The End of Hollywood? + AI "collapses."
LVMH x Tesla + Snoop Dogg and Master P sell cereal.
The Agenda:
Opinion
The end of Hollywood? [Hollywood, IP]
Challenges at Disney? [Hollywood]
Apple exec talks frankly about AI replacing Hollywood. [Hollywood, AI, Streaming]
Hollywood was prepping to cut out writers pre-AI. [Hollywood, IP]
Will Netflix replace all of entertainment? [Hollywood, Streaming, IP, Gaming]
Velma returns! [Hollywood, IP]
AI “collapses.” [AI]
McKinsey goes all in on AI. [AI]
“Techno-Narcissism”. [AI, Tech]
UK: Center of AI and crypto? [AI, Crypto, UK]
Big Tech: Regulation ahead? [Tech Regulation]
LVMH x Tesla. [Fashion/Luxury, Tech]
Pokémon crime spree in Japan. [Japan, IP]
Berserk: Griffith did nothing wrong, except release a fragrance. [Japan, IP, Fashion/Luxury]
US property costs crimping youth spending power. [B2C]
Retail media networks: A trend I’m watching. [B2C, Media]
Snoop Dogg and Master P are selling you cereal. Why not. [B2C, Music]
Lord of the Rings IP owner Embracer restructures. [IP, Gaming]
Manga
Business Samurai #81: “More Cash Flow Statements” [Coffee Distribution Arc #33]
Monday Motivation
Cut out toxic people! (Charlie Munger)
The most important thing to think about - cash flow statements!
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Opinion
(PS - I’m super-duper busy, so Business Samurai reactions will only appear every other week, in issues where there is no full Business Samurai episode.)
Hollywood
The end of Hollywood? [Hollywood, IP]
Note: When I say “Hollywood” in this writeup, I’m referring to the major legacy studios. Moving on: summer season is kicking off, and blockbuster movies have… not doing as well as expected? Except for Super Mario and Spider-Man, of course. An interesting discussion in The Business podcast, Guardians 3 did well, but not as well as Dr. Strange 2 a year earlier. Mario and Spider-Man have succeeded, but Disney/Pixar seems to be having a tougher time (more on that below). The new Transformers movie seems to have a large second-weekend drop-off, while The Flash, which features Michael Keaton’s Batman, looks like a bomb.
So much going on here, can we pick up any patterns as to why there may be some early underperformance? Is it superhero/multiverse fatigue? Then why did Spider-Man do well? Is it IP/franchise fatigue? Then what about Mario and Spider-Man, again? Do audiences only care about established IP? Then why did Lightyear, which is from the Toy Story IP and got good audience reviews, underperform?
Let’s take a step back and look at the larger picture. A central thesis to Cross Platform is that mobile Internet has opened the floodgates for all sorts of content, and as a result, competition for consumer attention is higher than ever (example: Netflix, see below), and that the walls that separated once-siloed verticals are coming down and, as a result, beloved IP like Super Mario are going cross-platform. The lesson here is that Hollywood - and everyone else, for that matter - cannot rest on its laurels like it did in previous times when the distribution of content was much more restricted.
The bar is set much higher, so the product must be much better. One key fundamental is good storytelling, and not doing the same thing all over again, as Guardian’s James Gunn and Spider-Man’s Lord and Miller have intimated.
Meanwhile, the Oscars haven’t been doing as well, and the Golden Globes have recently been sold. Succession, a show about the US media industry, while successful and well-reviewed, may be relatively niche. Hollywood appears to be aware of what may be insularity. That being said, it remains to be seen how summer blockbusters fare this year. Maybe Hollywood will surprise on the upside.
Challenges at Disney? [Hollywood]
A lot from last week. First, I discovered the FT’s video,”Can Bob Iger revive Disney?”. Excellent summary of Disney’s business and TV/film in general, highly recommend you watch. Then news came out about production delays in Avatar, Star Wars, and Marvel movies. And, finally, longtime CFO Christine McCarthy stepped down, and there were reportedly clashes among management. Not to mention political challenges. I think the last is especially difficult because it may be that much of Disney’s creative staff leans one way politically, while the state that hosts a significant part of Disney’s theme park business may, overall, lean the other way.
