If you try to handicap the eternal race for eyes in the entertainment industry, you can do worse than looking at the Oscar. While the Academy of Motion Picture Arts and Sciences may not do much to reward the action-adventure tent films that bring into the largest box office, they tend to deepen the quality. And the quality decreases quietly down the road.
In this segment of MarketFoolery the podcast sees host Chris Hill and Taylor Muckerman from Motley Fool Canada on the big picture on the business side reflecting how (NASDAQ: AMZN) and others did and what the impact of a good trophy tail could have on services like Hulu and the upcoming Disney Plus.
A full transcript follows the video.
This video was recorded on January 22, 2019.
Chris Hill: As mentioned, the Academy Award nominations came out this morning. As fans of movies, we look at this news through the movie of movies that we saw and enjoyed, and maybe we have rooting for. As investors, we look at this news through the lens to invest. It shakes with Disney as a study with 16 nominations, Netflix receives 13 nominations, including its first best-picture nomination with Roma . Amazon Studios comes in with three. A good deal of news for Disney and Netflix shareholders.
Taylor Muckerman: Yes, absolutely. It seems to be a two-two battle with these two companies. When you look at Disney's content expenses when you remove sports, Netflix is almost right with them. It didn't take long for the company to catch up. As you mentioned, Amazon has a few bids. They just sip on Netflix heels with the content costs. Ramping it up and not just using willy nilly. Apparently, they make wise decisions about the directors, the cast, the themes of these films and shows. Very well done for these companies. If you are a shareholder, then it is absolutely what you want to see. Without shows and movies for the subscribers would like to see what is really worth the company?
Hill: There is absolutely economic upside. We've seen the data year after year that movies that get these nominations and win the Academy Awards end up getting a boost at the cashier's office. I should point out that Disney was 16 nominations, Netflix with 13. Netflix actually came in third. Fox Searchlight as a study came in a second with 15. You look at Disney's purchase of Fox Fox Searchlight, 15 nominations. 20th Century Fox with Five. Really, the Disney properties come with what 36? Hopefully – I say it as a fan of movies and as a Disney shareholder – they just want to let Fox Searchlight people continue to do what they do and maybe not interfere too much. It's a studio that has worked very well with regard to premium season.
Muckerman: One thing I saw that interested me a little was the projected additions of Hulu subscribers in 2018 are supposed to trump Netflix for the first time ever Of course, Disney now owns a significant share of Hulu. You can imagine these movies being rolled down perhaps to Hulu subscribers. A nice little bump there for the subscription industry at the top of Disney +, which is coming out soon.
Hill: It will be interesting to see what Disney does with Hulu and in three years from now, we see some sort of merging of the Disney streaming app and Hulu or if they are able to manage them separately and make them grow.
Muckerman: Quite curious about it himself. I have no predictions, but it will be interesting to see.
John Mackey, CEO of Whole Foods Market, a subsidiary of Amazon, is a member of The Motley Tools Board. Sonia Rehill has no position in any of the mentioned shares. Taylor Muckerman owns shares in Amazon. The Motley Fool owns and recommends Amazon, Netflix and Walt Disney. Motley Fool has an information policy.