Speaker 1: Welcome to tech Stuff, a production from iHeartRadio. Hey there,
Speaker 1: and welcome to tech Stuff. I'm your host, Jonathan Strickland.
Speaker 1: I'm an executive producer with iHeart Podcasts and how the
Speaker 1: tech are you. I am wrapping up my vacation as
Speaker 1: you listen to this. I am sadly bidding a fond
Speaker 1: farewell to the Caribbean, unless, of course, hurricanes ruined my trip,
Speaker 1: which is entirely possible. I'm watching every day as storm
Speaker 1: systems form out there, so we'll see. But anyway, I
Speaker 1: am incapable of recording a new episode today. So this
Speaker 1: episode originally published on May twenty second, twenty twenty three.
Speaker 1: It is titled Streaming Services that sunk Golly, I'm on
Speaker 1: a boat and I've decided to run an episode with
Speaker 1: the words sunk in it. Y'all, just don't be me.
Speaker 1: Hope you enjoy. So. Back in two thousand and seven,
Speaker 1: a rent by mail video business made a move that
Speaker 1: would be a true disruption. We talk about disruptive companies,
Speaker 1: this was definitely one of them. It had already shaken
Speaker 1: things up by taking aim at a huge company that
Speaker 1: had dominated the home video rental market for decades through
Speaker 1: offering customers the chance to access a huge media library
Speaker 1: from the comfort of their own homes, albeit they had
Speaker 1: to wait for titles to make their way through the
Speaker 1: postal system before they could enjoy them. But now, this
Speaker 1: upstart company in two thousand and seven had set up
Speaker 1: a service where, if you can believe it, you could
Speaker 1: actually connect to a media player through the Internet and
Speaker 1: watch movies and television shows by streaming them to your device.
Speaker 1: The upstart company was, of course, Netflix had battled with Blockbuster,
Speaker 1: which actually had the opportunity to buy Netflix at one point,
Speaker 1: but walked away from that deal, and Netflix quickly became
Speaker 1: a big concern for the major studios, which understandably and
Speaker 1: arguably correctly worried that unless someone took action, Netflix would
Speaker 1: become a powerful monopoly for prestige media streaming services. I'm
Speaker 1: not talking about the user generated stuff which you would
Speaker 1: find on platforms like YouTube, but rather studio produced stuff. Now,
Speaker 1: at that point, Netflix would have a lot more leverage
Speaker 1: when negotiating with studios if it was the one and
Speaker 1: only place where customers could go to watch stuff online,
Speaker 1: and studios hate when leverage is given to anyone else.
Speaker 1: See also the Writer's Guild of America Strike. Lots of
Speaker 1: other streaming services would upear over the next decade and
Speaker 1: a half. Some of them were the product of collaboration.
Speaker 1: Hulu initially was I'll talk a little bit about who
Speaker 1: later on in the episode. Some streaming services launched as
Speaker 1: an extension of a television or cable channel, so eventually
Speaker 1: you would get things like Peacock or HBO Max or
Speaker 1: Disney Plus or Paramount Plus, which draws heavily from CBS,
Speaker 1: and lots more, including ones that aren't extension of media companies,
Speaker 1: like things like Amazon Prime Video and Apple TV Plus.
Speaker 1: There are so many streaming services now that if you
Speaker 1: subscribed to all of them, you would be probably paying
Speaker 1: more per month than you would if you went with
Speaker 1: one of those gargantuan cable TV packages. The landscape is
Speaker 1: crowded and it's complicated. I mean, sure, if all you
Speaker 1: consume are Disney films, and let's be honest, the way
Speaker 1: we're going, pretty soon every movie is going to be
Speaker 1: a Disney movie because the Mousehouse just gobbles up everything. Well,
Speaker 1: if that's all you do, then Disney Plus might be
Speaker 1: all you need. But most of us are likely to
Speaker 1: find ourselves subscribing to, or at least wanting to subscribe
Speaker 1: to a few different services to get access to all
Speaker 1: the stuff we like, and even then we're probably giving
Speaker 1: up on a couple of things. For example, I think
Speaker 1: at this point, I have Netflix, I have Amazon Prime,
Speaker 1: I have Apple TV Plus, I have Disney Plus, I
Speaker 1: have HBO Max. That might be at oh, I've got Peacock.
Speaker 1: So like, that's ridiculous, right, I Mean there are ties
Speaker 1: where I sit there and think, do I really need
Speaker 1: all these answers? No, I don't need them all, but
Speaker 1: there are programs that I can only watch through one
Speaker 1: of those services, and there's not really other alternative. So
Speaker 1: there I go. Now, the last couple of years have
Speaker 1: shown us that on the business side, if we go
Speaker 1: to the other side, yeah, things kind of stink if
Speaker 1: you're a consumer because they're all these different competing services.
Speaker 1: But on the other side, things aren't that rosy either.
Speaker 1: While the consumer struggles with which services they're gonna subscribe
Speaker 1: to or pass up, the media companies behind the services
Speaker 1: are trying to carve out a profitable path while also
Speaker 1: competing with one another. Now, maybe that involves producing new
Speaker 1: films and shows that are exclusively for the streaming service.
Speaker 1: Maybe it involves securing licensing for old favorites before a
Speaker 1: rival can do it, though a lot of that stuff
Speaker 1: ends up getting sewn up in existing libraries. Maybe it
Speaker 1: means taking some stuff off the service so that you
Speaker 1: know you're not paying people who made it over and
Speaker 1: over the residuals. Cough. David Zaslov does this a lot, cough.
Speaker 1: The point is, the streaming service business is really, really tough.
Speaker 1: I mean it's great when you're on a meteoric rise.
Speaker 1: You know, you launch, people find you, they talk you up.
