0:00

What’s up, everybody?

Are you tuning in to The Challenge USA?

On CBS well.

Tune in to me, Tyson Apostle, as I break down each and every episode with my co-host, a million WETA Meyer.

I’m also a contestant on the show which gives you all The Insider scoop.

0:15

Amelia how stoked are you to do this Tyson?

I’m freaking excited.

I cannot wait to sit my butt down every single week to watch the show.

Then come here, and recap it with you on the ringer reality TV podcast.

Today’s episode is a double feature on the future of media and entertainment.

0:37

I was thinking recently that this has been a really weird summer for Hollywood.

Like the theme of the last decade has been streaming as taking over the world and movie theaters are in slow motion stagnation or decline.

And you could absolutely say that the pandemic, put that narrative into hyperdrive movie theater tickets.

0:57

Plummeted box office was obliterated for two years, streaming was zooming forward.

It just seems so obvious that the future of film was moving away from Peters and toward your living room couch.

But then, this summer happened.

1:15

Netflix hit a subscriber wall and lots of media and entertainment.

Executives are now looking at that, subscriber wall and thinking Hmm does are streaming pure-play make as much sense as it did six months ago, is the ceiling of global streaming subscribers really like a billion, like we thought it was just a few months ago or is it a lot lower?

1:35

The recognizing the benefits of being, you know, an old-fashioned company?

That is Diversified where your fortunes are balanced among theme parks and Merchandising cable.

Yes, movie theaters.

This summer top gun, Maverick set the all-time box-office record for a Memorial Day opening.

1:55

Then minions set the all-time box-office record for a July 4th opening, does that sound like a industry?

That is dying.

You can scream its ticket inflation, its ticket inflation, all you want but it doesn’t change.

The fact that the movies are back or at least the movies as a tentpole.

2:14

Des are back.

This intersection really fascinates me.

I see like the history of media and entertainment is the history of Frontiers that rise and fall like waves coming after one, another movie theaters, were the wave of the early 1900’s, they Rose and Rose and then tickets bought per American peaked in the 1930s 1940s.

2:37

At about 35 movie, tickets bought per person in America and astonishing number has been declining ever since it’s now about two or three.

So what happened?

Well in the 1950s linear TV comes along changes, the world TV changing everything, but then linear TV itself, Peaks around 2010.

2:55

And what’s the next wave?

Well, it’s streaming streaming soars.

It revolutionizes entertainment.

Everything’s just going to stream to your couch.

Your couch is the future of all entertainment.

And yet.

Now we see that might be peeking.

Movies, TV streaming.

3:12

What’s next?

My guests today are Lucas Shaw and entertainment reporter at Bloomberg and frequent guest on the town podcast and Matthew ball.

Investor SAS author of The metaverse.

I have burning questions for both of them about PTV Netflix.

3:34

Disney Apple, the metaverse and the future of our attention.

As always, please send your comments criticisms ideas for future episodes too.

Plain At Spotify.com.

I’m Derek Thompson.

This is plain English.

4:11

Lucas Shaw.

Welcome to the podcast.

Thanks for having me.

It’s great to be here.

Absolutely.

So you wrote this piece for Bloomberg.

That I was just waiting for somebody to write this.

I have a list on my computer of like ways, the weird economy is going to change.

4:26

Ex and I had like the millennial consumers, subsidy and I had crypto, and I had all this stuff.

And then I had this one little tiny note, that was like, TV spending down, like that’s all I had, but that was covering up this larger story.

I was so interested in, which is having followed people, like, you and Matthew ball for a long time.

4:45

I knew that original scripts in Hollywood had increased from just over 300, in 2012, to nearly 600 in 2021 but now, Now, you’re saying this is coming to an end, so take us inside your Peak TV.

5:02

Hypothesis, what is Peak TV?

And why is it happening?

Yeah, so if you take a step back, there was always this belief in, in Hollywood among critics, all that, that, that film was Superior to television.

That was, I’d say, subsisted for the entirety of the 20th century, and even some of the 21st and that started to change at as HBO invested in.

5:26

Sure programming.

And you start to see this huge spike in programming on cable and broadcast didn’t change.

So as HBO and AMC and FX and all, the cable networks are spending more, the total number of TV being produced, and the quality of Television being produced grew appreciably, then Netflix comes along, and it tries to basically, at first just copy HBO, but eventually copy the entire Cable Bundle.

5:50

And so, even though broadcast cable production stays the same cable production, cable network Productions, Stays the same.

Even grows a little bit streaming comes.

And so, as you point out the, the volume of TV being produced, was just unprecedented and it struck all of these traditional people in the industry as unsustainable because there just didn’t seem like there were enough customers to watch all of it.

6:11

But there was this exuberance about streaming that was seen as the future.

And the sense that, or this belief that you could invest any amount of money to grow.

It was sort of a more of a Silicon Valley mindset of, let’s burn money.

Now lose money in the short term.

We will make it up in the long term and that stayed true for several years because Netflix kept growing.

6:32

I mean Netflix was really the company that that precipitated all of this and as it kept adding 25 million, customers a year and as every other Media company restructured itself merged and so on to try to copy Netflix, they have copied this place.

6:48

They also copied Netflix and making a bunch of shows and we seemed to have finally reached a breaking point where because Netflix has run into a wall and it’s contracted so far this year.

It’s spending is not going up at the same rate, it was and every other company that was using Netflix as its model.

7:07

Can now must copy Netflix again just in being more responsible about its spending.

Yeah.

So what I think is so interesting about this is I wonder in the era before what we’re calling Peak TV, right?

Whether it was the not just a golden age of TV, but like the Platinum age, TV that age of TV were the number of original.

7:28

Scripted shows was just going up and up and up.

Every single year Netflix was really well positioned to dominate in that era.

We had a low interest rate environment.

Netflix had taught, its investors to judge.

