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 iHeartRadio. And how the tech
Speaker 1: are you So? Back in two thousand and seven, a
Speaker 1: rent by mail video business made a move that would
Speaker 1: be a true disruption. We talk about disruptive companies, this
Speaker 1: was definitely one of them. It had already shaken things
Speaker 1: up by taking aim at a huge company that had
Speaker 1: dominated the home video rental market for decades through offering
Speaker 1: customers the chance to access a huge media library from
Speaker 1: the comfort of their own homes, albeit they had to
Speaker 1: wait for titles to make their way through the postal
Speaker 1: system before they could enjoy them. But now this upstart
Speaker 1: company in two thousand and seven had set up a
Speaker 1: service where, if if you can believe it, you can
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. It had battled
Speaker 1: with Blockbuster, which actually had the opportunity to buy Netflix
Speaker 1: at one point, but walked away from that deal, and
Speaker 1: Netflix quickly became a big concern for the major studios,
Speaker 1: which understandably and arguably correctly worried that unless someone took action,
Speaker 1: Netflix would become a powerful monopoly for prestige media streaming services.
Speaker 1: I'm not talking about the user generated stuff which you
Speaker 1: would 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 Guild of America strike. Lots of other
Speaker 1: streaming services would uppear over the next decade and a half.
Speaker 1: Some of them were the product of collaboration Hulu initially
Speaker 1: was I'll talk a little bit about Hulu later on
Speaker 1: in the episode. Some streaming services launched as an extension
Speaker 1: of a television or cable channel, so eventually you would
Speaker 1: get things like Peacock or HBO Max or Disney Plus
Speaker 1: or Paramount Plus, which draws heavily from CBS, and lots more,
Speaker 1: including ones that aren't extension of media companies, like things
Speaker 1: like Amazon Prime Video and Apple TV Plus. There are
Speaker 1: so many streaming services now that if you subscribed to
Speaker 1: all of them, you would be probably paying more per
Speaker 1: month than you would if you went with one of
Speaker 1: those gargantuan cable TV packages. The landscape is crowded and
Speaker 1: it's complicated. I mean, sure, if all you consume are
Speaker 1: Disney films, and let's be honest, the way we're going,
Speaker 1: pretty soon every movie is going to be a Disney
Speaker 1: movie because the mouse House 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 any other alternative.
Speaker 1: So there I go. Now, the last couple of years
Speaker 1: have shown us that on the business side, if we
Speaker 1: go to the other side, yeah, things kind of stink
Speaker 1: if 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 custom 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: The hope is that you scale up to a point
Speaker 1: where you ultimately are making more money than you're spending,
Speaker 1: but depending on how the landscape is, that might not
Speaker 1: even be a possibility. So we're going to take a
Speaker 1: look at some failed streaming services, ones that made an
Speaker 1: effort to hang with the cool kids, but ultimately flopped
Speaker 1: or faded away, as the case may be, and in
Speaker 1: 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 it's the
Speaker 1: kind of stuff that really blogs in a different kind
Speaker 1: of podcast. So as much as I would love to
Speaker 1: gush about it, I'm just gonna leave it here. Anyway,
Speaker 1: he decided he wanted to create a short form, highly
Speaker 1: produced video delivery platform aimed at the smartphone market. So
Speaker 1: you know, like TikTok is a user generated platform right.
Speaker 1: But what Katzenberg wanted to do was make a studio
Speaker 1: produced version of short form video platforms. So instead of
Speaker 1: it being you know, some kid hitting on a really
Speaker 1: cool dance or something and then getting virally famous, it
Speaker 1: would be studios making content and then using this platform
Speaker 1: to distribute that content. And you could sort of see
Speaker 1: the logic behind the decision because people are on their
Speaker 1: phones a lot. They are using their phones more and
Speaker 1: more to access entertainment, and short form content works well
Speaker 1: in situations where you might not have the time or
Speaker 1: desire to sit down to an hour or more of video,
Speaker 1: So why not create a platform specifically for that kind
Speaker 1: of audience. Katzenberg founded QUIBI, which kind of stands for
Speaker 1: quick Bites. He founded it in the summer of twenty eighteen.