Speaker 1: Your subscription rates soar. You're just doing gangbusters. It's growth
Speaker 1: all the way, baby. But eventually you start to hit
Speaker 1: a plateau and fewer people are signing up this quarter
Speaker 1: compared to last quarter, or worse, you might hit a
Speaker 1: point where you actually see subscriber numbers go down, and
Speaker 1: that's super bad. Now, maybe you supplement your revenue by
Speaker 1: showing ads against content. Maybe it's not just subscriptions. Maybe
Speaker 1: advertisers offer some stuff for you as well. Maybe you
Speaker 1: give customers options. Maybe they can subscribe it a higher
Speaker 1: tier and they can get an ad free experience. That's
Speaker 1: pretty common these days and then if they subscribe it
Speaker 1: a lower tier, they're spending less per month, but they're
Speaker 1: also having to sit through ads to watch the content
Speaker 1: they want. You still have to balance costs with revenue,
Speaker 1: and if you have to keep producing high quality content
Speaker 1: to both attract and keep customers, you might find that
Speaker 1: your profit margins are so thin they only have one side,
Speaker 1: or maybe even that you're losing money. And if you're
Speaker 1: seriously unlucky, you might find that you're on borrowed time,
Speaker 1: that you're losing money, and there's no pathway out of that.
Speaker 1: You know, the hope is that you scale up to
Speaker 1: a point where you ultimately are making more money than
Speaker 1: you're spending, but depending on how the landscape is, that
Speaker 1: might not even be a possibility. So we're going to
Speaker 1: take a look at some failed streaming services, ones that
Speaker 1: made an effort to hang with the cool kids, but
Speaker 1: ultimately flopped or faded away, as the case may be,
Speaker 1: and in one case, stopped a month after it had started. Now,
Speaker 1: I think I'm gonna start with a fairly recent example,
Speaker 1: one that I talked about a lot as the service launched, faltered,
Speaker 1: and then flopped. And that's quibi do you remember Quibi.
Speaker 1: In case you don't, here's the deal. So Jeffrey Katzenberg,
Speaker 1: who famously founded DreamWorks Animation after he left Walt Disney Studios.
Speaker 1: That story is a crazy one, by the way, full
Speaker 1: of like corporate drama, a lot of like like executives
Speaker 1: being really bitter about each other. Unfortunately, it's the kind
Speaker 1: of stuff that really blogs in a different kind of podcast.
Speaker 1: So as much as I would love to gush about it,
Speaker 1: I'm just gonna leave it here. Anyway, he decided he
Speaker 1: wanted to create a short form, highly produced video delivery
Speaker 1: platform aimed at the smartphone market. So you know, like
Speaker 1: TikTok is a user generated platform, right, But what Katzenberg
Speaker 1: wanted to do was make a studio produced version of
Speaker 1: short form video platforms. So instead of it being you know,
Speaker 1: some kid hitting on a really cool dance or something
Speaker 1: and then getting virally famous, it would be studios making
Speaker 1: content and then using this platform to distribute that content.
Speaker 1: And you could sort of see the logic behind the
Speaker 1: decision because people are on their phones a lot. They
Speaker 1: are using their phones more and more to access entertainment,
Speaker 1: and short form content works well in situations where you
Speaker 1: might not have the time or desire to sit down
Speaker 1: to an hour or more of video, so why not
Speaker 1: create a platform specifically for that kind of audience. Katzenberg
Speaker 1: founded QUIBI, which kind of stands for quick Bites. He
Speaker 1: founded it in the summer of twenty eighteen. Originally it
Speaker 1: had the name new TV, but it would change to
Speaker 1: QUIBBI a little bit later. In twenty eighteen, he hired
Speaker 1: Meg Whitman, who was the former CEO of Hewlett Packard,
Speaker 1: and she became the CEO of Quibi, and Katzenberg and
Speaker 1: Whitmen very quickly were making the rounds to various studios
Speaker 1: in an effort to drive up investments for Quibi, and
Speaker 1: they did. They raised like a billion dollars in the process.
Speaker 1: So the plan was to get production ramped up in
Speaker 1: twenty nineteen in preparation for a launch of the actual
Speaker 1: platform in the spring of twenty twenty. The hope was
Speaker 1: to create all sorts of different kinds of content across
Speaker 1: all genres reality, television, comedy, action, everything, and that they
Speaker 1: would take the form of stuff like short form television episodes,
Speaker 1: so things that lasted like ten minutes, to films that
Speaker 1: could be divided into ten minute long chapters, again, all
Speaker 1: designed to be watched on your mobile device. In fact,
Speaker 1: they even had this weird morphing technology where you could
Speaker 1: watch content either in portrait or landscape mode, and your
Speaker 1: experience of watching that program would depend upon what mode
Speaker 1: you were using, because you would get different views. Like
Speaker 1: it was shot with this in mind. It was kind
Speaker 1: of it was really ambitious, but also kind of odd
Speaker 1: to make that choice. It almost meant like you had
Speaker 1: to make two versions of your movie in order to
Speaker 1: do it so that way, like, if you're watching it
Speaker 1: in portrait mode, you're not missing some pivotal piece of
Speaker 1: information way off to the side in the frame, because
Speaker 1: it wouldn't show up due to the fact that your
Speaker 1: screen is vertical rather than horizontal. Anyway, they really pushed this,
Speaker 1: and producing stuff takes a lot of money, right You
Speaker 1: mentioned that earlier, like it is expensive to make studio
Speaker 1: level content, highly produced content. Even if you're cutting corners,
Speaker 1: it's still expensive. And meanwhile, the launch date was getting closer.
