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CAA-Closes-Deal-Acquire-ICM-thefutureparty

CAA closes deal to scoop up ICM

CAA-Closes-Deal-Acquire-ICM-thefutureparty
Illustration by Kate Walker

CAA closes deal to scoop up ICM

 

The Future. CAA’s landmark acquisition of ICM has passed government scrutiny and is officially a done deal — consolidating Hollywood’s Big 4 talent agencies into the Big 3. Like CAA’s rival, Endeavor, did last April, CAA may feel it finally has the scale to go public… potentially spinning out from its current majority owner TPG.

And then there were three…
Almost nine months after it was announced — thanks to a lengthy review by the DOJ over antitrust concerns — CAA has finally closed the deal to acquire rival ICM.

  • THR reports that the deal is valued at $750 million, giving the combined agency a valuation of $5 billion.
  • It brings top showrunners like Shonda Rhimes (Bridgerton), Vince Gilligan (Better Call Saul), and Bill Lawrence (Ted Lasso), as well as stars like Michael Keaton, Cillian Murphy, and Uma Thurman into the fold.
  • It also cements CAA as a force in new areas of representation like below-the-line film and TV production, book publishing, and soccer.

Per the deal, 425 of ICM’s agents and staffers (around 80% of the company) will join CAA, while 105 will be eliminated — a process that is already happening.

Representation matters
CAA’s takeover of ICM is just another episode in the consolidation of the entertainment industry’s upper echelons, as scale becomes seemingly the only way to compete. Endeavor, the umbrella company of WME, went public last year after a raft of growth acquisitions. And this month, UTA purchased renowned British agency Curtis Brown Group. Agency insiders have reasoned that the scale is the only way to take on ballooning entertainment conglomerates such as Warner Bros. Discovery, Apple, Amazon, Netflix, and Disney.

That’s not to say there’s no room for boutique firms to compete by offering more targeted, niche services. Kicked off by the WGA’s battle with agencies, a lot of agents decamped to start management firms such as Range Media Partners, M88, and 2 AM. Expect a lot of now-former ICM agents to follow suit… as many have already done.

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A24 develops its own membership club

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AAA24// Illustration by Kate Walker

A24 develops its own membership club

 

The Future. A24 All Access (AAA24) gives fans of the studio a backstage pass to the studio that can create hype simply from its logo popping up on a trailer. That reputation, built by bold films and sharp marketing, may have turned A24 into the cool kids’ Disney — a place where content, branding, and a vibe mix to give a company what they want most: loyalty.

A24 all the time
Fast Company’s Joe Berkowitz reports on his time inside the hip world of A24’s exclusive membership club.

  • Launched in April, AAA24 gives members access to perks like the studio’s monthly zine, a membership card, a key fob to get into private A24 events, access to exclusive merch, and Close Friends status on A24’s Insta to see “sneak peeks.”
  • Members can also take part in the monthly Closet Cleanouts — the ability to claim five archival merch items simply by answering trivia questions.

The membership runs for $5 per month and, unfortunately, does not include digital access to any of A24’s movies.

Miramax meets Supreme
While AAA24 is a pretty basic membership club on the surface, its popularity (just check out the A24-dedicated subreddit for a taste) shows how much cultural cache the studio has built up in a decade, not just in the world of entertainment but as a brand unto itself. That’s thanks to out-of-the-box marketing stunts, ridiculously expensive products, collabs with streetwear giants, and, of course, movies and shows that consistently push the envelope.

Berkowitz likens the A24 ethos to “What if Miramax, but also Supreme?” Funny enough, Puck’s Matthew Belloni says the New York-based studio is actually “a Midtown private equity play” that is “part of a calculated move to reinvent the indie film widget for the modern, social media-driven era.” The heads just also happen to have “good taste.”

Whatever the strategy, it has netted A24 a valuation of $2.5 billion (with rumors of sales talks to Apple), the biggest indie hit of the year with Everything, Everywhere, All At Once, and a devoted-enough fanbase to sell out of its Hot Dog Finger Gloves from that movie. That’s cultural power.

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Stranger Things powers a Kate Bush renaissance

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Illustration by Kate Walker

Stranger Things powers a Kate Bush renaissance

 

The Future. After the new season of Stranger Things featured Kate Bush’s “Running Up That Hill” in the jaw-dropping climax of its fourth episode, the song skyrocketed in popularity — topping charts for the first time and minting a lot of money for Bush. As with other popular needle drops in entertainment — “Stuck in the Middle with You” in Reservoir Dogs, “Tiny Dancer” in Almost Famous, “Come and Get Your Love” in Guardians of the Galaxy — “Running Up That Hill” may be inseparable from the show for a certain generation.

