Netflix’s stock price has been in free fall. The company was worth more than $300 billion late last year and now the stock market values the company at just $89 billion.
At the same time, CNN’s buzzy streaming service CNN+ didn’t even get the chance to spread its wings. David Zaslav, now the CEO of Warner Bros. Discovery, pulled the plug on the nascent streaming service after Discovery closed its acquisition of CNN parent company WarnerMedia.
On this week’s Dead Cat, Tom Dotan and I talk with Bloomberg’s Hollywood whisperer, Lucas Shaw, about Netflix’s struggles and the untimely demise of CNN+.
Give it a listen.
Get full access to Newcomer at www.newcomer.co/subscribe
00:00:06
Welcome Sally, I woke up to a crimson Sky.
00:00:15
Wednesday morning to see a flare off in the distance, and I
00:00:18
grabbed my son and I said that's looks missed, and it's bad.
00:00:23
And he's like, what, what happens?
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Now, dad and I said, I don't know, I don't know.
00:00:29
We'll have to figure it out. That was my reading of the road
00:00:31
as Netflix is a as Netflix is earnings report anywhere.
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Sorry, just start out the episode.
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Hi, we're here with dead cat. This is Eric.
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I'm the author of newcomer I'm in New Orleans for a wedding.
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We all have a sort of ad hoc audio gear here.
00:00:45
Tom, what you said you were hiking so was camping for the
00:00:48
last couple of days. I did I camps from SF down to
00:00:51
Los Angeles over the last few days.
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I'm back now, I'm back at home. So I do really excuses, but I
00:00:56
definitely miss the last week of news.
00:00:58
Who's so? I'm excited to learn about it
00:01:00
all from you guys know. Yeah, I'm dragging.
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You back to the podcast when you're supposed to be on
00:01:03
vacation but this extracurricular anyway and then
00:01:07
we have Lucas Shaw here. My old colleague at Bloomberg,
00:01:10
who is assembled enormous fiefdom on his, on the
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entertainment team. I think he's like the Czar of
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all things Hollywood. For Bloomberg.
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World Is Ours inside. The Bloomberg Empire, there was
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a period. Where is ours were very popular?
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Yeah. Come up with is ours for a
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particular cut, exact area that way you could create a new
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hierarchy within the existing scheme of hierarchies.
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I'm not as in touch with the Bloomberg politics of the day
00:01:40
but Lucas is the epitome of the player-coach right reporting
00:01:45
him. And you have a newsletter screen
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time, right? Yeah.
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Every Sunday. Yeah, the original Hollywood
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Entertainment News letter, I feel like, right.
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I know there's like they're a dime, a dozen these days.
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But I feel like back when I was, you know, on in the racket It.
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I was I remember yours coming out, like it's been a couple
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years since you were doing it, right?
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It's actually been 8 years. Wow, but it didn't get really
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routinized until about two years ago.
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Yeah, well I'm super excited to have you on.
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I mean Netflix as Tom was hinting at things have been
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crazy at terrible quarter fun to dive into streaming world and
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then after we talked about sort of the bloodbath at Netflix, we
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can compare CN n plus to quit being a debate, what went on
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there. And if now you're talking my
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language, if that is the most embarrassing which is the more
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embarrassing failure. I love y'all.
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We are devoid of takes but actually
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they just And in the course of a way you haven't had an outlet.
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Yeah. Just my kid.
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Okay. Any.
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All right, look at what you we sort of, you know, this the best
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I was actually reading your, you did a great like, QA sort of
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piece on what happened with Netflix.
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Can you just sort of explain to people why this is such a
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seismic quarter for Netflix? Well, so Netflix in the first
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quarter of 2022. So, the first three months of
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the year reported that it lost 200 subscribers.
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Which was a little I mean I thought they could have done a
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slightly better job messaging this only because they lost
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700 from exiting Russia so they really gained 500 in
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the quarter excluding that but they lost 200 first time
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they'd lost subscribers in about a decade.
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They also projected that in the current quarter that they would
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lose another two million subscribers so they're going to
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be down if they you know if they deliver on their forecasts about
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2.2 million subscribers in the first six months of the year,
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which is really unprecedented in the company.
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Since it went into streaming, the stock, which had already
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been tanking for several months because people were nervous and
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Netflix, it issued kind of a crappy forecast, the previous
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time then declined more than thirty percent in one day and a
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company that was worth more than 300 billion dollars in November,
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is now worth less than 100 billion dollars, which is just
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remarkable. And I think people had been
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waiting for Netflix, to stumble again because it had just been
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this Narrative of like, everything seemed to go.
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Netflix is way for the Longest time and they finally did and
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when they did everyone piled on Rise already presented my
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newsletter you know it's Tesla Netflix have been these two
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highly controversial, shorted stocks that people always said,
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you know, like the Netflix case was it's taken on so much debt.
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You know, it kept trying it invested to grow and then it
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kept succeeding and Tesla has been similar.
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And now a Tesla's, like, I mean, obviously there's such different
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businesses and totally, you know, I'm but in terms of stock
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market Obsession and And sort of risky growth strategies.
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I think they've been to stalks people love to talk about and
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now Tesla's worthless. It's like a trillion dollar
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company. And yeah, we see Netflix with
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less than 100 billion in market cap.
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It's it's been. Yeah, I mean they're all.
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So, it's an interesting parallel because they were companies that
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started in, you know, very well known public Industries,
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Automobiles and entertainment. A lot of the reasons that people
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were skeptical of the companies, I know A far less about Tesla
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than I do. About Netflix been a Netflix's
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case. A lot of the Skeptics were just
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wrong. It's like, odette's can be a
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problem that was really never a problem.
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Oh, they're not going to be able to make TV shows.
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They really had no problem making TV shows, but one of the
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reasons to be skeptical was that there was a lot of competition
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or a lot of companies that were capable of making good film and
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television and they just had to figure out how to put them on
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the Internet and in a way for people to watch them like
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Netflix is technological advantage.
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Has waned considerably over the last many years, Years.
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This is where I, you know, I defer to the car experts on
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this. I it seems like Tesla has more
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of a real technological advantage.
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But similarly, you just have to give sort of the mainstream.
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Automakers a chance to figure out how to make electric
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vehicles and all of a sudden it maybe makes less sense that
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Tesla is worth more than all of them put together, right and
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Michael burry the you know short seller known from the big short
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tweeted what had come for Netflix would come for Tesla you
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know competition. Yeah so but let's Talk about the
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specifics of Netflix. I mean, yeah, you made the
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point. Russia is some of the reason are
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a big reason that they're losing subscribers this quarter.
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But but North America and Europe are both down on their own,
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right? And that's being made up for by
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growth in Asia. So there is like a real issue
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here that they're losing subscribers.
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You think that's competition is you know Disney plus Etc is sort
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of the meat the main Explanation there in the u.s. probably a
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combination of just Market saturation.
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It already has, you know, they not they no longer break out the
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us because it's US and Canada together but they have in the
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ballpark of sine of 70. 75 million customers at its peak,
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there were more than 100 million u.s. pay TV households and so
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maybe they're there is more to grow.
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I think Netflix, the hoped that it would get to 90.
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But they always ballpark, they'd be in kind of the 60 to 90 range
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in the US and they're right in the middle of that.
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So that's a big part of it and then yeah.
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Competition, you know, Netflix was one of the only games in
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town for the longest time, it was Netflix, Amazon, and Hulu,
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and Amazon was and continues to be a less popular service.
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And Hulu is always held back by the dysfunction of having
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multiple corporate owners. And so, Netflix was Far and Away
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the leader in the Clear Choice and now people have a lot of
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choice. And it's not that hard to
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cancel. And Netflix also keeps raising
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prices, and I think there's sort of a limit you reach, you know,
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Netflix used To be one of its main selling points was that you
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could kind of get the TV experience, but it was more
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convenient to use and it was a lot cheaper.
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And all of a sudden it looks of the different streaming
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services. Like one of the more expensive
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ones especially if there aren't shows that you're interested in
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watching. I'm curious about the internal
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thinking in Netflix. Over the course of the last
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couple of years because, you know, you talked about signaling
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to the street that you were going to get to whatever 90
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million pay TV households. As a potential goal, it seemed
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clear to me a Of years ago that wasn't going to be the case,
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right? I mean they were leveling off
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pretty considerably in North America over the last few years.
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They got a bit of a jolt when they sign that deal with
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Comcast, which got the, you know, the bundled with Xfinity
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which was helpful for a bit but it was clear that like that 100
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million marker was just something they weren't going to
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be getting towards barring, some sort of, you know, secular
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change in the industry. I mean, how long do you think
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people within Netflix at whatever level?
