Please explain how removing access to shows saves money? (www.theverge.com)

submitted 10 months ago* (last edited 10 months ago) by GlassHalfHopeful@beehaw.org to c/entertainment@beehaw.org

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Would you all explain to me how removing content we expect to have access to is a "cost savings" measure?

The following is from the Willow Wikipedia page, which led me to the linked URL:

The series was removed from Disney+ on May 26, 2023, amidst a Disney+ and Hulu content removal purge as part of a broader cost cutting initiative under Disney CEO Bob Iger.

I've been abroad for a month and earned some time off afterwards. One of my kids reminded me that we never finished Willow, so I said "let's do it now!" The show wasn't perfect for many reasons, but I wanted to finish it for nostalgia's sake and my child legit found it interesting. Lo and behold, the series isn't on Disney+ any more!

A quick search later, I see the above referenced quote linking to the article associated with this post... which only made things worse. The Mysterious Benedict Society was something my whole family could watch and enjoy without arguments! Turner and Hooch was dorky, but something my youngest loved and it was a super safe and easy pick for us bond over.

This post isn't about whether the shows are good. And it isn't about how nearly every show I like ends up cancelled. The point is that I paid for access, they were then quietly removed (for various platforms), and I have zero understanding as to how this saves these companies money.

Would someone explain?

P. S. Yes, I know this is old news. However, this is just how I am. I'm not up to date with anything in the entertainment world. I intentionally wait a few seasons for things because I loath when shows are cancelled after a season. (I'm looking at you, Firefly.) I'm the same way with books, often waiting to read a trilogy after its published because I don't like the wait in between books. (Thanks, Rothfuss).

I just don't take cancellation wells, especially when I was on top of everything including summer podcasts and such. (Now anything with the names Abrams, Lindelof, or Cuse makes my skin crawl.)

I know. I'm weird and stuff.

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[-] Firipu@startrek.website 40 points 10 months ago

I'm not a specialist and I'm just guessing: licensing fees and streaming fees to the actors etc? Every view costs them a tiny bit of money. I guess over time it adds up. And from Disney's pov those shows don't bring in new subs or anything, so they only cost them money?

Please correct me if I'm wrong.

[-] HobbitFoot@thelemmy.club 6 points 10 months ago

My guess is that any fees or residuals are based on a time to stream, not a number of views.

If residuals were only paid per view, you could have an underperforming show on and not really care that it underperforms. However, if you are paying per month, an underperforming show is not going to make the streamer money.

[-] BarryZuckerkorn@beehaw.org 3 points 10 months ago

The streamers are very protective of viewership numbers and even the show's producers can't get access to that information. So all the payment formulas are based on subscribers, not viewers. A show that nobody is watching is too expensive to carry.

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[-] jtmetcalfe@lemmy.sdf.org 24 points 10 months ago

This thread isn’t touching on the biggest impact which is being able to write down or impair these assets that are taken off streaming or shows in production that are cancelled (for Warner’s an amount in excess of $3B) - the impaired asset value is then taken as a loss which reduces the company’s tax burden.

[-] BraveSirZaphod@kbin.social 4 points 10 months ago

I won't pretend to understand corporate accounting at all, but if a show is costing them more money than it's supposedly bringing in, how does it actually have any value as an asset in the first place? Can they literally just deduct the cost of production?

I guess I'm trying to imagine an analogous physical example. If a business spends $10,000 on a widget machine, but after several years it deteriorates to the point of being functionally useless and worth only $100 for parts, if they then throw it out, can they write off the $100 it's now valued at, or the $10,000 they originally paid? If it's the $10,000, can that expense not be deducted at purchase, and they have to wait until the actual object is disposed of?

[-] BarryZuckerkorn@beehaw.org 3 points 10 months ago

Physical equipment is depreciated at a specific schedule based on that asset's useful life. If you have a widget machine that costs $10,100 and is expected to last 10 years before being scrapped for $100, you can use a straight line depreciation of $1,000 per year.

But 5 years in, if the widget machine is destroyed, and the remaining scraps are only worth $100, then you can write down the $5,000 loss against your income, taking that tax benefit now instead of over the next 5 years.

If it’s the $10,000, can that expense not be deducted at purchase, and they have to wait until the actual object is disposed of?

