Disney Gets A Nice Fat Tax Break For Making Its Streaming Catalog Worse
from the streaming-enshittification dept
We just got done discussing how, as the streaming video space consolidates and grows, it’s starting to behave more and more like the unpopular, consolidated cable and broadcast companies they once disrupted. Cory Doctorow’s theory of enshittification has come to streaming, in a big way.
Netflix now thinks password sharing is the devil. Streaming catalogs are shrinking because hugely profitable companies are increasingly too cheap to pay residuals. Writers are striking because executives making billions of dollars don’t want to pay creatives a basic living wage. Prices and restrictions are increasing at the same time the quality of the streaming service you’re paying for deteriorates.
Mindless mergers and consolidation, and Wall Street’s inevitable need for improved quarterly returns at any cost (even if it profoundly harms long term company and brand health) are taking a sector that was just hitting its stride competitively and innovatively, and turning it inside out. All overseen by upward-failing execs who seem to have no idea what they’re doing (looking at you Time Warner Discovery).
We’ve noted repeatedly how these companies keep pulling shows from their lineups in a bid to save money. Often because they’re just too cheap to pay residuals. Following on the heels of HBO Max, last week, Disney+ pulled more than 100 titles from its lineup, including some (like Willow) it had only just produced. Why? Because it netted them a giant tax break:
According to an SEC filing from late Friday, Disney’s set to write off about $1.5 billion following this streaming purge. It was previously known this was a way for Disney to cut costs, and the filing notes that this will be reflected in the company’s fiscal third quarter. But if you thought this would be a one-and-done affair, that is not the case. Towards the end of the filing, the SEC wrote that Disney is “continuing its review and currently anticipates additional produced content will be removed.” Those removals equate to an additional estimated $400 million. But as far as when these removals may happen (or what canceled shows may be caught in the crossfire), that isn’t touched on in the filing, and Disney hasn’t yet said.
Users were given a week’s notice that this content would be disappearing. Media bean counters, myopically fixated on “growth for growth’s sake,” have begun the enshitification process of making you pay more money for an increasingly worse product. Even if that means harming the company’s long term success, brands, and employee and customer relationships.
Lost in the conversation is the fact that these companies burned through hundreds of billions of dollars on completely pointless megamergers that were supposed to deliver untold synergies, broad resiliency, and untold consumer benefits. These same companies also spent billions more on bloated executive compensation packages, or luxury resorts nobody could afford.
That these companies would have saved untold billions (far more money that it costs to host Willow on a server) by avoiding bloated executive compensation packages, leadership incompetence, or completely pointless mergers (see the $200 billion AT&T set on fire for its disastrous Time Warner and DirecTV deals) is curiously either footnoted or not mentioned at all in the broader conversation.
The MBAs who defend these kinds of decisions as cold calculus, are incapable of stepping back and acknowledging that the entire process of mindless consolidation and enshittification is violent, unpopular, senseless, often completely purposeless, results in untold layoffs and ill will, and actually harms these companies longer term. Because, and this is the gist, the stupidity benefits them personally.
Filed Under: consolidation, max, mergers, missing titles, streaming, video, willow
Companies: disney
Comments on “Disney Gets A Nice Fat Tax Break For Making Its Streaming Catalog Worse”
A system that gives them a benefit to make something, show it a couple times, trash it, collect a tax break, keep the content locked away for close to forever because they claimed it was worthless now which is why they dropped it but they hold the copyright and it doesn’t matter if the public wants more from it.
Masters of tax avoidance
The entertainment industry has always been the Masters of tax avoidance. “Hollywood” being the prime example.
I'm bored with everything
I can’t be bothered to watch any of the stuff they have on nowadays, I’d rather read a book. Or, maybe watch the occasional show on BBC iPlayer.
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Don’t worry; that business is run by profit-seeking assholes too. Pushing DRM on users, suing the Internet Archive (who were doing the same), generally fucking with libraries… and, more to the point, geting nice fat tax breaks by having bookstores destroy unsold books. Better than letting people get those at a discount, right?
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Watching movies or TV is always a tightrope walk. The artists need to be supported, but most of them need to go through the corporate system to make their art in the first place.
There’s no easy path that doesn’t involve some objectionable supplier.
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The corporate system, though, tries to fuck them at every step of the way, and many of them grow to detest it—at best, seeing it as a necessary evil. I can’t help but wonder whether that’s true, whether this corporate system is actually holding them back while pretending to help. If it went away, something would necessarily replace it, and it’s hard to imagine how that new thing would be worse for them. Perhaps we make things a little bit worse every time we interact with (giving money to or accepting money from) the film and TV companies.
Having your cake and eat it too?
A tax write-off of the production costs should only be possible along with relinquishing all copyright claims to the production.