It not just based on earnings but on subscriber growth varia can to Jeff Bezos in the early 2000s telling investors.

7:49

Don’t Judge Me on earnings, trust me earnings will come judge me on cash flow.

Judge me on the amount of cash that I am producing.

And eventually, I promise, I will get enough of a monopoly that I’ll be able to raise prices that kind of worked.

But also kind of worked for AWS reasons.

We won’t get into Amazon’s future but it worked for Netflix for a long time.

8:07

And then suddenly as you said, Netflix hits this wall, they assumed maybe that the total addressable Market of Netflix subscribers is going to be significantly higher than it actually was.

We’re going to get to sort of Netflix, Quan Netflix in just a second but I want to ask you if Netflix was perfectly set up for all these macroeconomic.

8:26

Strategic reasons to thrive in the era, that’s coming to an end who is set up to succeed in this the post Peak TV era couple nominees.

Number one, we have apple which can still spend like a drunken sailor because it’s got the iPhone which is basically like a private sector Financial, like Federal Reserve it can just print money.

8:44

Number two, you got HBO which I think it is fair to say has is famous for having the highest batting average per swing on it shows.

Maybe that’s just a classic East Coast over.

Educated journalist bias but I think pound-for-pound their shows are certainly the most celebrated by critics there’s Disney which has the IP and it can maybe Moneyball its way to the next few years by making Star Wars and Marvel.

9:09

Spin-offs that even if they don’t all go crazy berserk popular have a high audience floor.

So Apple HP oh Max Disney who do you think is in the driver’s seat for the peak TV era?

I mean, I think you picked the three best candidates although you did omit Amazon which sort of plays by the same rules as yeah, that finances are ya talking about the the case for Amazon is that they’ve been doing it for a long time.

9:36

They already have certain shows that people like to watch and and unlike Apple, there’s at least more of a track record.

The case against Amazon is they’ve been doing it almost as long as Netflix and Netflix releases more hit shows in a year than Amazon’s probably released an entire time.

9:52

As the studio brings, you know, I think of the ones that you identified Disney is probably in the strongest position.

Apple is, is in a good position to make shows that people care about.

10:08

I just am always reluctant to give too much credit or believe as much in a company where the programming is an afterthought.

You know, I just don’t think it matters enough to Tim Cook and to the leadership at the company.

Will they make good shows will?

Well, the streaming service grow probably, will it be, you know, are we going to have a conversation in 5 years about how, you know, Apple screwed it company over with how much we spent on programming know.

10:33

But I don’t think we’ll also have a conversation about how apple is now the leading streaming service and entertainment.

I could be wrong, HBO is in a really good position and as you point out, they do have a very high batting average.

They have sustained quality even while trying to kind of deal with with Netflix and increase its output.

10:52

I’m a little reluctant to, to Crown them.

The obvious leader because they’re going through their second merger in five or six years.

And there are a lot of indications that their new CEO of the new Warner Brothers Discovery.

CEO David says love is more is pretty cost-conscious.

11:10

You know, he’s saying all the right things about HBO being the one thing.

He doesn’t want to touch, but he’s got to figure out how to combine HBO Max their streaming service with Discovery plus, which goes to David as live had had previously run.

There’s just a lot of uncertainty there as they continue to lose Executives and change things.

11:28

It’s just, it’s a more vulnerable company.

They also have a ton of debt, which is not an issue that that apple and Disney really have Disney the reason to believe in them is because it’s Disney and it just, it’s, it’s a company that has engendered so much Goodwill with with fans.

11:45

It’s a diversified company in that it’s got theme parks that are doing incredibly well, right now, it’s had the movie studio that has has really dominated.

I hated the industry for the last 10, 15 years.

And oh, by the way, it’s had the fastest growing streaming service in the world for the past couple of years and and and may catch Netflix way faster than some of us had anticipated will see.

12:04

It’s going to lose some customers in India because of a cricket deal that we don’t necessarily need to go into but it’s just a really well positioned company.

The the red flag there is of course that the kind of the great momentum Disney had over the last many years was under the previous CEO Bob Iger it is now under new one and Bob jpac.

12:21

And there are a lot of Cern’s about him.

At least in the entertainment industry.

I think, what, at least Disney has that apple and HBO, Max don’t have what you think.

You summarized pretty well, is a kind of focus with apple.

Their focus is the iPhone because it should be the iPhone.

12:37

The iPhone is their business and TV is not with HBO.

Max TV is their business, but it’s the going through this transition.

It’s very hard to predict strategic changes when new people are coming into office.

It’s they should let Uh, bo remain its own fiefdom, but they should do a lot of things.

12:56

And that doesn’t mean that it’s going to happen Disney.

I think not just because of its IP, which is incredibly strong, totally unparalleled.

But also, because as you said, it’s so Diversified.

And so, you know, it has the opportunity to do really well in box office, while maybe it’s TV, doesn’t do one year and then really well in its amusement parks.

13:15

While it’s, you know, movies don’t do well, one year, I think that gives it the kind of strength that the 2020s might need Is going to be a little bit of a janky era.

So, my first burning question for you was about Peak TV.

My second burning question, is simply stated, how should Netflix fix Netflix?

13:32

So, let’s talk about the right side first.

This is a really successful company.

Netflix is more than 200 million subscriber accounts around the world.

And subscriber accounts aren’t like ticket sales.

It’s not like one equals one.

These accounts are not individuals.

They are entire families.

13:48

They are friends of families.

They are entire families of the friends of those families.

He’s like it’s conceivable that 1 billion people around the world, have easy access to a Netflix account which might explain why they hit the ceiling.

But despite all that, despite that extraordinary, penetration Netflix subscribers, as you said fell last quarter, the stock plummeted, 66 percent.

14:09

Year-to-date that is a crypto level crash, and the company seems to be suffering.

A kind of mini existential crisis, despite its strong position.