No, they can't deduct the purchase price because it's not actually a loss of income. If they bought something that doesn't lose value over time (a chunk of gold, a famous painting, some foreign currency, or a parcel of land), the amount they paid isn't a "loss," because they have a valuable asset after the purchase, so they're not any poorer after the transaction.

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[-] BarryZuckerkorn@beehaw.org 20 points 10 months ago

Most of these shows pay residuals to actors, writers, directors, and production companies based on formulas of how many subscribers the service has. Notably, none of the services are willing to publish detailed viewership statistics, even privately to creators, so the shows have to pay the same amount regardless of whether 1 person is watching or 1 million people are watching every day.

Rather than throw good money after bad, the services would rather take the show off entirely and not have to pay any residuals going forward. Then, with the show/movie making no money going forward, they get to write down the fair value of that intellectual property, which also saves the parent company on taxes.

[-] GlassHalfHopeful@beehaw.org 5 points 10 months ago

If this is accurate, then it would make a hell of a lot more sense. But... it sounds like these "residuals" need to be payed out differently because this sucks for consumers and... honestly... I think for those that poured themselves into making the content in the first place.

[-] BarryZuckerkorn@beehaw.org 9 points 10 months ago

This is a huge point of contention in the current strike negotiations in Hollywood. Take, for example, this article:

SAG-AFTRA has proposed a bonus on top of the standard residual for the most-watched shows. But the AMPTP has refused to go along with that.

One of the challenges is getting a common metric that would work across all the streaming platforms. Each platform measures views differently, and they also consider that data top-secret.

. . .

Under the current formulas, streaming residual payments for all three guilds are based on a pre-determined compensation formula that declines over time as the TV show or movie ages. Platforms are sorted into subscriber-based tiers, with the higher tiers paying a higher residual. But the payments are the same regardless of the popularity of a show.

[-] GlassHalfHopeful@beehaw.org 3 points 10 months ago

Yeah. I see this as being a problem. I was curious how it comes into play.

The popularity of a show really needs to be taken into account.

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[-] Franzia@lemmy.blahaj.zone 3 points 10 months ago

Most of these shows pay residuals to actors, writers, directors, and production companies based on formulas of how many subscribers the service has.

wait what I thought people are on strike because this ISN'T happening.

[-] BarryZuckerkorn@beehaw.org 6 points 10 months ago

The current residual formulas are based on subscriber counts for the whole service (which all the streamers publish to shareholders and the public), not the number of viewers or hours viewed or any statistics that have anything to do with the specific show/movie itself (which the streamers refuse to release even to content creators and producers).

The strike negotiations want bonuses based on actual streaming performance, but the streamers are resisting anything that might require them to actually disclose numbers.

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[-] reverendsteveii@lemm.ee 3 points 10 months ago

Its also worth noting that their focus is on new subscriptions rather than retention, and a sort of "originate then cancel" model has developed from that. They create a new show, the hype from that new show drives new subs, they cancel the show to save money on residuals and to dedicate production funds to originating new shows, a certain percentage of the people who subbed for just that show stay subbed, their sub numbers go up

[-] MudMan@kbin.social 10 points 10 months ago

So it's a tax thing.

The specifics of the tax and accounting issues at play here are beyond me, but it seems to be related to how big the value of the stuff you offer is versus how much of the cost you can write off as a loss.

The Guardian talks about it today and summarizes the whole process as "In May, Disney+ announced a content removal plan designed to cut US$1.5bn worth of content, meaning it substantially reduces the company’s value, giving it a lot less tax to pay."

https://www.theguardian.com/tv-and-radio/2023/aug/29/the-great-cancellation-why-megabucks-tv-shows-are-vanishing-without-a-trace

It's all fake, dumb monopoly money stuff and it sucks. Somebody track down an actual corporate accountant who can explain the process better than me, though. It's probably an interesting bit of detail to learn about.

[-] Anticorp@lemmy.ml 2 points 10 months ago

Business Accounting is such make-believe bullshit.

[-] GlassHalfHopeful@beehaw.org 2 points 10 months ago

This is what I had heard at some point. It's a tax thing. Even though there are no details, it makes more sense to me now. Reduced value == less taxes. Would love to hear the guts if this... but also at the same time pulling out hair. So much blood, sweat, and tears going into producing something only having it then wiped from existence. smh.