Running up those charts
Thanks to Stranger Things Vol. 4, “Running Up That Hill” is becoming a cultural anthem… 37 years after its release.

  • According to Billboard, the single became the artist’s first-ever top-5 song in the U.S., charting 26 places higher than when it was first released in 1985.
  • In her home country of the U.K., the song reached #1 on the charts — her first time in 44 years.
  • In just one week, it streamed 57 million times on Spotify alone.
  • Also, the album that the song is featured on, Hounds of Love, jumped to #12 on the album charts. It looks like everyone wants a little more of Bush.

All the success has led Bush to break a handful of records — the oldest female to top the charts in the U.K., the longest gap between #1 singles, and the longest time it’s taken a song to hit #1.

Running to the bank
The deal only gets sweeter for Bush — she owns all the publishing and licensing rights for her music (which goes through Warner Music Group via her label Noble & Brite), and the money just keeps pouring in.

  • Before the new season of Stranger Things was released, Bush’s music brought roughly $12,000 per week between streaming, album sales, and song downloads.
  • After the season dropped, the music generated $156,000 in sales. The following week, it was $258,000.

And don’t expect that popularity to wane anytime soon. The last two episodes of Stranger Things Vol. 4 are set to drop this Friday… and Netflix recently released a new trailer featuring a remix of “Running Up That Hill,” of course.

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YouTube Shorts closes in on TikTok

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 Illustration by Kate Walker

YouTube Shorts closes in on TikTok

 

The Future. YouTube Shorts now has the same number of users as TikTok, pitting the platforms in a battle for dominance. But with creators able to go back and forth between the platforms, both may be stuck in a cycle of growing at the same pace… and paying people for the same content.

The short of it
YouTube is doing a bit of a victory dance as it inches closer to TikTok’s short-form throne.

  • Per WSJ, Google revealed that over 1.5 billion people watch at least one YouTube Short monthly.
  • That’s comparable viewership to YouTube Shorts’ top competitor, TikTok.
  • YouTube Shorts hit this milestone less than two years after launching.

Ctrl+Alt+Clone
This is great news for YouTube, a major driver of Google’s ad business ($28 billion in revenue last year). After pressure from investors, the tech giant started reporting YouTube’s revenue separately in 2020 — just as TikTok started to take off. The viewership metric allows YouTube execs to boast that they can still compete.

As the two giants continue to battle for dominance, Instagram is also trying to edge its way in with Reels. The feature, which Zuckerberg says accounts for 20% of the time people spend on Instagram, is testing a new full-screen mode that… let’s face it… looks very similar to TikTok’s UI.

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Roku signs up Walmart for shoppable ads

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 Illustration by Kate Walker

Roku signs up Walmart for shoppable ads

 

The Future. Roku is teaming up with Walmart to bring shoppable ads to the streaming platform — all handled by nothing more than the Roku remote. The partnership is a gamechanger in the world of streaming and may inspire (read: pressure) other streamers to make ads on their platform dynamic… putting film and TV streamers in direct competition with the live-shopping features of social platforms like YouTube and Instagram.

Remote control
TechCrunch reports that Roku is turning its streaming platform into a shopping destination.

  • Roku is partnering with Walmart to bring shoppable ads to the platform, where users can use their Roku app to make purchases while streaming.
  • The feature works through an “overlay to an existing ad,” allowing viewers to simply click “OK” on their remote to start the transaction.
  • The purchase will go through automatically since the viewer’s billing information is already saved on the platform.

The shoppable ads will first roll out on The Roku Channel AVOD service and eventually to other channels on Roku. And don’t worry, streamers, your show or movie will pause while you purchase.

Climbing the charts
The shoppable ads are a big win for Roku, which can now claim to be the first platform (outside of Amazon, for obvious reasons) to strike this kind of deal with a retailer. Wall Street took notice, sending the company’s stock up 4%… giving it even more capital to make a name for itself in the original content game.

Additionally, the shoppable ads will be powered by Roku’s proprietary OneView ad-buying platform, which is the tech that Netflix reportedly hopes to license to jumpstart its own ad tier. If a deal materializes, could Netflix pony up even more cash to bring the shoppable ads to their platform?

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Spotify tries to turn up the volume on Wall Street

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Spotify stock // Illustration by Kate Walker

Spotify tries to turn up the volume on Wall Street

 

The Future. While primarily known as a music service, Spotify’s financial future lies squarely in podcasting… and CEO Daniel Ek made sure Wall Street knew that with a recent presentation. With podcasting — and the advertising revenue it generates — becoming the key financial lifeline for Spotify, it may inadvertently highlight how detrimental streaming has been for the music industry.