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But certainly at the higher levels we're starting to realize
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As that at least within North America and Europe, can either
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more mature markets, that they were headed towards this wall,
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that they were careening towards it.
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And I know we can get maybe into the pandemic and what that did
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of their business in a second. But just within like their
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expectations of this, you know, eventual bloody day, what a-what
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was there. I mean, were they shocked with a
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surprise to the seemed inevitable?
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Like, where were they I'd say prior to this past week
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Executives have up and down Netflix, including at the
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highest reaches, or always very consistent.
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Believing that their wild growth was clearly slowing.
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That there was still growth. Anytime I would ask about growth
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moderating and US and Canada or to them hitting a point of
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saturation. They would say, well, I know
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that people love to talk about this but we're still growing
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kind of 325 million customers a year and as long as even if
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they're, you know, the pace of growth has slowed if we keep
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doing that, you know, we'll get to, you know, we'll get to the
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numbers that we need to. I obviously had a hard time with
00:09:54
the folks who said that but it was very consistent messaging.
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I would say. With among everyone, you know,
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after this week, there's at least a something of a
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recognition that, that they need to do more.
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That's clearly why they're there.
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Now, talking about a cheaper ad-supported service, it's
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something that they always said that they didn't want to do and
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as, you know, and, and their main intention out for do
00:10:16
advertising. Yeah.
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It's one of those things, it's not like, and then, if all, if
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all goes, well, we're gonna introduce the ad-supported tear,
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it's like no one know what to tell her family.
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They've done that at work at time.
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And I, your His crate. It is a big reversal for
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neckflix to all of a sudden started saying advertise, right?
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I mean that's part of the signal here that there's a five-alarm
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fire, they've been so resistant to anything related to
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advertising over the years, right?
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Or was there any hint that they were going to make this
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reversal? There were hints in the recent
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and I'd say in the last month or two.
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You know, I had a meeting with a with a pretty senior person.
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There about a month and a half ago who used some language that
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that led me to To believe that their position was changing
00:11:00
which was then repeated by the the CFO at at a benefit public
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event, I was one of those investor conferences.
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There, the two phrases were were not religious about advertising
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and then I forget what the other one was but they were both.
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I think we've never say, never right?
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Yeah. And Never Say Never Never Say
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Never And so for this is we're spending way too much time
00:11:23
thinking about one company or reporting on when company comes
00:11:25
in handy because like you hear that and you're like that.
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Though it's a minor change is is actually like pretty much yeah.
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So it did feel like they were going in that direction the the
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fact them doing it so quickly and by doing it really just
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saying that they're going to do it.
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I think did catch a lot of people off guard, you know, I
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spoke with I don't know half a dozen employees this past week.
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Who had no idea that was coming. I read.
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I think it was actually in the information which historically
00:11:50
unreliable media coverage that, put that to the side made.
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It sound like this might have been almost inaudible that Reed
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Hastings. Called in the middle of the
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earnings call. Like I didn't listen to it, of
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course, but it sounded like he interrupted someone in the midst
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of answering a question. He was like you know and also
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we're thinking about advertising the next two years.
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Which I don't know how you know if truly off-the-cuff.
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It was for him to you know, see the stock market you know, see
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the post market trading just going in that direction and like
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what we got to do something and then you know you break in case
00:12:20
of emergency and throw out that you know, that line is that
00:12:23
right? I mean it's good.
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It truly have been something that was like in the In the Heat
00:12:27
of the pan. Of the moment.
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Reed was like fuck is ADS. I don't know the answer to that
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but I think your your former colleague Jessica and I got sort
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of had a similar feeling both watching it and talking to
00:12:41
people that it felt like, you know, there was a there was,
00:12:45
they did a press. Obviously talked about this
00:12:47
question in a prep call. They knew it was going to come
00:12:49
up, it comes up all the time. Their Executives had made some
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noise about it. It felt like Reed Hastings said
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a bit more than maybe they were. Planning to say which you get to
00:12:59
do when you're the co-founder and co-ceo and executive
00:13:03
chairman but I, you know, I haven't done enough reporting to
00:13:06
really know what was happening there, right?
00:13:08
And I look, you can also walk things back a little bit.
00:13:10
I all of us are familiar with reporters of CEO saying things
00:13:14
and US blowing it up into a big story and then like calms team's
00:13:17
coming out the next day and say I'm like well you know the
00:13:20
context of that back none understand we're doing it in a
00:13:23
week or in a year or two like you're either doing it or you're
00:13:26
not right? I said doing not considering It
00:13:28
was that was the active verb there.
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I'd have to. I'd have to look at the exact
00:13:32
language, but that was it didn't feel like something you're
00:13:35
walking back. Let's put it like this, if it
00:13:37
was considering that probably would have been the big
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messaging the day after the event, right?
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It would have been, like, listen In the Heat of the Moment, you
00:13:44
know, someone walked into Reed's room and his guest room, where
00:13:46
he does his calls. And you know, that's that's
00:13:49
really what he meant. And and you know, let's let's
00:13:51
not get ahead of ourselves here. I mean, clearly seems like
00:13:53
they're doing. I don't think they're, it
00:13:55
doesn't seem like they're trying to walk it back, right?
00:13:58
It's a huge thing to even float. You don't put the genie back in
00:14:01
the bottle or whatever weird stock market expression.
00:14:05
They would be especially because people have been speculating
00:14:06
about Netflix doing this for years.
00:14:08
Yeah, and Disney's doing it too. Right.
00:14:10
So we're basically reaching a point where all these streaming
00:14:12
services have their expensive subscription tear and the
00:14:16
cheaper ad-based here to like keep juicing the numbers right.
00:14:18
Yeah it's pretty much just Apple that doesn't and Amazon doesn't
00:14:21
in Prime but they do have the I am DPT IMDb TV now since
00:14:27
rechristened free And who knows what the name will be in, in to
00:14:31
you, by the way. I mean, all of these add
00:14:33
products on these streaming services are horrendous.
00:14:36
I don't know if you've ever watched any of these ad-based
00:14:38
tears, I mean I've watched II knew on Hulu and you just it's
00:14:41
so many ads and you get the same ad over and over again, the low
00:14:44
quality ads to, I mean, like IMDb TV, right?
00:14:47
Which is net, which is Amazon, which is one of the largest
00:14:50
digital ad companies in the world.
00:14:51
The number of like, you know, pay College ads or repeat it Ads
00:14:58
or just it's just amazing that even though these are the
00:15:01
biggest ad companies out there have not like developed a really
00:15:04
shitty product, which I imagine must be for Netflix, which is
00:15:07
coming into it from a standing start, right?
00:15:09
They don't have an ads team, they don't have the
00:15:10
relationships to build that kind of a product and not have it
00:15:13
completely screw up. What they consider a premium
00:15:16
product is going to be nightmarish for them.
00:15:18
I imagine it was very interesting or telling to me
00:15:21
that in that answer, that we referenced at Reed Hastings,
00:15:24
gave he referred to the competition.
00:15:26
It would it's working for them. So we might as well do.
00:15:28
It which is just not historically the net right way
00:15:31
of going about things. Like Netflix is always we're
00:15:34
going to do it our own way and yeah everybody says this other
00:15:36
thing is better but we know more and so it does speak to the head
00:15:40
of this moment where the company is under.
00:15:42
A lot of pressure, I want to ask a little bit about the
00:15:44
competition. I saw that your buddy, Matt Bell
00:15:47
any had a piece saying that there's this like orgy of
00:15:50
schadenfreude coursing through the industry right now, which by
00:15:53
the way, disgusting image. And once I get it right, I mean
00:15:57
like this is a company that Comes in there that disrupts,
00:15:59
you know, the very sacred and profitable models of the Cable
00:16:02
Bundle. And it probably unduly
00:16:04
accelerates the decline of the theatrical industry.
00:16:08
And they're paying, you know, Nan Market rates for content and
00:16:11
they're poaching. All of their talent and the
00:16:14
company's fucking led by a guy with David Lynch hair who's a
00:16:16
math genius and you know, Coke creatively led by a guy who
00:16:20
looks like he's constantly chaperoning like the Sadie
00:16:22
Hawkins dance. But at the same time, like these
00:16:26
companies, like you can't Enjoy the, you know, if you're, if
00:16:30
you're a competitor, if you're a Disney or Warner media, you
00:16:33
can't enjoy the Netflix situation for all that much
00:16:36
longer, because if they're capping out at what, is it, 220
00:16:40
million or so if that ends up being the global Peak, that is
00:16:43
bad. Fucking news for all of these
00:16:45
companies, right? I mean, Disney's whole like, you
00:16:48
know, Bob iger's, magical trick that he pulled off and getting
00:16:50
Disney revalued. A couple years back was
00:16:53
predicated on the belief that they're going to get to why, I
00:16:56
guess now it's changed with JPEG but it's like more than that.