Speaker 1: Originally it had the name new TV, but it would
Speaker 1: change to quibbi a little bit later. In twenty eighteen,
Speaker 1: he hired Meg Whitman, who was the former CEO of
Speaker 1: Hewlett Packard, and she became the CEO of Quibi, and
Speaker 1: Katzenberg and Whitman very quickly were making the rounds to
Speaker 1: various studios 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 Quibi 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 that those download numbers dropped drastically. Signing up
Speaker 1: would give you access to Quibe 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. So, yeah, Quibi.
Speaker 1: There were some major players in entertainment behind the scenes,
Speaker 1: both directly working for Quibi and also investing into the company.
Speaker 1: But our next example was an actual extension of a
Speaker 1: truly massive media conglomerate. So NBC Universal, which itself is
Speaker 1: a branch of Comcast, decided to dip its corporate tow
Speaker 1: in the subscription based video on demand service back in
Speaker 1: twenty fifteen. So a media executive named Evan Shapiro led
Speaker 1: the charge, and the goal was to create a video
Speaker 1: service centered around owned comedy. So the question was could
Speaker 1: Yuck Yucks bring in the buck bucks? The service would
Speaker 1: be called SISO, and it launched to a small beta
Speaker 1: test in December twenty fifteen, but the actual service went
Speaker 1: live in early twenty sixteen. Shapiro spared no expense when
Speaker 1: it came to curating content for the service. He wanted
Speaker 1: all things comedy, including older material like episodes of Monty
Speaker 1: Python's Flying Circus or the Great Sketch show The Kids
Speaker 1: in the Hall. That Saturday Night Live library was part
Speaker 1: of it. Remember this was an extension of NBC Universal.
Speaker 1: He also initially had eyes on making SISO the exclusive
Speaker 1: platform to stream episodes of the Office and Parks and
Speaker 1: rec Those plans would ultimately fall through, not Shapiro's fault, really,
Speaker 1: but it was a part of his plan where he thought,
Speaker 1: if we can do this, then that's going to attract
Speaker 1: a huge base of users. He made licensing deals left, right,
Speaker 1: now center. He brought in a ton of popular comedy
Speaker 1: under one roof, and he also empowered his staff to
Speaker 1: produce original content for the platform as well. NBC Universal
Speaker 1: was kind of using CISO as a sort of experimental platform,
Speaker 1: the idea of being that if a comedy centric video
Speaker 1: on demand service and over the top streaming service, if
Speaker 1: that could work well, then INBC. Universal might launch other
Speaker 1: genre or interest specific streaming platforms in the future, like
Speaker 1: maybe one based around horror. Universal famously has a really
Speaker 1: deep horror library that they keep trying to exploit in
Speaker 1: the modern era and often failed to do so. Or
Speaker 1: maybe like a streaming service that's really focused on things
Speaker 1: like reality television programming, which arguably can be scarier and
Speaker 1: more disturbing than horror is. The Sisow subscription was just
Speaker 1: three dollars ninety nine cents per month when it launched.
Speaker 1: Victual Catalog was heavy on stuff that comedy fans were
Speaker 1: likely to gravitate toward, including a sizable library of British
Speaker 1: comedy that could actually be a little tricky to access
Speaker 1: here in the United States outside of some notable exceptions
Speaker 1: like everyone's heard of Monty Python's Flying Circus, But there
Speaker 1: are a lot of other British comedies that the average
Speaker 1: American may not be familiar with. Some of them are
Speaker 1: really famous, I mean, like some you might have encountered
Speaker 1: on other channels like Adult Swim showed The Mighty Boosh
Speaker 1: for a while, which is a bizarre, absurd comedy series,
Speaker 1: And then there were some sketch comedies, like one of
Speaker 1: my favorites was that Mitchell and Weblook, which Netflix carried
Speaker 1: briefly and then it became unaccessible to an American public.
