Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Netflix is the largest
Speaker 1: paid streaming service in the world, but it's so much.
Speaker 2: More when you think of the traditional film and television.
Speaker 2: Netflix is the biggest TV network. It is the most
Speaker 2: productive movie studio.
Speaker 1: Lucas Shaw reports on the business of entertainment for Bloomberg,
Speaker 1: and he's covered Netflix closely for years as the company
Speaker 1: has grown from a DVD by mail service into a
Speaker 1: streaming juggernaut.
Speaker 2: It's been making original programming for about ten years, and
Speaker 2: in that ten year span it has more from sort
Speaker 2: of like this small, cuddly company into the most powerful
Speaker 2: for us in Hollywood.
Speaker 1: Today, Netflix is the envy of other paid subscription services,
Speaker 1: along with many TV networks and movie studios. But back
Speaker 1: in twenty twenty two, there were a lot of questions
Speaker 1: about Netflix's future coming out of the pandemic when streaming
Speaker 1: use skyrocketed then plateaued. The company had the worst six
Speaker 1: month stretch in its history, and it lost around two
Speaker 1: hundred billion dollars in market value. But Netflix defied its
Speaker 1: critics and engineer to turn around, and Lucas says there
Speaker 1: is one person who's led the way through the company's rebound.
Speaker 2: He's one of the most important and powerful people in
Speaker 2: the media entertainment business and someone that I think nobody
Speaker 2: knows anything about.
Speaker 1: Greg Peters is Netflix's co CEO, an executive handpicked by
Speaker 1: Reed Hastings. He's the company's billionaire co founder who stepped
Speaker 1: aside last year. Well now Peters runs Netflix alongside Ted Sarandos,
Speaker 1: and together they've put Netflix on track to generate ten
Speaker 1: billion dollars in profit this year. On today's episode, who
Speaker 1: is Greg Peters And what's his vision for Netflix? And
Speaker 1: how we'll watch? Well everything, I'm David Gerret and this
Speaker 1: is the big take from Bloomberg News. Bloomberg's Lucas Shaw
Speaker 1: recently sat down with Greg Peters for his first print
Speaker 1: profile since he became Netflix's co CEO last year. Can
Speaker 1: you describe what it was like to meet him and
Speaker 1: sort of how you thought about the scenes or the
Speaker 1: situations in which you'd want to show him in this role.
Speaker 2: Well, I only had so much control over that, right,
Speaker 2: Netflix is a very controlling company. You know, Normally, if
Speaker 2: you profile someone, you want to spend a lot of
Speaker 2: time with them, you want to see them in multiple settings.
Speaker 2: But you know, I knew I wanted something that was
Speaker 2: sort of more of a corporate event to see him
Speaker 2: interacting with peers, and so that ended up being going
Speaker 2: to this thing they have called New Employee College, which
Speaker 2: is like new higher orientation, and he gave sort of
Speaker 2: a basically a pep talk to this room of people.
Speaker 1: The orientation happened at an art deco theater in Hollywood,
Speaker 1: and Peters started that pep talk by tracing Netflix's history,
Speaker 1: a history he helped shape.
Speaker 2: If you look at the biggest initiatives for the company
Speaker 2: over the last few years, he has been the person
Speaker 2: leading those.
Speaker 1: Peters is not exactly your average tech guy. He's a
Speaker 1: bit of a renaissance man. He speaks six languages and
Speaker 1: plays the Digeri do. After college at Yale, where he
Speaker 1: studied physics and astronomy, he got a job as an
Speaker 1: engineer at an online wine reed sailor, where he developed
Speaker 1: a taste for the finest barolos before the dot com
Speaker 1: bubble burst in two thousand and one. Over the next
Speaker 1: few years, Peters bounced around from tech company to tech company,
Speaker 1: and in two thousand and eight he got a call
Speaker 1: from Netflix.