00:16:58
Right. Like, they, their minimum
00:16:59
Global. They forecasts like 240 or
00:17:02
something and by, by by 2024. If yeah, that's not that long
00:17:07
for now, and they're not that much more sophisticated
00:17:10
streaming. Penetration is like, 30%, right?
00:17:13
I was looking through the Netflix, my making that payment
00:17:16
ball, dude. It depends on what you consider
00:17:18
the market, right? So are you measuring against
00:17:21
anybody with a mobile phone? Are you measuring against
00:17:24
anybody with connection to fixed Broadband?
00:17:26
Are you measuring against? TV households World.
00:17:29
ATV, how like, pay TV households worldwide?
00:17:32
I think is in the like around. I'm gonna be off but let's say
00:17:36
it's around 700 million, right? Which means that, yes, Netflix
00:17:39
is, is at about 30, 35? I mean, this shows how
00:17:42
disconnected I am from America though.
00:17:45
I don't think my father watches streaming TV, but it's hard for
00:17:47
me to imagine like the households just watching like
00:17:51
regular cable and not using streaming it.
00:17:55
It feels like they're totally different get out there in
00:17:57
America. I mean but don't I mean, doesn't
00:18:00
everybody still thinks streaming is going to win out.
00:18:02
I mean it's a superior product and that sort of long-term is
00:18:06
not Zero Sum so I'll start with the competition and
00:18:11
schadenfreude which is I think there's there's it depends on
00:18:14
who you talk to. There is no question that
00:18:17
there's a large reservoir of resentment specifically in
00:18:20
Hollywood for Netflix because it's success prompted.
00:18:24
All these companies to merge restructure.
00:18:27
It led Tell, you know, thousands of people losing their jobs.
00:18:30
It led to everybody, you know, having to change the way that
00:18:33
they did business. You've got, especially on the
00:18:35
movie side. You have all these people who
00:18:36
are very upset concerned about the future of the movie
00:18:38
business, to future of movie theaters future of going to see
00:18:41
movies in theaters, and a lot of them blame Netflix for that and
00:18:44
they had to pay creators more God forbid.
00:18:47
Yeah. But I do think aspects at the,
00:18:49
you know, the tops of a lot of these companies there to Tom's
00:18:53
point, they're not really celebrating because this poses a
00:18:57
great danger for them. You know, they have had a
00:18:59
re-engineer their companies to copy Netflix or really kind of
00:19:04
write off of its coattails. And if you're going to Peak out
00:19:06
at 220 million, you're going to, you know, all these companies
00:19:09
are eventually going to run into some of the same problems that
00:19:12
Netflix has and that's pretty scary for them.
00:19:14
So what we, so what I mean. So this is now whatever week
00:19:17
later or will be by the time this episode comes out.
00:19:20
I mean what what moves did they take, how do they signal to Wall
00:19:23
Street to their employees? That like hey look whatever
00:19:25
disease is afflicting Netflix. That's not us.
00:19:28
We don't have that problem of peeking well for one because
00:19:31
they're starting from a smaller base and they're still expanding
00:19:34
worldwide. They're still growing so Atrium
00:19:36
acts reported that it R 8T reported HP Max added 3 million
00:19:41
subscribers I think in the most recent quarter I've heard some
00:19:43
pretty good things about Disney in the most recent quarter.
00:19:46
So if those companies continue to grow they're going to at
00:19:50
least for now be able to sort of forced all the Doom.
00:19:53
The other thing that they can say to kind of to the the other
00:19:56
question that Eric asked is that.
00:19:57
Yeah, the The, the streaming Market continues to grow the
00:20:00
number of people paying for a streaming service, or the number
00:20:02
of subscriptions is going up. The amount of time.
00:20:06
People are spending watching streaming relative to cable is
00:20:08
going up, but there hasn't been a complete cannibalization and
00:20:12
there might not be because you still have so much programming,
00:20:15
specifically, news and Sport sort of tied up in the
00:20:18
traditional TV business, right? All right.
00:20:21
And I want to talk about this idea that account sharing is all
00:20:26
of a sudden issue. This is Total like we need, we
00:20:30
need something, right? We've been saving this one.
00:20:32
I mean, it's, it's amazing that they're blowing.
00:20:34
Both like we might do advertising and account sharing
00:20:38
in the same. Call to me that underlines how
00:20:41
terrible this earnings was because those seem like two
00:20:45
bullets. So you'd pull out when you're
00:20:47
really in trouble. I mean it's not like they didn't
00:20:49
know that account sharing was going on.
00:20:51
I mean, do you think this is just like a sort of thing that
00:20:54
they're waiting for on a rainy day to say?
00:20:57
Okay, we can we can crack down on this to improve the business.
00:21:01
Yeah, they've been. So they've said in the past four
00:21:05
years that there was a lot of account sharing when they were
00:21:07
growing really quickly, they said they didn't care so much
00:21:10
because exposing more people to the service was head of a net
00:21:13
positive. It was basically like marketing,
00:21:16
I'd say about three years ago, they started to take take
00:21:19
cracking down on password sharing more seriously.
00:21:22
You know, I had meetings with people and ahead of senior
00:21:24
people at the company where they walk me through some of the
00:21:26
strategies they were, The challenge that they've had is
00:21:29
it's just it's really hard to curb password sharing because
00:21:33
you don't want to alienate your customers, right?
00:21:35
So you don't want to actually cancel people's subscriptions or
00:21:38
prevent them from using it because that's bad for you, you
00:21:41
know, I mean you're going to have you're going to have a lot
00:21:43
of people upset with you. And so what are the ways that
00:21:45
you can sort of subtly nudge people to start paying and
00:21:49
they've tried some stuff so far? I don't think it's worked that.
00:21:51
Well, they're now doing this new test in Latin America, where the
00:21:55
kind of new strategy is just to get someone who's clearly
00:21:58
sharing to pay a little bit extra.
00:22:00
They don't have to set up their own account, just maybe you pay,
00:22:02
you know, if you're a if you're the your pet, you're using your
00:22:05
parents but you don't live with them, maybe you pay three
00:22:08
dollars extra a month. It remains to be seen if any of
00:22:10
this will work, it doesn't seem very like, rational markets to
00:22:14
me. Like to me, it would seem like
00:22:16
customers know that part of buying Netflix is that you have
00:22:19
this service that you can give to your friends.
00:22:22
Like that's part of what you're subscribing for any idea that
00:22:25
they can just take that away and I don't, Want some of them want
00:22:29
to unsubscribe. Seems crazy me.
00:22:30
It's, it's a perk. It's an Express.
00:22:32
Understood perk of yes. Dreaming where, I mean, like
00:22:36
Netflix definitely played into that for a long time, I think
00:22:38
they're even tweets still up there showing them talking about
00:22:41
how, you know, love is letting someone use your Netflix account
00:22:44
and I, by the way, have been enjoying your Hulu account.
00:22:47
It's certainly a core part of good relationship but like,
00:22:49
right, it's a don't shave on the podcast, what's one thing?
00:22:53
But I also think that like these things just evolved over time
00:22:57
and like I remember with With, you know, Adobe and Photoshop.
00:22:59
They were like use it. You know, used to be pretty
00:23:01
relaxed about piracy and the fact that there were so many
00:23:04
young people that were just fairly easily downloading these
00:23:06
things, but it changes over time and you have all.
00:23:09
But I don't think like the idea of making a, you know, I like, I
00:23:12
buy more the issue that it's just technologically,
00:23:14
complicated to force people to a rather than like it undercuts
00:23:17
the core offering of the service by saying everyone.
00:23:20
And anyone can use someone's past what's also confusing.
00:23:23
I pay for the Ultra Premium, whatever Netflix is and you get
00:23:26
as part of that. More devices.
00:23:29
So isn't that I'm confused, isn't that partially connected
00:23:33
into account share? And it's like, yeah, my sister
00:23:35
or whoever uses my Netflix so I bought the more premium one.
00:23:39
So I have more devices at the same time, like is that not
00:23:42
already addressing the count sharing, why don't I mean you,
00:23:45
you tell me Lucas but like I imagine like that's one portion
00:23:48
of the user base that they maybe are less concerned about, I
00:23:50
think it's more, the people that are paying at the lowest tier
00:23:53
that they're getting, you know, the least value from that are
00:23:55
sharing those accounts to, you know, Large numbers of people.