Profit problems
Despite everyone and their mom using Spotify, the company is struggling to actually make money, according to THR.

  • Since its direct listing in 2018, Spotify has grown exponentially, but its gross margins (profitability expressed as a percentage) have remained the same… and by the same, we mean “not great.” That’s kept the company’s stock from growing.
  • So, earlier this month, CEO Daniel Ek held his first investor day in years to highlight what has been behind the cash crunch — the heavy, nonstop investment into podcasting.
  • It has invested $1 billion in the podcasting space, which it expects to become a $20 billion business for the company… eventually.
  • Ek’s message to investors was that the losses would peak this year but decline as the podcasting market matures.

So here’s the $20 billion question: Did Wall Street buy it? Bank of America analyst Jessica Reif Ehrlich summed up the vibe on the Street best: “The inflection in podcasting should be a key driver of future margin improvement.

Translation: “Cool, we buy it.”

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faze-clan-entertainment-industry-thefutureparty

FaZe Clan plots entertainment takeover

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FaZe Clan plots entertainment takeover

 

The Future. While FaZe Clan started as an esports team dedicated to Call of Duty streams, it’s grown into an entertainment giant spanning esports, merch, lifestyle content, brand activations, and even cinema. But with gaming still the anchor to FaZe’s popularity (but definitely not its financial success), the most meaningful thing that the company may have accomplished is helping cement gaming’s cultural cache in the worlds of fashion, sports, and entertainment.

Level up
GQ’s Sam Schube recently profiled FaZe Clan and came away with some insight into the future of the hard-to-define entertainment company.

  • It now has 11 esports teams (for games like Call of DutyFortniteCounter-Strike, and more).
  • Across all of its members’ socials — some dedicated to esports, others to lifestyle, pranks, and more — FaZe Clan stands at about 500 million followers.
  • It brought on high-profile members like Snoop Dogg, Lil Yachty, and Arizona Cardinal quarterback Kyler Murray.
  • CEO Lee Trink has helped increase FaZe Clan’s headcount by 60% (now at 130 employees) in the past two years.
  • The company is moving aggressively into Web3, believing it will bring in more than 80% of its revenue in a few years.

Even though FaZe Clan isn’t yet profitable (losing $37 million last year on $53 million in revenue), it’s about to go public through a SPAC merger at a valuation of $1 billion.

Play as a team
The unique setup of FaZe Clan is that it’s essentially dozens of businesses operating under one roof. Each personality (FaZe ___ ) acts as both entrepreneur and celebrity of their own fiefdom, while in-house talent managers secure deals and handle logistics. And with the company bullish on adopting the metaverse, those personalities may not even need to be human in the future — Faze Mynt is a digital avatar created and run by FaZe’s head of creative tech, Tarek Mustapha.

With over 3 billion people playing video games all over the world (and it being the most popular form of entertainment among Gen Z), it’s no wonder that Matt Belloni, revered entertainment reporter at Puck, said FaZe Clan is “definitely among those groups of emerging media companies that you have to pay attention to, because they are a sign of a trend. And the trend is towards esports, and the creator-driven digital economy of content.”

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Apple scores decade-long major league soccer deal

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Apple soccer // Illustration by Kate Walker

Apple scores decade-long major league soccer deal

 

The Future. Apple has wrapped up a deal with Major League Soccer (MLS) to broadcast its games for the next ten years. It marks the first time a major sports league has given exclusive rights to any platform… let alone a streaming service. With streamers jockeying aggressively to make sports deals to attract new subscribers, expect the Apple-MLS one to be a blueprint for negotiations moving forward.

Global play
After dipping its toes in live sports with a deal for the MLB’s Friday Night Baseball, Apple has inked a much larger one in the world of soccer.

  • THR reports that Apple will exclusively broadcast all MLS games globally for the next ten years, starting in 2023.
  • All the games will stream on Apple TV+, with some available for free.
  • Highlight packages will also be available on the Apple News app.
  • Reports say the deal will cost Apple $250 million per year.

All of the games will stream in both English and Spanish, with Canadian games also available in French.

Streaming World Cup
The deal is a big win for Apple TV+. Not only is the tech giant getting exclusive rights to one of the fastest-growing leagues in all sports, but it’s also securing one of the streaming war’s biggest gets. In general, locking up sports rights is becoming a go-to move to win subscribers, with Amazon (football), Peacock (the Olympics), Disney (cricket in India), and Paramount+ (basketball and golf) each throwing their hat into the ring.