Who knows what’s going on behind the scenes with Disney, but managing and working in a company of that size is probably very difficult. I am of the view, per the writeup above on Hollywood, that the entire global entertainment landscape is changing, and adopting to change is difficult.
Apple exec talks frankly about AI replacing Hollywood. [Hollywood, AI, Streaming]
Strikegeist has an exclusive interview with an anonymous Apple TV+ exec re: the writers’ strike and AI. Really good if you want to know about some of the inner workings of streamers. Note the focus on IP and cost cutting. BTW, it looks like directors can be outsourced and actors can be automated. As I said last week, the way forward for writer, actors, and maybe directors too is to be able to own your own data set, your own IP. But I was thinking too, that might put actors in closer competition with influencers…
[The importance of IP in the digital economy.]
Hollywood was prepping to cut out writers pre-AI. [Hollywood, IP]
Fast Company published this oped by A.S. Hamrah back in May. According to Hamrah, Hollywood had been making moves to reduce its reliance on writers and focus on IP, even before the current AI hype cycle. Sums up the themes above: 1) Global entertainment is changing, 2) IP, 3) cost cutting (I think increased competition partially responsible for this). BTW, Daredevil and The Penguin production has been halted bc of the writers strike.
[The importance of IP in the digital economy.]
Will Netflix replace all of entertainment? [Hollywood, Streaming, IP, Gaming]
I’ve been thinking a lot about Netflix recently, here are some bullet points representing my thoughts:
The company is extremely savvy and nimble:
1) Grow on other co.’s IP, as their distributor (DVDs, then streaming).
2) Avoid being beholden to other co’s by launching your own IP and use first-mover advantage vs. other co.’s who turn the tables and launch their own distribution platforms.
3) Focus on securing top spot, while adroitly managing shareholder expectations, avoiding any costly major shareholder battles.
4) Current stage: Go cross-platform (ex. gaming, restaurants?), becoming a true IP company.
While the some in Hollywood may be doing things as they were done back in the previous century (see writeup above), Netflix is listening to what global audiences actually want in a market flooded with content. Its current playbook involves massive investment in local content, but also note its investments in gaming, Korean content, and anime. Also worth noting that some of Netflix’s content isn’t without its controversies, but some may offend one end of the political spectrum, while others may offend the other end.
[The importance of IP in the digital economy.]
Velma returns! [Hollywood, IP]
AI
AI “collapses.” [AI]
“Specifically looking at probability distributions for text-to-text and image-to-image AI generative models, the researchers concluded that “learning from data produced by other models causes model collapse — a degenerative process whereby, over time, models forget the true underlying data distribution … this process is inevitable, even for cases with almost ideal conditions for long-term learning.”
“Over time, mistakes in generated data compound and ultimately force models that learn from generated data to misperceive reality even further,” wrote one of the paper’s leading authors, Ilia Shumailov, in an email to VentureBeat. “We were surprised to observe how quickly model collapse happens: Models can rapidly forget most of the original data from which they initially learned.””
If I am interpreting correctly: if the pre-existing data becomes more and more AI-generated, it ruins the quality of new output. I suppose this is more relevant to consumer applications, whereas AI for enterprise, where the client uses its own data, might be spared from this.
Speaking of data, it appears AI startups have a lot of cash, but not enough data.
…So will AI-generated art and writing get worse over time?
McKinsey goes all in on AI. [AI]
Meanwhile, McKinsey released a new report on AI, with one key theme being the effects of AI on knowledge workers. Here are some of their estimates of, if I am interpreting correctly, % of tasks that can potentially be automated, per profession relevant to Cross Platform:
Business and legal 62%
STEM professionals 57%
Creatives and arts management 53%
Managers 44%
Customer service and sales 57%
See the number for managers? It might be that the middle may be hollowed out, as I have discussed previously. Of course, these are just estimates and forecasts. Who knows what will happen in the future.