It’s talking about adding advertising, it’s talking about cracking down on passwords.

So that was a long wind-up.

But Lucas, what do you think is Netflix’s biggest problem?

14:28

And is it fixable well, if I if I had the solution for Netflix as problem, I could probably get paid a lot of money to do something else.

The, the their biggest issue is they don’t seem to know what the solution is.

14:43

You know, this is a company, I think you’re right and identifying them at being at having something of an existential crisis.

I’m sure that that the the leaders Reid, hey, Stinks intense around us would push back on that a little bit, but it’s a company that has habitually seen around the corner and anticipated, the problems that were coming, its way before they happened.

15:01

So when it was a dvd-by-mail service, they saw that streaming was coming and they created a streaming service.

And they had this.

They ended up splitting the business after temporarily but it ended up working in the long run.

Yes, they saw that their biggest suppliers were going to pull TV shows and movies from the service, so they started making their own.

15:18

They built up a huge Studio before they lost too much of that, we all Well, that worked out for them.

They saw that there was going to be kind of a globalization of content and that they needed to get ahead of it.

That’s their biggest advantage.

On all the competition is that they have a huge business and all these other markets, but the issue of competition and saturation, which they were asked about Ad nauseam in over many years, they either didn’t see coming or willfully ignored, or there was just some, they had some blind spot to this.

15:50

And they seem to have been legitimately caught off guard.

Guard over the last kind of four to six months by this pretty dramatic slowdown in their business page policy right there.

Why do you think they didn’t see this coming?

Like, read and Ted are brilliant and they were as you just said it.

16:07

Their foresight was Immaculate up until November 20, 21.

Is there some particular reason why?

This crisis, you think caught them off guard.

I remember God, what podcasters are listening to?

I think it might have been the all in podcast where Shh math was talking about how he thought that maybe apples privacy changes, which we know have screwed over Facebook and we know of screwed.

16:32

Over Snapchat might have also reduced the efficacy of Netflix’s advertising to pull in new subscribers which would have increased the churn rate for Netflix and we have seen some evidence that Netflix is churn rate has increased.

16:47

Write the ratio of people leaving the service versus those coming in, has gotten a little Lil Bit wonky do you have any theory about about why this was the corner that Reed Hastings and Ted strandos didn’t see around?

That’s a really interesting Theory.

17:03

I will say my explanation is a little bit simpler than that which is if you talk to those Executives over the years, they were pretty clear that they saw the market opportunity at being 400 million subscribers, 500 million subscribers, maybe maybe 600 million subscribers.

You know these these huge numbers.

17:19

Jason kilar who has run both Lubin Warner media talked about there, being a billion subscribers out there for streaming service and so I just don’t think they thought they were at that saturation Point yet.

You know, they, they had their best year ever in 2020 which was fueled in part by the pandemic and people being at home.

17:38

But I do think obscured some of the other changes that were happening.

They had seen the entry of these new competitors and it didn’t seem to have a dramatic effect on them at first.

And so they may have assumed that there would be room in the Market for many people and I think there was probably a mistake and not recognizing that it would take 18 months to two years before you saw the real impact of the so-called streaming Wars, because you have people experimenting with all these other services and realize, you know what, they wanted to keep in what they didn’t.

18:13

There’s their, the macroeconomic factors that you talked about with regard to interest rates and inflation and things that are really beyond their control.

I do think have some impact Because it’s affecting spending a lot of ways and you know I think there’s a little bit of a little bit of hubris here.

It’s just a company that has been so right about so many things that despite it being seeming, kind of a parent that they would run into some problems.

18:39

As there was more competition and if they got to a certain scale they just didn’t believe it was going to happen to them.

Yeah, when you talk about a company, like Netflix, having 1 billion subscribers and you add the multiplier that one subscriber, / is a household sometimes you have households of what four five, six, sometimes.

18:56

I think they ever have.

Yeah.

Like three and a half is what they’ll say one household is, okay.

So one household is three and a half but the probably sharing it with their sister, their cousin, their cousins best friend.

I mean, I don’t I’ve never seen the internal figures of what Netflix Associated, the assumed the multiple on their account was, but if you’re talking about a billion paid accounts, you may very well be talking about 3.5 to 4 billion people watching Netflix show every single year.

19:22

And you are at that point, you are screening straight incredulity, right?

There’s only, what 7 billion people on Earth, you’re talking about 60% of them watching squid games every year.

Like I did it just doesn’t seem plausible but I want to move on to my my follow-up question on Netflix, which is should someone buy them like Disney Apple Amazon?

19:42

Like this is a distribution platform for 1 billion people, 220 million subscribers, 1 billion people.

It’s price earnings ratio has Fallen from about 400.

In 2015 when I was screaming about the company being overvalued to 16 today which is basically the average for the S&P 500, Netflix is a good deal, it is a great company with extraordinary unprecedented reach and it is trading cheaply.

20:14

Why shouldn’t Disney or apple try to buy it?

It’s very possible that that will happen, especially After they report their their second quarter Financial results in the middle of July about a week after this episode will go up, I think, and all expectations are that it will lose customers again.

20:34

And I think that if it had and this is despite having stranger things, the, you know, the biggest show in the world over the last month.

If they have another bad quarter, I think you can expect the stock to continue to drop right now.

I forget when I last looked, it’s probably in the 80 billion range that’s still pretty hefty for some of these companies.

20:52

If it gets down to 50 60 billion that that the number of companies that are capable of buying it grows, you know, I think that the challenge for an apple or one of those big Tech Giant’s is.

There’s a lot of doubt that they could get that through The Regulators in DC.

21:10

Now, maybe the fact that that Microsoft seems to be pulling off Activision, would convince Apple that, oh, we could probably pull off Netflix to because it seems somewhat similar right.

You know, Microsoft Coughs.

Having the biggest gaming platform, and then buying the biggest Studio.