Speaker 1: I finally ended up breaking down and buying the British
Speaker 1: DVDs and a region free DVD player so I could
Speaker 1: find I could watch them again. But anyway, the goal
Speaker 1: of CISO was to create original content. That was the
Speaker 1: long term goal, to make its own content that would
Speaker 1: build its own following, much like Netflix had done with
Speaker 1: things like Orange as the New Black and A House
Speaker 1: of Cards and Stranger Things, And now every streaming services
Speaker 1: is following that same kind of philosophy. So you use
Speaker 1: the library to first attract your ground base of subscribers,
Speaker 1: and then you create original content to attract new ones
Speaker 1: and to keep everybody there. Now, one early mistake that
Speaker 1: the executives made over at SISO, though according to Shapiro,
Speaker 1: was actually folks higher up at NBC Universal that made
Speaker 1: this mistake, was to flinch at a deal that would
Speaker 1: have made CISO the exclusive streaming home for the Office.
Speaker 1: As I mentioned earlier, so Netflix was really interested in
Speaker 1: having access to the office. They really really really wanted it,
Speaker 1: and the plan was originally that CISO was going to
Speaker 1: get the exclusive deal, but Netflix made INBC Universal executives
Speaker 1: an offer they couldn't refuse, and they agreed to let
Speaker 1: Netflix get access to those programs, which meant CISO would
Speaker 1: not have that exclusivity. And even if CISO were to
Speaker 1: show episodes of the Office, the fact that you could
Speaker 1: already get it on Netflix and a lot of people
Speaker 1: were already Netflix subscribers meant you weren't going to lure
Speaker 1: Netflix users to SISO just based on the Office, So
Speaker 1: one of the things that possibly could have brought over
Speaker 1: a larger base of subscribers fell through. On the flip side,
Speaker 1: it also meant that CISO had some budget freed up
Speaker 1: for making original content. Now Apparently, Shapiro initially was told
Speaker 1: that NBC Universal was going to have this enormous marketing
Speaker 1: campaign to promote CISO, like a ten million dollar effort
Speaker 1: to highlight the service across the company's various networks, But
Speaker 1: that really didn't manifest and CISO received relatively little marketing support,
Speaker 1: which not surprise, meant that subscription numbers were lackluster. I mean,
Speaker 1: it's hard to get excited about subscribing to a service
Speaker 1: if you've never heard of it, or if the promotion
Speaker 1: you see doesn't really talk it up enough. Making matters
Speaker 1: worse is that Ciso had its own video player that
Speaker 1: occasionally had technical issues and wasn't compatible with some of
Speaker 1: the hardware consumers used to access streaming content. So again,
Speaker 1: let's contrast this with Netflix. Netflix had made a decision
Speaker 1: a long time ago to pretty much make sure it
Speaker 1: was anywhere where there's a screen. Netflix worked to create
Speaker 1: apps that were compatible with video game consoles, with streaming boxes,
Speaker 1: connected to televisions, to smart TVs. In fact, like if
Speaker 1: you have a fridge that has a video screen incorporated
Speaker 1: in it, there's a chance that there's a Netflix app
Speaker 1: native for that particular device. But Comcast's approach wasn't as
Speaker 1: broad a and this is kind of a pun a
Speaker 1: spectrum as what Netflix was. Take now, CISO did end
Speaker 1: up joining Amazon's streaming Partners program in mid twenty sixteen.