And I hadn't realized that Westworld was axed too. For a show that made such a huge hubbub and then to remove it entirely?! Ugh

[-] Blaidd@lemm.ee 5 points 10 months ago* (last edited 10 months ago)

It's because they take the value of the shows they remove and mark them down as a straight loss, it's a ridiculous loophole. They are literally saying, "I have this thing that's so valuable, but I 'accidentally' threw it away, it's worthless now, I need to mark this down as a loss." They are destroying their own products for tax purposes.

The Discovery channel boss started this trend when he cancelled that Batwoman movie, and now other streaming corps are following suit. Hopefully the law will catch up to prevent this kind of trickery, but for now it seems they are doing everything they can to reduce costs because they rushed to steal Netflix's lunch without a solid business plan.

[-] GlassHalfHopeful@beehaw.org 3 points 10 months ago

it’s a ridiculous loophole. They are literally saying, “I have this thing that’s so valuable, but I ‘accidentally’ threw it away, it’s worthless now, I need to mark this down as a loss.” They are destroying their own products for tax purposes.

This. ☝

[-] Rhodin@kbin.social 10 points 10 months ago

Your best bet is to vote with your wallet. Can’t get Willow on Disney+? Then, Disney+ doesn’t get your money. I’ve been buying more physical media and downloading again like I’ve gone back in time 20 years.

[-] GlassHalfHopeful@beehaw.org 2 points 10 months ago

Not physical media again. Haha. We got rid of all our DVDs to trim down on all the...stuff. No more stuffffff.

But it's that or someone hosts it, which costs money and circle around again...

[-] Neato@kbin.social 6 points 10 months ago

Bring back the giant disc cases! 100 discs in a single soft-sided case takes up less room than a shelf of DVDs. Now all your friends can flip through to decide what they want, just like in college! /old

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[-] GenderNeutralBro@lemmy.sdf.org 5 points 10 months ago

A single consumer hard drive can hold several thousand DVDs. With newer codecs you can get much much better quality at smaller file sizes, too.

I consider this by far the best experience in terms of quality and performance. Unfortunately, the only way to live this dream is to pirate everything, or spend a lot of time ripping your own discs (which might not be legal anyway thanks to bullshit DRM cracking laws).

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[-] nottheengineer@feddit.de 2 points 10 months ago

Or everyone hosts it and shares the costs, aka piracy.

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[-] averyminya@beehaw.org 5 points 10 months ago

Lindelof

This one seems a different case. You have Lost which was written as it was being filmed and then you have one of the best single season shows of all time a decade later with Watchmen (series). He never planned it past the first season and it didn't need to be, which I quite prefer to, say, dragging out a show for 4 more seasons.

As for why things get removed - contracts for the rights and the cost of them. I need to go to be so in short, companies can leverage the popularity of their shows. Whatever network for Gray's Anatomy for example is exempt from all "Ad-Free" Hulu plans, because ABC or whatever's network contract with Hulu specified they'd still shows ads. Fox contracted the streaming rights for It's Always Sunny in Philadelphia which lapsed in 2017, so Fox Century owned by Disney which owns Hulu and FX then were able to keep IASIP on Hulu alone (except for outside the U.S. where it's on Disney+...)

The most recent absurdity is formerly HBO formerly HBO Max now just Max having removed over around 30+, mostly animated, shows many of which were originals and are now no longer available anywhere.

I suggest looking into the cost of an Intel Quicksync server and a couple hundred for some high capacity hard drives and setting yourself up a media server. I like to support the content actively coming out, but I can't trust and rely on those to always be there. They aren't accessible if the internet is down or if there's a password mishap, but my server is up as long as there's power running.

[-] GlassHalfHopeful@beehaw.org 3 points 10 months ago* (last edited 10 months ago)

Ugh. I used to host my own content for years. I stopped for a number of reasons and I just... don't wanna anymore? Haha. I host and run enough services as it is.

Like so many folks, I can access any show I want at anytime. This includes Willow mentioned above. And yes, we will still watch it. It simply won't be via Disnley+ now. Thr point is that I want to to pay for these services and then they make these decisions which make it so hard. Agghhhh. 😖

[-] Talaraine@kbin.social 3 points 10 months ago

That's the same conclusions many people are coming around to, unfortunately. We hoped streaming was the answer to the cable problem but... money talks and we're kinda back where we started.