One of the biggest gaming Studios.

21:26

Why couldn’t Apple, which is some major distributor by a major entertainment company.

I think, for all the difference between the sort of vertical integration versus horizontal, right?

Like 100 of our drivers and software is a little bit different than studio studio, but but - it just returns of big company in size and all those things.

21:45

But for for the other media, and entertainment companies, I think You know, they would love some of them would love to try to figure it out.

Like there’s been some discussion about how Comcast and Jeff Schell and all that but Comcast had such a hard time just getting to nbcuniversal deal done there would certainly be a lot of concern about trying to get the Netflix deal done.

22:05

You know Disney just did this huge transformation will deal with Fox.

I’m just coming up with the reasons against it, but I think you’re totally right.

That this is something that these that a lot of these larger companies have to consider because it is, if the stock keeps dropping it, becomes this incredibly valuable all asset that is suddenly available for a sixth of what it would have been just a few months ago.

22:25

I think look, it would be an extraordinary steel.

I think it’s an amazing company.

It’s an amazing product.

It’s taken a beating because conditions have changed so dramatically, but my God, that area seems pretty frothy for possible consolidation one going thing.

22:40

I did the one thing I did want to point out and this is more to what we were discussing earlier.

But in talking about kind of PVP, And all these problems, it should be noted.

That it’s not as though spending on entertainment, is actually declining.

22:57

It continues to to stay the same and or go up a little bit.

It’s just not going up at anywhere near the rate that it used to be and given some of the inflationary impacts on some of the inputs.

You could argue that kind of adjusting for inflation, it’s down or flat but they’re basically is not a world in which companies / their production budget by five billion.

23:19

Is write it but it might change the way that they spend money and how they allocate that money and that actually ties into the third, burning question that I have for you, which is moving from television to film what lesson we should take from this Summer’s surprisingly even shockingly, strong movie, theater season so movie theaters.

23:40

Like, remember when those were supposed to be dead, remember where they were dead, like with the pandemic was supposed to Kill movie theaters because everything was just going to be streamed to flat screens and living rooms.

So, No, spoiler alert.

They’re not dead top gun.

Maverick scored the highest Memorial Day Weekend, Opening Ever, it’s now goes to billion dollars minions.

23:58

The rise of grew just broke the box office record for a debut over Fourth of July weekend.

The media narrative, I think, is that these movies were sort of lofted by very different and even opposite forces on the one hand, with Top Gun, you have the force of celebrity like the might of Tom Cruise and the zillion W mile.

24:16

And then with minions, it’s a sequel.

Yes.

Very Popular franchise, but it was also buoyed by this viral.

Tick-Tock mean of dudes, going into movie theaters and Suits calling themselves gentle minions.

So you’ve got ol fashion celebrity on the one hand new-fashioned or newfangled verse virality, on the other hand, what broader lessons for the movie industry.

24:39

If any do you draw from this Summer’s Blockbuster season?

So I object to the first part of your question which and It’s not specific to you, but I’ve seen a lot of people frame it in the weren’t movie theaters.

Supposed to be dead, wasn’t the business over.

24:56

And, and I will admit that some of this might be defensive on my part because people group me in, with the people who said, feeders were done.

I don’t think that was ever the argument.

I think the argument was the movie theater, the movie business was already facing something of a crisis because attendance was going down every single year and it was clear that people were more than than happy to watch most movies at home and so movie studios and theaters needed to figure out a way so that they could release movies at home either directly or get movies that were in theaters at home sooner.

25:34

And this is a problem that the pandemic actually forced them to solve.

Because these companies had been talking about doing this for a decade and they could never get anywhere, because theater saw it as counter, to their interest to let Studios make movies available at home after say, two weeks.

Or a month or six weeks, instead of the traditional window which had been more like 3 months, or 6, months, or 9.

25:55

And so I’ll what this was this huge problem in the movie business that the pandemic actually helped solve.

And so, I think that is one thing we’re seeing, is that because studio is now have more flexibility, they can release.

They can release movies in the way that they should be really.

26:11

So you have movies like minions or Top Gun where they’re huge and it makes sense.

There’s Adam, there’s a those are events There is a reason to go to the theater to see that the movie theater business, is now more than ever, it’s an event business.

It is not a habit, it is not something that people most people do every week or even every other week it’s something that they do every couple of months and so they’re going to go for a big event and that movie should be in theaters and it should be exclusive in theaters for a period of time and they are.

26:39

And they’re all of these other movies that Studios have to figure out how to release.

And, that’s the one that’s tricky because, to me the fact that a movie, like, Top Gun, worked, or the movie like me, His work shouldn’t be news.

I mean, it’s great that this business that suffered for so long.

Now, seems to be mostly back, but Hollywood had become a hits driven business.

27:01

It’s even more of a hip driven business you’ve tweeted and written about this many times.

The hips are as big if not bigger than ever.

And the question is, what do the Studio’s do with everything else?

That’s exactly right.

And when I was tweeting about this, I think you and I were going back about one aspect of my interpretation and Sean fantasy at the ringer and I were going back about a different aspect of my Station and he pointed out that I think I’m just quoting from Sean’s Twitter feed at this point.

27:24

So 121 films released in the u.s. in 2019 before the pandemic earned at least ten million dollars at the box office halfway through this year. 2022 only 28 movies have reached that same threshold The Middle’s not back and quote that Sean and I totally agree.

27:43

The hits are as big as ever the event job of the movie.

Peter is still doing its job.

People are still responding to event movies.

The same way.

They always were, but the middle and the low end isn’t back.

Americans, aren’t coming back for West Side Story, right?

28:00

For those kind of, and, and everything below West Side Story for those kind of movies.

Americans are saying, you know what?

It’s going to be on streaming, and whatever, three weeks, five weeks.

