1 00:00:08,119 --> 00:00:11,440 Speaker 1: Welcome to another episode of Strictly Business, the podcast in 2 00:00:11,480 --> 00:00:13,720 Speaker 1: which we talked with some of the brightest minds working 3 00:00:13,760 --> 00:00:17,200 Speaker 1: in the media business today. I'm Andrew Wallenstein with Variety, 4 00:00:17,640 --> 00:00:19,920 Speaker 1: and the guest I'll be interviewing in this week's episode 5 00:00:20,000 --> 00:00:23,840 Speaker 1: is well me kind of anyway. I just thought that 6 00:00:23,880 --> 00:00:25,599 Speaker 1: with the year drawing to a close, it was a 7 00:00:25,640 --> 00:00:28,000 Speaker 1: good time to reflect on all that happened and what 8 00:00:28,200 --> 00:00:32,400 Speaker 1: has to be the entertainment world's hottest sector, streaming video. 9 00:00:32,880 --> 00:00:37,040 Speaker 1: We're talking Netflix, Disney Plus, HBO, Max of course, and 10 00:00:37,080 --> 00:00:39,760 Speaker 1: a whole lot more. And yeah, I could interview someone 11 00:00:39,800 --> 00:00:41,559 Speaker 1: else about it, just like we do each week on 12 00:00:41,640 --> 00:00:44,000 Speaker 1: Strictly Business, but I've got a lot on my mind 13 00:00:44,040 --> 00:00:51,880 Speaker 1: to share, so I'm flying solo this time. So let's 14 00:00:51,880 --> 00:00:55,200 Speaker 1: get started where we have to start the pandemic. It's 15 00:00:55,240 --> 00:00:58,080 Speaker 1: strange to say because of how awful and tragic COVID 16 00:00:58,200 --> 00:01:00,640 Speaker 1: nineteen has been to the world and so many ways, 17 00:01:00,720 --> 00:01:03,400 Speaker 1: but the truth is it's probably the best thing that 18 00:01:03,400 --> 00:01:06,039 Speaker 1: could have ever happened to the streaming business. When you 19 00:01:06,080 --> 00:01:08,640 Speaker 1: think back to those first few months, in particular, when 20 00:01:08,680 --> 00:01:12,319 Speaker 1: the US market was sheltering at home and spending record 21 00:01:12,360 --> 00:01:15,119 Speaker 1: hours in front of their TVs and phones. That set 22 00:01:15,160 --> 00:01:19,480 Speaker 1: up a surgeon consumption just when streaming services needed it most. 23 00:01:19,680 --> 00:01:22,960 Speaker 1: Because when you think back to early the streaming wars 24 00:01:23,040 --> 00:01:27,080 Speaker 1: had just kicked into overdrive, the days when Netflix, Amazon 25 00:01:27,160 --> 00:01:29,840 Speaker 1: and Hulu having the subscription v o D world to 26 00:01:29,880 --> 00:01:33,360 Speaker 1: themselves were over. Disney Plus and Apple TV plus We're 27 00:01:33,440 --> 00:01:36,840 Speaker 1: just getting started and HBO Max and Peacocks soon followed 28 00:01:36,880 --> 00:01:39,680 Speaker 1: in the first half of So what better time could 29 00:01:39,680 --> 00:01:42,360 Speaker 1: there be for all these new market entrants to put 30 00:01:42,360 --> 00:01:44,959 Speaker 1: their lines in the water at a time when more 31 00:01:45,080 --> 00:01:47,560 Speaker 1: fish were biting than ever. And that's my first real 32 00:01:47,600 --> 00:01:50,440 Speaker 1: takeaway from the year and streaming. Just imagine for a 33 00:01:50,440 --> 00:01:53,640 Speaker 1: moment what would have been like in this category had 34 00:01:53,640 --> 00:01:56,600 Speaker 1: there been a so called normal year. It's possible we 35 00:01:56,600 --> 00:01:58,480 Speaker 1: could have seen some of the new players go the 36 00:01:58,520 --> 00:02:01,240 Speaker 1: way of Quimby. We'll to them later. I think of 37 00:02:01,320 --> 00:02:03,720 Speaker 1: all these new market entrants got a boost of good 38 00:02:03,760 --> 00:02:07,440 Speaker 1: fortune from launching it exactly the time a global audience 39 00:02:07,520 --> 00:02:10,320 Speaker 1: was hungrier for content like never before. So you have 40 00:02:10,440 --> 00:02:13,639 Speaker 1: to recognize that what we saw in was shaped by 41 00:02:13,639 --> 00:02:17,919 Speaker 1: a confluence of the pandemic hitting and new services coming 42 00:02:17,919 --> 00:02:20,040 Speaker 1: to market. There's something else I'm not sure we would 43 00:02:20,040 --> 00:02:22,679 Speaker 1: have seen were it not for the streaming boom. Look 44 00:02:22,680 --> 00:02:25,720 Speaker 1: at the traditional media companies that finally got real about 45 00:02:25,800 --> 00:02:28,600 Speaker 1: streaming over the past twelve months. They made some pretty 46 00:02:28,680 --> 00:02:32,440 Speaker 1: drastic moves internally to reorient their companies for the future. 47 00:02:32,520 --> 00:02:36,519 Speaker 1: Look at what Disney, Werener Media, Comcast did in to 48 00:02:36,639 --> 00:02:39,880 Speaker 1: restructure in a way that moved aside the traditional pillars 49 00:02:39,919 --> 00:02:43,280 Speaker 1: of their businesses TV and film to serve their new 50 00:02:43,480 --> 00:02:47,080 Speaker 1: streaming master. To some degree, they had to. The way 51 00:02:47,120 --> 00:02:51,200 Speaker 1: the pandemics apt key revenue streams and forced mass layoffs 52 00:02:51,560 --> 00:02:54,480 Speaker 1: meant these companies had to do more with less people. 53 00:02:54,720 --> 00:02:57,320 Speaker 1: But these weren't just thousands of job cuts, some of 54 00:02:57,360 --> 00:03:01,120 Speaker 1: which claimed some very senior, well known executive is. Operations 55 00:03:01,160 --> 00:03:04,799 Speaker 1: were reconfigured and consolidated in a way that one's blurred 56 00:03:05,200 --> 00:03:09,680 Speaker 1: clear lines between production output for TV, film, and streaming. 57 00:03:10,200 --> 00:03:12,720 Speaker 1: They also left the TV business that was once the 58 00:03:12,800 --> 00:03:16,480 Speaker 1: clear cash cow governed by shall we say, less elaborate 59 00:03:16,600 --> 00:03:19,240 Speaker 1: or charts. I'm very curious what that's gonna mean for 60 00:03:19,320 --> 00:03:22,760 Speaker 1: broadcast and cable TV going forward. There's somehow going to 61 00:03:22,800 --> 00:03:25,760 Speaker 1: get by with less resources, and I think we're already 62 00:03:25,760 --> 00:03:28,800 Speaker 1: seeing signs that linear channels are becoming something of a 63 00:03:28,800 --> 00:03:32,760 Speaker 1: Potempkin village, attempting to fool viewers that it's business as usual, 64 00:03:32,840 --> 00:03:36,200 Speaker 1: when if you look closely, there's signs of decline from 65 00:03:36,200 --> 00:03:40,280 Speaker 1: reduced investment and focus. Now, court cutting actually didn't fall 66 00:03:40,320 --> 00:03:43,120 Speaker 1: off the cliff many thought it would in But if 67 00:03:43,440 --> 00:03:46,600 Speaker 1: pay TV subscribers start to notice they're paying a lot 68 00:03:46,720 --> 00:03:49,400 Speaker 1: each month to get less than they did before, that's 69 00:03:49,400 --> 00:03:52,480 Speaker 1: going to hurt that business and make the streaming world 70 