Speaker 1: That helped a little. By the end of twenty sixteen,
Speaker 1: it was finally compatible with Apple TV. But you know,
Speaker 1: this was like a full year in operation when these
Speaker 1: things started to click into place. While CISO failed to
Speaker 1: take off to the moon, it did grow in its
Speaker 1: second year, so in twenty seventeen it began an upward
Speaker 1: trajectory for subscriber growth. The famous podcast My Brother, My
Speaker 1: Brother and Me launched a television show on the network
Speaker 1: in twenty seventeen. They often joke about how the SISO
Speaker 1: platform subsequently died on their podcast a lot, but while
Speaker 1: they make jokes about it, their show was not likely
Speaker 1: to have been a contributing factor to ciso's demise. The
Speaker 1: service was spending a lot more money than it was
Speaker 1: bringing in, and arguably this was necessary in order to
Speaker 1: scale to a level that could compete with bigger, more
Speaker 1: established services like Netflix. But a prestige show on CISO
Speaker 1: called There's Johnny About Johnny Carson may have been the
Speaker 1: straw that broke NBC Universal's back. It was an expensive
Speaker 1: show to produce and with the numbers headed in the
Speaker 1: wrong direction, At least for the higher ups at NBC Universal,
Speaker 1: it meant Evan Shapiro got his walk in papers in
Speaker 1: May twenty seventeen. CISO kept on going for a little bit,
Speaker 1: but it didn't last long. A couple of months after
Speaker 1: Shapiro had left, SISO announced it would be shutting down
Speaker 1: by the end of the year, and it didn't even
Speaker 1: make it that far. It actually went dark in mid
Speaker 1: November twenty seventeen. Ciso's failure is complicated. It probably relates
Speaker 1: to a lot of different factors. One is that it
Speaker 1: didn't get the marketing push it needed from its parent company,
Speaker 1: a lesson NBC Universal appears to have learned, because you
Speaker 1: can't turn around without running into a promo for Peacock
Speaker 1: these days, so they've definitely changed their tune on that.
Speaker 1: But for another, SISO failed to explore AD supported options,
Speaker 1: which potentially could have brought in revenue to help offset
Speaker 1: the costs. Third, some of the moves to produce original
Speaker 1: content might have been a bit too ambitious so early on,
Speaker 1: Like it's really good to have the goal to create
Speaker 1: prestige content, but it's possible that the service needed the
Speaker 1: ground to be a touch more firm before trying to
Speaker 1: create something like There's Johnny. This is no shade on
Speaker 1: There's Johnny. I'm not saying that that was a bad
Speaker 1: series by far, just that it was. It was a
Speaker 1: big risk considering how much it costs, and maybe the
Speaker 1: wise move would have been to hold off just a
Speaker 1: bit longer to try and establish a standing before going
Speaker 1: into it. It's hard to say, like these things. In hindsight,
Speaker 1: it's really easy to say one way or the other.
Speaker 1: But at the time, I'm sure these decisions were not
Speaker 1: easy ones. Some of the content that was on CISO
Speaker 1: would end up going to other platforms, including another one
Speaker 1: then no longer exists, VRV or verve. The history of
Speaker 1: VRV or I'm just gonna call it VERV why not.
Speaker 1: The history of VERV is also pretty short. So for
Speaker 1: one thing, it launched in late twenty sixteen, so CISO
Speaker 1: was wrapping up its first year in twenty sixteen. That's
Speaker 1: when VERV launched, and it was sort of a sister
Speaker 1: service to the anime focused streaming platform called crunchy Roll.
Speaker 1: Crunchy Role still exists. VERV was kind of a similar
Speaker 1: streaming service, but crunchy Role focused on anime. Vervewould end
Speaker 1: up getting lots of different content from all sorts of companies.
Speaker 1: They included companies like Geek and Sundry, which was really
Speaker 1: a YouTube studios channel. Rooster Teeth was another company that
Speaker 1: provided content to VERV, and other partners included College Humor,
Speaker 1: which would subsequently develop its own subscription streaming service called
Speaker 1: Dropout TV Mashinima dot Com, which we will talk about
Speaker 1: more in a second. So there's a spoiler. We know
Speaker 1: Mainama is not gonna last forever. They were also a
Speaker 1: partner with VERV. Shutter provided content to Verver for a while.