Maybe it’s already on streaming, I would rather watch a movie that doesn’t have enormous characters, big explosions, big movie stars.

I’d rather watch that movie on my couch with ice cream that I don’t pay. $19 for then, go to the movie theater, spend 100 bucks and popcorn and have to go through that whole experience.

28:24

And also to your point like you reminded me as I was, you were totally right.

And your initial criticism of my framing that I, I made the mistake of the classic journalism mistake of using the word dead or death to refer to a downturn in the second derivative like when something stops growing, the media always says it’s dead.

28:43

I remember like in a like 2015, there was all these articles about like is cable dead, right?

It’s like no cable TV is Dead tens of millions of people still watch lots of shows, but it has stopped growing.

And from that definition from the media, definition of dead movie theaters have been dead since the 1940s, like tickets, bought per person.

29:01

Peaked at about 35 in the late, 1930s, 1940s.

And now, it’s about 2.5 three-ish, I think per year, movie tickets, Baht per person.

So the movie theaters have been quote, unquote dead for the last, you know, 70 years by the media definition, but by the actual economic definition No, they’re still making, you know, hundreds of millions billions of dollars in Revenue, one aspect of this that I wanted to ask you about and it ties us a little bit back to the streaming question.

29:29

I look at the 2022 box office and it’s all sequels top gun.

Maverick number one Doctor.

Strange number two, the Batman reboot.

Number three Jurassic world Dominion number for Spider-Man.

Number five Sonic, the Hedgehog 2, number six, minions, number seven, etcetera.

29:49

Movie theaters are doing this.

Excuse me?

Movie studios.

Are doing this because they know what people watch a know people want to watch.

And so then they have scarce money, and they have to drive people back to the movie theaters, they make sequels adaptations, and reboots toward extent.

You think we’re going to see that logic come into streaming like why won’t streaming in a austere World follow the sequel ization.

30:13

Path of movies.

You, you will.

Only see it at some place.

I mean look Disney’s streaming strategy is already that for the most part you know, Disney pluses is largely predicated on Star Wars and Marvel.

I guess I was mostly thinking Netflix here but yeah, you’re totally right, I do.

30:29

But but if you listen to, you know, Netflix has been at Netflix as a company is kind of obsessed with Disney now and also they’ve talked a lot about trying to create franchises because you know the the biggest hurdle in streaming or one of at least is is minimizing churn which is Who cancel?

30:49

And one way to do that is if they know that your service has a certain type of programming or they know that there are new seasons of something that they love coming.

They’re probably not going to cancel.

I mean, maybe they’ll do the drop in sign up again thing.

And there are certainly people who do, but it, definitely mitigates churn.

31:06

If you have, if you are the home of stranger things and you are the home of a good game and you are the home of all these shows that people love.

And so, Netflix is trying on the franchise front, it just creating franchises.

From scratch is really hard.

The reason the movie business is all sequels is because most of these Studios have struggled to create new IP that people love.

31:25

And that’s, I mean, that’s another reason to, at least for the, for the time, being be bullish on the future of Disney.

And this, but you’re seeing, you’re certainly seeing it across the board.

I mean HBO is working, a has a has a prequel to Game of Thrones coming and they are.

Developing other ideas, you know, Amazon.

31:43

Amazon bought MGM in part because it has this library of show of movie.

And shows that supposedly people love and it can turn into properties.

To people know.

It also has Lord of the Rings Paramount with with Paramount, plus has definitely leaned into creating worlds, you know, pair it’s their show Yellowstone popular is having its own Marvel, right?

32:07

It’s and so now they’re trying to create a yellow stone Universe.

This idea, that, that, that Disney created of the Marvel Cinematic Universe.

People tried to replicate movies with very mixed results.

It’s and there are increasingly efforts to do it in TV.

So I think you’ll see that at the same time you’ll see, I think a swing towards cheaper easier programming.

32:28

So like there’s been a huge boom in unscripted and I think that will continue unabated because you can get more people watching an unscripted show, that costs a million dollars an hour right then you know as you can getting you know people to watch a show that costs fifteen or Twenty million dollars an hour.

32:44

Yeah you know, right.

It’s interesting you know the The thought that came to mind and it’s probably a little bit too.

Glib, is that first TV mimics film in terms of production, qualities and now streaming, in an age of austerity will have to mimic film in terms of build turning its content.

33:03

In Two Worlds, worlds, that can be equalized and prequel eyes and accessorized with all sorts of different spin offs.

And it’s not, I don’t see it as cynical.

I see it as frankly, intelligent This is people like watching iterations of what they know and what I’m doing is a huge hit.

33:23

Why wouldn’t you make nineteen eighteen, eighty whatever, and why wouldn’t you do 14?

Spin-offs that everyone who loves those characters can gobble up as much of the Yellowstone universe as they possibly can.

Well, and if you think about the impact of austerity, you could see it to some extent in, what’s happened in broadcast where the budgets stopped growing a long time ago because it wasn’t the area of growth and BC is basically the Dick Wolf Network, CBS has all of certain NCAA, all these procedurals and shows like that that it has a million copies of their seven different singing shows.

33:59

You know the the variety of programming on broadcast has shrunk appreciably recently.

Okay burning question number four is Tick-Tock eating the world like the entire world.

I don’t know what the most sophisticated way to ask this question is, so maybe I’ll just ask it in a Supid way when I talk to people about, you know what’s plaguing Facebook, Instagram, Snapchat, the Legacy, social media companies.

34:25

It’s kind of funny to call them Legacy there, like three years old, but they keep saying.

All right.

Well, Tick Tock is eating young, people’s attention.

All right, got it, social media, but then, I talked to people in the music industry about what keeps them up at night.

And they’re like, well, there’s this problem that Tick Tock is creating all these surprising hits Tick.

34:41

Tock is eating people’s attention.

And then I talked to people in TV and film about their big picture fears and they’re like, well, you know, there’s only so many hours in a day.