00:03:52,480 --> 00:03:55,200 Speaker 1: look even better. This is really job one for the 71 00:03:55,240 --> 00:03:59,080 Speaker 1: media conglomerates right now, managing the decline of linear TV 72 00:03:59,280 --> 00:04:02,840 Speaker 1: so it doesn't plum it too quickly while shifting energies 73 00:04:02,840 --> 00:04:05,200 Speaker 1: to the streaming world we all know is where the 74 00:04:05,240 --> 00:04:08,360 Speaker 1: future lies. It's just gonna take some time to get 75 00:04:08,400 --> 00:04:11,560 Speaker 1: to that future, which means pay TV needs to avoid 76 00:04:11,640 --> 00:04:15,760 Speaker 1: collapsing for as long as possible. And no one is 77 00:04:15,800 --> 00:04:19,320 Speaker 1: doing this delicate dance better than Disney, which is somehow 78 00:04:19,400 --> 00:04:21,960 Speaker 1: wild Wall Street this year, even while much of its 79 00:04:22,000 --> 00:04:24,560 Speaker 1: business has been put in the toilet by the pandemic, 80 00:04:24,760 --> 00:04:28,560 Speaker 1: the success of Disney Plus has completely distracted investors from 81 00:04:28,560 --> 00:04:32,880 Speaker 1: the cataclysmic impact Disney has been feeling across movies, TVs 82 00:04:32,960 --> 00:04:35,680 Speaker 1: and theme parks and hotels. As long as the market 83 00:04:35,720 --> 00:04:38,680 Speaker 1: believes Disney has found its lifeline to the future, It's 84 00:04:38,720 --> 00:04:42,159 Speaker 1: like the current woes, deep as they are, don't really matter. 85 00:04:42,480 --> 00:04:45,640 Speaker 1: And what Disney Plus did this year was eye popping. 86 00:04:45,760 --> 00:04:49,240 Speaker 1: I mean, no superlatives or enough. Sure, there were plenty 87 00:04:49,240 --> 00:04:52,359 Speaker 1: of Disney bulls out there, but no one foresaw the 88 00:04:52,400 --> 00:04:56,040 Speaker 1: heights Disney Plus hit in. I mean, you have to 89 00:04:56,120 --> 00:04:59,599 Speaker 1: wonder whether Bob igor is kicking himself for stepping down 90 00:04:59,600 --> 00:05:03,080 Speaker 1: from the EO job right before the pandemic struck. I 91 00:05:03,120 --> 00:05:05,440 Speaker 1: wondered whether he bawled knowing what was about to hit 92 00:05:05,560 --> 00:05:08,440 Speaker 1: his company, fearing the worst and taking a lesser role 93 00:05:08,560 --> 00:05:12,080 Speaker 1: rather than risk a black mark on his otherwise stellar legacy. 94 00:05:12,320 --> 00:05:15,440 Speaker 1: Lo and behold. He may have underestimated the Disney magic, 95 00:05:15,920 --> 00:05:18,279 Speaker 1: and now, Bob Chapek, it's all the glory. And what 96 00:05:18,440 --> 00:05:21,320 Speaker 1: makes Disney Plus all the more impressive is it didn't 97 00:05:21,360 --> 00:05:24,040 Speaker 1: need much in the way of original programming to propel 98 00:05:24,080 --> 00:05:26,480 Speaker 1: its first year. If the company was able to do 99 00:05:26,560 --> 00:05:29,000 Speaker 1: this well, that just like a few seasons of The 100 00:05:29,000 --> 00:05:32,880 Speaker 1: Mandalorian and not much else, in part because the pandemic 101 00:05:32,920 --> 00:05:37,400 Speaker 1: pinched the production pipeline. Just imagine what a fully stocked 102 00:05:37,760 --> 00:05:40,719 Speaker 1: content cupboard could have yielded this year. And that's what 103 00:05:40,800 --> 00:05:45,000 Speaker 1: makes Disney Investor Day such a memorable success. In early December, 104 00:05:45,040 --> 00:05:48,200 Speaker 1: the sheer tonnage of top shelf I p on display 105 00:05:48,720 --> 00:05:52,680 Speaker 1: wowed investors and fanboys alike. From Star Wars to Avengers. 106 00:05:52,720 --> 00:05:56,080 Speaker 1: There is no franchise under Disney's various banners that they 107 00:05:56,120 --> 00:05:59,920 Speaker 1: have squeezed, not every ounce out of It's kind of real, 108 00:06:00,080 --> 00:06:03,560 Speaker 1: and it really sets them up well fore and far beyond. 109 00:06:03,720 --> 00:06:05,719 Speaker 1: I mean, I hate to hear myself gushing like some 110 00:06:05,839 --> 00:06:09,040 Speaker 1: Marvel fanboy, but really I can't stop myself. And don't 111 00:06:09,040 --> 00:06:12,080 Speaker 1: forget that Disney Plus is also bundled with the ESPN 112 00:06:12,080 --> 00:06:14,960 Speaker 1: Plus and Hulu is an option, and they're pretty formidable 113 00:06:14,960 --> 00:06:17,800 Speaker 1: in their own right. But while ESPN Plus is probably 114 00:06:17,839 --> 00:06:20,120 Speaker 1: just at the beginning of its journey, I get the 115 00:06:20,200 --> 00:06:23,680 Speaker 1: opposite impression of Hulu. It's done a ton to distinguish 116 00:06:23,680 --> 00:06:27,040 Speaker 1: itself from a strong live TV component to some great 117 00:06:27,080 --> 00:06:29,719 Speaker 1: original series. But I think Disney pumping the brakes on 118 00:06:29,800 --> 00:06:32,800 Speaker 1: giving Hulu any kind of international presence tells you a 119 00:06:32,800 --> 00:06:35,440 Speaker 1: lot about the future of that brand. I feel like 120 00:06:35,480 --> 00:06:37,920 Speaker 1: we're just a year or two away from Hulu being 121 00:06:37,960 --> 00:06:41,719 Speaker 1: folded into disney pluss tab for the more adult door 122 00:06:41,760 --> 00:06:45,839 Speaker 1: oriented content they'd rather not taint Disney's own family friendly 123 00:06:45,880 --> 00:06:47,960 Speaker 1: brand with. But when you step back and look at 124 00:06:48,000 --> 00:06:51,039 Speaker 1: what happened in twenty Disney managed to turn the streaming 125 00:06:51,080 --> 00:06:54,160 Speaker 1: category into a three way race with Netflix and Amazon. 126 00:06:54,360 --> 00:06:57,360 Speaker 1: That seemed like a near impossible long term dream in 127 00:06:58,400 --> 00:07:00,560 Speaker 1: But now really the rest of the field is fighting 128 00:07:00,560 --> 00:07:03,440 Speaker 1: for fourth place and beyond. And honestly, I'm not sure 129 00:07:03,480 --> 00:07:06,039 Speaker 1: that there are even four places to be had, and 130 00:07:06,080 --> 00:07:08,360 Speaker 1: I think you can even make the argument that Disney 131 00:07:08,400 --> 00:07:11,640 Speaker 1: will displaces Amazon is the real number two as its 132 00:07:11,640 --> 00:07:14,840 Speaker 1: global market push expands further. It's not that Prime Video 133 00:07:14,920 --> 00:07:17,120 Speaker 1: is doing anything wrong, mind you. I just don't see 134 00:07:17,120 --> 00:07:20,440 Speaker 1: them having done anything terribly right either. Remember, the content 135 00:07:20,520 --> 00:07:22,440 Speaker 1: is so far from the focus there. It's just a 136 00:07:22,480 --> 00:07:25,520 Speaker 1: business Jeff Bezoz likes to be in, and it supposedly 137 00:07:25,520 --> 00:07:28,600 Speaker 1: helps them make their core e commerce business stickier. Their 138 00:07:28,680 --> 00:07:31,480 Speaker 1: entertainment business is in good shape, But nothing occurred over 139 00:07:31,480 --> 00:07:34,400 Speaker 1: the course of that suggested Amazon has moved into some 140 00:07:34,520 --> 00:07:36,920 Speaker 1: new phase in that time. We may have to have 141 00:07:36,920 --> 00:07:39,800 Speaker 1: another conversation about that when it's massive Lord of the 142 00:07:39,880 --> 00:07:43,320 Speaker 1: Rings TV franchise is expected to kick in. Until that happens, 143 00:07:43,360 --> 00:07:46,000 Speaker 1: I could easily see a new narrative really taking hold 144 00:07:46,000 --> 00:07:49,800 Speaker 1: of this coming year, Disney plus versus Netflix. Now not 145 00:07:49,920 --> 00:07:52,640 Speaker 1: predicting Netflix is about to be knocked off its throne, 146 00:07:52,760 --> 00:07:55,640 Speaker 1: But what I am saying is it was inconceivable that 147 00:07:55,680 --> 00:07:59,600 Speaker 1: anyone in would get near its throne, and that just happened. 