Speaker 1: Shutter is a horror based company Riff Tracks, which is
Speaker 1: made up of people who used to be part of
Speaker 1: Mystery Science Theater three thousand. They partnered with Verve for
Speaker 1: a while, and like crunchy Roll, verv wasn't over the
Speaker 1: top streaming service. It contained multiple channels of content ranging
Speaker 1: from animation to geeky lifestyle programming to horror, so you
Speaker 1: could log into the little service you know, you subscribe
Speaker 1: to Verve and you could access all this different stuff.
Speaker 1: So partners joined and dropped out of Verve over the years.
Speaker 1: So it's actually really hard to talk about what was
Speaker 1: on Verve because it all depended upon what year it was. So,
Speaker 1: like I said, at one point you had Shutter as
Speaker 1: part of Verve, and then Shutter would leave Verve in
Speaker 1: twenty nineteen. That same year, Nerdiced left Verve, Curiosity Stream, Geek,
Speaker 1: and Sundry they all left Verve in twenty nineteen but
Speaker 1: others would join the service, so there was this fluctuating
Speaker 1: list of content that was available throughout its short history.
Speaker 1: Makes it a little difficult to talk about verv because
Speaker 1: it's not like there was a central identity you could
Speaker 1: easily point at, because it was serving as a distribution
Speaker 1: platform for lots of different partners, and those partners kept changing.
Speaker 1: By early twenty twenty two, all those partners were pretty
Speaker 1: much gone. They had left after the terms of their
Speaker 1: licensing contracts expired, and in March twenty twenty two word
Speaker 1: got out that verv was going to cease to exist
Speaker 1: to be its own thing, it would merge with crunchy Roll.
Speaker 1: The Verve app went dark just a couple of weeks
Speaker 1: before I recorded this episode on May eighth, twenty twenty three.
Speaker 1: So even the backup plan needed a backup plan, and
Speaker 1: this really shows how challenging it could be to run
Speaker 1: a streaming service successfully. Now, a lot of partners I
Speaker 1: mentioned they still have their own platforms. Many of them
Speaker 1: are part of much larger companies. So even though verv
Speaker 1: doesn't exist anymore, some of a lot of the partners
Speaker 1: that worked with Verve, they do still exist in one
Speaker 1: form or another. So, for example, rooster Teeth, which initially
Speaker 1: launched as a sort of independent content company, is today
Speaker 1: part of Warner Brothers Discovery Shutter the horror themed over
Speaker 1: the top streaming services owned by ABC Networks, and it
Speaker 1: can also be accessed not just through its own app,
Speaker 1: but also through Amazon Video. So there are different places
Speaker 1: you can find this content. You just can't go to
Speaker 1: one central location and find it all there anymore, which
Speaker 1: is part of the problem. Right. It's a big challenge
Speaker 1: we consumers face is that we might hear about something
Speaker 1: we're interested in. Just figuring out where the heck you
Speaker 1: can 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 gonna take
Speaker 1: another quick break. When we come back, I've got some
Speaker 1: more failed streaming platforms to talk about. We're back, And
Speaker 1: as I said, I had mentioned Machinima earlier. By that,
Speaker 1: I mean mashinima 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: gonna give a very brief one. I could do a
Speaker 1: full episode about machinima dot com because holy cow, there's
Speaker 1: a lot to talk about, both from a tech side
Speaker 1: and from a business side, and really a talent side
Speaker 1: 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 Mainama 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: use the Xbox game Halo as the foundation for that show. Anyway,
Speaker 1: a machinima creator named Hugh Hancock registered mainema 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. So
Speaker 1: remember two thousand, this was before YouTube. If you created
Speaker 1: digital video, you had to host that somewhere online. Typically
Speaker 1: you would host it on a server and then people
Speaker 1: would have to navigate to a web page and download
Speaker 1: the video in order to watch it because streaming was
Speaker 1: not really a thing yet. So the website let creators
Speaker 1: tap into a growing audience for the medium. So there
Speaker 1: became like this kind of clearinghouse for machinima based entertainment,
Speaker 1: so people knew where to go to get it, and
Speaker 1: then creators had a place to put it so that
Speaker 1: they didn't have to try and do everything themselves, you know,
Speaker 1: host the material, market it, get people aware of it,
Speaker 1: that kind of thing. But hosting media files is expensive, right,
Speaker 1: especially are downloading them. That's a lot of bills you
Speaker 1: have to pay. So Mashinima was making revenue through an
Speaker 1: online store, so they would sell various types of merchandise
Speaker 1: to fans, and they also sold ad space on the
Speaker 1: site itself. And Hancock was pretty much responsible for running
Speaker 1: the whole darn thing for about six years, and in
Speaker 1: two thousand and six he decided that he needed a rest.