“Techno-Narcissism”. [AI, Tech]
Scott Galloway recently published a piece that expresses views similar to my own re: AI. Like fear mongering as marketing, and amorality among some in the tech industry. Also: “Real outcomes are never the extremes of the futurists. They are messy, multifaceted, and, by the time they work their way through the digestive tract of society, more boring than anticipated.” Please have a read.
UK: Center of AI and crypto? [AI, Crypto, UK]
Prime Minister Rishi Sunak is looking for the UK to be a center for AI regulation, while also a global hub for crypto. Hmm…
Tech Regulation
Big Tech: Regulation ahead? [Tech Regulation]
FTC Chairperson Lina Khan won’t recuse herself vs. Meta, FTC may block Microsoft-Activision Blizzard deal (Microsoft pursuing the deal because it wants access to mobile), EU may follow US in regulating Google’s ad-tech biz.
Fashion/Luxury
LVMH x Tesla. [Fashion/Luxury, Tech]
The two richest people in the world, Elon Musk of new-school tech, and Bernard Arnault of old-school luxury, had lunch recently. Don’t know what they discussed, but I hope they talked about IP!
Japan
Pokémon crime spree in Japan. [Japan, IP]
Someone even rappelled off a rooftop to break in!
[The importance of IP in the digital economy.]
Berserk: Griffith did nothing wrong, except release a fragrance. [Japan, IP, Fashion/Luxury]
[Premiumization.]
B2C
US property costs crimping youth spending power. [B2C]
Per BofA, younger people (Gen X and below) move twice as often as older generations, face higher housing costs (rent, mortgage, prices) each time, one cause for them to spend less. Will housing supply increase to offset this? Is private equity real estate investments a cause or a symptom of higher costs?
Retail media networks: A trend I’m watching. [B2C, Media]
Been wanting to mention this for a while, but consumer co.’s are increasingly using their own data to advertise. Walmart, Uber, Marriott, CVS, even Doritos.
Snoop Dogg and Master P are selling you cereal. Why not. [B2C, Music]
For the whole family! I assume they looked at demographic data and saw that 90’s kids now have kids of their own.
IP
Lord of the Rings IP owner Embracer restructures. [IP, Gaming]
Expanded too much, too quickly..?
Manga
Business Samurai: Business Strategy Manga
Latest episode of webcomic about businesses selling to consumers. Cross Platform’s own IP and multimedia franchise. You can read the complete story so far here.
The plot: The MASTER (マスター) corporation has hired a team of young and talented businesspeople from diverse backgrounds to guide its business strategy as it enters new industries. But is everything is as it seems? Hijinks and drama ensue as team CLARITY (明快さ) launches new businesses, while each member tries to make her and his way in the world!
The current story arc: Claurette, Lixue, Jiae, and Ryota are working to distribute Cafe Honesty's cold brew based on coffee beans... digested by a house cat. But now they've bumped up against competition with the Toriyaki company!
Episode #81: “More Cash Flow Statements” [Coffee Distribution Arc #33]
Monday Motivation
Cut out toxic people! (Charlie Munger)
Man, I wanted to write a whole essay about this but I’m running out of time. But nevertheless, this one’s really important, especially when you do something massively contrarian. So many people are obsessed with immediate social validation, and the sad truth is that they will judge you on some kind of social ranking - in high school it’s about “popularity”, in the adult world it’s about your immediate job and/or how much money you make. If you do something contrarian and delay gratification, a good number of people will treat you poorly, because you are “low status” in their eyes - until you make a lot of money. Negative attitudes are like a disease, so these people may get inside your head and deter you from your goals. Cut them out physically, and if you can’t, I recommend earphones. Keep going, while objectively assessing hints of what the market is willing to pay you for, and realize you’re not alone.
GO FOR IT! REACH YOUR GOAL!