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[-] frog@beehaw.org 4 points 10 months ago

The only thing I can think of is licencing fees: if Disney don't actually own the rights to a particular show, then they're paying fees to be able to provide it on their platform. If the number of people watching that series after subscribing to the service isn't high enough (and I imagine Disney put a lot of effort into tracking what subscribers are watching in order to determine which series are motivating people to start or continue a subscription), then effectively that series is losing them money.

It is, however, one of those cost-cutting measures that will bite them in the ass within 6-12 months. Cutting back the catalogue too much and only leaving the super popular stuff available will lead to subscribers going "well I've watched everything I want to watch, why am I spending money on this?" sooner than if there's a wider catalogue with a much broader range. Most people aren't going to keep subscribing to a streaming service just to watch the same 6 things on a loop.

There is, ultimately, only one solution to streaming services taking away the stuff you want to watch...

🏴‍☠️ 🏴‍☠️ 🏴‍☠️

[-] GlassHalfHopeful@beehaw.org 6 points 10 months ago

And this is why I'm thinking I need to have sit down with my partner. We are streaming several platform and I think it's time to start cutting back. Perhaps cycling through different services throughout the year.

I miss when it was just all on Netflix. Way too many platforms now...

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[-] sanzky@beehaw.org 3 points 10 months ago

unfortunately, in the age of streaming the measurement for success is not "how many people watch it" but "does it bring new subscribers and keep the current ones?".

if a show can be removed without fear of people cancelling their subscriptions, removing them saves them money.

[-] Necromnomicon@lemmy.dbzer0.com 2 points 10 months ago

It's so they don't have to pay royalties to the people who made the shows.

[-] dangblingus@lemmy.dbzer0.com 2 points 10 months ago

It's not about saving money on the backend, it's about not bombarding people with terrible shows like Netflix does. They're trying to trim the fat so that all you see are quote unquote bangers. For instance, the Willow show was hot garbage.

[-] GlassHalfHopeful@beehaw.org 4 points 10 months ago

Hot garbage they spent a whole lot of money on that could still be served without ever showing on the main title screens. They clearly had to have made a determination that the show would cost them more to keep it available, even though it doesn't entirely make sense to me how that all works.

[-] amio@kbin.social 2 points 10 months ago

IP is a clusterfuck of rights and licenses. The owners have generally made sure to wring the last cent out of this stuff, making it fairly complicated. So things can randomly end up removed from re-releases or over the air, due to time-limited licenses. E.g. Scrubs had a huge part of its iconic soundtrack nuked from streaming versions.

[-] GlassHalfHopeful@beehaw.org 2 points 10 months ago

Indeed.

Btw, was Scrubs removed or the music replaced? I don't even know where to find it now.

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[-] EvilColeslaw@beehaw.org 2 points 10 months ago

This used to be the only reason, however in the last couple years we're starting to see streaming services remove their original programming (owned and produced by themselves/their parent or affiliate studios). Seemingly just so they don't have to pay more in royalties.

[-] trustnoone@lemmy.sdf.org 2 points 10 months ago

Many companies have to pay a publisher rights for their show, which may or may not go onto paying other actors and companies and other stuff. This is much lower if you own the show. Hence why Netflix will have their own shows that don't disappear. Or Disney plus will keep Disney owned shows.

But some examples are:

you are an avid watcher, you've seen these shows, so to retain you, companies will cycle out long standing shows for others (use the money for new stuff)
Company is paying a lot for 1 show when they could diverse (or the other way) to get a more popular show to drive in traffic or cheaper shows that drive more traffic.
company would rather drop the money going to the publisher and spend it for their own new show that they pay less ongoing cost for
if a company has a hard year, they may just not pay publishers for as many shows so their books look better and they make some money to invest in innovation/shows
some CEO's look at companies differently. They join a company, they cut costs saving 10mil by not paying publishers. They then pocket 5mil as a ceo saying they saved so much money. Then they move onto their next company. And the company pays for the show to come back again.

[-] GlassHalfHopeful@beehaw.org 5 points 10 months ago

That last point is especially true for so much business these days. Ugh.

[-] chaogomu@kbin.social 3 points 10 months ago

You missed the Tax write-off. Through some creative accounting, a company can remove something from streaming, claim the service is now less valuable, and save money on their taxes.

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