But Apple may have changed the game — the MLS deal represents the first time that any major league has signed over all broadcast rights to a single platform. However, MLS commissioner Don Garber said that MLS might be able to simulcast games to linear broadcast networks during the first couple of years. Call it a slow fade to streaming.

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Hollywood won’t bat an eye at the prospect of a recession, but viewers might

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Illustration by Kate Walker

Hollywood won’t bat an eye at the prospect of a recession, but viewers might

 

The Future. Persistent inflation, supply pressures from the war in Ukraine, and the Federal Reserve’s rate-hike program all boost the likelihood of a coming recession. For Hollywood, that could spell losses, not just in theater ticket sales but streaming subscriptions and ad revenue. If there is an economic downturn, the entertainment industry may have to revise its entire business model.

Troubled waters
JPMorgan CEO Jamie Dimon recently warned of an approaching economic “hurricane” that could severely curtail consumer spending. Many disagree with his forecast, but if it does come true, the entertainment industry has done little to prepare for it.

  • The optimist’s take. Cinema and video game industry professionals both scoffed at the idea that a recession could hurt their businesses, claiming that people lean on entertainment during hard times to keep their spirits up.
  • The cynic’s take. As food and gas prices skyrocket, people probably won’t consider entertainment expenses essential — including streaming subscriptions and movie tickets. With subscription sales and theater turnout already faltering, the industry needs a new way to either boost revenue or cut costs.
  • The bitter pill. Ever since Snap released its Q2 guidance, tech and media stocks have both tanked on a large scale. The reason is that digital advertising is faltering even without a recession, partly because some products, like cars, are flying off the shelves without help from ads.

Recent weeks have seen the longest streak of losses for tech stocks since the dot-com bubble in the early 2000s. Thanks to streaming and digital advertising, the entertainment industry is deeply tied to tech, so even if there’s not a widespread recession, Hollywood may still suffer.

Land of the free (streaming services)
So far, this is all theoretical. Some signs that a recession has actually arrived would be hiring freezes, especially when followed by wider layoffs — in other words, short-term cost-cutting measures.

But if things get bad enough, some big players might have to take more drastic measures. According to The Hollywood Reporter, this might mean transitioning away from paid subscriptions in favor of free, ad-supported streaming (“FAST”) services, which would appeal to those who feel they can’t afford to pay. Any big streamer to adopt this model could force its competitors to follow suit.

Welcome to the golden age of… cable TV, basically.

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Netflix might buy Roku, but should they?

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Roku // // Illustration by Kate Walker

Netflix might buy Roku, but should they?

 

The Future. The internet (and Roku’s stock) lit up on Wednesday following a rumor that Netflix might acquire Roku. If it happens, the acquisition could answer both companies’ revenue problems, as Netflix fights its way into the ad space and Roku seeks wider distribution for its offerings. On the other hand, fiscal strain and opposing philosophies could make the deal crash and burn, that is, if it’s even happening.

Everybody talks
The buzz kicked up after Business Insider reported Roku employees were discussing a possible acquisition after the video-streaming company prevented them from selling their vested stock. Neither Netflix nor Roku have confirmed the rumor.

  • The Netflix angle. Netflix’s shared subscriber numbers have dropped lately, and the streamer has been looking to supplement revenue by building out an ad business — precisely what Roku already has.
  • The Roku angle. Roku, meanwhile, has been investing heavily in original content, a bet that’s largely paid off. But it could be a bigger payoff if Roku’s distribution skyrocketed —and who better to make that happen than Netflix, who could feature Roku’s content on its platform ad-free?
  • A huge acquisition costing both money and time might make the purchase ill-advised– or unrealistic as both companies have been spending lots of cash either aggressively expanding or trying to erase a deficit.

Not to mention Roku CEO Anthony Wood, who’s famously strong-willed and invested in growing Roku rather than selling it.

Survival of the biggest
Still, there are plenty of reasons to believe that Netflix and Roku are at least in discussions. Recent years have been full of huge acquisitions, like Amazon’s purchase of MGM and the bidding war between the big dogs of streaming over exclusive rights to stream sports games.

The explosive proliferation of content and viewing platforms of the past decade seems to be entering a new phase — consolidation. The field has become so large and competitive that players like Netflix can no longer count on subscriber growth (which had to stop sometime), and instead have to either trim the competition or pad their margins with ads.

We may be entering a new era of commercial breaks.

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