00:23:59
Yeah, and I look, they're definitely making noise about it
00:24:02
now because they're in a tricky spot and they want to signal
00:24:05
that they could. There's plenty of growth that
00:24:07
they can get their also making noise about it now, because
00:24:10
they've gotten so big that, you know, what was once sort of a
00:24:14
tear point of per core for them? Marketing is now a bit of a
00:24:17
problem because, you know, if you believe their numbers, there
00:24:20
are 100 million households that are, you know, using Netflix and
00:24:23
not paying for it. And if they can even convert,
00:24:25
you know, 20 or 30 million of those to pay a little bit of
00:24:27
money. A lot for them.
00:24:29
It's a really tricky balance that they have to strike.
00:24:31
I think both technologically in terms of how they sort of nudge
00:24:34
people to do it. And I think you're right, Eric
00:24:36
about kind of the perception of the company.
00:24:39
And this is the tricky thing when you get really big is, you
00:24:42
know, Netflix was this company that everybody adored because it
00:24:46
had no, it made it super easy to watch TV at home and they made
00:24:48
all these fun provocative shows and it's definitely entering.
00:24:52
And I think has been for a while this phase where it's a little
00:24:55
bit more of just, it's a massive Corporation and People's kind of
00:24:59
positive association with it is being challenged a bit and
00:25:03
cracking down on 1password sharing.
00:25:05
And the way that they've messaged around it, I think
00:25:07
doesn't help either because you have a lot of people who think
00:25:09
that they're suddenly going to get cut off tomorrow.
00:25:12
And that's not what's going to happen.
00:25:14
I did want to ask, I guess, sort of about the Netflix brand or
00:25:19
you know, if we're in this world where Netflix can't really say,
00:25:22
okay, we're just going to be the big one.
00:25:24
And instead, it's competing more as a peer against Disney Hulu
00:25:29
Apple, Amazon. Obviously, they're all different
00:25:32
size HBO Max. I mean, is Netflix going to have
00:25:36
more of like a brand? Like I don't know what I
00:25:39
associate Netflix with. Like where is Disney is able to
00:25:43
say somehow? I mean this is what's amazing
00:25:45
about Disney but Disney's able to be enormous and still have
00:25:49
these iconic Brands where you understand what Disney is about
00:25:52
and why you might subscribe. Like, do you see Netflix moving
00:25:55
in terms of the actual sort of Content to any sort of thematic
00:26:00
bundling. So people understand, do you?
00:26:02
Netflix is about this or, or do they just want to be the sort of
00:26:06
vague brand? That's like, everything for
00:26:09
everybody will teach you. Your first point, I do think
00:26:13
it's important to put into context.
00:26:14
That Netflix is still magnitudes bigger than everyone else.
00:26:18
I mean, you know, just in terms of subscribers, Netflix is
00:26:20
bigger than Disney plus an HBO Max put together.
00:26:23
Yeah. And so, the amount of viewership
00:26:25
that it generates the amount of time people spend, it still
00:26:27
dwarfs the Competition, but it does have.
00:26:31
It does come at come at this, from a disadvantage in that, it
00:26:35
doesn't have a long Legacy of making shows and owning things
00:26:39
that people love. You know, Bob Iger bought a lot
00:26:42
of the great brands that now constitute that kind of that
00:26:45
Disney offering with Marvel Stars Star Wars and Pixar before
00:26:48
Netflix had a streaming service. And so Netflix would sure would
00:26:52
love to be able to have its own Marvel.
00:26:54
It's not easy. Every, every studio in Hollywood
00:26:57
wants to have their own Marvel. They haven't been able to do it,
00:26:59
but it doesn't have many Brands like that, right?
00:27:01
I mean, it's name. Yeah, I mean, this has been a
00:27:03
debate that I've heard a lot between kind of current and
00:27:07
former Netflix. People is like, should they
00:27:10
because I think early on, they kind of identified these these
00:27:13
different niches and kind of soup served them.
00:27:18
And there are some people who wish that Netflix just like took
00:27:21
that and owned it. But I think as Netflix got
00:27:23
bigger and bigger and bigger. Oh, just like, well, let's do
00:27:25
this. And let's do this.
00:27:26
And let's do this. And let's just replicate
00:27:27
everything. You could find in TV and, and
00:27:30
that has, I think deluded the brand a bit because you're not
00:27:34
sure there's this constant dialogue right about like, is
00:27:38
quality on Netflix there. A lot of people who think that
00:27:40
Netflix doesn't make good shows anymore and I get why they say
00:27:42
that I even as a consumer probably blind is the greatest
00:27:46
show of all time. What do you do?
00:27:47
Yeah. Well, but see that's that's sort
00:27:49
of what you're getting at. Right, is all these, all these
00:27:51
kind of dating shows. They were hugely popular are not
00:27:54
anyone's definition of quality, but I was at a I was at a You
00:27:58
know, a birthday party on Friday night.
00:28:00
And someone was telling me all about how they think the quality
00:28:03
of Netflix has gone way down. And then that proceed or that
00:28:06
precipitated like a 10-minute conversation between people
00:28:10
about how much they love the ultimatum.
00:28:11
Right? And so you can't you can't have
00:28:13
it both ways. And, and Netflix has to figure
00:28:15
out sort of the right balance of programming where they're sort
00:28:18
of satisfying that big audience while also and maintaining this
00:28:23
perception, that you can find really good programming there
00:28:25
because there is some of it, maybe not at the same.
00:28:28
Same rate as HBO or maybe you don't feel it as much because
00:28:31
they drop everything at once. But there's still a lot of stuff
00:28:33
on Netflix to watch it sort of two parts to that to keep coming
00:28:37
to mind. One is like, let's not pretend
00:28:39
here that have Netflix had run Severance, or, I don't know, the
00:28:43
undoing or some, you know, of the White Lotus or something
00:28:46
that they suddenly would have had three million more subs
00:28:48
gained during the quarter. You know, obviously it would be
00:28:51
nice temperature for Netflix to have those kind of hit, water
00:28:54
cooler, whatever you want to call them shows.
00:28:55
But that we're talking about a secular problem here.
00:28:58
Now, so much that, like, you know, they didn't have an
00:29:01
out-of-the-box enormous hit. And the other thing on the IP
00:29:04
side, it's very funny for me to hear and I know you're talking
00:29:08
about just, you know, the general populace complaining
00:29:11
about quality of shows. If this is coming from
00:29:13
high-level Executives at rival movie studios, why don't you
00:29:16
guys develop some new IP and not just keep spinning off?
00:29:19
You know, content that was created in the 70s and and 60s,
00:29:24
and comic books and and Star Wars and Pixar, you know, things
00:29:27
that you acquired, It's been a long time that I can remember
00:29:31
that. A completely unique,
00:29:32
out-of-the-box, huge piece of IP came from anyone these days.
00:29:36
Well, they have. And if it did it, it probably
00:29:39
came from Netflix. I mean the biggest new projects
00:29:43
that maybe not in the movie side, but, you know, the biggest
00:29:46
show of last year with Squid game, that's a totally new idea.
00:29:49
It's from South Korea, like unlike anything that Hollywood
00:29:51
is churning out or a la casa. De papel money, Heist, huge show
00:29:56
from Spain for Netflix, A original Ip.
00:29:59
I think someone will probably tell me if that's not true,
00:30:01
right? You know, and then more
00:30:03
traditional stuff like the witcher's video game and Bridget
00:30:05
in is based on some books. But at least those are our sort
00:30:09
of relatively new. It's yeah.
00:30:10
You know, movies that were made in the 70s that they're still
00:30:13
claiming as I go through. This is original Ip that we have
00:30:15
it's like no not really. You guys are just kind of like
00:30:17
mining further and further something that was made decades
00:30:20
ago. Yeah, to an audience that wants
00:30:21
it but it wouldn't call it new well and that's especially true
00:30:24
on the movie site and fairness on the TV side.
00:30:26
You know, HBO produces a lot of Original ideas.
00:30:29
I think there are, I mean it's Disney plus obviously is still
00:30:32
sort of the Marvel and Star Wars Factory but that's working so
00:30:35
well for them. You know why deviate who lubed
00:30:37
also has a lot of new original ideas.
00:30:39
It's on the movie side where you know, we've just settled into if
00:30:43
it's not a pre branded franchise, we have a hard time
00:30:45
but the movie stuff is also driving the TV stuff, right?
00:30:48
I mean with Disney plus? It seems like the most attention
00:30:50
they get her from serialized versions of their movie
00:30:53
properties. So it's sort of like all kind of
00:30:56
one in the same thing when it comes to, you know.
