many previews, rude ass moviegoers, and high ticket prices make staying at home a better option.

You can see some movies from streaming companies in theaters, too. You could have seen Amazon Studios’ Cold War (nominated for Best Foreign Language Film) and Roma in theaters, on a TV screen, or on a device. (I prefer seeing movies on big screens. But I don’t always have the time and money to go to the movies. I saw Roma at home and Cold War in a theater. Both experiences were equally satisfying.)

And streaming is becoming even bigger. Disney will soon launch its own service, Disney+. AT&T will launch its own streaming service, capitalizing on its ownership of Time Warner to feature content from WarnerMedia, a newly formed entity that includes HBO and Turner Broadcasting.

Old Hollywood’s war against streaming is going to be harder to fight, especially with Disney putting its muscle behind streaming. You don’t mess with the Mouse.

Streaming Services Offer Alternatives for Artists

Roma is an intensely personal movie from Alfonso Cuarón, who previously won multiple Oscars for directing Gravity. When Roma won multiple Golden Globe Awards in January, Cuarón was asked to comment on a perception that Netflix is threatening independent cinema. He replied:

My question to you is, how many theaters did you think that a Mexican film in black and white, in Spanish and Mixteco, that is a drama without stars — how big did you think it would be as a conventional theatrical release? I just hope the discussion between Netflix and platforms in general should be over. I think those guys, platforms and theatrical, should go together . . . They both together can elevate cinema, and more important, they can create a diversity in cinema.

Anne Thompson of IndieWire recently provided some inside baseball on how Netflix ended up with Roma:

The studios could have acquired “Roma.” Participant showed ten minutes of footage to seven companies with global distribution. There were no passes and three offers. Four companies explained that because a black-and-white film in Spanish would not qualify for their Pay-TV output deals, they needed to see the film (which was still in post and not available to screen). Once they could see the film they’d be able to seek a waiver from their Pay-TV output partners, as The Weinstein Co. did on “The Artist.”

Participant explored the three offers and after a month-long negotiation landed on Netflix, which gave the most persuasive (and financially viable) marketing, distribution, and awards commitment. The studios weren’t willing to step up to Netflix’s bid for worldwide rights (a bit more than $20 million), which included a commitment for a substantial global theatrical release (excluding China — which Participant kept and will open in theaters, having just passed the censors).

Alfonso Cuarón is not the only big-name director working with Netflix. Even an Old Hollywood stalwart like Martin Scorsese is leaping into the arms of Netflix. Scorsese’s forthcoming movie, The Irishman, will be distributed by Netflix in theaters and via streaming. The movie is reportedly a long-time passion project of Scorsese’s. Commenting on Netflix’s involvement in the film, he said, “People such as Netflix are taking risks. ‘The Irishman’ is a risky film. No one else wanted to fund the pic for five to seven years. And of course we’re all getting older. Netflix took the risk.”

An Interesting Turn

The debate could take an interesting turn if a major streaming service such as Netflix cracks into the movie business. The idea is not far-fetched. In 2018, Netflix was rumored to be a potential buyer for Landmark Theaters but reportedly backed out due to the cost. Nevertheless, speculation remains that Netflix may crack into theaters in 2019. Rationale:

Theaters give Netflix a way to distribute more movies eligible for the Oscars (Netflix aired Roma in theaters so that it would qualify for an Oscar, but its relationship with theater chains is uneasy.)

Theaters also give Netflix another revenue stream for branded merchandise and concessions. Netflix already licenses Stranger Things merchandise through retailers. Theaters would give Netflix a channel to sell merch by itself.

Given the enormous cost of developing content, Netflix may stay firmly rooted in streaming for the near term, making Amazon a more likely candidate to buy a movie theater chain (also not a far-fetched notion with Amazon expanding into the brick-and-mortar grocery and retail industries).