Speaker 1: Now It is impossible for us to say if Quibi
Speaker 1: would have survived if things had been a little different. Personally,
Speaker 1: I think Quibi was doomed to fail no matter what,
Speaker 1: But the decline may have taken a lot longer if
Speaker 1: things had been very different in twenty twenty, because it
Speaker 1: seems to me like the mobile focused approach really limited
Speaker 1: Quibi's usefulness. But maybe it would have held on, and
Speaker 1: maybe it would have even been a success. I'll never
Speaker 1: be able to tell, but you know, something major happened
Speaker 1: in twenty twenty. We had the COVID nineteen pandemic hit
Speaker 1: and nearly everyone was stuck at home for a long time,
Speaker 1: so the use case for Quibi was reduced significantly. I mean,
Speaker 1: here was a product that was intended to go to
Speaker 1: folks who were looking for some sort of entertainment while
Speaker 1: they were like on a bus or on a subway
Speaker 1: or standing in line, you know, doing all the things
Speaker 1: that they could not do because they were stuck at home.
Speaker 1: And at home they had access to tons of other
Speaker 1: entertainment services that were designed to work with their lifestyles.
Speaker 1: So trying to fit Quibbi in when they were no
Speaker 1: longer in those use cases it just didn't really catch. Now.
Speaker 1: At launch, Quibi did see quite a few downloads. I
Speaker 1: think it hit like number three on the most popular
Speaker 1: apps for the week that it debuted, but then the
Speaker 1: following week, those download numbers dropped drastically. Signing up would
Speaker 1: give you access to Quibi for three months for free,
Speaker 1: and after that you were supposed to pay for a subscription.
Speaker 1: So about three quarters of Quibi's users just opted to
Speaker 1: bounce off the service rather than convert to a paid
Speaker 1: subscription once their free trial was up. So the company
Speaker 1: attempted to bail water out of the sinking boat, but
Speaker 1: six months after going live, the writing was on the wall,
Speaker 1: so in mid October twenty twenty, the Wall Street Journal
Speaker 1: reported that Quibi was on the way out, and by
Speaker 1: December of twenty twenty, the lights had gone off in Quibi.
Speaker 1: Roku ended up purchasing Quibi's library, and thankfully creators retained
Speaker 1: the rights to their intellectual property, which gave them the
Speaker 1: chance to find some other platform to host their work.
Speaker 1: We're going to talk about a different company later here,
Speaker 1: where it's like the opposite of that to an extreme.
Speaker 1: But yeah, Quibi came and went so fast it didn't
Speaker 1: even say goodbye. Now there's a lot more we're going
Speaker 1: to talk about today with various failed streaming services, But
Speaker 1: before we get into all of that, so that we
Speaker 1: don't fail. Let's take a quick break to thank our sponsors.
Speaker 1: So yeah, Quibi. There were some major players in entertainment
Speaker 1: behind the scenes, both directly working for Quibi and also
Speaker 1: investing into the company. But our next example was an
Speaker 1: actual extension of a truly massive media conglomerate. So NBC Universal,
Speaker 1: which itself is a branch of Comcast, decided to dip
Speaker 1: its corporate tow in the subscription based video on demand
Speaker 1: service back in twenty fifteen. So a media executive named
Speaker 1: Evan Shapiro led the charge, and the goal was to
Speaker 1: create a video service centered around comedy. So the question
Speaker 1: was could yuck yucks bring in the buck bucks. The
Speaker 1: service would be called CISO, and it launched to a
Speaker 1: small beta test in December twenty fifteen, but the actual
Speaker 1: service went live in early twenty sixteen. Shapiro spared no
Speaker 1: expense when it came to curating content for the service.
Speaker 1: He wanted all things comedy, including older material like episodes
Speaker 1: of Monty Python's Flying Circus or the Great Sketch show
Speaker 1: The Kids in the Hall. That Saturday Night Live library
Speaker 1: was part of it. Remember this was an extension of
Speaker 1: NBC Universal. He also initially had eyes on making CISO
Speaker 1: the exclusive platform to stream episodes of the Office and
Speaker 1: Parks in rec Those plans would ultimately fall through, not
Speaker 1: Shapiro's fault, really, but it was a part of his
Speaker 1: plan where he thought, if we can do this, then
Speaker 1: that's going to attract a huge base of users. He
Speaker 1: made licensing deals left, right and center. He brought in
Speaker 1: a ton of popular comedy under one roof, and he
Speaker 1: also empowered his staff to produce original content for the
Speaker 1: platform as well. NBC Universal was kind of using CISO
Speaker 1: as a sort of experiment mental platform, the idea of
Speaker 1: being that if a comedy centric video on demand service
Speaker 1: and over the top streaming service, if that could work well,
Speaker 1: then NBC Universal might launch other genre or interest specific
Speaker 1: streaming platforms in the future, like maybe one based around horror.
Speaker 1: Universal famously has a really deep horror library that they
Speaker 1: keep trying to exploit in the modern era and often
Speaker 1: failed to do so, or maybe like a streaming service
Speaker 1: that's really focused on things like reality television programming, which
Speaker 1: arguably can be scarier and more disturbing than horror is.
Speaker 1: The cisow subscription was just three dollars ninety nine cents
Speaker 1: per month, when it launched. The initial catalog was heavy
Speaker 1: on stuff that comedy fans were likely to gravitate toward,
Speaker 1: including a sizable library of British comedy that could actually
Speaker 1: be a little tricky to access here in the United
Speaker 1: States outside of some notable exceptions like everyone's heard of
Speaker 1: Bonty Python's Flying Circus. But there are a lot of
Speaker 1: other British comedies that the average American may not be
Speaker 1: familiar with. Some of them are really famous. I mean,
Speaker 1: like some you might have encountered on other channels like
Speaker 1: Adult Swim showed The Mighty Boosh for a while, which
Speaker 1: is a bizarre, absurd comedy series. And then there were
Speaker 1: some sketch comedies, like one of my favorites was that
Speaker 1: Mitchell and Weblook, which Netflix carried briefly and then it
Speaker 1: became unaccessible to an American public. I finally ended up
Speaker 1: breaking down and buying the British DVDs and a region
Speaker 1: free DVD player so I could find I could watch
Speaker 1: them again. But anyway, the goal of CISO was to
Speaker 1: create original content. That was the long term goal, to
Speaker 1: make its own content that would build its own following,
Speaker 1: much like Netflix had done with things like Orangees of
Speaker 1: the New Black and A House of Cards and Stranger Things.