00:30:58
What original Ip Drive Subs. As far as that goes.
00:31:00
Yeah, we're about to talk about CNN plus and B, as we can always
00:31:04
go back and forth and this is the topic.
00:31:05
Everybody wants to hear about. But before that, I wanted to ask
00:31:08
one question, sort of out of left field, but just because
00:31:12
we're talking about Disney and Marvel, I'm curious like this
00:31:16
sort of Marvel sort of cheaply, produced shows or content, you
00:31:22
know just the lower budget Marvel at the moment.
00:31:24
Like is that a realization that like the Marvel Brand?
00:31:28
They need to like squeeze everything out of it while they
00:31:30
can like it feels like I guess if I were Disney and trying to
00:31:34
preserve Marvel, like one strategy would be like cool
00:31:38
little little. Make sure it like has longevity
00:31:41
and the other would be like actually.
00:31:42
Let's get every dollar out of it.
00:31:44
We can and just like do everything until people get sick
00:31:48
of this or or I guess the third is just that I'm so disconnected
00:31:51
from reality and everybody loves Marvel so much that this will
00:31:54
never never end. I don't know if you were to
00:31:57
what's your view Of sort of how, they're how they're treating
00:32:00
sort of the Marvel. Marvel in terms of, it's sort of
00:32:03
continued sustainability. It's the most popular vein of
00:32:08
Storytelling in the world. And it seems that every time we
00:32:11
talk about superhero fatigue, something else comes along to
00:32:14
prove to us that we're all wrong, you know?
00:32:16
The new Spider-Man movie, you'd think that we're all a little
00:32:19
tired of Spider-Man and then it goes on to be one of the most
00:32:21
successful movies of all time. Those the the different shows on
00:32:25
Disney plus including kind of Vision Loki, they seem very,
00:32:30
very popular. You know, they're not cheap by
00:32:32
the way. Eric, those stars look like a
00:32:33
turtle's was cheaper. Some of them are cheaper than
00:32:37
the others right there on a relative rollout, baby.
00:32:39
But I think they're all pretty expensive and Disney.
00:32:42
Just feels like, you know, it's going to keep playing its cards
00:32:46
and keep playing to its strength until someone tells them, they
00:32:48
can't anymore. I'm because they right.
00:32:50
Look, they re being the wars are extremely quarters.
00:32:52
You gotta, you gotta use your entire Arsenal.
00:32:54
They ran into this with, with Star Wars, right?
00:32:56
It's like there were, there was a A sense that maybe on the
00:32:59
movie side, there was a little bit of fatigue.
00:33:01
And so they have held off on just churning out new Star Wars
00:33:04
movies, but they had a lot of success with the Mandalorian and
00:33:08
TV. And so now that's turned towards
00:33:10
up, you'll just hate bad ones and like good ones.
00:33:12
And as long as they're good, you can keep pumping.
00:33:15
Maybe can I ask one one final question on this segment to sort
00:33:18
of end it? Yeah, I mean, going forward
00:33:21
cover in this company. Lucas, are you now think about
00:33:24
things like Netflix? Yeah.
00:33:25
Yeah. Are you thinking about things
00:33:27
differently at all? I mean, It's obviously a new
00:33:29
era. And, you know, I think one
00:33:32
aspect of what exactly this company is.
00:33:34
There's been a lot of stories I've written them.
00:33:36
I'm sure you have a lot of people have of like, you know,
00:33:38
is Netflix moving from a tech company to an entertainment
00:33:40
company. And the center of gravity is
00:33:42
moved from whatever, blows Gatos to Hollywood and all of that
00:33:46
stuff and, you know, we're in a position now where people are
00:33:48
saying that like, oh, Netflix missed its numbers because it
00:33:51
didn't have any big hits. Like, oh, that's kind of
00:33:53
familiar. I know what happens when
00:33:55
entertainment companies don't have big hits, they about
00:33:56
quarter that just sounds But you're kind of just an
00:33:58
entertainment company. You're obviously, you get this
00:34:01
company very well and the sophistication behind it.
00:34:04
But, do you think about them differently at all?
00:34:06
Now, is this a different way to? Or at least he'll reader is a
00:34:09
different way to look at this company than the way they may
00:34:11
have in the past. I mean, I felt for a while that
00:34:13
it was, it was more of an entertainment company than a
00:34:16
tech company. You know, as soon as, as soon as
00:34:19
they started spending, you know, five six times more on
00:34:22
programming than they did on than they do in engineering when
00:34:25
the all the hiring they were doing was in l.a. all their
00:34:27
senior leadership. Up either moved to LA or had to
00:34:30
spend a lot of time there. I mean, their CFO left basically
00:34:32
because their CFO didn't want to move or the previous one, didn't
00:34:35
want to move to Los Angeles wasn't the only reason but it
00:34:37
was a major factor and so that is not what changes.
00:34:41
I do think though that we're entering a period of kind of a
00:34:46
new period of perhaps skepticism about the company and where
00:34:51
there's going to be a lot of you know, probably a lot of internal
00:34:56
unrest and hand-wringing About where it's going.
00:34:59
And I think it'll be a pretty fertile time actually for
00:35:01
storytelling about and the culture, right?
00:35:03
Letting can you keep running the company and that aggressive, you
00:35:07
know, internal criticism, shut Sunshine, everything sort of way
00:35:10
that you know if you're not exactly the Cock of the Walk,
00:35:13
might not be that easy to do the company's gotten really big
00:35:16
really quickly and it's hard to preserve that culture and so I
00:35:22
think that's that was already a problem.
00:35:24
It was a problem internationally, you know, they
00:35:25
had a really hard time. Getting people say in Japan.
00:35:28
And which is has a very different kind of corporate
00:35:30
sensibility to live by this Netflix culture, where you you
00:35:34
weren't going to have it was hard to get, say, someone who
00:35:37
was at a lower position in Japan, to be honest and
00:35:41
criticize, their Superior that just was, is kind of very
00:35:44
foreign to that country and you had problems like that, play out
00:35:47
all over the world and I also think that as there's been this
00:35:50
very steady influx of Hollywood people into Netflix and rising
00:35:54
up, you know, it's hard for it, not to just start operating.
00:35:58
I'm feeling like another Hollywood company.
00:36:00
You know, my sort of take away right now, is it?
00:36:02
Just Netflix? Felt like a special place to a
00:36:04
lot of people for a long time and there were good, there was
00:36:06
good and bad to that. And I think now it just feels a
00:36:09
little bit more normal. Like a big company, something
00:36:12
said about that, we're all, we're all just the same in the
00:36:14
end, it all just kind of like dilutes to the mean II know.
00:36:17
On the it's like we have two more in this like brutal culture
00:36:20
where people get fired and they're like, yeah, I deserved
00:36:23
it. Like I wasn't my Prime, they got
00:36:25
my prime years out of me, and then they treated me like trash
00:36:28
Shouldn't the best company in the world.
00:36:30
I mean, I I interesting admire it, I am laughing, but it's,
00:36:34
it's definitely get those conversations with with former
00:36:37
Netflix people that will talk about, you know, the trauma that
00:36:39
they went through dealing with the direct criticism and how
00:36:42
many hours, they worked and all of that.
00:36:43
But they don't speak ill of the company.
00:36:45
They don't necessarily need some do obviously and those stories
00:36:48
get written in there. Really interesting.
00:36:50
But a lot of people it's just like, yeah, fucking insane over
00:36:52
there, but I don't know. It seems to work and I like the
00:36:54
work I did over there. I mean, is it is amazing?
00:36:57
I mean, there's still Will you know I saw in this quarterly
00:37:00
earnings they were still talking about like the fight with
00:37:03
Blockbuster and stuff. I mean just just everything.
00:37:05
Netflix has been able to do. I mean they wear that history on
00:37:08
its sleeve and that that's given them some protection.
00:37:13
Certainly in this hard time for them.
00:37:16
But yeah. We'll see if that that last.
00:37:19
Well this is it. Yeah I think there's a degree to
00:37:21
which you know, Reed Hastings is one of the hand of the great
00:37:25
entrepreneurs of the last 25 years, shall we say, a few, To
00:37:28
make a list of the 10 best you probably be on it somewhere, but
00:37:32
this is now sort of his legacy, right?
00:37:34
As I think he was maybe ready to, you know, he'd made tedster
00:37:38
and us the co-ceo. There was some assumption that
00:37:41
some point in the next few years, he might just move up to
00:37:43
being chairman and not be in their day-to-day anymore, that
00:37:47
it's kind of harder for him to step away.
00:37:48
Now, listen, if there's anything, we've learned from
00:37:50
Disney, Hollywood, people don't just like, give you the edge.