Speaker 1: That he had been running it and did about as
Speaker 1: much as he could as a single person, so he
Speaker 1: sold it to the former operators of a company called
Speaker 1: Creative Planet. Now not long after that you had the
Speaker 1: impact of YouTube, and in two thousand and seven Mashinima
Speaker 1: established a YouTube channel and began to upload videos to
Speaker 1: 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: Mishinima 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 mahinema 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: in our article that said when Creators were signed on
Speaker 1: with Mashinema, they were agreeing to a lifelong contract that
Speaker 1: everything they made from that point forward would essentially belong
Speaker 1: to Mashinema forever. Even if they left the company, Mashinima
Speaker 1: would retain rights to that and to all the stuff
Speaker 1: they made afterward. That, y'all, is a bad deal. I
Speaker 1: mean pulling back the curtain. iHeart owns the rights to
Speaker 1: text stuff, so if I were ever to part ways
Speaker 1: with iHeart, I would not be able to take tech
Speaker 1: stuff with me. It does not belong to me, it
Speaker 1: belongs to iHeart. However, I could still create my own
Speaker 1: shows later on and those would belong to me, because
Speaker 1: that's reasonable, right. But Masinima's agreements sounded like something out
Speaker 1: of a fairy tale, like you belong to me forever.
Speaker 1: Like Ursula was in charge of the contracts department at Mashinema,
Speaker 1: the company was growing but also operating at a loss.
Speaker 1: In twenty fourteen, Warner Brothers invested around fourteen million dollars
Speaker 1: in the company. Mashama got a new CEO in the
Speaker 1: form of Chad Gutstein. He reorganized the company, He landed
Speaker 1: some licensing deals with Warner Brothers, and he managed some
Speaker 1: other deals that have ultimately tempted Warner Brothers even more.
Speaker 1: And in twenty sixteen, Mashinama accepted a buyout offer for
Speaker 1: one hundred million smackaroos. So Gutstein joins in twenty fourteen.
Speaker 1: In twenty sixteen, he says, my job here is done
Speaker 1: and he leaves because he was essentially leading the company
Speaker 1: toward this acquisition, and Russell Aerins, who was a Warner
Speaker 1: Brothers executive, became the new head of Mashinema. By the way,
Speaker 1: this is also around the same time when AT and
Speaker 1: T acquired Warner Brothers and formed Warner Media. It is
Speaker 1: weird to think that it hasn't been that long since
Speaker 1: AT and T bought Warner Brothers, much less than divested
Speaker 1: itself of Warner Brothers, where Warner Brothers then merged with Discovery.
Speaker 1: It's crazy how much has changed in just in less
Speaker 1: than a decade. It's it's bonkers, all right. So anyway,
Speaker 1: WarnerMedia reorganized and put Mashinema under a division called Otter Media.