148 00:07:59,760 --> 00:08:02,400 Speaker 1: Just the fact that Disney managed to get in spitting 149 00:08:02,440 --> 00:08:04,640 Speaker 1: distance of Netflix means we're going to see a lot 150 00:08:04,720 --> 00:08:09,520 Speaker 1: more comparisons in the coming year. Nevertheless, Netflix enjoyed almost 151 00:08:09,560 --> 00:08:12,720 Speaker 1: as good as Disney's. The streaming boom helped drive an 152 00:08:12,720 --> 00:08:15,720 Speaker 1: obscene inflation of its subscriber levels in the first half 153 00:08:15,720 --> 00:08:18,000 Speaker 1: of the year. It was so big it's really gonna 154 00:08:18,120 --> 00:08:22,520 Speaker 1: just create tough comparisons the business can't possibly match going forward. 155 00:08:22,760 --> 00:08:26,200 Speaker 1: But the streaming boom doesn't entirely explain yet another great 156 00:08:26,280 --> 00:08:29,080 Speaker 1: year for Netflix. It's really nothing short of staggering their 157 00:08:29,160 --> 00:08:32,480 Speaker 1: singular ability to not just crank out hit after culture 158 00:08:32,520 --> 00:08:36,600 Speaker 1: defining hit all year long, like Tiger King, the Queen's Gambit, 159 00:08:36,679 --> 00:08:39,880 Speaker 1: Emily in Paris. It's also that they're expanding their dominance 160 00:08:39,920 --> 00:08:43,640 Speaker 1: into new genres like unscripted TV shows and big budget 161 00:08:43,679 --> 00:08:45,760 Speaker 1: action movies. It's only a matter of time before they 162 00:08:45,760 --> 00:08:49,120 Speaker 1: start to match Disney's franchise building powers and film. And 163 00:08:49,120 --> 00:08:51,319 Speaker 1: if I had to guess, even at this early point 164 00:08:51,360 --> 00:08:54,360 Speaker 1: in awards season, Netflix will finally get its big breakthrough 165 00:08:54,400 --> 00:08:56,680 Speaker 1: at the Oscars in April. It has too much good 166 00:08:56,679 --> 00:08:59,400 Speaker 1: films to miss this time around. It's like there's nothing 167 00:08:59,440 --> 00:09:02,600 Speaker 1: they don't do well. All. This would seem remarkable if 168 00:09:02,600 --> 00:09:06,120 Speaker 1: any other company besides Netflix was responsible for this great 169 00:09:06,160 --> 00:09:09,880 Speaker 1: track record. Unfortunately, the excellent has become routine for them. 170 00:09:09,960 --> 00:09:12,240 Speaker 1: It doesn't make you say wow the way the emergence 171 00:09:12,240 --> 00:09:14,720 Speaker 1: of Disney Plus does. It's just kind of what you 172 00:09:14,840 --> 00:09:17,839 Speaker 1: expect from Netflix. But there in lies the question I 173 00:09:17,920 --> 00:09:21,079 Speaker 1: think we have to ask ourselves about Netflix. In one, 174 00:09:21,360 --> 00:09:24,600 Speaker 1: when you've been on the kind of absurdly successful run 175 00:09:24,640 --> 00:09:27,200 Speaker 1: that they've been on all this time, at some point, 176 00:09:27,360 --> 00:09:30,160 Speaker 1: isn't there nowhere to go but down? As we marvel 177 00:09:30,240 --> 00:09:32,960 Speaker 1: at it's incredible consistency? Is it also fair to ask 178 00:09:33,000 --> 00:09:35,040 Speaker 1: if we are seeing a company that's at the very 179 00:09:35,120 --> 00:09:38,160 Speaker 1: height of its powers. CEO Read Hastings has to be 180 00:09:38,240 --> 00:09:40,880 Speaker 1: hoping that he hasn't hit the ceiling yet, because when 181 00:09:40,880 --> 00:09:43,000 Speaker 1: you think about the speed with which Disney Plus is 182 00:09:43,040 --> 00:09:45,880 Speaker 1: approaching in the rear view mirror, it would be nice 183 00:09:45,880 --> 00:09:48,959 Speaker 1: to know and Netflix can slip into an even higher gear. 184 00:09:49,280 --> 00:09:51,480 Speaker 1: Keep in mind, Netflix is cruising at a time when 185 00:09:51,520 --> 00:09:55,160 Speaker 1: there's some pretty significant personnel changes going on. Hastings now 186 00:09:55,200 --> 00:09:58,720 Speaker 1: has the king of Netflix's content machine, Ted Sarandos, moving 187 00:09:58,800 --> 00:10:01,880 Speaker 1: up as co CEO, and underneath Ted, Netflix is actually 188 00:10:01,880 --> 00:10:04,200 Speaker 1: working through some of the same big structural shifts the 189 00:10:04,200 --> 00:10:07,040 Speaker 1: companies trying to catch up to them are undergoing. Now, 190 00:10:07,200 --> 00:10:10,120 Speaker 1: Sorandos has to hope his mightas touched will hold up 191 00:10:10,120 --> 00:10:14,359 Speaker 1: as content operations are retooled under the oversight of Bella Bajaria, 192 00:10:14,440 --> 00:10:16,680 Speaker 1: who so far seems to have as golden a gut 193 00:10:16,679 --> 00:10:19,440 Speaker 1: as Ted does. Now it just needs to stay that way. 194 00:10:19,720 --> 00:10:22,160 Speaker 1: So now that we've got the top three streamers out 195 00:10:22,200 --> 00:10:24,720 Speaker 1: of the way, let's discuss the rest of the field, 196 00:10:24,800 --> 00:10:27,319 Speaker 1: because as I see it, even at this early stage 197 00:10:27,320 --> 00:10:29,600 Speaker 1: in the game, I'm confident the rest of the field 198 00:10:29,640 --> 00:10:33,120 Speaker 1: will not crack this upper echelon, at least not anytime soon. 199 00:10:33,400 --> 00:10:36,560 Speaker 1: Now that's probably not what Jason Kyler wants to hear 200 00:10:37,040 --> 00:10:40,400 Speaker 1: as CEO of Warner Media. He needs HBO Max in 201 00:10:40,440 --> 00:10:43,040 Speaker 1: the running for these top spots. If he can't make 202 00:10:43,040 --> 00:10:46,439 Speaker 1: it happen, it calls into question parent company A T 203 00:10:46,600 --> 00:10:49,440 Speaker 1: and T s moved to make the massive acquisition of 204 00:10:49,480 --> 00:10:52,480 Speaker 1: Warner Media in the first place. That's really the context 205 00:10:52,559 --> 00:10:55,440 Speaker 1: you need to appreciate the sheer, ballsy nous of the 206 00:10:55,480 --> 00:10:59,280 Speaker 1: moves Kyler made. In While Disney and NBC Universal did 207 00:10:59,320 --> 00:11:03,880 Speaker 1: some serial retrenching to reorient their businesses around streaming, Kyler 208 00:11:03,920 --> 00:11:06,520 Speaker 1: may have gone the furthest not only laying off hundreds 209 00:11:06,520 --> 00:11:09,360 Speaker 1: in the process, but removing an entire generation of senior 210 00:11:09,440 --> 00:11:13,040 Speaker 1: leaders across HBO, Warner Brothers, the Turner Networks. I'm not 211 00:11:13,080 --> 00:11:15,120 Speaker 1: saying that was definitely a mistake. I'm just noting it 212 00:11:15,160 --> 00:11:18,120 Speaker 1: was a drastic step to take. But of course, even 213 00:11:18,200 --> 00:11:20,440 Speaker 1: that was no match for what will be remembered as 214 00:11:20,480 --> 00:11:23,920 Speaker 1: one of the boldest or most bonkers decisions the media 215 00:11:24,000 --> 00:11:29,880 Speaker 1: business has ever seen, releasing Warner Brothers entire movie slate 216 00:11:30,040 --> 00:11:32,840 Speaker 1: on HBO Max for a thirty day period the same 217 00:11:32,920 --> 00:11:36,080 Speaker 1: day each title is scheduled to arrive in US theaters. 218 00:11:36,120 --> 00:11:39,079 Speaker 1: Here in Hollywood. They're breaking out the pitchforks over how 219 00:11:39,160 --> 00:11:44,040 Speaker 1: Kyler railroaded this decision, alienating profit participants and exhibitors in 220 00:11:44,080 --> 00:11:46,800 Speaker 1: the process. But I have to say I admire how 221 00:11:46,840 --> 00:11:49,800 Speaker 1: breathtaking the audacious at all is, even though I can 222 00:11:49,840 --> 00:11:52,040 Speaker 1: make an argument in the same breath that it's also 223 00:11:52,160 --> 00:11:55,640 Speaker 1: a misguided overreach. Not that I don't think it will 224 00:11:55,640 --> 00:11:58,840 Speaker 1: be effective. The incredible lineup of movies coming to HBO 225 00:11:58,920 --> 00:12:02,920 Speaker 1: Max will super charge its subscriber growth like nothing else can. 226 00:12:03,120 --> 00:12:06,880 Speaker 1: But the cost, both financial and diplomatic, that Warner Media 227 00:12:06,880 --> 00:12:09,320 Speaker 1: will pay for that growth will be in men's as well. 228 00:12:09,640 --> 00:12:11,280 Speaker 1: Now we're gonna spend a lot of time on this one. 229 00:12:11,320 --> 00:12:13,480 Speaker 1: I'm gonna take a little drink of water here. Before 230 00:12:13,480 --> 00:12:15,400 Speaker 1: I size up the right and wrong of it, I 231 00:12:15,480 --> 00:12:18,400 Speaker 1: have to ask first why Kyler seems to be throwing 232 00:12:18,440 --> 00:12:21,319 Speaker 1: a hail Mary in the first place. The movie slate 233 00:12:21,360 --> 00:12:24,480 Speaker 1: pivot is a desperate measure, but are these desperate times 234 00:12:24,480 --> 00:12:26,600 Speaker 1: for HBO Max. I should say off the top that 235 00:12:26,800 --> 00:12:29,360 Speaker 1: HBO Max is a good product, though at a higher 236 00:12:29,400 --> 00:12:32,080 Speaker 1: price point than the rest of its competition. Right there, 237 00:12:32,120 --> 00:12:34,960 Speaker 1: I can understand the impulse to justify that price point 238 00:12:35,040 --> 00:12:37,280 Speaker 1: by putting those movies in there. He also has a 239 00:12:37,280 --> 00:12:40,000 Speaker 1: figure of the movies where the leverage HBO Max needed 240 00:12:40,360 --> 00:12:43,800 Speaker 1: to secure a long delayed deal with Roku, which greatly 241 00:12:43,880 --> 00:12:47,160 Speaker 1: improves the accessibility of the HBO Max app. As of 242 00:12:47,160 --> 00:12:50,760 Speaker 1: early December, the company boast twenty eight point seven million 243 00:12:50,960 --> 00:12:54,400 Speaker 1: HBO Max sign ups, which sounds like a healthy number, 244 00:12:54,440 --> 00:12:56,800 Speaker 1: but first off sign ups is not the same thing 245 00:12:56,840 --> 00:13:00,400 Speaker 1: as subscribers. Then there's the absurdity that nearly half of 246 00:13:00,400 --> 00:13:03,800 Speaker 1: the sign ups are people already paying for HBO that's 247 00:13:03,800 --> 00:13:06,800 Speaker 1: still haven't made a free upgrade to HBO Max where 248 00:13:06,800 --> 00:13:10,120 Speaker 1: they can get more content for what they're already paying for. 249 00:13:10,400 --> 00:13:12,800 Speaker 1: HBO Max has been in market for five months and 250 00:13:12,880 --> 00:13:16,079 Speaker 1: can't persuade the majority of its paying subscribers to switch. 251 00:13:16,320 --> 00:13:19,040 Speaker 1: No wonder they need to resort to drastic measures to 252 00:13:19,080 --> 00:13:22,800 Speaker 1: induce the shift. Still, I think the biggest reason Kyler 253 00:13:22,880 --> 00:13:25,800 Speaker 1: rolled the dice on movies for HBO Max came down 254 00:13:25,800 --> 00:13:29,360 Speaker 1: to extrinsic pressures, not the result of the streaming services 255 00:13:29,440 --> 00:13:34,520 Speaker 1: inherent shortcomings. See well, HBO Max isn't doing badly. Bad 256 00:13:34,640 --> 00:13:37,960 Speaker 1: has to be redefined against Disney Plus, which is doing 257 00:13:38,000 --> 00:13:43,360 Speaker 1: so spectacularly that when you're doing say okay comparatively, okay 258 00:13:43,679 --> 00:13:46,760 Speaker 1: is bad. The streaming wars are a game of musical chairs. 259 00:13:47,080 --> 00:13:50,080 Speaker 1: There will be only so many subscriptions the average consumer 260 00:13:50,160 --> 00:13:52,840 Speaker 1: is going to take, and if HBO Max isn't careful, 261 00:13:52,920 --> 00:13:54,880 Speaker 1: it's going to be left without a chair, which is 262 00:13:54,880 --> 00:13:58,440 Speaker 1: why a dramatic move to boost its value proposition through 263 00:13:58,440 --> 00:14:01,520 Speaker 1: the addition of day and date d trickles makes sense. 264 00:14:01,760 --> 00:14:04,439 Speaker 1: Desperation is also clear in the context of Warner Media's 265 00:14:04,440 --> 00:14:06,920 Speaker 1: owner A T and T. A T and T stock 266 00:14:06,960 --> 00:14:09,440 Speaker 1: has been lagging all year and needs just the kind 267 00:14:09,440 --> 00:14:12,559 Speaker 1: of kicker Disney plus his growth story provided Disney, But 268 00:14:12,679 --> 00:14:15,000 Speaker 1: A T and T is drowning in debt. There's this 269 00:14:15,120 --> 00:14:18,760 Speaker 1: vague hope that vertical integration makes sense, but WarnerMedia can 270 00:14:18,840 --> 00:14:21,120 Speaker 1: end up as big and albatross as Direct TV if 271 00:14:21,120 --> 00:14:23,040 Speaker 1: they don't get it right. And in that respect, I 272 00:14:23,040 --> 00:14:26,680 Speaker 1: could respect what Kyler is doing, taking a big swing 273 00:14:26,800 --> 00:14:29,160 Speaker 1: to get the big results he needs. Look at it 274 00:14:29,200 --> 00:14:30,560 Speaker 1: this way, it's hard to see how A. T and 275 00:14:30,640 --> 00:14:33,360 Speaker 1: T can bounce back if he just left everything well 276 00:14:33,480 --> 