Take talk as eating attention.

So, I’ll ask you, the stupid question is Tick-Tock eating entertainment.

So Tick-Tock is posing the same existential challenge to media that YouTube did 10 or 15 years ago, where it’s so popular and so many people are using it that they have to be there, you feel, you can’t write.

35:10

If you have a new movie, if you have a new album, if you have a new show, you Need to use tick tock, there’s 22, valuable, and audience there, especially because they tend to be younger viewers but the more you feed it, the more time people spend on Tick Tock and not using anything that you’re trying to get them to use its best argument especially in music has always been that it’s not a substitute right?

35:32

You’re not going to listen to a song you’re not going to listen to a full song there.

You’re certainly not going to watch a full movie there and that’s true to a point.

But it’s also there’s also some concern I think that It’s training people to not need that.

You know, we’ve seen this evolution in sports, where a lot of younger sports fans, don’t watch the full events.

35:51

They just catch up on social media.

I’m raising my hand here.

Yeah, I love basketball.

I love baseball.

I follow basketball, not exclusively, but say 70% through podcasts and I follow baseball.

Maybe 85% exclusively through box scores it’s remarkable the degree to which I watch these Sports by not watching them.

36:12

It’s actually very very A bizarre, the way that I practice my fandom in with basketball and baseball or football totally different.

I schedule Sundays for football, basketball baseball.

Like, we could, we could have a three-hour conversation about the nitty-gritty of the Yankees lineup or the Kevin Durant trade.

I do not watch these sports during the regular season, basically, at all.

36:30

So, sorry, I take that in a longer Direction, but you’re actually write it.

It’s, if there’s, there are ways in which people can learn to consume a piece of media in a way that is it totally not its intended consumption.

Right.

And I think that’s the real challenge for these because there’s only there’s finite amount of time, right?

36:48

I, we see the crazy numbers about the number of hours every day, or week that people watch TV, or the amount of time they spend on Tik-Tok, or Facebook or different social media, but there’s still only so much time.

And so the larger share that take that gets in the more beloved, It Is by a younger generation.

37:05

It does pose a risk to some of these companies.

I will the one thing I’d say you brought this up a little bit with minions so I don’t I don’t want to be redundant.

I do think, sometimes we give Tech talk too much credit, because I think they’re undoubtably songs or movies or projects that were Tick-Tock is not creating the trend of just amplifying it.

37:24

And so, they’re like, and canto is already really popular and then people liked it.

And so, they made things and then that song blew up and it undoubtedly, made it much bigger, but that doesn’t exist without the original movie.

And so the Total distribution mechanism, right, original advertising or original label reach.

37:42

Yeah, that’s right.

Right.

And and so I were like with minions how much of it I was debating this with a co-worker of mine this week.

Like how much of the gentle minions in the whole minions blowing up on Tick-Tock is organic and how much of it is because illumination the company behind it started posting to tick tock two years ago and they clearly had some they sort of ceded.

38:02

The idea Tick-Tock is like the all-purpose Cedar, it seeds, music kits, news, topics culture Trends.

It’s really astonishing how much of the media and entertainment world is somehow Downstream of something that happens on Tick Tock.

It really does seem to me to be gobbling up attention in an attention finite, world and II.

38:23

Hope we have more time to talk about it in future episodes, so, Lucas Shaw.

Thanks so much for coming on.

We’ll have you back soon, man.

Thanks so much.

Thanks for having me.

That was Lucas Shaw, entertainment reporter for Bloomberg.

38:39

And next up my interview with Matthew ball, investor essayist and the author of the new book, The metaverse Matthew ball, welcome to the podcast, happy to be here you have a great new book out next week called the metaverse, and we’re going to talk about it in just a few seconds.

38:56

But first, I wanted to get your brain on the topic of Netflix and hits you.

And I talked a lot over the last few years.

Out Netflix and what it takes to make a hit and what it’s worth to have a hit.

I think I’m quoting or misquoting.

39:13

Jeff Bezos here.

When he said in some earnings report in baseball, a home run is worth four runs.

But in business, a home run is worth 1000 runs because the iPhone is not just like four times more valuable than the typical successful product.

It’s a million times more valuable and entertainment a home run like Game of Thrones or stranger things or the Mandalorian X exponential.

39:35

Actually, more valuable than a typical break even show or film, but it’s not clear to me that for all its operational.

Brilliance Netflix is getting better at doing this.

It and so I’m I wonder it.

Seems like it’s become really hard to build new franchises in the 21st century.

39:55

Do you agree that Netflix has a hit problem, a franchise problem and why do they have that problem?

I definitely agree that they have hit problem.

And what’s interesting about that is what you mentioned which is they don’t seem to be getting better.

One can argue that they’re getting worse, in fact, and that’s despite the fact that let’s compare versus 2016 when I joined Amazon Studios since then they’ve probably spent 60 or 70 billion on original content, a good assumption would be that you have gotten much better.

40:28

And yet the data seems to suggest relative stagnation Lemme give you a good case study.

There’s a company parrot analytics their portfolio company.

They do demand measurement how excited our audiences about shows.

How much are they talk about it?

Do they pirate it?

Do they share gifs about it review on IMDb do they download it?

40:48

They show that in 2019 Netflix had a total of 16 outstanding or excellent series.

That means essentially in the top three point two percent of all releases, 16 sounds good.

But they released 135 series total.

41:04

Let’s compare that to HBO HBO released 14 that’s two fewer but they release 30 total.

So we had roughly 1/4 the batting average at Netflix that we did at HBO in 2021 two years later that Delta had actually exacerbated.

41:22

We now saw that HBO was at nearly 20 series and Netflix had actually retracted to about 13 despite increasing their output.

So why is this happening like my first order explanation would be, Netflix is an amazing company that has grown its user base to extraordinary levels, but it does not own the kind of valuable 20th century IP.