Re: Writing off production costs
This in spades. If you’re going to write down the value of something, then you should have to place it in the public domain. If you still need to protect it, then it still has value that can’t be written off.
So the “new option” that got me to stop searching for “alternative sources” is now driving me back to those “alternative sources”.
I wonder if Best Buy still has a $2 bin?
‘the stupidity benefits them personally’
wow! how dare you even think of such a thing! but, as said before, you cant put sense where there isn’t room!!
Mel Brooks was prescient
Disney execs have adopted “The Producers” as its accounting method.
Disney removing content
Can consumers sue over this? Can they claim they signed up for Disney+ specifically to watch Willow, but now they can’t? After all, didn’t Disney make a big advertising push to promote Willow, just to get subscribers?
And what about the other content? Can people make a case that they’re not getting the content they paid for?
But then this leads to a cycle: Disney removes content because they say they can’t afford it. So people cancel their subscription, which is less income for Disney. So Disney removes more content because they say they can’t afford it. Then more people cancel, more content is removed, and so on.
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Sure, but the lawsuit(s) would almost certainly be quickly dismissed. Like cable TV, you’re paying for access to a mixed bag of stuff as long as you’re a subscriber. You’ve been disappointed more than deceived. It’s not like those DRMed downloads that are fraudulently advertised as “purchases”, but which can be taken away at any time.
So, what would your damages be here? Maybe you paid your June 2023 subscription fee on the basis you’d get to watch Willow. Now you can’t. A refund of the monthly fee, plus costs, would make you whole. But the first step would be to cancel and ask for a one-month refund; a court’s not gonna be happy if you go straight to them without trying to resolve it yourself.
Re: they can cancel
The more these sites yank content, the quicker I churn (tho I haven’t really noticed the stuff I like being yanked). Not bothering with Disney+ till all the Ahsoka episodes are up, probably will do another month and then bail. If they don’t like that, they need more content, not less, and not all Star Wars and Marvel stuff, which is very hit or miss.
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Although quite a few people would be happy to see the original Star Wars trilogy get a proper high-definition release (as Harmy and 4K77 have provided).
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Good luck convincing a jury of that.
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You almost certainly accepted that possibility when you signed up and agreed to the ToS. I don’t know for sure though because I didn’t read them either.
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Assuming “disneytermsofuse.com” is an official site with terms that apply to Disney+, section 8 requires binding arbitration rather than lawsuits, and requires individual actions rather than class-actions. But as we’ve seen from past Techdirt stories, that can be a mistake: if enough people are upset, they could flood Disney with so many complaints that Disney will wish they could deal with a class-action.
Still, I don’t see “Disney’s service is somewhat crappier than I expected” being one of the great concerns of the modern era. Unless you’re stuck in a long-term contract or something, just cancel and move on with your life. (Disney’s “unofficial competition” has always been better than their products anyway, the “Disney Vault” being a particularly long-running annoyance.)
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“Assuming “disneytermsofuse.com” is an official site with terms that apply to Disney+”
That’s an interesting one, and might be regional. That URL seems to be owned by Disney, but I don’t see reference to it on the Disney+ site. If I go to Disney+ and click on the subscriber agreement link it takes me here:
https://www.disneyplus.com/en-gb/legal/subscriber-agreement
But, there’s no section 8 in what I’m looking at. Maybe it’s a different agreement overall, maybe EU rules mean that they can’t do what you mention.
“Unless you’re stuck in a long-term contract or something, just cancel and move on with your life”
That’s probably the best defence for them. It’s implicitly understood that streaming services don’t always have the same content month to month. Even if someone argues that they expected something like Willow to be on Disney forever, nobody is locked in, you can cancel as soon as you find out it’s not there, then pay a competitor for the content. I doubt it falls within any legal area where you could conceivably claim more than a month’s subscription.
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What you might be overlooking is that, sometimes, there’s no competitor that has it (except maybe the competitors who don’t obey copyright laws). That seems to be the case with Willow: it’s just gone. It’s been announced that this will happen with Final Space, too; the write-off, as I understand it, was contingent on nobody having legal rights to air it (thus, it’s valueless, and the full tax benefits can be claimed).
This doesn’t mean that suing a streaming service for sucking is a viable legal strategy; the market can punish them anyway, in the form of the death spiral described by John. Maybe something about copyright abuse or anti-trust would work better. It might be on shakey ground in jurisdictions that have no mandatory copyright licensing for audiovisual works, although the image of things Disney owns (archived) certainly makes me think “antitrust”.
Like I keep saying, Disney isn’t a saint, they are in it for the money, and when govt’s actins and recent legislation threatens a significant portion of that profitability, then the Mouse is going to push back, which is what is happening. DeSantis thinks this is ideological, and it is… from him, from Disney, it’s all business.
Re: why even mention that demagogue?