00:14:36,920 Speaker 1: enough alone. But it's been weeks since Kyler's big move, 277 00:14:37,000 --> 00:14:38,920 Speaker 1: and I think a sense of shock has yet to 278 00:14:39,000 --> 00:14:41,400 Speaker 1: wear off in Hollywood. But even if you have only 279 00:14:41,480 --> 00:14:44,960 Speaker 1: a passing familiarity with Kyler's history, it really shouldn't have 280 00:14:44,960 --> 00:14:47,360 Speaker 1: come as much surprise. Think back to his time as 281 00:14:47,400 --> 00:14:50,160 Speaker 1: CEO of Hulu, when he grew so frustrated with the 282 00:14:50,200 --> 00:14:54,200 Speaker 1: conservative approach of his company's multiple traditional media owners that 283 00:14:54,280 --> 00:14:57,000 Speaker 1: he lashed out at them in a public blog post. 284 00:14:57,400 --> 00:14:59,400 Speaker 1: This is a guy who will not tolerate what he 285 00:14:59,440 --> 00:15:02,720 Speaker 1: sees as the path to innovation getting blocked, and a 286 00:15:02,840 --> 00:15:04,640 Speaker 1: T and T knew that when they hired him. You 287 00:15:04,640 --> 00:15:07,320 Speaker 1: also have to consider the domestic performance of Tenant at 288 00:15:07,360 --> 00:15:10,240 Speaker 1: Warner Brothers this year as probably having left the bad 289 00:15:10,280 --> 00:15:13,480 Speaker 1: taste in Kyler's mouth. Did it not flop as hard 290 00:15:13,560 --> 00:15:15,840 Speaker 1: as it did in the US, maybe Kyler wouldn't have 291 00:15:15,840 --> 00:15:19,280 Speaker 1: been as motivated to try something bolder instead. How you 292 00:15:19,320 --> 00:15:22,840 Speaker 1: see what he did, it really depends on which ethos 293 00:15:22,920 --> 00:15:26,440 Speaker 1: you apply to. If you're a Hollywood traditionalist, you share 294 00:15:26,480 --> 00:15:30,000 Speaker 1: the outrage of filmmakers like Christopher Nolan or agents like 295 00:15:30,120 --> 00:15:33,520 Speaker 1: CIA's Brian Lord who say they were not notified of 296 00:15:33,600 --> 00:15:36,479 Speaker 1: the decision or how it would impact their profit participation 297 00:15:36,560 --> 00:15:39,600 Speaker 1: before it was announced, and you'd also be horrified, but 298 00:15:39,720 --> 00:15:41,880 Speaker 1: what the decision is going to do to movie theaters? 299 00:15:42,000 --> 00:15:44,480 Speaker 1: But if you are fond of the daring of salt 300 00:15:44,520 --> 00:15:49,320 Speaker 1: Silicon Valley style innovators, Kyler's is just boldly disrupting business practices. 301 00:15:49,360 --> 00:15:52,160 Speaker 1: Hollywood has been criticized for being too timid about to 302 00:15:52,280 --> 00:15:54,960 Speaker 1: its own detriment. He's blazing a path to the future 303 00:15:55,040 --> 00:15:57,400 Speaker 1: by trying to create it in the present, no matter 304 00:15:57,480 --> 00:16:01,560 Speaker 1: what the criticism is from these traditionalist resistant to change. 305 00:16:01,600 --> 00:16:05,520 Speaker 1: But there's bold and then there's bananas. In so many ways, 306 00:16:05,560 --> 00:16:08,840 Speaker 1: one can quibble with Kyler on his film strategy. Why 307 00:16:08,880 --> 00:16:11,640 Speaker 1: have not waited until after Wonder Woman came out and 308 00:16:11,680 --> 00:16:15,480 Speaker 1: assessed its dual distribution performance before loading up the rest 309 00:16:15,520 --> 00:16:18,240 Speaker 1: of the slate for the same treatment, And why load 310 00:16:18,320 --> 00:16:23,280 Speaker 1: up the entire slate when even conservative estimates see theaters 311 00:16:23,360 --> 00:16:26,400 Speaker 1: returning to operation at some point in the back half 312 00:16:26,520 --> 00:16:31,240 Speaker 1: of And why give a very disparate group of films 313 00:16:31,280 --> 00:16:34,440 Speaker 1: a uniform thirty day period on HBO Max when that 314 00:16:34,480 --> 00:16:37,920 Speaker 1: window could have been varied or at least uniformly shortened. 315 00:16:38,040 --> 00:16:40,760 Speaker 1: You can argue that in his effort to be radical, 316 00:16:41,280 --> 00:16:44,440 Speaker 1: Kyler shot way past bold and ended up in what 317 00:16:44,480 --> 00:16:48,200 Speaker 1: were You thinking? Territory? But the criticism Kyler has faced 318 00:16:48,240 --> 00:16:51,200 Speaker 1: has been less focused on the strategic particulars and more 319 00:16:51,280 --> 00:16:53,080 Speaker 1: on the manner in which he did what he did. 320 00:16:53,600 --> 00:16:56,960 Speaker 1: And while I understand and empathize with where that criticism 321 00:16:57,000 --> 00:16:59,200 Speaker 1: is coming from, I do see the other side of 322 00:16:59,200 --> 00:17:02,400 Speaker 1: the stories. Whe L I mean, do all of Kyler's 323 00:17:02,400 --> 00:17:04,959 Speaker 1: critics believe for one second that there could have been 324 00:17:05,000 --> 00:17:08,800 Speaker 1: a scenario when Warner Media negotiated with hundreds of profit 325 00:17:08,840 --> 00:17:12,480 Speaker 1: participants prior to making such a massive move and not 326 00:17:12,640 --> 00:17:16,040 Speaker 1: have gotten bogged down in endless negotiations That would have 327 00:17:16,080 --> 00:17:19,120 Speaker 1: also meant losing control over the messaging to the marketplace 328 00:17:19,160 --> 00:17:22,200 Speaker 1: of the move, which would certainly have been leaked. Look, 329 00:17:22,200 --> 00:17:24,800 Speaker 1: I'm not justifying what Warner Media did in a legal 330 00:17:24,920 --> 00:17:28,040 Speaker 1: or even a moral sense. I'm just explaining what went 331 00:17:28,080 --> 00:17:31,560 Speaker 1: down from a tactical perspective. This wasn't some example of 332 00:17:31,600 --> 00:17:35,720 Speaker 1: Silicon Valley tone deafnessist with a tech visionary in chief 333 00:17:35,760 --> 00:17:39,359 Speaker 1: was moving too fast to understand the implications of his actions. 334 00:17:39,440 --> 00:17:43,160 Speaker 1: Oh please, This was a calculation made that the most 335 00:17:43,160 --> 00:17:46,840 Speaker 1: expedient thing to do, given the inevitable messy backlash, was 336 00:17:46,880 --> 00:17:50,240 Speaker 1: to just shoot first and ask questions later. Now, that 337 00:17:50,320 --> 00:17:53,320 Speaker 1: may have been messy, but it's actually less messy than 338 00:17:53,359 --> 00:17:56,560 Speaker 1: the alternative. Kyler was reasoning that the cost of settling 339 00:17:56,680 --> 00:18:00,720 Speaker 1: or even losing multiple lawsuits was worthy end run he made. Now, 340 00:18:00,800 --> 00:18:02,880 Speaker 1: none of this is going to keep the torrential downpour 341 00:18:03,000 --> 00:18:06,679 Speaker 1: of sanctimony coming from Hollywood right now about how Kyler 342 00:18:06,720 --> 00:18:09,560 Speaker 1: doesn't understand the value of relationships. It's a little rich 343 00:18:09,600 --> 00:18:12,359 Speaker 1: to hear all this talk about valuing relationships and shark 344 