Speaker 2: They were looking for someone who could help get the
Speaker 2: service distributed on a lot more devices because Netflix started
Speaker 2: off only being available on your computer. You know, I
Speaker 2: watched it on my laptop in college that year, and
Speaker 2: Greg had a resume that was in many ways perfect
Speaker 2: for that because he was navigating this relationship between representing
Speaker 2: software and negotiating with consumer electronics companies.
Speaker 1: Peters was part of the team that convinced the TV
Speaker 1: manufacturer Visio to put a Netflix button on its remotes,
Speaker 1: and that convinced Netflix co founder Read Hastings that Peters
Speaker 1: had potential.
Speaker 2: Read takes a liking to him. He sees someone with
Speaker 2: broad interests. He sees someone who is sort of multifaceted
Speaker 2: because he understands the technical side very well and can
Speaker 2: do things that other people explain to me that I
Speaker 2: would struggle in explaining, and so I think that became
Speaker 2: attractive to someone like Read.
Speaker 1: Hastings tapped Peters to oversee Netflix's expansion in Japan, and
Speaker 1: then Peters became the company's chief product officer, and in
Speaker 1: that role, Peters started looking into something that had become
Speaker 1: a problem for the company, password sharing.
Speaker 2: Netflix started to study it. They tried to examine there
Speaker 2: are both ways to identify who was sharing and then
Speaker 2: how you would stop them from doing soak.
Speaker 1: There are a lot of ways people share Netflix, like
Speaker 1: a family of four using the same account under one roof.
Speaker 1: But then there's the twenty something who's moved away from
Speaker 1: home and lets his two friends and his ex girlfriend
Speaker 1: us his mom's account. Peters and his team studied all
Speaker 1: those scenarios.
Speaker 2: There's a lot of studying of building the algorithm to
Speaker 2: determine who is sort of unfairly sharing, and then how
Speaker 2: do you communicate that without pissing people off.
Speaker 1: After rooting out the moochers, Netflix started to think about
Speaker 1: how it could launch a broader crackdown in twenty twenty two,
Speaker 1: but Lucas says there was this divide within the company
Speaker 1: about how to proceed.
Speaker 2: They have a big disagreement basically about what the best
Speaker 2: approaches Read Hastings on one side, Greg Peters and most
Speaker 2: of his most of the executive team on the other side.
Speaker 1: Hastings, Netflix's co founder, thought Netflix should charge by physical location.
Speaker 1: For example, if you are lucky enough to have two houses,
Speaker 1: you would need two Netflix accounts. Well, Peters thought that
Speaker 1: violated Netflix's core promise that if you paid for the service,
Speaker 1: you should be able to take it with you. Peters
Speaker 1: advocated for a model based on individual users. You could
Speaker 1: access Netflix wherever you wanted, but you'd have to pay
Speaker 1: to add new users to your account.
Speaker 2: So they test both models in Latin America in sort
Speaker 2: of two distinct tests, and Greg's instinct proves to be correct.
Speaker 1: By this point, Hastings had been thinking for a while
Speaker 1: about his next chapter. The fact that Peters's approach worked
Speaker 1: that led to more sign ups, fewer cancelations, and less
Speaker 1: online outrage was the last in a string of successes
Speaker 1: that convinced Hastings Peters could lead Netflix.
Speaker 2: He was, as Read Hastings described, like kind of the
Speaker 2: battlefield generals. And so there's a reason that after they
Speaker 2: had settled on how to crack down and password sharing,
Speaker 2: read Hastings decides, now's my time. I can leave, and
Speaker 2: I trust Greg to succeed me.
Speaker 1: In January twenty twenty three, Netflix announced Hastings would transition
Speaker 1: to a role as executive chairman. Peters became co CEO
Speaker 1: alongside Ted sarandos.
Speaker 2: Now you've got this structure where you've got Greg Peters
Speaker 2: seen as sort of the tech Silicon valley guy in
Speaker 2: many ways, the air to read Hastings working alongside Ted Sarandos,
Speaker 2: who's the Hollywood guy running this massive company.