Speaker 1: Now every streaming services is following that same kind of philosophy.
Speaker 1: So you use the library to first attract your ground
Speaker 1: base of subscribers, and then you create original content to
Speaker 1: attract new ones and to keep everybody there. Now, one
Speaker 1: early mistake that the executives made over at SISO, though
Speaker 1: according to Shapiro, was actually folks higher up at NBC
Speaker 1: Universal that made this mistake, was to flinch at a
Speaker 1: deal that would have made CISO the exclusive streaming home
Speaker 1: for the Office. As I mentioned earlier, so Netflix was
Speaker 1: really interested in having access to the Office. They really,
Speaker 1: really really wanted it, and the plan was originally that
Speaker 1: CISO was going to get the exclusive deal. But Netflix
Speaker 1: made NBC Universal executives an offer they couldn't refuse, and
Speaker 1: they agreed to let Netflix get access to those programs,
Speaker 1: which meant SISO would not have that exclusivity. And even
Speaker 1: if SISO were to show episodes of the Office, the
Speaker 1: fact that you could already get it on Netflix and
Speaker 1: a lot of people were already Netflix subscribers meant you
Speaker 1: weren't going to lure Netflix users to SISO, just based
Speaker 1: on the office, so one of the things that possibly
Speaker 1: could have brought over a larger base of subscribers fell through.
Speaker 1: On the flip side, it also meant that Ciso had
Speaker 1: some budget freed up for making original content. Now apparently,
Speaker 1: Shapiro initially was told that NBC Universal was going to
Speaker 1: have this enormous marketing campaign to promote Ciso, like a
Speaker 1: ten million dollar effort to highlight the service across the
Speaker 1: company's various networks, But that really didn't manifest and Ciso
Speaker 1: received relatively little marketing support, which not surprisingly meant that
Speaker 1: subscription numbers were lackluster. I mean, it's hard to get
Speaker 1: excited about subscribing to a service if you've never heard
Speaker 1: of it, or if the promotion you see doesn't really
Speaker 1: talk it up enough. Making matters worse is that Ciso
Speaker 1: had its own video player that occasionally had technical issues
Speaker 1: and wasn't compatible with some of the hardware consumers used
Speaker 1: to access streaming content. So again, let's contrast this with Netflix.
Speaker 1: Netflix had made a decision a long time ago to
Speaker 1: pretty much make sure it was anywhere where there's a screen.
Speaker 1: Netflix worked to create apps that were compatible with video
Speaker 1: game consoles with streaming boxes connected to televisions to smart TVs.
Speaker 1: In fact, like if you have a fridge that has
Speaker 1: a video screen incorporated in it, there's a chance that
Speaker 1: there's a Netflix app native for that particular device. But
Speaker 1: Comcast's approach wasn't as broad a and this is kind
Speaker 1: of a pun a spectrum as what Netflix was taking now.
Speaker 1: CISO did end up joining Amazon's streaming partners program in
Speaker 1: mid twenty sixteen. That helped a little. By the end
Speaker 1: of twenty sixteen, it was finally compatible with Apple TV.
Speaker 1: But you know, this was like a full year in
Speaker 1: operation when these things started to click into place. While
Speaker 1: CISO failed to take off to the moon, it did
Speaker 1: grow in its second year, so in twenty seventeen it
Speaker 1: began an upward trajectory for subscriber growth. The famous podcast
Speaker 1: My Brother, My Brother, and Me launched a television show
Speaker 1: on the network in twenty seventeen. They often joke about
Speaker 1: how the CISO platform subsequently died on their podcast a lot,
Speaker 1: But while they make jokes about it, their show was
Speaker 1: not likely to have been a contributing factor to ciso's demise.
Speaker 1: The service was spending a lot more money than it
Speaker 1: was bringing in and Arguably this was necessary in order
Speaker 1: to scale to a level that could compete with bigger,
Speaker 1: more established services like Netflix, But a prestige show on
Speaker 1: cso called There's Johnny About Johnny Carson may have been
Speaker 1: the straw that broke NBC Universal's back. It was an
Speaker 1: expensive show to produce and with the numbers headed in
Speaker 1: the wrong direction, At least for the higher ups at
Speaker 1: NBC Universal. It meant Evan Shapiro got his walk in
Speaker 1: papers in May twenty seventeen. CISO kept on going for
Speaker 1: a little bit, but it didn't last long. A couple
Speaker 1: of months after Shapiro had left, SISO announced it would
Speaker 1: be shutting down by the end of the year, and
Speaker 1: it didn't even make it that far. It actually went
Speaker 1: dark in mid November twenty seventeen. Ciso's failure is complicated.
Speaker 1: It probably relates to a lot of different factors. One
Speaker 1: is that it didn't get the marketing push it needed
Speaker 1: from its parent company, a less an NBC Universal appears
Speaker 1: to have learned because you can't turn around without running
Speaker 1: into a promo for Peacock these days, so they've definitely
Speaker 1: changed their tune on that. But for another SISO failed
Speaker 1: to explore ad supported options, which potentially could have brought
Speaker 1: in revenue to help offset the costs. Third, some of
Speaker 1: the moves to produce original content might have been a
Speaker 1: bit too ambitious so early on, Like it's really good
Speaker 1: to have the goal to create prestige content, but it's
Speaker 1: possible that the service needed the ground to be a
Speaker 1: touch more firm before trying to create something like There's Johnny.