Something Is Happening Here

Meanwhile, Netflix addressed the Old Hollywood-versus-Netflix story with a thoughtful Tweet:

Which evoked replies such as these:

Instead of trying to move the goal line for streaming companies, the defenders of Old Hollywood need to ask why exciting directors such as Alfonso Cuarón are turning to streaming companies and why businesses such as Disney are changing with the times, too. Old Hollywood can change just as record labels eventually adapted their business models for music streaming. Meanwhile, to paraphrase Bob Dylan, something is happening here, but you don’t know what it is, do you, Mr. Spielberg?

Six Famous Movies That Lived up to Massive Hype

Posted on December 27, 2015 by ddeal

What’s more impressive: the fact that 195 nations signed a global accord on climate change or that Star Wars: The Force Awakens lived up to the hype?

I’m going to go with Star Wars. The Paris Agreement to fight climate change still needs to be implemented. The Force Awakens has delivered the goods, earning a 94-percent certified fresh rating on Rotten Tomatoes, and shattering box office records following an unprecedented $350 million marketing blitz from Disney.

Star Wars: The Force Awakens is the fastest movie ever to gross $1 billion worldwide, thus joining a short list of films have delivered against massive hype. Take a moment to walk with me down memory lane, as I recall six rare gems that exceeded the expectations created by their marketing. To qualify for my list, a movie needed to meet three requirements:

Noteworthy promotion that was worthy of analysis in and of itself — in some cases for being inventive and in others for just being over the top.

Box office success that exceeded estimates.

Critical success, as measured by whether a film received a “fresh” rating on the popular Rotten Tomatoes website, which aggregates reviews from critics and the public. A fresh rating means that at least 60 percent of composite reviews are favorable. All of the films I’ve selected are not only fresh but also “certified fresh,” meaning the earned positive scores from at least 75 percent of reviewers.

Here are six that stand out:

Continue reading →

Apple and Disney Launch and Learn with Wearables

Posted on May 17, 2015 by ddeal

Apple has some work to do with the Apple Watch. Early adopters are criticizing the new wearable for a host of problems, including limited battery life. In other words, development is progressing on schedule. Apple is breaking into a nascent market with an imperfect product just as another huge brand, Disney, did two years ago with the launch of the MagicBand wearable that manages most facets of a guest stay at Walt Disney World. Disney faced criticisms for a new device, addressed them, and is seeing strong uptake two years later. Apple will, too. The biggest challenge Apple faces is investor expectation that every new Apple product will take hold immediately like the iPhone or iPad. The Apple Watch is different: it represents an entry into an evolving market, more akin to the first Model T automobiles. (By contrast, the iPhone cracked an already established telephony industry.) As I discuss in a recently published white paper, both Apple and Disney are acting on a vision to change the way we live. Following is an excerpt discussing why I believe they will succeed.

Ease of Use

Apple and Disney designed the Apple Watch and MagicBand to look good, and they need to look good. The devices are designed to be visible extensions of you, worn prominently on your wrist instead of being tucked away in your pocket. Disney wants Disney World patrons to use their MagicBands to manage their entire stays, including checking into their lodging, buying souvenirs, reserving their ride times via the FastPass+ system, and getting their meals served — akin to using a wristband to live in a city. Apple has even grander ambitions: your Apple Watch is the key to not only buying goods and services, but also handling myriad other aspects of your life, such as managing your fitness.

Apple and Disney need you to feel comfortable about wearing your devices, and for good reason: wearables have been marred by ugly design, and who wants to wear a device that embarrasses the owner? Appearance is so crucial that Apple has departed from its usual custom of providing simple product options and instead provides 38 different Apple Watch designs, ranging in price from $349 to $17,000. Similarly, the Disney MagicBands are available in many different colors (at prices ranging from $12.99 to $29.99), and Disney makes it possible for MagicBand owners to “show off your Disney side” by customizing its look with accessories such as an R2-D2 Magic Slider.