00:37:53
I feel like every anyway. That's a well, the Disney thing
00:37:56
is a good comparison to As I mean, Iger was in a somewhat
00:37:59
similar situation, right? Like he was set to walk off into
00:38:02
the sunset and then Disney plus becomes a priority and decides
00:38:05
to extend for a couple more years one because he's clearly
00:38:09
addicted to the job and is you know, Tom Brady like terrified
00:38:12
of what he would do after it. But also because it's like, you
00:38:15
know, my legacy of buying up all this great IP of building Disney
00:38:19
into a behemoth at a time where everyone else was shrinking.
00:38:22
I can't just leave at this moment that we have the most
00:38:25
important initiative in the last couple decades to you.
00:38:28
To be launched and then covid hits and they have that awful
00:38:30
earnings call anyway. Yeah, it's interesting how much
00:38:33
these things end up being similar to each other.
00:38:35
All right. Lucas.
00:38:35
You want CN n? Plus, I want to let you, you
00:38:38
frame it up because, you know, better than I, I cannot unless I
00:38:42
know you've been focused more on the Netflix story but are you
00:38:45
willing to sort of set the stage, the old head of CNN, Jeff
00:38:48
soccer since deposed decided that to kind of bring this Cable
00:38:53
News Network into the future. They needed a paid streaming
00:38:55
service. Of course, for the Plus at the
00:38:57
end of the name, Cuz that's what every streaming service does.
00:39:00
And even though he was sort of ousted, right before the service
00:39:03
came out, his then boss also since the pose or since I was 2,
00:39:06
Jason Clark, I'll are out of brings this thing out right
00:39:10
before Warner media. And Carl are was a Believer, and
00:39:14
CN n plus. That's the sentence, right?
00:39:16
Yes. So, they Warner media and
00:39:19
Discovery are set of set to merge, but they want to rush CN
00:39:22
n plus out the door before that happens.
00:39:25
Both because they, you know, believe, And because they want
00:39:29
to try, they figure if they get it out that the discovery people
00:39:31
can't kill it and yet it took just one month for the discovery
00:39:35
people to kill it. Is basically what happened.
00:39:38
I mean, it this does feel very much like Quimby and who thought
00:39:41
this was going to work. I really don't get the query
00:39:44
comparisons. Oh, really?
00:39:45
Yeah, gonna get into that. I mean, what do I think?
00:39:49
Will be comparisons are the sort of self-evident launching a
00:39:52
service where who has the intuition that there's demand
00:39:56
for this product obviously the Formats are so different.
00:39:59
Tom, you're like, I don't really have a billion dollars on this.
00:40:02
No, I finish your thought. I'm just making faces.
00:40:06
Well, yeah, I mean they're very different Services obviously but
00:40:10
it's spend a lot of money to hire talent for a type of
00:40:17
content that people are skeptical about on quippy.
00:40:21
It's like, okay, we're inventing a format on CN n.
00:40:24
Plus it's the idea that people are going to just subscribe For
00:40:28
I mean you mentioned earlier in this conversation that you know
00:40:31
there isn't there hasn't been sort of evidence of sort of
00:40:34
stand-alone news interest. You're somebody's going to say
00:40:38
that fox has had some success there but no not really though.
00:40:41
I don't think the fox dreaming. That whatever.
00:40:43
What is it called? Fox show talking about Nation,
00:40:45
Fox Nation. I don't cover this shit before
00:40:48
so I'm not up to date on the numbers.
00:40:49
I don't think it's killing it. It's like okay, right?
00:40:51
They haven't disclosed. Yeah, I think the similarity is
00:40:54
that they both spent a bunch of money to create a Aid Service,
00:40:58
that offered something that people can get for free in a lot
00:41:01
of other places. The Quimby idea, never made
00:41:04
sense to me, because they were basically saying we're going to
00:41:07
take, we're going to make, you know, TV quality shows but at,
00:41:12
you know, YouTube length and it's like, okay, but people and
00:41:15
there is this inference that YouTube was not quality but
00:41:18
people really, really love you too bright.
00:41:21
So you didn't need and paid version of that and also people
00:41:25
really, really love Netflix and they didn't need Their Netflix
00:41:28
shows chopped up into nine minute and there's no part of
00:41:31
that. And I usually, YouTube creators
00:41:32
are responsive to what their customers want.
00:41:37
Where as quippy was just like a top-down product where it was
00:41:40
like, Hollywood says, like we know right?
00:41:44
What? Yeah, I guess, here's where I
00:41:46
would say the similarities and Divergence has our quippy is a
00:41:50
classic Hollywood approach to a digital product.
00:41:52
It's Jeffrey katzenberg seeing you to being like, well, this
00:41:55
stuff isn't very good. It has no stars in And the
00:41:58
Prussian quality is really bad. But what if we put huge Stars,
00:42:01
what do you put the rock or or Kevin Hart in these things?
00:42:04
And we have the same, you know, content length which is clearly.
00:42:07
What the only reason people watch it is because it's short
00:42:09
which like know and and it was a very yeah, like you said
00:42:12
top-down approach, a Hollywood focus on what they think.
00:42:15
Historically is worked. I think CNN my guests here is
00:42:19
that it was partly X naught existential for them but they
00:42:23
needed a digital play. That was more than just having
00:42:26
videos posted on the Website and a social media presence, right?
00:42:30
Like they were like, well, we're, you know, we're going to
00:42:32
keep losing Subs here and let's just find a way to tap into
00:42:36
streaming. So maybe it's not existential as
00:42:38
in CNN, would shut down if it didn't happen.
00:42:40
But there's a little bit more strategic imperative behind it
00:42:43
where, as quippy seemed more like, well, let's invent a new
00:42:45
category because we think it doesn't exist yet.
00:42:48
We're CNN's is more like, well, let's just kind of makes a
00:42:50
streaming version of CNN. That has somewhat, you know,
00:42:53
focused content in that way. Yeah, CNN had to do something
00:42:57
you can argue That it should have been integrated into HBO
00:43:00
Max, you know, that's up for debate.
00:43:03
But if you see what's happening to the Cable Bundle and you're a
00:43:06
channel that makes a lot of money from the Cable Bundle.
00:43:09
You try to figure out some solution to it.
00:43:11
It's the same reason that, that Fox News did did what it did
00:43:15
with Fox Nation. I mean you could always put jet
00:43:17
which is a totally different type of, you know, the
00:43:19
e-commerce play, where they spent a bazillion dollars to try
00:43:21
and compete with Amazon. And yeah, I guess I find these
00:43:24
things all annoying because they skip over the sort of minimum
00:43:27
Viable product idea. And they just say, wow, if we
00:43:30
throw Talent money marketing, everything at it, we can
00:43:35
overwhelm. And then it's often just
00:43:38
inexplicable, why these people are given sort of such long
00:43:42
leashes when there's really no reason they couldn't do it the
00:43:45
slow way, except if you did it, this low way, people might start
00:43:48
to get skeptical and then you wouldn't get the same amount of
00:43:51
money. You would, if you poured all the
00:43:52
money in in the beginning, right?
00:43:54
With a it's funny that you use the term Long Leash to describe
00:43:57
see Then plus because they didn't get much time.
00:43:59
Me, I was about to say it's like a comedic Lee Short, right?
00:44:02
I think. But a lot of money, right?
00:44:04
I mean, it's 300 million. Plus what is the number?
00:44:06
Am I making that up there? Have been a few different
00:44:08
reports. Some there was a 300 million,
00:44:10
there was a 500 million a lot. If it's the 500 that had to
00:44:13
include sort of the full budget for the year, you can you can
00:44:16
nitpick are you can sort of, you can question.
00:44:20
The programming choices they made, they went with 10 of
00:44:22
these. A lot of Lifestyle shows that
00:44:24
didn't seem to make a lot of sense for CN n plus those
00:44:27
certain, you know, that The Eva Longoria show felt like could
00:44:29
have lived on on HBO Max, but there was also they hired some
00:44:33
really big news Talent Audie Cornish from NPR and Chris
00:44:36
Wallace from Fox News, but there's not Scott Galloway.
00:44:43
But they were, you know, they were trying to compare loose or
00:44:45
the New York Galloway. That's why we brought you on the
00:44:47
podcast. I hold you guys.
00:44:49
Accountable for whatever wind sorry.
00:44:52
The curse of Scott Galloway continues.
00:44:55
I gotta I gotta wash my own streaming service and promise
00:44:57
scholarship. Show.