Speaker 1: This is no shade on There's Johnny. I'm not saying
Speaker 1: that that was a bad series by far, just that
Speaker 1: it was. It was a big risk considering how much
Speaker 1: it costs, and maybe the wise move would have been
Speaker 1: to hold off just a bit longer to try and
Speaker 1: establish a standing before going into it. It's hard to say,
Speaker 1: like these things in hindsight, it's really easy to say
Speaker 1: one way or the other. But at the time, I'm
Speaker 1: sure these decisions were not easy ones. Some of the
Speaker 1: content that was on CISO would end up going to
Speaker 1: other platforms, including another one then no longer exists VRV
Speaker 1: or VERVE. So the history of VRV or I'm just
Speaker 1: gonna call it VERV why not. The history of VERV
Speaker 1: is also pretty short. So for one thing, it launched
Speaker 1: in late twenty sixteen, so CISO was wrapping up its
Speaker 1: first year in twenty sixteen. That's when Verve launched, and
Speaker 1: it was sort of a sister service to the anime
Speaker 1: focused streaming platform called crunchy Roll. Crunchy Role still exists.
Speaker 1: Verv was kind of a similar streaming service, but Crunchy
Speaker 1: Role focused on anime. Verve would end up getting lots
Speaker 1: of different content from all sorts of companies. They included
Speaker 1: companies like Geek and Sundry, which was really a YouTube
Speaker 1: studios channel. Rooster Teeth was another company that provided content
Speaker 1: to VERV, and other partners included College Humor, which would
Speaker 1: subsequently develop its own subscription streaming service called Dropout TV
Speaker 1: Machinima dot Com, which we will talk about more in
Speaker 1: a second. So there's a spoiler. We know Maine is
Speaker 1: not gonna last forever. They were also a partner with VERV.
Speaker 1: Shutter provided content to verv for a while. Shutter is
Speaker 1: a horror based company Rifftracks, which is made up of
Speaker 1: people who used to be part of Mystery Science Theater
Speaker 1: three thousand. They partnered with VERV while and like crunchy Roll,
Speaker 1: Verve wasn't over the top streaming service. It contained multiple
Speaker 1: channels of content, ranging from animation to geeky lifestyle programming
Speaker 1: to horror. So you could log into the little service,
Speaker 1: you know, you subscribe to Verve and you could access
Speaker 1: all this different stuff. So partners joined and dropped out
Speaker 1: of Verve over the years, so it's actually really hard
Speaker 1: to talk about what was on Verve because it all
Speaker 1: depended upon what year it was. So, like I said,
Speaker 1: at one point you had Shutter as part of Verve,
Speaker 1: and then Shutter would leave Verve in twenty nineteen. That
Speaker 1: same year, Nerdiced left Verve, Curiosity, Stream, Geek, and Sundry
Speaker 1: they all left Verve in twenty nineteen, but others would
Speaker 1: join the service. So there was this fluctuating list of
Speaker 1: content that was available throughout its short history. Makes it
Speaker 1: a little difficult to talk about Verve because it's not
Speaker 1: like there was a central identity you could easily point out,
Speaker 1: because it was serving as a distribution platform for lots
Speaker 1: of different partners, and those partners kept changing. By early
Speaker 1: twenty twenty two, all those partners were pretty much gone.
Speaker 1: They had left after the terms of their licensing contracts expired,
Speaker 1: and in March twenty twenty two, word got out that
Speaker 1: verv was going to cease to exist to be its
Speaker 1: own thing, it would merge with crunchy Roll. The Verve
Speaker 1: app went dark just a couple of weeks before I
Speaker 1: recorded this episode on May eighth, twenty twenty three. So
Speaker 1: even the backup plan needed a backup plan, And this
Speaker 1: really shows how challenging it could be to run a
Speaker 1: streaming service successfully. Now, a lot of partners I mentioned
Speaker 1: they still have their own platforms. Many of them are
Speaker 1: part of much larger companies. So even though Verve doesn't
Speaker 1: exist anymore, some of a lot of the partners that
Speaker 1: worked with verv, they do still exist in one form
Speaker 1: or another. So, for example, rooster Teeth, which initially launched
Speaker 1: as a sort of independent content company, is today part
Speaker 1: of Warner Brothers Discovery Shutter, the horror themed over the
Speaker 1: top streaming services owned by ABC Networks, and it can
Speaker 1: also be accessed not just through its own app, but
Speaker 1: also through Amazon Video. So there are different places you
Speaker 1: can find this content. You just can't go to one
Speaker 1: central location and find it all there anymore, which is
Speaker 1: part of the problem. Right. It's a big challenge we
Speaker 1: consumers face is that we might hear about something we're
Speaker 1: interested in. Just figuring out where the heck you can
Speaker 1: get hold of that content can be a huge headache.
Speaker 1: Figuring out, Hey, do I actually subscribe to the service
Speaker 1: that runs this thing or am I going to have
Speaker 1: to subscribe to something else? All Right, we're going to
Speaker 1: take another quick break. When we come back, I've got
Speaker 1: some more failed streaming platforms to talk about. We're back,
Speaker 1: And as I said, I had mentioned Machinema earlier. By that,
Speaker 1: I mean machinima dot com. It has also ceased to
Speaker 1: be It operated for about twenty years before it went away,
Speaker 1: and it's a fascinating story all by itself. And I'm
Speaker 1: going to give a very brief one. I could do
Speaker 1: a full episode about Machinima dot com because holy cow,
Speaker 1: there's a lot to talk about, both from a tech
Speaker 1: side and from a business side, and really a talent
Speaker 1: side as well. Uh. It launched a ton of different shows,
Speaker 1: including one that I still followed today, though you could
Speaker 1: argue that the show I followed today is very different
Speaker 1: from the show as it originated back in the Maschionama days.