But what makes Apple Watch and MagicBand game changers are their ease of use. Both devices eliminate an action: digging through your belongings to conduct an action. Have you ever found yourself fumbling around for your iPhone to search for a restaurant on Yelp? Dropped your Disney room key while trying to lasso your kids as you dig through your backpack? Apple and Disney just eliminated those aggravating moments and replaced them with more fluid, graceful user interfaces such as swiping, glancing, and speaking.

Pervasiveness

For the products to take hold, they need to be more than user friendly; they need to be pervasive. As Austin Carr of Fast Company notes, Disney designed the MagicBands to support your visit to a metropolis spanning 25,000 acres, comprising four theme parks, 140 attractions, 300 dining locations, Continue reading →

Apple and Disney: Extensions of You

Posted on May 11, 2015 by ddeal

Apple and Disney want more than your money. They want to influence your behavior. Disney’s MagicBand wearable is teaching hundreds of thousands of Walt Disney World visitors how easy it is to manage their vacations with a simple swipe of the wrist. The Apple Watch promises to empower consumers to use their wrists and voices to perform actions ranging from buying coffee to controlling the temperatures of their homes. I use the term “market maker” to refer to a person or business that shapes our lives and behaviors. Small, nimble businesses such as Airbnb and Uber are market makers because they have upended lodging and transportation by convincing people to share services with each other. But as Apple and Disney show, big brands can be market makers, too — and big brands wield more scale. The Apple Watch and MagicBand are imperfect devices that promise to get better as more people use them (the MagicBand, with a two-year head start on the Apple Watch, has already done so). But what makes Apple and Disney market makers isn’t their focus on making better products: it’s their vision to create an extension of you. My new white paper, Apple and Disney: Extensions of You, analyzes the three reasons why the MagicBand and Apple Watch are designed to succeed where other wearables have failed, and I provide tips for your business to embrace wearables successfully. I invite you to download a copy (no registration required) and let me know what you think of it.

How to Win the War for the Everywhere Customer

Posted on March 19, 2015 by ddeal

The battle for the omni-channel customer experience has become a war for an “everywhere customer,” who uses multiple devices and channels for shopping and expects brands to be everywhere. On average, Americans own four digital devices and users who interact across multiple devices or channels are substantially more likely to purchase than those who do not. Some brands, such as Disney, Macy’s, and Wells Fargo, are moving from awareness to action by rolling out technologies that allow them to service everywhere customers online as well as in-store. And the early adopters will be rewarded: everywhere customers spend an average of 15-to-30 percent more than their counterparts.

Disney is an excellent example of a brand that knows how to design an experience that anticipates and responds to the behaviors of everywhere customers. Disney guides visitors through an online/offline journey at Disney World, from research to purchase to visit. The journey begins at the My Disney Experience website. Registered users rely on My Disney Experience for the most complicated part of their Disneyworld visit: planning. With Disney offering a wide variety of lodging, dining, and ticketing options, planning can be a complex task, and far too complicated for a mobile app. The website makes all those tasks easier. Users create their own profiles, which they may update as they build their itineraries. Users may also collaborate with one another on their vacation planning and reservations. The desktop experience is augmented with live chat, email, and click-to-call tabs for users, who need help planning their vacations or navigating the website.

As users update their itineraries, the Disney master ticket (a laminated card sent to users separately) updates in sync. When guests arrive at a park, their tickets contain up-to-date details such as lodging choices and Fast Pass ride times. Moreover, users may choose to link all their information to a Disney MagicBand, a smart wristband, instead of the laminated card. With the wristband, Disney creates its own customer service channel through the wearable device that is used throughout the entire Disney World experience. My Disney Experience also guides users to the My Disney Experience app, which can be used for managing onsite details such checking park hours and times for character appearances.

My recently published CMO.com column, “‘Everywhere Customers’ Are Your Future,” offers six steps brands can take in order to win the war for this important audience, which I believe define the future of American consumerism. Read the column here and let me know what you think.