DeSantis is clueless. The issues facing Disney have nothing to do with being woke. It’s all about them making $$$ on cable and broadcast, which is dying and being replaced by streaming, where they make pennies. They’ll figure it out. It’s not like they have an alternative.
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Because a significant portion of what Disney has been in the news for recently, including here on Techdirt, is directly related to him, even if this specific story isn’t.
Re: Re: Clueless like a fox
Meatball isn’t clueless. Never underestimate his capabilities. He’s the one who is capably engineering authoritarianism. He’s trying to prove to the GOP and the magavolkisch that he’s a competent authoritarian.
He’s patterning himself after Orban, Erdogan and Putin before them. He is working on the institutional capture phase, looking at how to use state capacity to project personal power, looking for load-bearing and pressure points within institutions, gauging popular sentiment, and engaging nodes of resistance (e.g., civil servants).
What drives Meatball is showing the world he can.
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I dunno about “capably”. He’s popular in Florida, but I think his ambitions will most likely stop there.
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Yes, capable. The Florida Legislature carries his water.
The laws he does pass are red meat for a red-state base, and he’s big on policies that are “heavy on enforcement, light on law” (overly broad to require enforcement and a legal challenge and appeal that the judiciary has to figure out, especially in the hopes of a gimme from Scotus).
There’s also a DeSantis Style of politics, as seen in his Election Stasi and his migrant dumping. Take an ominous policy action but apply it to a very small group of people — like the small plane of migrants or the 20 or so people arrested on charges of voter fraud. There’s a thuggish “leave a receipt” mentality behind these policies — it gets a lot of press attention and Floridians crave it.
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We’ll see how all that works out for him in the long term. I don’t think he’s got anywhere to go but down.
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That’s like saying “tobacco companies are clueless. Smoking has nothing to do with being cool.”
You are presuming here that DeSantis is not a cynical, self-serving deceitful asshole. And that premise just seems sort of a shaky proposition to start arguing from.
more mindless mergers to come
Streaming replaced linear TV, which is dying, because streaming is better for customers. They like paying a lot less money to companies vs cable. But that yanks a lot of money out of the ecosystem and something’s gotta give.
Not all the competitors can survive now that customers are getting hip to churn, lowering their costs even more and yanking out even more money. Paramount will be sold when Shari Redstone finally admits defeat. Comcast will sell NBC Universal. Warners might make it, might not. Amazon is the most likely to buy the losers.
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As big, if not bigger reason is they get to watch when they want, not when the company wants, and have the same capabilities for managing watching as with a DVD, that is pause, rewind and stop and resume watching latter.
Pirates, as always, are unaffected.
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Well, in a way, we are affected. By that, I mean that if the output of current content dwindles, then all we’re left to pirate is old stuff we’ve already seen/heard.
Of course, as Ed Sheeran points out, piracy is what got him started on the road to fame, so I see that avenue as not only open to a lot of other upcoming talent, but as nearly an invitation to do take that path. We may have to sit through several years of B-grade material, but as quality equipment gets cheaper, and production values benefit from experience, I see a resurgence in quality entertainment.
Until some fucktard comes along and promises the moon if every entertainer will “just unite” under his banner… then it’s enshittifcation all over again. Hopefully I’ll be gone by then.
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Or you could… just try stuff you’ve never heard before, and word of mouth makes old things new again as you’re introduced to new genres and content.
Or enough people, out of nostalgia or curiosity, remix or modify what already exists.
Mostly agree with the rest of what you have to say. If we have to sit through too much crap people will simply gravitate back to what they’re already used to and put it on repeat.
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I resemble that remark.
I haven’t had my rates increased or a reduction in service for decades.
How the fuck does that even work.
“far more money that it costs to host Willow on a server”
Here’s the real problem, hidden within the larger issue. Once a movie or show is made, it’s basically a digital file that can be accessed on any device or location it’s made available. Audiences know that on some level, so they also understand that any restriction is artificial.
But, they still want to support the artist in some way, usually. Whether this is due to subscriptions, watching ads or some other means, give them access and they’ll usually choose that instead of piracy. Here, the pendulum has swung too far the other way. People are blocked from watching something because there’s more money blocking them than allowing them full access? The high seas, it is.
What this means for production, especially after the writer strike, I don’t know. But, there needs to be some business model other than the fragmented mess streaming has become in recent years. The ideal model for consumers is a one stop shop for what they want to watch, without having to pay extra to subsidise the things they don’t. There must be a middle ground between that and “you can only see that one show if you pay a premium to a platform you otherwise wouldn’t go to”.
What for the axe?
You have to put numbers with general statements.
What was the viewership of Willow vs Marvel and Starwars and Dumbo!
“Popular” is a generic statement without comparative numbers.
Few argue that the management of any company is likely overpaid. But shows get cut, dims get cut, because the viewership isn’t there.