Speaker 1: This was in December twenty eighteen. Another company that was
Speaker 1: under Otter Media Rooster Teeth. Well. Then, just a few
Speaker 1: weeks later, on January nineteenth, twenty nineteen, Otter Media wiped
Speaker 1: all of Mashinima's YouTube videos off the face of the earth,
Speaker 1: like the whole channel was nuked from orbit. It's the
Speaker 1: only way to be sure. Every single video was deleted
Speaker 1: or at least removed from public view. Then, at the
Speaker 1: beginning of February twenty nineteen, word got out that Otter
Speaker 1: Media had laid off every single Mashinema employee. All eighty
Speaker 1: plus of them were fired or moved to a different
Speaker 1: division within Otter Media. So what gets Why was Machinima
Speaker 1: wiped out like that? Well, the was to consolidate digital
Speaker 1: media offerings in Warner Media, so the company owned a
Speaker 1: whole bunch of different digital media production companies and channels
Speaker 1: like a bunch, including Brewster Teeth, a full screen Crunchy Role.
Speaker 1: Warner would later sell Crunchy Role to Sony in twenty twenty,
Speaker 1: and they just wanted to kind of streamline things. They
Speaker 1: felt like there was too much overlap. It probably ended
Speaker 1: up being for the best because, as we all know,
Speaker 1: Discovery would acquire Warner Brothers after AT and T decided
Speaker 1: that its earlier decision to buy the company was a booboo,
Speaker 1: and knowing how David zaslovorx I imagined, Mishinima would have
Speaker 1: been an early candidate for the chopping block in an
Speaker 1: effort to reduce costs if it had still been a thing.
Speaker 1: On a similar note, here in Atlanta, we had a
Speaker 1: company called film Struck. Technically this was a division under
Speaker 1: Warner Brothers and Turner Classic Movies. The service launched in
Speaker 1: twenty sixteen with two tiers, so for six ninety nine
Speaker 1: cents a month, you would have access to a basic
Speaker 1: digital library of various movies, mostly film classics. But if
Speaker 1: you coughed up ten dollars ninety nine cents a month,
Speaker 1: you would also have access to the criterion collection libraries.
Speaker 1: There's lots of different, highly regarded movies. So the whole
Speaker 1: concept behind this particular streaming platform was to attract movie
Speaker 1: lovers who wanted to be able to watch classics and
Speaker 1: foreign films and independent films, the stuff that you often
Speaker 1: can't find on most streaming platforms. They said, well, here's
Speaker 1: the solution. We're going to make this platform and you'll
Speaker 1: be able to access those titles here. The service lasted
Speaker 1: 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 It was a niche product. So it didn't last
Speaker 1: at all due to corporate maneuvers. I mean, that was
Speaker 1: the reason why it died. So if that hadn't happened,
Speaker 1: if the corporate maneuvers 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 going
Speaker 1: to know. Also, we had another streaming service launched out
Speaker 1: of Atlanta that lasted a whole month and then it
Speaker 1: was a shock when it got shut down. So in
Speaker 1: this case, and it relates back to Warner again, I'm
Speaker 1: talking about CNN Plus, the subscription based streaming service related
Speaker 1: to CNN, but it was going to carry things like documentaries,
Speaker 1: TV specials, that kind of thing, stuff that goes into
Speaker 1: much more depth than would be a lot of original programming.
Speaker 1: The division spit something like three hundred million dollars in
Speaker 1: building up to the launch, because, as I mentioned, this
Speaker 1: sort of production ain't cheap. Throughout twenty twenty one, it
Speaker 1: was gearing up for this event. It actually launched on
Speaker 1: March twenty ninth, twenty twenty two, and it didn't immediately
Speaker 1: crush it. It's not like they suddenly were overwhelmed by subscribers,
Speaker 1: but you know, they had just gotten started but by
Speaker 1: the following month it got shut down. So again this
Speaker 1: would be because of David the Grim Reaper Zaslov, because
Speaker 1: CNN was part of Warner Brothers. Discovery merged with Warner
Speaker 1: Brothers after AT and T bounced off of that partnership,
Speaker 1: and Zaslov needed to take a serious swing at cutting
Speaker 1: costs because both Discovery and Warner Brothers were in some
Speaker 1: fairly tough times. So once upon a time, this show
Speaker 1: tech stuff was actually part of Discovery Communications, and David
Speaker 1: Zaslov was CEO of Discovery and now he's CEO of
Speaker 1: Warner Brothers Discovery. So I got to see how things
Speaker 1: operated to a certain extent. It's not like I was
Speaker 1: in the room where it happens to quote Hamilton, but
Speaker 1: you know, I was in the company, so I could
Speaker 1: kind of see what was going on. And the cable
Speaker 1: business is really tough, similar to streaming. You know, things
Speaker 1: are great when you're pouring on subscribers. It's a money
Speaker 1: train at that point, baby, All those monthly fees are
Speaker 1: pouring in throughout the year. Those big carriage deals with
Speaker 1: cable companies, they're huge and they bring in billions of dollars. However,
Speaker 1: Eventually you hit saturation and it gets a lot harder
Speaker 1: to grow as a company, and growth is what investors want.