How C2E2 Celebrates the Superfan

Posted on April 27, 2014 by ddeal

Three years ago, I blogged about the first time I attended the Chicago Comic & Entertainment Expo, then in its second year. This fan culture event was overwhelming, and it was difficult to know where to begin talking about the experience. On April 26, I experienced C2E2 from a more personal perspective: my 12-year-old daughter Marion was among the throng of attendees who dress up as their favorite fictional characters ranging from Princess Mononoke to Dr. Who. Marion was adorned in a trench coat and black wings to honor Castiel, an angel in the CW Network series Supernatural. As I noted on a LinkedIn blog post, being with Marion helped me appreciate first-hand a superfan loyalty that is rooted in self-expression and spontaneous community.

C2E2 has quickly become a premier destination for fans and companies to gather and celebrate each other over the course of one weekend. C2E2 attracted 53,000 attendees in 2013, up from 40,000 the year before, and the event has taken up more space in the Chicago McCormick Place convention center to accommodate the growing number of merchants and entertainment properties participating.

If you opt into the C2E2 email newsletter, your experience begins well in advance of the actual event. The pedestrian-looking newsletter and website serve up a steady stream of announcements about the show, such as autograph signings (for a fee) by comic book legends such as Stan Lee, a panel with Game of Thrones cast members, or the unveiling of an interactive booth for online game League of Legends.

But you really don’t begin to understand C2E2 until you walk into McCormick Place on the day of the show and take stock of your surroundings. Even before you enter the formal C2E2 convention area, you encounter the superfans expressing their passions. Continue reading →

Why We Can’t Stop Talking about Steve Jobs

Posted on April 26, 2013 by ddeal

If Steve Jobs were alive today, he would be the first to tell you he was not the only person responsible for making Apple succeed. But let’s face it: Steve Jobs defined the Apple brand, a reality that has been underscored lately by grumbling among the pundits that Apple is in danger of losing its swagger and cool (examples her e and here). Maybe Jobs defined Apple too well. But the reason we can’t stop talking about him today is that he transcended the Apple brand and did more than sell products. He was a market maker. I recently introduced the term market maker to describe business people who act like artists and change the world with their personal visions. Successful marketers sell things; but market makers inspire people to act, to believe, and to live their lives differently. Jobs is one of four market makers, including Ahmet Ertegun, Anita Roddick, and Guy Kawasaki, whom I profile in my recently published white paper, How to Be a Market Maker. Jobs influenced entire industries, ranging from consumer products to music. But is he so extraordinary that everyday people cannot relate to his achievements? I think not. I believe we can adopt a little of Steve Jobs at his best by living our lives with passion no matter what we do.

Steve Jobs is the kind of market maker we might call a creator. Creators are directly involved in the development of products and services for a company. Creators have a vision for how the world should work and are bold enough to impose that vision on those around them through the products and services they develop.

By now Jobs’s life is so well known it plays like the plot of a movie we’ve all seen hundreds of times (and, of course, we’ll soon be able to see a real movie about him): his explosive early years at Apple, when his company introduced a new vision for fusing design, user experience, and computing; the exile from Apple, when he founded the revolutionary Pixar Animation; and his glorious second act as CEO of Apple, when the company completely disrupted industries ranging from music to telecommunications by introducing wave upon wave of innovative mobile devices that changed how we consume content.

Throughout his storied career, Jobs, more than anyone, humanized technology. So great was his impact on popular culture, that upon his death, his image graced the covers of publications ranging from The New Yorker to Rolling Stone. Macs came along when personal computers were widely perceived as the province of a nerdy few. Apple did something that still seems astounding: turned an impersonal computing device into something warm and desirable.(My family still owns our clamshell iMac from the late 1990s — even though we don’t use it anymore, we just love having it around because with its sleek cover and aqua green finish, it looks like a piece of art.)

