PRO Tip Sheet: 5 Insights From This Week

This week we dove into how Netflix built its dominant international business, on a potential breakup of Paramount into separate parts, on how Alex Jones is back on X, and on how two Japanese films landed in the top 3 of the U.S. box office [5 Insights From WrapPRO]( This week we dove into how Netflix built its dominant international business with shows like “Narcos.” We also analyzed a potential breakup of Paramount into separate parts as Shari Redstone mulls her options, reported how controversial figure Alex Jones is back on X and what it means for the struggling platform, reflected on the milestone of two Japanese films landing in the top three of the U.S. box office and chronicled how Netflix’s animation division became a powerhouse rivaling established studios like Disney. 1. [Netflix Rules Over International Content in Hollywood, and It’s Only Getting Bigger]( By Manfredi and Kayla Cobb | Source: [WrapPRO]( - Netflix's early and bold investment in overseas co-productions, exemplified by the success of "Narcos" in 2015, has propelled the streaming giant to become the undisputed leader in global original productions, boasting 247.15 million subscribers, with over 70% outside the United States. - Breaking the traditional mold, Netflix's strategy of embracing non-English language content has paid off, with non-English titles accounting for 30% of viewing from January to June 2023, and the South Korean series "Squid Game" emerging as its biggest overseas hit, garnering a reported 2.2 billion hours viewed in its first season. - Netflix's international success is attributed to its willingness to delegate decision-making power to local executives, tailoring content to diverse cultures and languages, and establishing a strong international presence with projects in over 50 countries and languages. - With less than one-third of its 247 million subscribers based in the U.S. and Canada, Netflix has strategically expanded its reach in Europe, the Middle East, Africa, Latin America, and Asia-Pacific, making it the most profitable streamer and reshaping the global streaming landscape. - While Netflix's gamble on globalization has mostly worked, it faces challenges such as lower pricing in less-wealthy countries, increased content production costs, and the need to navigate diverse markets. Future success hinges on strategies like password-sharing crackdowns, the introduction of ad-supported tiers, and potential price adjustments to sustain profitability worldwide. [Keep Reading]( 2. [Shari Redstone Faces Tough Choice as Paramount Seems Ripe for Asset Sale, Break-Up]( By Lucas Manfredi | Source: [WrapPRO]( - Paramount's celebrated brand is reportedly up for sale, with analysts suggesting that the company, facing challenges in linear businesses and streaming losses, is likely to be sold off for parts, marking the latest move in Hollywood's ongoing consolidation trend. - Paramount's stock has seen a 17.4% drop in the past year, reflecting challenges such as declining advertising revenue in linear businesses and streaming operations operating at a loss, raising questions about the company's overall financial health. - Analysts believe that regardless of the buyer, selling off Paramount's assets is inevitable, with a potential breakup of the company presenting an opportunity for increased stock value; they estimate a 20% to 30% upside in the event of a breakup. - Shari Redstone, Paramount Global’s non-executive chair, is reportedly in talks to sell either the entire company or her controlling stake to Skydance Media CEO David Ellison and RedBird Capital’s Gerry Cardinale, with Skydance and Redbird signing NDAs to explore a possible acquisition. Other potential buyers include Netflix, Activision and Warner Bros. Discovery. - Analysts suggest various scenarios, including a partial asset sale that could see Paramount's cable and broadcast network businesses sold for cash, estimating a divestiture enterprise value of around $13.5 billion. A breakup could potentially unlock significant value, with estimates ranging from $23 per share to $38 per share based on different asset sales and valuation perspectives. [Keep Reading]( 3. [Alex Jones Is Back on X, But it's a 'Sinking Ship' With a Muted Reach, Say Media Experts]( By Sharon Knolle | Source:WrapPRO]( - Elon Musk's decision to bring back controversial figures like Alex Jones to X has sparked debates on whether it signifies the demise of the platform for rational discourse or a deliberate shift towards accommodating unfettered speech and controversial figures. - Despite criticism, a discussion featuring Alex Jones on X drew significant live viewership, suggesting Musk might be steering the platform towards a new model for a tech-led media ecosystem, potentially challenging mainstream media. - While Alex Jones has returned to X with increased followers, media experts believe his impact is likely limited, with the platform losing users regularly and being considered a "sinking ship." - Internal documents reveal X's valuation at $19 billion, half of Musk's purchase price, and potential losses of up to $75 million in advertising revenue, raising concerns about the platform's financial viability. - Musk's unconventional approach, including welcoming back banned users and openly challenging advertisers, has led to a decline in user and advertiser trust, with concerns about the platform's direction and impact on discourse. [Keep Reading]( 4. [Inside Japan's Historic First at U.S. Box Office - With 2 Movies in Top 3]( By Jeremy Fuster | Source:WrapPRO]( - Two Japanese films, “The Boy and the Heron” and “Godzilla Minus One,” achieved a historic milestone by cracking the top 3 of the U.S. box office, signaling a growing influence of Japanese cinema in the American market. - “The Boy and the Heron,” produced by Studio Ghibli, marked the first time an original anime film claimed the No. 1 spot at the U.S. box office, showcasing the increasing popularity of anime among American audiences. - Smart timing by U.S. distributors GKIDS and Emick Media, along with a lack of major Hollywood releases in early December, contributed to the success of both Japanese films, emphasizing the significance of release strategy in capturing audience attention. - The success of Studio Ghibli and Godzilla in the U.S. suggests a shift in audience preferences, potentially mirroring the 1970s when darker films gained popularity, indicating a willingness among moviegoers to explore diverse cinematic experiences. - Strong critical acclaim, audience recognition, and word-of-mouth played crucial roles in the success of “The Boy and the Heron” and “Godzilla Minus One,” highlighting the importance of these factors in the performance of specialty titles in the American box office. [Keep Reading]( 5. [How Netflix Became the Unlikely King of Animation]( By Drew Taylor | Source: [WrapPRO]( - Netflix's animation division, established in 2017, has rapidly become a powerhouse rivaling established studios like Disney, with strategic hiring, diverse content styles, and partnerships contributing to its success. - The face-off between Disney's theatrical release "Wish" and Netflix's "Leo" showcased the streaming giant's ability to attract audiences, with "Leo" amassing 34.6 million views on its opening weekend, equivalent to a $500 million box office haul. - Netflix's success is attributed to recruiting top-tier talent, including executives poached from DreamWorks Animation, fostering a consistent pipeline of releases, and achieving critical acclaim with films like "Klaus" and Guillermo del Toro's "Pinocchio." - Unlike traditional animation studios with a distinct "house style," Netflix embraces a wide spectrum of styles, partnering with external studios globally, such as Cartoon Saloon and Aardman Animation, to deliver a variety of animated content. - Netflix's global reach, licensing deals, and a diverse array of original and licensed animated content have positioned it as a go-to platform, with plans to enhance its animation output, including partnerships with Nickelodeon and Skydance, and a continued commitment to external collaborations for sustained success in 2024 and beyond. [Keep Reading]( With a focus on delivering actionable intelligence, the PRO Tip Sheet empowers readers to stay ahead of the game in the industry. Want to go deeper? [Explore WrapPRO today](. TheWrap | 2034 Armacost Ave Los Angeles, CA 90025 [Unsubscribe](