00:45:00
They I mean do you think this is a sign of actual like executive
00:45:07
decision making that maybe posts as love in a somewhat positive
00:45:11
light that he's willing to pull the plug on something that he
00:45:13
doesn't believe in early on rather than just do it to you
00:45:16
know, Susie goes and and you know be a kind of accommodating
00:45:20
to the new talent but actually say look I have a strategy here,
00:45:23
this didn't fit into it, the numbers at least early on didn't
00:45:25
back it up. Like let's fucking kill it
00:45:27
rather than You know, the may be more judicious.
00:45:31
We'll look he's he's certainly come out of this transition.
00:45:34
Looking good. Right there was a lot of, you
00:45:38
know, we talked about some of the the built-up animosity
00:45:40
towards Netflix. There's a lot of frustration in
00:45:43
the kind of entertainment Community with AT&T.
00:45:45
There's a lot of frustration with the leadership of Werner
00:45:47
media because of what they did and how they released the movies
00:45:51
at home, which I still think was the right decision from a
00:45:53
business perspective view. But but there were definitely
00:45:56
some missteps and how they executed that And so he was, he
00:46:00
was coming in with people giving him move.
00:46:02
He's at home, you mean? Skipping theaters?
00:46:03
Yeah. When they, when they decided to
00:46:05
release their entire slate of 2021 movies on HBO, Max and in
00:46:09
theaters, at the same time, it caused this kind of whole shit
00:46:12
show in Hollywood have represented a thing that only
00:46:14
matters in Hollywood and the rest of America is like the rest
00:46:18
of America is like movies at home.
00:46:20
Great. Like I don't want to go to the
00:46:21
theater right now. What's like no I need to read a
00:46:24
3000 word. Open letter by Christopher Nolan
00:46:27
to understand why you've been wrong.
00:46:28
And that's, that's what we start.
00:46:30
I derailed that. But yeah, fine, but I think
00:46:33
there's, he, he comes in with people giving him the benefit of
00:46:35
the doubt because they want to see the company go in the right
00:46:39
direction. And I do think there's there is
00:46:41
something to being decisive because it you sort of when you
00:46:44
rip the Band-Aid off, it really sucks for a little bit, but then
00:46:47
you get to where you want. The question all have is, you
00:46:48
know, they're they're going to, you know, probably lose a bunch
00:46:51
of or fire a bunch of people through that.
00:46:53
They're about to have to fire a bunch of other people through
00:46:55
kind of re organizations and consolidations and
00:46:57
quote-unquote. He's and if he can get that if
00:47:00
David says, I can get through that without in a seeming like
00:47:04
the bad guy. That'll be quite the trick with
00:47:05
sorry. For the non-hollywood Among Us,
00:47:08
what is his fiefdom? Or what are they mean proper so
00:47:11
David's as love was until recently the the CEO of
00:47:15
Discovery Communications which just owns a bunch of cable
00:47:19
networks, you know, including Discovery and PLC and they
00:47:23
bought scripts, which has HGTV and Food Network, and they then
00:47:27
merge with Warner media. To, which is HBO, the CNN Warner
00:47:33
Brothers Studio, and also the Turner networks like TNT and TBS
00:47:37
and adults when their plan is to make HBO Max even more maximum
00:47:41
maximum. Yeah.
00:47:41
They, they keep saying that they want to have just one service.
00:47:45
And so Discovery has the service Discovery plus, which kind of
00:47:49
went through a similar, they didn't shut it down but they had
00:47:52
gone in spending a bunch of money on shows with celebrities.
00:47:55
And, you know, discovered he's always been kind of a low-cost
00:47:57
programming place and They were they tried to go premium with
00:48:00
Discovery. Plus it didn't work, they can
00:48:03
regroup, then they do this deal. There's an assumption that
00:48:05
Discovery plus will either just be folded into HBO.
00:48:08
Max or will be bundled in some way that is positive for the
00:48:12
consumer and CN n plus just didn't fit into this into this
00:48:16
plan. You think the HBO Max brand is
00:48:18
like set. Like at this point it's still a
00:48:20
little nonsensical, right? It's possible that they will
00:48:23
change the name. They have not, they have not
00:48:25
made any public comments on it, you have a gut Feeling on that,
00:48:30
I really don't. Because I think these companies
00:48:32
have all taken different approaches with naming HBO
00:48:35
continues to be a really good brand and I don't know why you
00:48:38
want to throw that out to try to create something new, but having
00:48:41
a bunch of reality television HBO with a brand won't mean
00:48:44
anything in five years. I mean something, totally
00:48:46
different, right? Won't mean the wiring, well, one
00:48:50
assumes that they will still have all of those shows.
00:48:53
They'll just, it'll be like like Netflix where they make a lot of
00:48:57
really good Prestige programming.
00:48:58
Then they also have all this other stuff, they already have
00:49:01
kind of lowered the quality of from the HBO brain on HBO Max
00:49:04
already a island is on HBO Max. That's how about watch that one.
00:49:08
But yeah I mean the HBO Max original versus an HBO show it's
00:49:12
obviously to almost any normal person, all the same thing but I
00:49:16
know within hvo. There was a lot of massaging of
00:49:18
like what could technically defined as an HBO show versus a
00:49:22
Mac show that. Yeah I mean I know, you know,
00:49:24
back at the end, the tail end of my covering the bead and the D,
00:49:27
the deal with start To be discussed.
00:49:29
There was a lot of consternation that Discovery was sort of
00:49:31
associated with some of the worst quality content on
00:49:34
television, right? I mean, this was like, you say,
00:49:36
low budget reality stuff that could really be considered
00:49:39
garbage. That was then going to be
00:49:41
married with, you know, the premium most high-quality
00:49:44
intellectual, you know, content that I feel like that's going to
00:49:47
be one of the biggest issues for them to reckon with over the
00:49:50
next couple of months is like, what brand do we really stand
00:49:52
for? How do we keep HBO safe from it
00:49:55
and, and, and like, you're saying, what do we call this
00:49:57
fucking thing? Yeah, I mean all but it's the
00:50:00
truth is all these services are going through this, right?
00:50:02
So we've all talked about Disney on.
00:50:05
This Disney is in the midst, and I forget, I think you, you wrote
00:50:08
about this, Tom when you're still at the information.
00:50:10
Jessica at the information loves to write about this subject,
00:50:12
which is like, how do they teach us?
00:50:14
Good to incorporate. Yeah.
00:50:16
Yeah. How does Disney plus become more
00:50:19
than just Marvel and Star Wars, right.
00:50:20
This is a, this is a service that caters to those super fans
00:50:24
and also to, you know, people with young kids because they
00:50:27
have the Disney In the Pixar movies and all that, but it's
00:50:30
it. The the general customer does
00:50:34
not view that as something that they're going to turn on every
00:50:36
night to find something new to watch, right?
00:50:38
Like they're going to go there for a very specific thing and
00:50:41
they've realized that if they want to hit the targets that
00:50:43
they've put out, they're going to have to broaden what they do
00:50:46
and it's why you see them putting Dancing with the Stars
00:50:48
on Disney plus and they're going to keep doing stupid things.
00:50:51
All these services are still trying to figure out how to be
00:50:54
like Netflix, which is why some of the problems that Netflix has
00:50:57
had recently. So much concerning for them.
00:51:00
I teed this up earlier but so I just want to make sure it sounds
00:51:04
like everybody. Thinks quippy was far worse
00:51:05
since you know plus or so. What were the definitive takes
00:51:09
on? Some of you are rejecting this
00:51:11
framework at all. I didn't invent this.
00:51:13
I've seen people saying this, I look they're both comedic
00:51:16
blowouts. And and before I answer that
00:51:19
question, I just want to say one quick thing because I did check
00:51:20
in, on Twitter, over the weekend.
00:51:22
Luke is, you can't say this because you still cover the be
00:51:24
but Eric and I can the implosion of CN n plus is funny.
00:51:28
I'm sorry. It fundamentally is funny, I'm
00:51:30
sorry, people lost their jobs, it happens.
00:51:33
It'll happen. Even more as the discovery
00:51:35
integration goes through but like you don't have to sit there
00:51:37
and cry about the fact that there are people who lost their
00:51:40
jobs the whole way through. Enjoy the things that I like
00:51:42
that. You should know you're taking a
00:51:45
risk, they do act like it's a fucking tragedy.
00:51:48
Anybody who started it. He had to admit that like, we
00:51:52
went in, knowing, it was like a big gamble and your amazing part
00:51:55
of taking jobs, like, betting on, like, how good the company
00:51:58
is going. Do whatever you like that.
00:51:59
I think the funny part is the The Clash of or the kind of the
00:52:05
really rich powerful people and of basically fighting over the
00:52:09
future of this thing because there was a point a week or two
00:52:12
ago where it just seemed very clear to me that someone within
00:52:15
the discovery Universe was leaking bad news about.