Speaker 1: But but Machinima is a portmanteau of machine and cinema,
Speaker 1: or sometimes machine and anime. It typically refers to a
Speaker 1: type of entertainment where you use computer generated characters, often
Speaker 1: video game characters, and you use them like digital puppets,
Speaker 1: and you tell a story, and that includes stories that
Speaker 1: have nothing to do with the platform you're using, the
Speaker 1: video game you're using. So in the old days, folks
Speaker 1: did this just for the fun of it. They used
Speaker 1: in game tools to cobble together and record short sketches
Speaker 1: or stories. So typically your camera was provided by someone
Speaker 1: who is recording their point of view as the story
Speaker 1: played out, or maybe they were using in game tools
Speaker 1: to position a virtual camera somewhere in an environment. Rooster Teeth,
Speaker 1: which I mentioned earlier in this episode, had a monumentally
Speaker 1: successful show in this genre called Red Versus Blue. They
Speaker 1: used the Xbox game Halo as the foundation for that show. Anyway,
Speaker 1: a mashinima creator named Hugh Hancock registered mashinema dot com
Speaker 1: in two thousand. The site would serve as a place
Speaker 1: for creators to store and make available their videos two thousand.
Speaker 1: This was before YouTube. If you created digital video, you
Speaker 1: had to host that somewhere online. Typically you would host
Speaker 1: it on a server, and then people would have to
Speaker 1: navigate to a web page and download the video in
Speaker 1: order to watch it, because streaming was not really a
Speaker 1: thing yet. So the website let creators tap into a
Speaker 1: growing audience for the medium. So there became like this
Speaker 1: kind of clearing house for machinema based entertainment, so people
Speaker 1: knew where to go to get it, and then creators
Speaker 1: had a place to put it so that they didn't
Speaker 1: have to try and do everything themselves, you know, host
Speaker 1: the material, market it, get people aware of it, that
Speaker 1: kind of thing. But hosting media files is expensive, right,
Speaker 1: especially if people are downloading them. That's a lot of
Speaker 1: bills you have to pay. So Mashinima was making revenue
Speaker 1: through an online store, so they would sell various types
Speaker 1: of merchandise to fans, and they also sold ad space
Speaker 1: on the site. And Hancock was pretty much responsible for
Speaker 1: running the whole darn thing for about six years, and
Speaker 1: in two thousand and six he decided that he needed
Speaker 1: a rest. That he had been running it and did
Speaker 1: about as much as he could as a single person,
Speaker 1: so he sold it to the former operators of a
Speaker 1: company called Creative Planet. Now not long after that you
Speaker 1: had the impact of YouTube, And in two thousand and seven,
Speaker 1: Mashinima established a YouTube channel and began to upload videos
Speaker 1: to YouTube itself. The company became rather dependent on YouTube actually,
Speaker 1: both as a place to store videos and to monetize them.
Speaker 1: Mashinima grew rapidly. It hit one billion monthly video views
Speaker 1: on YouTube in November twenty eleven. That is an incredible statistic.
Speaker 1: Mashinima was one of the largest most successful channels on YouTube.
Speaker 1: I think the only one that was ahead of it
Speaker 1: was Vivo, the music video channel. It had incredible engagement.
Speaker 1: People would go to Mashinema and stay there for more
Speaker 1: than an hour. But the company was also spending money
Speaker 1: very quickly, and in twenty twelve that caught up with
Speaker 1: them and they had to make some cutbacks because they
Speaker 1: were running out of cash. So they laid off more
Speaker 1: than twenty employees, which doesn't sound like a lot of people,
Speaker 1: but Mashinima was a lean operation that was like ten
Speaker 1: percent of all staff at the time. Then there was
Speaker 1: this expose and this is where I was really talking
Speaker 1: about how Mashinima was different from Quibi. You know, like
Speaker 1: Quibi creators, they retained intellectual property rights for their stuff.
Speaker 1: That wasn't how it was a Machinema. So this expose
Speaker 1: showed how predatory Mashinima could be. The Dallas Observer published
Speaker 1: an article that said when creators were signed on with Mashinema,
Speaker 1: they were agreeing to a lifelong contract that everything they
Speaker 1: made from that point forward would essentially belong to Mashinema forever.
Speaker 1: Even if they left the company, Mashinima would retain rights
Speaker 1: to that and to all the stuff they made afterward. That, y'all,
Speaker 1: is a bad deal. I mean pulling back the curtain.
Speaker 1: iHeart owns the rights to text stuff, so if I
Speaker 1: were ever to part ways with iHeart, I would not
Speaker 1: be able to take tech stuff with me. It does
Speaker 1: not belong to me. It belongs to iHeart. However, I
Speaker 1: could still create my own shows later on, and those
Speaker 1: would belong to me, because that's reasonable, right. But Mashinima's
Speaker 1: agreements sounded like something out of a fairy tale, like
Speaker 1: you belong to me forever. Like Ursula was in charge
Speaker 1: of the contracts department at Mashinema. The company was growing
Speaker 1: but also operating at a loss. In twenty fourteen, Warner
Speaker 1: Brothers invested around fourteen million dollars in the company. Masha
Speaker 1: got a new CEO in the form of Chad Gutstein,
Speaker 1: He reorganized the company, He landed some licensing deals with
Speaker 1: Warner Brothers, and he managed some other deals that have
Speaker 1: ultimately tempted Warner brook There's even more, and in twenty sixteen,
Speaker 1: Mashinima accepted a buyout offer for one hundred million smackaroos.
Speaker 1: So Gutstein joins in twenty fourteen and twenty sixteen, he says,
Speaker 1: my job here is done, and he leaves because he
Speaker 1: was essentially leading the company toward this acquisition, and Russell Aerins,
Speaker 1: who was a Warner Brothers executive, became the new head
Speaker 1: of Mashinema. By the way, this is also around the
Speaker 1: same time when AT and T acquired Warner Brothers and
Speaker 1: formed Warner Media. It is weird to think that it
Speaker 1: hasn't been that long since AT and T bought Warner Brothers,
Speaker 1: much less than divested itself of Warner Brothers, where Warner
Speaker 1: Brothers then merged with Discovery. It's crazy how much has
Speaker 1: changed in just in less than a decade. It's it's bonkers,
Speaker 1: all right. So anyway, WarnerMedia reorganized and put Mashinima under
Speaker 1: a division call Otter Media. This was in December twenty eighteen.