Speaker 1: Netflix is now thriving. It's adding subscribers and advertisers even
Speaker 1: as other streaming services struggle, which is something Lucas saw
Speaker 1: Peters brag about when he was on stage at that
Speaker 1: new employee orientation.
Speaker 2: Greg is basically saying, you know, all these traditional media
Speaker 2: companies with cable networks, they are screwed. Their cable networks
Speaker 2: are shrinking and that's depriving them of resources, and their
Speaker 2: streaming services don't make any money, and so these aren't
Speaker 2: sort of real threats to us. And the companies that
Speaker 2: have the money to compete with us, the Apples and
Speaker 2: Amazons of the world, they don't really care about entertainment
Speaker 2: like Amazon's been at it for almost as long as Netflix,
Speaker 2: and Netflix has probably released more hit shows this year
Speaker 2: than Amazon has released in its entirety. And I think
Speaker 2: he wants to say it's ours to win, but he
Speaker 2: feels that Netflix has always been more effective when it
Speaker 2: has seen itself as the underdog, and so he sort
Speaker 2: of ends this by saying it's ours to lose.
Speaker 1: It's ours to lose. Uz coming up after the break
Speaker 1: Greg Peters's strategy to win. Lucashaw oversees media and entertainment
Speaker 1: coverage for Bloomberg and writes a weekly newsletter called screen
Speaker 1: Time about the business of pop culture, which means he
Speaker 1: knows a lot about the competitive landscape Netflix is in.
Speaker 1: Lucas says, one part of co CEO Greg Peters's plan
Speaker 1: for Netflix is pretty simple. It's to focus on what
Speaker 1: the company is good at.
Speaker 2: I think that they want to continue to be the
Speaker 2: best and most popular streaming service in the world without
Speaker 2: getting distracted by a lot of other potential initiatives. But
Speaker 2: there's a recognition that they need to evolve the business
Speaker 2: and have sort of multiple levers for growth.
Speaker 1: Peters isn't pushing Netflix to expand into movie theaters or
Speaker 1: build theme parks some other media companies, but Lucas says
Speaker 1: Netflix is entering a new phase. One we're making more
Speaker 1: money from its current model is as important as adding
Speaker 1: new subscribers, and the company has identified three ways to
Speaker 1: do that. To sell ads, to make video games, and
Speaker 1: to raise prices. When it comes to the first one, advertising,
Speaker 1: Netflix has a pretty straightforward strategy.
Speaker 2: If you can get people to spend more time watching Netflix,
Speaker 2: you can sell more ads and make more money.
Speaker 1: And one way to get subscribers to spend more time
Speaker 1: on Netflix is live programming. That company announced last week
Speaker 1: it's acquired the rights to stream two NFL games on
Speaker 1: Christmas Day, the Chiefs versus the Steelers and the Ravens
Speaker 1: versus the Texans. Netflix also acquired the rights to air
Speaker 1: professional wrestling, and there are plans in the works for
Speaker 1: award shows and more comedy specials.
Speaker 2: I would anticipate you'll see just more and more live
Speaker 2: programming and get to the point where they have something
Speaker 2: live almost every day.
Speaker 1: Are there signs that that's strategy branching in live events
Speaker 1: is working for them.
Speaker 2: It's really too soon to tell, because their early live
Speaker 2: programming didn't matter, didn't move the needle. The Chris Rock
Speaker 2: Live Comedy Special it did fine, right, but it's still
Speaker 2: a live comedy special. There's only so much you can
Speaker 2: get from that. They had a Lover Is Blind reunion
Speaker 2: that was a technical failure. They had like this Mark
Speaker 2: Twain Prize, who cares. They had a celebrity golf match
Speaker 2: with golfers and F one drivers, like sort of more
Speaker 2: of a stunt test. These are all I think Netflix
Speaker 2: trying to figure out what could work and not spend
Speaker 2: too much money because live sports can be prohibitively expensive.