00:52:18
So it n plus because they wanted to kill this thing.
00:52:21
And so then you had some people on the, the within the kind of
00:52:24
broader CNN Warner media universe, who wanted to try to
00:52:27
rescue it. And so that part of it, I was a
00:52:29
little bit of humor, I think the sad part is all the people who
00:52:33
will lose their jobs as a result, but that is kind of sort
00:52:35
of undeniably sad. It's sad to me.
00:52:38
I think the funny part is this CNN has this very like, were the
00:52:42
authority brand like we're delivering you like the news
00:52:46
like we understand the world and then for the product of such a
00:52:51
type of person to fail reflects that they don't actually
00:52:55
necessarily understand the world.
00:52:57
Obviously, They're not business people and their different
00:53:00
things. And as a journalist, I'm
00:53:01
sympathetic but I to me the funny part is the conflict
00:53:04
between this brand of authority and they're sort of inability to
00:53:08
judge their own likelihood of success your scrunchie a nose at
00:53:12
this. Oh no.
00:53:12
I'm just saying that shit's hard.
00:53:14
Like I definitely the fact that it's run by journalists
00:53:17
certainly doesn't mean that it or not run by journalists but
00:53:20
they would be good at it but which is why I'm like just
00:53:23
generally Pro you know, slow slow and steady growth.
00:53:27
I mean that's you know we both Both came from the information
00:53:29
that suggests is done. Like I I believe that some
00:53:32
things are key, I mean, Disney plus was a huge, you know, out
00:53:35
of the box, hit, you know, they got like 10 million Subs day.
00:53:37
One there, there are things that, dude, legitimately take
00:53:40
off. Typically those things were good
00:53:41
ideas, whereas when you have a bad idea it tends to not do very
00:53:45
well or were you're not operating from a position of
00:53:47
strength? I mean, Disney had the best
00:53:50
known entertainment brand in the world and launched this sort of
00:53:54
just remarkable marketing campaign.
00:53:57
You know, most of these other services.
00:53:58
As you know, took Netflix years to even get to a million
00:54:01
subscribers. It different news organizations,
00:54:04
which is sort of the world that CNN's playing in had to spend a
00:54:06
while to you don't usually jump out of the gate like Disney did,
00:54:10
right? Well, Disney had an insane value
00:54:12
probably was super cheap. This is a company that's like,
00:54:15
sort of divvied out. It's like old properties and
00:54:18
sort of not, you know, they just were very restrictive about what
00:54:21
they let people have. And all of a sudden, they're
00:54:22
like, giving people like everything.
00:54:24
I mean, it was. Yeah, I mean, it's just amazing.
00:54:26
So it's having a product that people, I want you guys are
00:54:29
refusing, even ate in terms of quippy.
00:54:31
Just say, I'm they'll know, you won't even address it head-on.
00:54:34
We kind of already did. I feel?
00:54:35
I mean like, like Quimby, like Lucas.
00:54:38
And I think we agree on. First of all, way more money,
00:54:40
invested billions, we're invested into quippy.
00:54:44
So if the 300 million figure is right for CNN, we're talking
00:54:47
like less than three times, you know the Investments.
00:54:51
Wait no more. You know what I mean?
00:54:52
Whatever, far less investment. You're like nobody it CNN called
00:54:56
journalist Peters or Probably have but it's Tom got.
00:55:03
She said that that journalists groom sources the same way that
00:55:06
child Predators groom and you were that I was this list.
00:55:10
I still have to inform everybody when I move into a new
00:55:12
neighborhood that I'm a journalist, so it's very, it's
00:55:15
very concerning for my personal life, but no way more money was
00:55:18
invested into Quimby. It was as Lucas made the point
00:55:21
earlier, a much worse idea. There was no reason for it to
00:55:24
exist CN. N plus wasn't the first attempt
00:55:27
at this thing, you know, Fox, Nation is still around, they're
00:55:30
probably going to see other companies try to do this sort of
00:55:32
thing right. There needs to be some kind of
00:55:34
streaming answer for, for cable news.
00:55:36
So it's hard for me to eat. It's not even in the same
00:55:38
universe. There's a bunch of other CNN,
00:55:41
pluses out there, right? I mean, there's every company.
00:55:44
There's so many different Niche, streaming services, CN n plus
00:55:47
just got a ton of attention because journalists are
00:55:50
narcissists. And we like the right, but other
00:55:51
journalists exact, right? I agree with like media already
00:55:54
gets overcome this is that you know, media that happens to be
00:55:57
populated by journalists is Yeah.
00:55:59
A different level of narcissism that will require people to
00:56:02
think it was a much bigger implosion than it was.
00:56:05
Anyway, so my CN n. Plus show is not going to make
00:56:07
it, I'm sorry to say but I'm still I'm still open for anyone
00:56:10
that wants to buy the IP. Maybe the I don't know the
00:56:13
newcomer streaming service can pick it up.
00:56:15
So last thing here maybe just with the discovery this as love
00:56:18
era of media. What do you look at with CNN
00:56:21
plus now in the rearview mirror? Like what's next as like the
00:56:25
biggest hurdle that they're going to have to address and
00:56:27
like will give a sense as to what You know the the outside of
00:56:30
Disney, the largest Media company out there is going to be
00:56:33
going after. Well they have to figure out
00:56:35
what they want and what they're streaming strategy is they have
00:56:37
two different Services right now, they have Discovery plus an
00:56:39
HBO Max one assumes that they should just be squished together
00:56:43
because Discovery plus an HBO, Max are both making unscripted
00:56:47
programming and Discovery plus has a, you know, a much smaller
00:56:52
user base. But there's some, you know,
00:56:55
there's some brand confusion there that that Eric alluded to
00:56:58
earlier. HBO ran into this.
00:57:00
When they first started selling HP.
00:57:02
Oh, Max. Because there were all these
00:57:04
different names. There's HBO Go and HBO now.
00:57:06
And and so, which one were you getting?
00:57:08
I mean, thankfully, at least they didn't go with with another
00:57:10
plus and what prevent chance. Now, they have that shit can
00:57:15
relaunch with the plus. I love how that you're strong.
00:57:17
That seems like your strongest ideologies require us.
00:57:19
Like I'm anti plus like that I'm alive.
00:57:22
Oh, I have opinions about a lot of things.
00:57:23
I'm just trying not to get in too much trouble today.
00:57:25
Are you allowed? Are you free?
00:57:26
Are you what? Yeah, I mean it looks.
00:57:28
My newsletter is basically a weekly column.
00:57:30
You you're not going to find like right really strongly
00:57:34
voiced opinions but it's I wouldn't describe it as holy
00:57:37
neutral. That's a big evolution.
00:57:38
When I was there, when I was writing fully charged, they
00:57:43
would never. Let me say it was opinion.
00:57:45
It was I don't, I don't view it. As I don't view it in their
00:57:47
different. I viewed as a report, I view it
00:57:49
as a recorded column, sure. Hey, yes!
00:57:53
Want the pure undiluted, Lucas shopping.
00:57:54
You gotta sign up for Lucas. Plus, you gotta, you gotta get
00:57:58
the premium. The premium level subscription.
00:58:00
Don't you go and Balinese my eyes can go on, I go on the
00:58:04
town, every Monday and then I occasionally appear on the
00:58:08
business, which is Kim master show at KCRW.
00:58:11
And there may or may not be some other things coming at some
00:58:15
point, he knows when that's good, we got it, we got it.
00:58:19
I think the other big question is, you know, David sighs lab
00:58:22
has no experience running or little it's been a long time,
00:58:25
running a big entertainment company that likes to spend.
00:58:28
And a lot of money and so is, how is he going to feel when
00:58:32
he's got a clear, a 200 million dollar check for a Batman movie
00:58:35
or when he's got to sign off on an HBO show that's going to cost
00:58:38
twenty million dollars an episode if he's if he's cool
00:58:40
with it, great, but that's something he hasn't had to do in
00:58:44
a in a very long time. If ever, I love it.
00:58:46
He's in the hot seat. All right, thanks.
00:58:48
Thanks for doing this. Lucas and do it on a Sunday?
00:58:50
I appreciate it. Oh yeah.
00:58:51
Almost for that kind of coverage and whatever the next implosion,
00:58:54
maybe I'm sure you'll have something good to say about it.
00:58:56
Yeah, thanks, Bethany. Goodbye,
00:59:10
goodbye, goodbye, goodbye. Goodbye, goodbye, goodbye.
00:59:14
Goodbye.