Speaker 1: Another company that was under Otter Media Rooster Teeth. Well.
Speaker 1: Then just a few weeks later, on January nineteenth, twenty nineteen,
Speaker 1: Otter Media wiped all of Mashinima's YouTube videos off the
Speaker 1: face of the earth, like the whole channel was nuked
Speaker 1: from orbit. It's the only way to be sure. Every
Speaker 1: single video was deleted or at least removed from public view. Then,
Speaker 1: at the beginning of February twenty nineteen, word got out
Speaker 1: that Otter Media had laid off every single Machinema employee.
Speaker 1: All eighty plus of them were fired or moved to
Speaker 1: a different division within Otter Media. So what gets Why
Speaker 1: was Machinima wiped out like that? Well, the idea was
Speaker 1: to consolidate digital media offerings in WarnerMedia, so the company
Speaker 1: owned a whole bunch of different digital media production companies
Speaker 1: and channels like a bunch, including Rooster Teeth, Full Screen,
Speaker 1: crunchy Roll. Warner would later sell Crunchy Role to Sony
Speaker 1: in twenty twenty, and they just wanted to kind of
Speaker 1: streamline things they felt like there was too much overlap.
Speaker 1: It probably ended up being for the best, because, as
Speaker 1: we all know, Discovery would acquire Warner Brothers after AT
Speaker 1: and T decided that its earlier decision to buy the
Speaker 1: company was a booboo, and knowing how David zaslovorx I imagined,
Speaker 1: Mishinima would have been an early candidate for the chopping
Speaker 1: block in an effort to reduce costs if it had
Speaker 1: still been a thing. On a similar note, here in Atlanta,
Speaker 1: we had a company called film Struck. Technically this was
Speaker 1: a division under Warner Brothers and Turner Classic Movies. The
Speaker 1: service launched in twenty sixteen with two tiers, so for
Speaker 1: six dollars ninety nine cents a month, you would have
Speaker 1: access to a basic digital library of various movies, mostly
Speaker 1: film classics. But if you coughed up ten dollars ninety
Speaker 1: nine cents a month, you would also have access to
Speaker 1: the criterion collection libraries. There's lots of different, highly regarded movies,
Speaker 1: so the whole concept behind this particular streaming platform was
Speaker 1: to attract movie lovers who wanted to be able to
Speaker 1: watch classics and foreign films and independent films the stuff
Speaker 1: that you often can't find on most streaming platforms. They said, well,
Speaker 1: here's the solution. We're going to make this platform and
Speaker 1: you'll be able to access those titles here. The service
Speaker 1: lasted two whole years and then shut down in twenty eighteen.
Speaker 1: So why did it shut down? Well, remember how I
Speaker 1: said AT and T merged with WarnerMedia. Well, part of
Speaker 1: that process involved slimming down and streamlining things, and film
Speaker 1: Struck was struck because it was seen as having a
Speaker 1: limited appeal. It was a niche product, so it didn't
Speaker 1: last at all due to corporate maneuvers. I mean that
Speaker 1: was the reason why it died. So if that hadn't happened,
Speaker 1: if the corporate manu had not been a thing, if
Speaker 1: giant companies weren't trying to figure out what can we
Speaker 1: strike from our record books to make this deal look better,
Speaker 1: then would Film Struck have been a big success. Probably not,
Speaker 1: but it might have done just fine, especially being supported
Speaker 1: by a community of film lovers. But we're never gonna know. Also,
Speaker 1: we had another streaming service launched out of Atlanta that
Speaker 1: lasted a whole month and then it was a shock
Speaker 1: when it got shut down. So in this case, and
Speaker 1: it relates back to Warner again. I'm talking about CNN Plus,
Speaker 1: the subscription based streaming service related to CNN, but it
Speaker 1: was going to carry things like documentaries, TV specials, that
Speaker 1: kind of thing, stuff that goes into much more depth
Speaker 1: than would be a lot of original programming. The division
Speaker 1: spit something like three hundred million dollars in building up
Speaker 1: to the launch, because, as I mentioned, this sort of
Speaker 1: production ain't cheap. Throughout twenty twenty one, it was gearing
Speaker 1: up for this event. It actually launched on March twenty ninth,
Speaker 1: twenty twenty two, and it didn't immediately crush it. It's
Speaker 1: not like they suddenly were overwhelmed by subscribers, but you know,
Speaker 1: they had just gotten started. But by the following month
Speaker 1: it got shut down. So again this would be because
Speaker 1: of David the Grim Reaper Zaslov because CNN was part
Speaker 1: of Warner Brothers. Discovery merged with Warner Brothers after AT
Speaker 1: and T bounced off of that partnership, and Zaslov needed
Speaker 1: to take a serious swing at cutting costs because both
Speaker 1: Discovery and Warner Brothers were in some fairly tough times.
Speaker 1: So once upon a time, this show tech stuff was
Speaker 1: actually part of Discovery Communications, and David Zaslov was CEO
Speaker 1: of Discovery and now he's CEO of Warner Brothers Discovery.
Speaker 1: So I got to see how things operated to a
Speaker 1: certain extent. It's not like I was in the room
Speaker 1: where it happens to quote Hamilton, but you know, I
Speaker 1: was in the company, so I could kind of see
Speaker 1: what was going on. And the cable business is really tough,
Speaker 1: similar to streaming. You know, things are great when you're
Speaker 1: pouring on subscribers. It's a money train at that point, baby,
Speaker 1: All those monthly fees are pouring in throughout the year,
Speaker 1: those big carriage deals with cable companies, they're huge and
Speaker 1: they bring in billions of dollars. However, eventually you hit
Speaker 1: saturation and it gets a lot harder to grow as
Speaker 1: a company, and growth is what investors want. So yeah,
Speaker 1: you could still be making huge amounts of money, but
Speaker 1: if you're not growing, that's a problem. So Discovery was
Speaker 1: kind of running up against that. Back when I was there.