Speaker 1: So yeah, you could still be making huge amounts of money,
Speaker 1: but if you're not growing, that's a problem. So Discovery
Speaker 1: was kind of running up against that. Back when I
Speaker 1: was there, the company was focusing a lot on establishing
Speaker 1: a presence in countries where it previously didn't have service,
Speaker 1: like Central America or South America, and it was because
Speaker 1: that represented a place where it could actually grow. You
Speaker 1: couldn't really grow in the United States because the Discovery
Speaker 1: channel was already on pretty much all the different cable
Speaker 1: packages it could be on in the US, so you're
Speaker 1: not really growing there. Once you established your presence in
Speaker 1: a part of the world that dried up so that
Speaker 1: you had to go into different it almost becomes like colonization,
Speaker 1: but 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
Speaker 1: figures and he said, well, there's no reason to keep
Speaker 1: this around. It's super expensive. It's going to take forever
Speaker 1: for it to reach a point where it might be offitable,
Speaker 1: and in the meantime, we need to cut billions of
Speaker 1: dollars off of our costs. So he shut it down
Speaker 1: after it had been open for a month. Now, there's
Speaker 1: no denying the service was costing Warner Brothers a lot
Speaker 1: of money and that subscribers hadn't 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: so 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 clear 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 shakeout, which is kind of funny because,
Speaker 1: like I said, Netflix launched their way back in two
Speaker 1: thousand and seven, not long after YouTube had become a thing.
Speaker 1: So the fact that we've been around this long with
Speaker 1: these streaming services and we're still trying to figure out
Speaker 1: a way of making them make money at a level
Speaker 1: where we're gonna get that prestige content, it's really interesting.
Speaker 1: I don't think it's gonna change. I don't think we're
Speaker 1: gonna lose these streaming services. We might lose some of
Speaker 1: them when companies just can't afford to continue the business.
Speaker 1: But I think that's still like the future of entertainment
Speaker 1: for at least the near term. But yeah, a lot
Speaker 1: of stuff's going to have to shake out for it
Speaker 1: to be sustainable and to be profitable. All right, that's
Speaker 1: it for this episode. Like I said, there were a
Speaker 1: ton of other streaming services, some of which were more
Speaker 1: about audio streaming rather than video. But there's a lot
Speaker 1: of others that we could talk about. Maybe I will
Speaker 1: in future episodes, but I really wanted to focus on
Speaker 1: these and kind of explore what went wrong. A lot
Speaker 1: of times it wasn't the fault of the people who
Speaker 1: were running the program. It was literally because folks above
Speaker 1: them had to make some tough decisions while there were
Speaker 1: all these mergers and acquisitions going on. So yeah, tough story,
Speaker 1: but one that I think is worth examining. I hope
Speaker 1: you are all doing well, and I will talk to
Speaker 1: you again really soon. Tech Stuff is an iHeartRadio production.
Speaker 1: For more podcasts from iHeartRadio, visit the iHeartRadio app, Apple Podcasts,
Speaker 1: or wherever you listen to your favorite shows.