41:43

It’s really easily merchandize of all like easily see equalized?

It’s it owns a lot of new stuff that it has to build, like squid games and stranger things.

But those don’t easily lend themselves to the kind of universes that we see something like Game of Thrones or Disney Marvel.

42:01

Velour Disney Star Wars.

So is it just as simple as other companies?

Have a 30, 40 100 Year, Head, Start building this IP library and Netflix is in the process of trying to grow those trees right now.

Or is there something else happening that I’m not?

42:18

Thinking of that is a big part of it.

Why?

Because the floor on content that were deeply bonded to is quite High.

Marvel is a good example.

If you take a look at the reception to their TV slate, it’s pretty mixed.

You awful in some instances, Moonlight as an example was pretty widely pant, and yet the for especially, if we’re talking about demand again, the parent analytics, focus is still high because there are tens of millions of people who are 15 years into the Marvel Cinematic Universe, their Delight.

42:49

For the next entry depends on consumption of the last and so the lack of intellectual property aimed his storytelling ecosystem or Cinematic Universe is a big part but their overall Challenges reflect for things that are unique to being an upstart when they started their original programming, really in 2013, but ramped up by 2016, they had no pipeline, you option books, you sign talent and you cultivate and develop those early stage ideas.

43:19

They had to start from zero fox in 2016 head over 65 writers already signed two deals.

Sony has over 100 starting from zero takes time, partly.

Because the best Want is not available, you have to wait for new books to come out to option them, and you have to win them.

43:36

The Second Challenge was speed, HBO is famously slow.

They often take four to five years to put.

Even the most beloved franchise into production from development.

Netflix could not wait, they needed shows tomorrow globally and so they often had a reputation for producing before something might be ready.

44:00

That’s nice for Talent who doesn’t want to sit around for years, but it may not be the best for Quality, the tired apology there as you’re going through three, and before you hit three and four.

It’s so interesting because like four years ago, I wish I was talking to people that were relatively high up in Netflix and they mention that this was a benefit to them.

44:17

This was a strength.

They said there’s all this red tape at all these other organizations, you go to Sony.

You go to HBO, you go to whatever Fox and they are going to put you through screenwriting, hell, you are going to be in purgatory with your script for years and years and years.

And we tell them come to Netflix and make your dream project basically immediately.

44:36

This is why people want to work with us and it’s interesting because there’s no such thing as the pure good when it comes to strategy, everything is some kind of trade off and in the short term, this worked out well for Netflix because they had to go from 0 to 60 or 80 to 100, when it came to having writers that were consistently within that Netflix ecosystem, but in the long run, it might have come at the cost of quality because you didn’t have all these hands and fingers.

44:59

Massaging the original.

The screenplay to make sure that by the time it went to production it wasn’t be - maybe a pushing B.

It was a minus a.

So I think it’s just it’s interesting to think back at these arguments and how they age over the last four years.

45:15

Sorry to interrupt.

No it’s quite right for and part of that is they often picked up whichever projects were fairly mature but passed on late stage from another Network often.

This is why they were renewing cancelled series or bringing back Sold series.

45:32

And that’s sometimes very successfully like you, for example, right?

Which languished on TV and then became an enormous hit on Netflix, but it was partly a reflection of.

We don’t have time to wait to develop new potential hits but we see something that did well enough elsewhere that we believe our economic model can float.

45:49

So let’s Greenlight it sometimes that meant you found the diamond in the rough often.

There was a reason.

Why discarded series were discarded.

But the third and fourth reasons are important because they answer your question of the inversion of that argument.

46:05

And that is, there’s that old adage from William.

Goldman the in Hollywood, nobody knows anything.

HBO and Kevin feige at Marvel, prove that that’s wrong as does Pixar they continuously for decades produce quality and that is because of two different things that also lacked process knowledge.

46:26

That’s the establishment of a very specific approach to programming and employees who know not just the process but one another they’ve developed for a decade.

They know how their boss thinks.

They know They have a good Instinct for their Partners within the network on the market and side production, side and development.

46:48

It’s one of the reasons why you take a look at one of the most consummate.

Developers of the past.

Decade, Ryan Murphy who worked deep in partnership with Dana Walden with John landgraf, with the FX marketing, team to enormous effect, but at Netflix has been fairly muted.

47:07

Hmm.

So it’s interesting because the when I first things that I said was butchering, maybe at Jeff Bezos quote about how in business the Home Run scores 1000 runs.

I was thinking that the runs scored by home runs in entertainment, are sequels, prequels adaptations, and reboots.

47:23

If you have a hit like Game of Thrones, it means you can make a prequel.

You can make a spin-off, you can do what Disney is doing to Star Wars and Marvel and just spin off this entire enormous universe, but you’re making a really subtle extension of that point, which is that another run that is scored by business.

47:41

Home runs, is that you build a culture of success, the people who participate in that home, run know how that home run was done.

And they can say this is how we can do it again.

And then we get that next big hit we can take lessons.

From A and B and apply it to see.

And so these places like Pixar and Marvel and HBO people have been working together and making these hit shows over and over again.

48:03

It is precisely because they have this long Legacy of making these hits and spitting them out.

If they might have a slightly higher, slugging percentage, going forward, make your last point on Netflix and then we’ll move on to your bubble.

So I’ll give you my favorite example, which is that in late 2019 or early 2020, HBO canceled a shot pilot.

48:23

An All-Star cast for another Game of Thrones spin-off.

Imagine how hard it would be for HBO at the time when AT&T owned them under extraordinary, pressure to make what we know, wasn’t too successful investment work going into the pandemic.

48:40

Any other network would have said, it doesn’t matter how bad this spin office, it doesn’t matter if it’s just a b-plus, it’s going to air will fix it and season 2.

Instead we’re going to go three years without Game of Thrones because they said it doesn’t work or not, going to fix it, we’re going to move on.