With the iPad, Apple essentially made a computing device a natural extension of our sense of touch. The iPhone transformed the mobile phone from a boring utility to a playful toy that we can’t do without. In fact, half of all Americans now say we sleep next to our mobile phones.

And of course Apple helped disrupt the entire music industry through iTunes and the iPod — liberating music from the limits of analog and empowering consumers to make music part of their mobile lifestyles. As Randy Lewis of the Los Angeles Times wrote, “With Apple’s iTunes and iPod, [Steve Jobs] revived the single, put music libraries in fans’ pockets and posed a challenge to brick-and-mortar record stores and radio.” Record companies, betting on the long-term success of the compact disc, failed to respond to how Apple was helping to turn consumers from album aficionados to snackers of individual digital downloads. The music industry is still trying to catch up.

Jobs’s legacy at Apple is so astonishing that it’s easy to overlook what he accomplished by founding and developing Pixar. Pixar would eventually do far more than create high-quality blockbuster entertainment. Pixar changed movie making. Pixar movies taught Hollywood how to gracefully fuse technology, humanity, and storytelling. The Pixar team created movies that somehow turned animated objects like toy cowboys into fully realized characters injected with humanity.

In doing so, Pixar made it cool for anyone to enjoy a family film: single gay male urbanites, suburban parents, children, teens too self-consciously hip for Bambi — to name but a few demographics. Pixar has touched. Pixar launched animated movies that children can enjoy again as fully-grown adults — and that adults can enjoy for the first time without children in tow. By contrast, even Disney classics like Snow White and Pinocchio are forever remembered as animated family movies that children appreciate the most.

As Brent Schlender wrote in a Fast Company recollection of Steve Jobs, Pixar upended the entire business model of animation. Although Jobs’ contributions to Pixar were more financial than creative, the company succeeded because Jobs recognized that at its core, Pixar is a content company, not a creator of computer animation.

Steve Jobs best exemplifies a trait common to all market marketers: a burning passion. Steve Jobs “put passion into products,” noted James B. Stewart in one of the many heart-felt tributes to Jobs written in the aftermath of his death in 2011. In his acclaimed biography, Steve Jobs, Walter Isaacson describes the moment when unveiled iTunes to jazz trumpeter Wynton Marsalis, who turned out to be an indifferent audience:

“Watch what it can do!” Jobs kept insisting when Marsalis’s attention would wander. “See how the interface works.” Marsalis later recalled, “I don’t care much about computers, and kept telling him so, but he goes on for two hours. He was a man possessed. After a while, I started looking at him and not the computer, because I was so fascinated with his passion.”

Isaacson also recounts the time Jobs decided to make a major overhaul to the design of the iPhone as the project neared completion, telling designer Jonathan Ive that “‘I didn’t sleep last night because I realized that I just don’t love it’ . . . Ive, to his dismay, instantly realized Jobs was right.”

In fact, Jobs expressed his passion for design in every aspect of his life. He personally supervised the construction of an old-fashioned brick factory-style building for Pixar, and according to Brent Schlender, if the colors of the custom-made bricks were not distributed evenly enough, Jobs made the bricklayers tear apart the bricks and start over. (But those exacting standards also had a down side. When people failed to live up to what he wanted, he could be brutal and insufferable, as you can read in Ben Austin’s Wired August 2012 cover piece, “Do You Really Want to Be Like Steve Jobs?”)

All the market makers profiled in this white paper demonstrate passion.

Anita Roddick, founder of the Body Shop, was passionate about human rights, and, in particular, women’s rights. The entire premise behind the Body Shop was selling cosmetics without sexism and eschewing the cult of youth. Guy Kawasaki is passionate about injecting enchanting values and practices in the work place — and if you’ve ever worked with him, you know he has an equally strong zeal for clear, simple communication. Ahmet Ertegun, co-founder of Atlantic Records, was so passionate about music that he sometimes lived in the studio with the artists on his label.

It doesn’t matter whether you work for a pet food store or write for a living: you can be a market maker by acting with passion.

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