Speaker 2: I see all of these as what works and how
Speaker 2: should we do it.
Speaker 1: Then there's Netflix's ambitions in the world of gaming.
Speaker 2: They have a very nascent investment in video games, which
Speaker 2: is also something that Greg is in charge of. They
Speaker 2: don't make any money from it yet, and it's still
Speaker 2: really unclear if that's working.
Speaker 1: So there's advertising and gaming, and then everyone's favorite charging
Speaker 1: more money. We've seen the price increases, and I wonder
Speaker 1: are we at the end of that. No, how do
Speaker 1: they think about how much more they can raise prices
Speaker 1: and maintain audience or continue to build audience.
Speaker 2: Well, their argument is always we feel comfortable raising prices
Speaker 2: if we are giving you more that you like and
Speaker 2: care about. Right, Because if you think about the start
Speaker 2: of Netflix, and it was very affordable, and because they
Speaker 2: had so many licensing deals with so many other studios,
Speaker 2: it was in many ways a replacement for cable at
Speaker 2: a fraction of the cost of cable. It's still a
Speaker 2: fraction of the cost of cable. We can argue over
Speaker 2: whether it has as much right they're not getting as
Speaker 2: nearly as much licensed from others, but they make a ton.
Speaker 2: If you really wanted to just watch Netflix, you wouldn't
Speaker 2: get all the news and sports, but you could replace
Speaker 2: all the entertainment programming anywhere on just Netflix. So I
Speaker 2: think as they invest more, you know, they bring in wrestling,
Speaker 2: they bring in football, they bring in gaming. As they
Speaker 2: add more of these elements, they feel comfortable raising prices.
Speaker 2: But it's a tricky balance.
Speaker 1: So what are the odds that Greg Peters will succeed?
Speaker 1: Lucas says that from everything he's heard about him and
Speaker 1: what he saw as he reported on him, Peters is
Speaker 1: not someone people tend to bet against.
Speaker 2: There were stories of you know, a company off off
Speaker 2: sites where they would play sort of fun and silly
Speaker 2: like family feud type games, and he would take it
Speaker 2: very seriously and you would know that if you were
Speaker 2: on his side, you were going to win. Actually, like
Speaker 2: I had one of these awkward moments you have when
Speaker 2: you're profiling someone where I was like, you know, I
Speaker 2: talked to someone who said that you would play family
Speaker 2: feud and jeopardy in these games and that you would cheat,
Speaker 2: and he both categorically denied ever cheating while saying, you know,
Speaker 2: if you're going to do something, you might as well
Speaker 2: do it to win, which I thought was very telling.
Speaker 2: You know, I drew a comparison to how you might
Speaker 2: sometimes like you don't want to spoil your kids by
Speaker 2: making them think that they could always win and losing
Speaker 2: on purpose, and he did verify that he has routinely
Speaker 2: lost on purpose to with children, but I think when
Speaker 2: facing other adults, Greg Peters does not like to lose.
Speaker 1: You can sign up for Lucas's screen Time newsletter at
Speaker 1: Bloomberg dot com. This is the Big Take from Bloomberg News.
Speaker 1: I'm David Gera. This episode was produced by Thomas lou
Speaker 1: It was edited by Aaron Edwards. It was mixed by
Speaker 1: Blake Maples. It was fact checked by Adriana Tapia. Our
Speaker 1: senior producers are Kim Giittleson and Naomi Shaven. Our senior
Speaker 1: editor is Elizabeth Ponso. The cole Beemster Bor is our
Speaker 1: executive producer. Sage Bauman is our head of podcasts. Thanks
Speaker 1: for listening. Please follow and review The Big Take wherever
Speaker 1: you get your podcasts. It helps new listeners find the show.
Speaker 1: We'll be back tomorrow.