00:18:12,440 --> 00:18:16,280 Speaker 1: infested Hollywood. Make no mistake, All these public condemnations are 345 00:18:16,320 --> 00:18:19,720 Speaker 1: just the beginning of a negotiation to maximize the compensation 346 00:18:19,760 --> 00:18:22,840 Speaker 1: a lot of profit participants lost on the back ends 347 00:18:22,840 --> 00:18:25,520 Speaker 1: of their deals. But what Kyler must also understand is 348 00:18:25,840 --> 00:18:28,200 Speaker 1: you don't make a bet this huge without staking your 349 00:18:28,359 --> 00:18:31,199 Speaker 1: entire career on it. He will walk away from this 350 00:18:31,280 --> 00:18:34,879 Speaker 1: defining his legacy either as a reckless gambler who can 351 00:18:34,960 --> 00:18:38,680 Speaker 1: join Steve Case and Time Warners Hall of shame, or 352 00:18:38,720 --> 00:18:41,600 Speaker 1: a genius visionary who ushered in the future of film 353 00:18:41,640 --> 00:18:45,400 Speaker 1: distribution and put HBO Max on the map. Sure're gonna 354 00:18:45,440 --> 00:18:48,200 Speaker 1: get interesting to see in one how if at all, 355 00:18:48,359 --> 00:18:51,959 Speaker 1: Kyler is countered by the other studios with streaming services 356 00:18:52,000 --> 00:18:55,080 Speaker 1: like Universal or Paramount. Are they now forced to abandon 357 00:18:55,160 --> 00:18:59,679 Speaker 1: less aggressive strategies in success? Will HBO Max have reset 358 00:18:59,760 --> 00:19:03,520 Speaker 1: the are for consumer expectations on what the movie offerings 359 00:19:03,520 --> 00:19:06,520 Speaker 1: of leading streaming services will be. I'm not even necessarily 360 00:19:06,520 --> 00:19:08,960 Speaker 1: saying they need to belly up to the streaming bar 361 00:19:09,080 --> 00:19:12,040 Speaker 1: with thirty day, day and date strategy. I'm wondering whether 362 00:19:12,040 --> 00:19:14,640 Speaker 1: we'll see more of what say Disney did with Mulan 363 00:19:14,720 --> 00:19:19,240 Speaker 1: in creating a prime access extension to Disney Plus that 364 00:19:19,480 --> 00:19:22,680 Speaker 1: enabled subscribers to pay a pretty healthy surcharge to see 365 00:19:22,680 --> 00:19:24,600 Speaker 1: a theatrical I think there's gonna be a lot of 366 00:19:24,640 --> 00:19:27,919 Speaker 1: experimentation and hybrid film distribution in the coming years. If 367 00:19:27,920 --> 00:19:30,480 Speaker 1: I had to guess, Kyler's one size fits all approach 368 00:19:30,680 --> 00:19:32,800 Speaker 1: isn't where things are going to end up, though I 369 00:19:32,840 --> 00:19:36,159 Speaker 1: do think consumers will embrace the simplicity of that HBO 370 00:19:36,240 --> 00:19:39,720 Speaker 1: Max approach. Kyler's gambit seems all the more audacious when 371 00:19:39,720 --> 00:19:42,080 Speaker 1: you think of how far the film world has come 372 00:19:42,119 --> 00:19:44,760 Speaker 1: in a very short time in terms of budging its 373 00:19:44,800 --> 00:19:48,560 Speaker 1: traditional windows. Wasn't that long ago Netflix and Amazon seemed 374 00:19:48,600 --> 00:19:52,399 Speaker 1: downright galling for having the nerve to stream movies a 375 00:19:52,440 --> 00:19:55,400 Speaker 1: few weeks after they got a brief run in theaters. 376 00:19:55,400 --> 00:19:57,720 Speaker 1: Not that they wanted to be in theaters, but that 377 00:19:57,800 --> 00:19:59,679 Speaker 1: was the price you had to pay to get in 378 00:19:59,720 --> 00:20:01,640 Speaker 1: busness us with the directors who wouldn't have in any 379 00:20:01,680 --> 00:20:03,800 Speaker 1: other way. Now you fast forward to the start of 380 00:20:03,800 --> 00:20:08,320 Speaker 1: the pandemic, you've got Universal Pictures looking revolutionary for skipping 381 00:20:08,440 --> 00:20:13,199 Speaker 1: theaters entirely and successfully taking trolls world tour straight to homes. 382 00:20:13,359 --> 00:20:16,480 Speaker 1: They leverage that into a new seventeen day theatrical window 383 00:20:16,520 --> 00:20:19,000 Speaker 1: deal with exhibitors. It's funny how Kyler has made even 384 00:20:19,000 --> 00:20:22,720 Speaker 1: bothering to talk to exhibitors almost a quaint notion. These 385 00:20:22,760 --> 00:20:25,359 Speaker 1: are all different cracks in the same damn a. For 386 00:20:25,400 --> 00:20:29,800 Speaker 1: a few decades of maximum pressure and minimal experimentation, studios 387 00:20:29,800 --> 00:20:32,520 Speaker 1: have finally truly embarked on a new era of film 388 00:20:32,600 --> 00:20:34,800 Speaker 1: in which these streaming services will play a part in 389 00:20:34,880 --> 00:20:38,000 Speaker 1: bringing movies into the homes much earlier than ever before. 390 00:20:38,359 --> 00:20:41,680 Speaker 1: There's just no going back. And yes, it will shrink 391 00:20:41,760 --> 00:20:44,680 Speaker 1: the exhibition business. It's not going to kill it outright. 392 00:20:45,080 --> 00:20:48,439 Speaker 1: There'll be less theaters, a lot less, But honestly, that's 393 00:20:48,480 --> 00:20:50,840 Speaker 1: a whole other podcast. Episode. We still have a lot 394 00:20:50,880 --> 00:20:53,720 Speaker 1: of other streaming services to talk about. If we're rewarding 395 00:20:53,880 --> 00:20:57,360 Speaker 1: HBO Max a distant fourth place finish in I'd say 396 00:20:57,400 --> 00:21:01,080 Speaker 1: Apple TV Plus and Peacock round out this second tier 397 00:21:01,200 --> 00:21:04,560 Speaker 1: and subscription streaming video there well behind the first here 398 00:21:04,640 --> 00:21:07,600 Speaker 1: in terms of progress, but as I'll explain, they also 399 00:21:07,600 --> 00:21:09,760 Speaker 1: have a lot of upside, which means you'll need to 400 00:21:09,840 --> 00:21:12,440 Speaker 1: keep an eye on them next year. Apple has given 401 00:21:12,520 --> 00:21:15,879 Speaker 1: no indication of how many subscribers Apple TV Plus actually has, 402 00:21:15,880 --> 00:21:18,600 Speaker 1: so it's hard to gauge performance. I would say the 403 00:21:18,600 --> 00:21:21,000 Speaker 1: first six months this streaming service was in the market 404 00:21:21,119 --> 00:21:24,800 Speaker 1: seemed pretty bleak. Without licensing any of the catalog sitcoms 405 00:21:24,800 --> 00:21:27,800 Speaker 1: and dramas that seemed like table sticks in the streaming wars, 406 00:21:27,920 --> 00:21:30,840 Speaker 1: Apple TV Plus seemed a pretty thin soup, and all 407 00:21:30,880 --> 00:21:33,720 Speaker 1: Apple really had going for it on this original programming 408 00:21:33,760 --> 00:21:36,639 Speaker 1: front was The Morning Show, a star studded soap that 409 00:21:36,680 --> 00:21:38,879 Speaker 1: probably didn't make quite as much a splash as Apple's 410 00:21:38,920 --> 00:21:42,440 Speaker 1: programming chiefs Zack Van Amberg and Jamie Erlick wanted. These 411 00:21:42,480 --> 00:21:44,880 Speaker 1: guys have a track record for creating hits when they 412 00:21:44,960 --> 00:21:48,000 Speaker 1: ran Sony Studio, but there was little evidence of that 413 00:21:48,080 --> 00:21:50,880 Speaker 1: in the first crop of Apples shows, But I'd say 414 00:21:50,880 --> 00:21:53,800 Speaker 1: the second half of the year gave me more confidence. 