Speaker 1: The company was focusing a lot on establishing a presence
Speaker 1: in countries where it previously didn't have service, like Central
Speaker 1: America or South America, and it was because that represented
Speaker 1: a place where it could actually grow. You couldn't really
Speaker 1: grow in the United States because the Discovery channel was
Speaker 1: already on pretty much all the different cable packages it
Speaker 1: could be on in the US, so you're not really
Speaker 1: growing there. Once you established your presence in a part
Speaker 1: of the world that dried up so that you had
Speaker 1: to go into different It almost becomes like colonization, but
Speaker 1: through cable channels again, kind of similar to streaming, right, Like,
Speaker 1: once you reach a saturation point where the people who
Speaker 1: are likely to subscribe are already subscribed, you don't really
Speaker 1: grow after that. That's a problem. So anyway, Zasov took
Speaker 1: a look at CNN Plus's business plan and its performance figures,
Speaker 1: and he said, well, there's no reason to keep this around.
Speaker 1: It's super expensive, it's going to take forever for it
Speaker 1: to reach a point where it might be profitable, and
Speaker 1: in the meantime, we need to cut billions of dollars
Speaker 1: off of our costs. So he shut it down after
Speaker 1: it had been open for a month. Now, there's no
Speaker 1: denying the service was costing Warner Brothers a lot of money,
Speaker 1: and that subscribers have exactly gone gaga over it. Plus
Speaker 1: both Warner Brothers and Discovery also already had their own
Speaker 1: streaming services, which of course raises the possibility that it
Speaker 1: could end up competing against itself in the market. You know,
Speaker 1: maybe one streaming service is a little more expensive than
Speaker 1: the others, but it doesn't have the number of subscribers
Speaker 1: that it should because you've kind of already convinced people
Speaker 1: to go to this other subscription service for less, even
Speaker 1: though it's a different offering. That's a real issue, right,
Speaker 1: So the plug got pulled. Now, there are lots of
Speaker 1: other streaming services that didn't stick around. Like I didn't
Speaker 1: even touch on Vine, which is another user generated one.
Speaker 1: We've talked about that one in the past and how
Speaker 1: Vine was kind of a precursor to Mega hit like TikTok.
Speaker 1: But yeah, there are other examples, not just the highly
Speaker 1: produced stuff that I focused on in this episode. Also,
Speaker 1: a lot of these existing streaming services are headed toward consolidation, right,
Speaker 1: Like we know that Discovery and HBO Max are becoming Max.
Speaker 1: That Max is going to be this combination of material.
Speaker 1: Although from why I understand, Discovery is still going to
Speaker 1: continue to operate its own independent streaming service because there's
Speaker 1: a fear that by combining, some of those subscribers will
Speaker 1: just jump ship because they don't want the max stuff,
Speaker 1: they don't want to spend more money on content, so
Speaker 1: they might leave. So I think that both of those
Speaker 1: are going to continue to exist. We found out not
Speaker 1: long ago that Disney is merging Hulu and Disney Plus
Speaker 1: into a single service by the end of this year,
Speaker 1: and that the Disney Plus subscription, at least for the
Speaker 1: ad free experience, will also be going up. So yeah,
Speaker 1: we're still seeing stuff consolidate. We're seeing streaming services merge
Speaker 1: together because I think all of them have come to
Speaker 1: the same conclusion that it's clear there's a demand for
Speaker 1: these services. It's clearer people want them, but it's also
Speaker 1: clear that there are real challenges to making it a profitable,
Speaker 1: scalable business while also producing you know, the content that's
Speaker 1: going to keep people there, because that content is so
Speaker 1: expensive and it's not like you know, serving ads against stuff.
Speaker 1: I mean, even though some of these streaming services do
Speaker 1: serve ads or have opportunities for people to subscribe it
Speaker 1: an ad supported tier, but there's no like Box Office
Speaker 1: for these streaming you know, pieces of content. So it's
Speaker 1: it's harder to get it to monetize properly. You know.
Speaker 1: It's the old models don't work on the streaming approach,
Speaker 1: so new models need to be formed. And I think
Speaker 1: we're still seeing that shake out, which is kind of
Speaker 1: funny because, like I said, Netflix launched theirs way back
Speaker 1: in two thousand and seven, not long after YouTube had
Speaker 1: become a thing. So the fact that we've been around
Speaker 1: this long with these streaming services and we're still trying
Speaker 1: to figure out a way of making them, you know,
Speaker 1: make money at a level where we're gonna get that
Speaker 1: prestige content, it's really interesting. I don't think it's gonna change.
Speaker 1: I don't think we're gonna lose these streaming services. We
Speaker 1: might lose some of them when companies just can't afford
Speaker 1: to continue the business. But I think that's still like
Speaker 1: the future of entertainment for at least the near term.
Speaker 1: But yeah, a lot of stuff's going to have to
Speaker 1: shake out for it to be sustainable and to be profitable.
Speaker 1: All Right, that's it for this episode. Like I said,
Speaker 1: there were a ton of other streaming services, some of
Speaker 1: which were more about audio streaming rather than video, but
Speaker 1: there's a lot of others that we could talk about.
Speaker 1: Maybe I will in future episodes, but I really wanted
Speaker 1: to focus on these and kind of explore what went wrong.
Speaker 1: A lot of times it wasn't the fault of the
Speaker 1: people who were running the program. It was literally because
Speaker 1: folks above them had to make some tough decisions while
Speaker 1: there were all these mergers and acquisitions going on. So yeah,
Speaker 1: tough story, but one that I think is worth examining.
Speaker 1: I hope you are all doing well, and I will
Speaker 1: talk to you again really soon. Tech Stuff is an
Speaker 1: iHeartRadio production. For more podcasts from iHeartRadio, visit the iHeartRadio app,
Speaker 1: Apple Podcasts, or wherever you listen to your favorite shows.