415 00:21:53,840 --> 00:21:56,720 Speaker 1: Apple is building up a content roster that can keep 416 00:21:56,760 --> 00:22:00,000 Speaker 1: them in this race. They scored with more original series 417 00:22:00,160 --> 00:22:02,639 Speaker 1: is like ted Lasso and Tehran, and they've got a 418 00:22:02,640 --> 00:22:04,920 Speaker 1: handful of movies like On the Rocks that I think 419 00:22:04,960 --> 00:22:08,080 Speaker 1: can make some noise on the award circuit. But my 420 00:22:08,160 --> 00:22:10,480 Speaker 1: gut tells me the reason Apple can't be counted out 421 00:22:10,480 --> 00:22:13,320 Speaker 1: of the streaming race anytime soon isn't so much what 422 00:22:13,359 --> 00:22:15,880 Speaker 1: they've already done with Apple TV Plus, but what they 423 00:22:15,920 --> 00:22:19,119 Speaker 1: can still do. Remember, this is a company with a 424 00:22:19,200 --> 00:22:22,800 Speaker 1: market cap well over two trillion dollars. Content is a 425 00:22:22,840 --> 00:22:26,680 Speaker 1: mirror rounding error. What makes Apple so dangerous is more 426 00:22:26,680 --> 00:22:30,080 Speaker 1: than anyone else, they are capable of funding a transformative 427 00:22:30,119 --> 00:22:34,199 Speaker 1: move like acquiring a rival streaming service or buying a 428 00:22:34,240 --> 00:22:37,960 Speaker 1: studio capable of fueling their programming. MGM just went on 429 00:22:38,000 --> 00:22:41,280 Speaker 1: the market again. Another aspect of Apple strategy that bears 430 00:22:41,320 --> 00:22:45,159 Speaker 1: watching is its ability to bundle Apple TV Plus. Of course, 431 00:22:45,320 --> 00:22:47,800 Speaker 1: there is the obvious bundle, which is embedding the app 432 00:22:47,840 --> 00:22:51,679 Speaker 1: across the massive installed base of devices from iPhones to iPads, 433 00:22:51,720 --> 00:22:54,320 Speaker 1: but there was also some interesting experiments, like a bundling 434 00:22:54,359 --> 00:22:57,399 Speaker 1: of Apple TV Plus with CBS and Showtime for just 435 00:22:57,480 --> 00:22:59,880 Speaker 1: ten dollars a month, and the introduction of Apple One, 436 00:23:00,119 --> 00:23:04,600 Speaker 1: which packaged multiple Apple offerings like Apple TV Plus, Apple Music, 437 00:23:04,680 --> 00:23:07,720 Speaker 1: Apple Fitness, and so on. I don't think these specific 438 00:23:07,760 --> 00:23:10,240 Speaker 1: bundles have lit the world on fire yet, but I 439 00:23:10,280 --> 00:23:12,240 Speaker 1: think Apple is just getting his feet wet as it 440 00:23:12,359 --> 00:23:15,760 Speaker 1: gets smarter about deploying these bundles. There's an edge it 441 00:23:15,800 --> 00:23:19,000 Speaker 1: will be able to exploit in the marketplace. Not that 442 00:23:19,040 --> 00:23:21,440 Speaker 1: Apple is alone in that regard. Disney Plus has done 443 00:23:21,440 --> 00:23:25,080 Speaker 1: some bundling, Prime Video has its channel strategy, but this 444 00:23:25,160 --> 00:23:27,040 Speaker 1: is a strategy that I think will start to get 445 00:23:27,040 --> 00:23:31,520 Speaker 1: more attention over time. We're still talking subscription streaming second tier, 446 00:23:31,640 --> 00:23:34,800 Speaker 1: and that includes NBC Universal's Peacock. It's off to a 447 00:23:34,960 --> 00:23:38,720 Speaker 1: respectable start. It has about twenty six million sign ups. 448 00:23:38,840 --> 00:23:41,960 Speaker 1: Note that's not subscribers. We don't know how many of 449 00:23:42,000 --> 00:23:46,359 Speaker 1: that million are those watching the free ad supported component 450 00:23:46,440 --> 00:23:48,919 Speaker 1: of Peacock. That said, I don't want to imply that 451 00:23:49,000 --> 00:23:52,080 Speaker 1: this free audience is of no value. To the contrary, 452 00:23:52,240 --> 00:23:55,040 Speaker 1: what Peacock may come to find is that subscription video 453 00:23:55,119 --> 00:23:59,200 Speaker 1: doesn't interest some consumers, particularly in a pandemic and post 454 00:23:59,280 --> 00:24:02,160 Speaker 1: pandemic ear or when a lot of households are looking 455 00:24:02,160 --> 00:24:05,359 Speaker 1: to tighten the purse strings. Netflix has made commercial free 456 00:24:05,440 --> 00:24:08,560 Speaker 1: ultra premium streaming the sexier side of this business that 457 00:24:08,600 --> 00:24:10,639 Speaker 1: everyone watches. But I think we saw a lot of 458 00:24:10,680 --> 00:24:13,920 Speaker 1: evidence in twenty that those playing the ads supported free 459 00:24:13,920 --> 00:24:17,520 Speaker 1: game like Peacock demonstrated there's a pretty vibrant market to 460 00:24:17,560 --> 00:24:19,560 Speaker 1: be had at their end of the pool. Just look 461 00:24:19,600 --> 00:24:21,840 Speaker 1: at the incredible growth of a lot of pure play 462 00:24:21,920 --> 00:24:26,359 Speaker 1: free offerings like Viacom, cbs IS, Pluto TV, and Foxes 463 00:24:26,400 --> 00:24:28,800 Speaker 1: to Be just to name a few. Hbo Max is 464 00:24:28,840 --> 00:24:31,600 Speaker 1: also expected to go to the Peacock route sometime next 465 00:24:31,680 --> 00:24:34,600 Speaker 1: year and offer its own free ad supported extension. You 466 00:24:34,680 --> 00:24:37,119 Speaker 1: have to wonder if these kind of businesses will eventually 467 00:24:37,160 --> 00:24:40,320 Speaker 1: build a bigger audience than their subscription counterparts because there's 468 00:24:40,400 --> 00:24:44,000 Speaker 1: no barrier to entry. Still, Peacocks still has a long 469 00:24:44,040 --> 00:24:47,159 Speaker 1: ways to go to be taken more seriously. It was 470 00:24:47,240 --> 00:24:49,960 Speaker 1: late to market, and once it did launch, the absence 471 00:24:49,960 --> 00:24:52,679 Speaker 1: of the Olympics this year robbed this streaming service of 472 00:24:52,760 --> 00:24:56,200 Speaker 1: the best promotional platform it could have possibly had. Original 473 00:24:56,240 --> 00:24:59,120 Speaker 1: programming on Peacock has also been pretty unremarkable so far, 474 00:24:59,280 --> 00:25:01,440 Speaker 1: and that's what's real going to get the subscription side 475 00:25:01,440 --> 00:25:05,120 Speaker 1: of the Peacock business growing From NBC Universal CEO Jeff Shell. 476 00:25:05,320 --> 00:25:07,399 Speaker 1: Right now, I'm thinking long and hard about what he 477 00:25:07,440 --> 00:25:09,960 Speaker 1: could do to move the needle to make sure Peacock 478 00:25:10,080 --> 00:25:13,359 Speaker 1: doesn't end up a distant also ran in the streaming race. 479 00:25:13,560 --> 00:25:16,960 Speaker 1: Remember they've got a movie studio leverage, just like Disney 480 00:25:17,000 --> 00:25:19,919 Speaker 1: and HBO. Max Shell showed he's not adverse to making 481 00:25:19,920 --> 00:25:22,679 Speaker 1: ways when he skipped theaters with Trolls World Tour. But 482 00:25:22,720 --> 00:25:26,680 Speaker 1: now that Kyler has reset the bar on ballsy strategies, Shell, 483 00:25:26,840 --> 00:25:29,879 Speaker 1: we'll have to dig deeper to do something dramatic so 484 00:25:30,080 --> 00:25:33,880 Speaker 1: that rounds out streaming second tier. But we're not done yet. Honestly, 485 00:25:33,960 --> 00:25:37,080 Speaker 1: I'd be remiss in not saying anything about Quimby in 486 00:25:37,119 --> 00:25:40,359 Speaker 1: a commentary about streaming. I'm not gonna say much considering 487 00:25:40,400 --> 00:25:42,560 Speaker 1: what really could be said at this point that hasn't 488 00:25:42,600 --> 00:25:44,840 Speaker 1: already been said. If there was one thing that left 489 00:25:44,880 --> 00:25:48,399 Speaker 1: me awestrock about Quimby wasn't actually anything about Quimby per se. 490 00:25:48,520 --> 00:25:51,800 Speaker 1: It was the disproportion between the venture itself and the 491 00:25:51,960 --> 00:25:54,920 Speaker 1: sheer volume of words written about it. I mean, the 492 00:25:55,200 --> 00:25:58,680 Speaker 1: post mortems will probably last longer than Quimby itself did. 493 00:25:58,800 --> 00:26:01,040 Speaker 1: But I want to make one brief observation. While the 494 00:26:01,080 --> 00:26:03,720 Speaker 1: suggestion that it was the pandemic that did Quimby in 495 00:26:04,040 --> 00:26:07,639 Speaker 1: is ridiculous, I would suggest the pandemic did Jeffrey Katzenberg 496 00:26:07,680 --> 00:26:10,880 Speaker 1: a favor. It compressed into six quick months what would 497 00:26:10,920 --> 00:26:14,080 Speaker 1: have probably been a very slow bleed for as many 498 00:26:14,119 --> 00:26:17,440 Speaker 1: investors that probably would have taken years to play out. 499 00:26:17,520 --> 00:26:20,000 Speaker 1: Perhaps it was better we're all financially involved, that it 500 00:26:20,119 --> 00:26:23,040 Speaker 1: died as quickly as it did before good money got 501 00:26:23,040 --> 00:26:26,399 Speaker 1: thrown after bad. There's an alternate reality somewhere where Quimby 502 00:26:26,400 --> 00:26:29,600 Speaker 1: would have lingered long passes due date and pivoted a 503 00:26:29,640 --> 00:26:32,200 Speaker 1: few times, and it would have failed in that scenario 504 00:26:32,320 --> 00:26:37,240 Speaker 1: to just taken longer to do so. Looking ahead to briefly, 505 00:26:37,480 --> 00:26:40,600 Speaker 1: we'll still see even more launches in this space. Viacom 506 00:26:40,720 --> 00:26:43,160 Speaker 1: CBS is doing what you might call a relaunch around 507 00:26:43,160 --> 00:26:46,520 Speaker 1: CBS All Access, which will be back, bigger and presumably 508 00:26:46,560 --> 00:26:49,520 Speaker 1: better with the new brand Paramount Plus at some point 509 00:26:49,560 --> 00:26:52,320 Speaker 1: in the first half of the year. Discoveries also joining 510 00:26:52,320 --> 00:26:56,400 Speaker 1: the plus brigade, with Discovery Plus coming to market January four, 511 00:26:56,880 --> 00:26:59,920 Speaker 1: well stocked with the unscripted series that the company's cable 512 00:27:00,080 --> 00:27:02,960 Speaker 1: channels have made a specialty. You have to ask whether, 513 00:27:03,200 --> 00:27:06,560 Speaker 1: even in the best possible versions of these ventures, do 514 00:27:06,640 --> 00:27:09,960 Speaker 1: they stand a chance and what seems like an overcrowded marketplace. 515 00:27:10,200 --> 00:27:14,480 Speaker 1: Surveys point to different consumer capacities from multiple streaming subscriptions. 516 00:27:14,720 --> 00:27:17,679 Speaker 1: I've seen them all. Even if US households were flush 517 00:27:17,760 --> 00:27:20,640 Speaker 1: with disposable income, I just don't see the average consumer 518 00:27:20,760 --> 00:27:23,879 Speaker 1: having the patients to constantly hop scotch from one app 519 00:27:23,920 --> 00:27:27,000 Speaker 1: to another to find the content they want. At some point. 520 00:27:27,040 --> 00:27:30,200 Speaker 1: There's a problem of discovery. It's the simplicity that comes 521 00:27:30,240 --> 00:27:32,879 Speaker 1: with locating the content you want when you want it. 522 00:27:33,040 --> 00:27:35,199 Speaker 1: Think about what I was saying earlier about bundling, the 523 00:27:35,320 --> 00:27:38,920 Speaker 1: notion that the competitive dynamic and the subscription streaming video 524 00:27:39,000 --> 00:27:41,439 Speaker 1: marketplace is going to be like eight or ten or 525 00:27:41,480 --> 00:27:44,960 Speaker 1: twelve different players going it alone against each other. I 526 00:27:45,040 --> 00:27:48,000 Speaker 1: just don't think that's gonna hold right now. Premium video 527 00:27:48,040 --> 00:27:50,440 Speaker 1: programming can be thought of as a pendulum that has 528 00:27:50,480 --> 00:27:53,360 Speaker 1: swung from what you might call the over bundled world 529 00:27:53,400 --> 00:27:56,080 Speaker 1: of pay TV, which was too expensive and offered too 530 00:27:56,080 --> 00:27:58,480 Speaker 1: many channels, And now it's over at the other extreme, 531 00:27:58,600 --> 00:28:01,840 Speaker 1: where you've got these allah cart options that carry with 532 00:28:01,840 --> 00:28:04,000 Speaker 1: it a ceiling for just how many people are going 533 00:28:04,040 --> 00:28:06,640 Speaker 1: to pay for them. Look for the pendulum to come 534 00:28:06,640 --> 00:28:09,359 Speaker 1: back towards the middle and time and bundling some of 535 00:28:09,359 --> 00:28:12,240 Speaker 1: these offerings together is how that's going to happen. So 536 00:28:12,359 --> 00:28:14,960 Speaker 1: at long last, I think I finally exhausted myself on 537 00:28:14,960 --> 00:28:17,400 Speaker 1: the subject of streaming, but I can't wait to see 538 00:28:17,440 --> 00:28:20,600 Speaker 1: what has to offer. Maybe we'll talk again then when 539 00:28:20,640 --> 00:28:24,120 Speaker 1: that year comes to a close. Until then, happy holidays 540 00:28:24,160 --> 00:28:25,879 Speaker 1: one and all, and we'll see you next week for 541 00:28:25,920 --> 00:28:36,320 Speaker 1: another regular episode of Strictly Business. This has been another 542 00:28:36,359 --> 00:28:39,440 Speaker 1: episode of Strictly Business. Tune in next week for another 543 00:28:39,480 --> 00:28:43,360 Speaker 1: helping of scintillating conversation with media movers and shakers, and 544 00:28:43,360 --> 00:28:45,640 Speaker 1: please make sure you subscribe to the podcast to hear 545 00:28:45,720 --> 00:28:49,560 Speaker 1: future episodes. Also, leave a review in Apple Podcasts and 546 00:28:49,640 --> 00:28:50,920 Speaker 1: let us know how we're doing.