49:01

And that is the culture that you were speaking about.

That’s the bar that they aspire to and it has endured for decades.

Let’s move speaking of possible hits to the platform upon which the next generation of possible hits might form and that is the metaverse.

49:17

So you wrote this wonderful book about the metaverse, the future of The metaverse and the Deep history of how for at least a century people have been thinking about ways that we might live together in Virtual Worlds.

I want you to First, tell me what the metaverse is but not from a vocabulary perspective.

49:37

I want you to tell me what the metaverse could be from A Day in the Life perspective.

Like if I were describing in 1995, the future of the consumer internet to someone in a way that they might understand it.

In 95, I might say, like, imagine you.

49:55

There’s a strip mall that you can visit by driving down the street and parking in front of the Foot Locker.

Well, imagine instead, you sit at your desk, you pull open a virtual tie screen, and you can visit the FootLocker and CVS and department store on that screen load a program that allows you to click on, make contact with various products at that Footlocker, CVS department store and conduct all your shopping from the couch or From a desk that doesn’t explain, obviously the entirety of what the internet would become, but it might make it concrete to someone who didn’t understand in the early 90s, what the internet would do.

50:31

It’s a virtual strip mall in that same kind of hopefully not too over simplified way.

What is the experience of the metaverse going to be like in your imagination?

Well so let me hit on the fun part which is what you just said, is exactly true.

50:47

And yet the lesson from Jeff Bezos from the.com crash is that in 1995 A few people would have imagined that had utility and almost no one on earth.

Actually.

Imagine that as a scalable experience that is to say, one that could span as many retailers, that could have as much utility and that could be relevant to as many people.

51:07

As we would have imagined.

I would describe the internet as a consistent comprehensive and reliable system for the exchange of all forms of information, which spans 40 And individually operated networks 4 million different servers.

51:28

Nearly every country and almost every private public governmental system globally.

Now, That asked the question of what is that that the metaverse is not and the answer is the experience.

51:44

You describe the experience that is possible.

Today is two-dimensional, you can send an email, you can download a web page but you can’t do much.

That’s in 3D that sustains that connection.

They’re all isolated.

51:59

This is where your Mall.

Example exist.

We can access every retailer through a web browser from almost any device but all The experiences are isolated.

They can’t communicate with one another.

They can’t find one another so we think of the metaverse is that Evolution?

I have a cheeky question for you, about defining the metaverse when I’m on Twitter with other people, we’re participating in a game.

52:26

The game is called discourse.

I didn’t say it was a good game.

By the way, it’s often a terrible game, but that’s the game.

The game is called discourse.

I have a separate identity on Twitter.

I’m not Derek the guy that you have Had beers with I’m DK tomp.

And when I say something that people like on Twitter, I get little tokens specific to Twitter.

52:45

I get likes retweets follows.

When I mess up, I get dragged on Twitter and typically in ways that don’t actually make contact with my corporeal life.

So this world on Twitter exists, its persistent, it’s synchronous, it’s an economy of reputation and while it’s not VR, it is in a very real way.

53:05

A virtual reality.

Non physical layer of experience with continuity of identity and history.

So maybe you wouldn’t say, Twitter is a meta verse.

I don’t think I would say Twitter is a meta verse but maybe Twitter is a meta verse like how would the metaverse make my experience of Twitter different or better.

53:26

So it’s a really fun question.

I think the first starting point is to ask whether or not we’re talking about an entirely different experience or just a 3D version Twitter.

And the answer is likely to be the former Not the latter email still exists in the ear of instant messaging and social networking.

53:43

We didn’t just replace it with the latter.

In fact, the latter is a different version of it.

And so perhaps part of the problem is you’re thinking about, what if Twitter in 3D instead, it looks a lot more like social gaming experiences.

And this is one of the fun observations of Neal Stephenson who wrote snow crash in 1992.

54:02

Coined the term metaverse and he says he imagined people in virtual space getting a beer too.

There is you mention but instead we had raids in Warcraft, you can tell when that quote comes from and so part of it is we’re going to reimagine that experience.

I grew up on the internet using IRC kids today.

54:20

Interact very differently.

In fact they’re primarily doing it in Roblox but this question of why 3D there are few different elements.

One is to recognize that 3D and immersive experiences are a lot more natural.

We didn’t evolve for thousands of years to tap a flat piece of glass.

54:38

For you.

And I to have a zoom call by me staring at a camera 2 inches above your head so that it looks like I’m talking to you.

When you take a look at other use cases such as education or Healthcare, going to 3D starts to make a little bit more sense.

Not just for surgery but for Lifestyle Fitness Diagnostics.

54:56

But lastly we can look at children 75% of those between 9 and 12 in most, western markets, use Roblox alone on a regular basis.

That is their social For you talk a little bit about what Roblox is for people who don’t engage with that regularly.

55:13

What is this product, and why is it so important to your vision of the metaverse?

So Roblox is a limited example because it is purely focused on consumer Leisure and typically, just for children, but it’s an instructive example of the internet but in 3D because it’s a network of over 70 or 80 million different Virtual Worlds that can be seamlessly, accessed with.

55:37

The identity payments virtual Goods that has hundreds of millions of people interacting together and not just for play, but increasingly for concerts for Education.

There are actually a number of different classes.

You can take the construction of a Rube Goldberg machine, testing different chemical combinations and so forth that starts to express the potential.

56:00

I know that virtual reality and 3D is a critical part of your vision of the metaverse and I really want to like your vision of Metaverse.

I really want to like the are but I don’t like VR.

I don’t like Oculus and other virtual reality headsets that are on the market.

56:16

I think they’re heavy.

I think they’re sweaty, I think they’re uncomfortable.

I don’t like having them on my face.

That makes me think that lightweight.

They are VR glasses are eight.

Absolutely essential piece of this puzzle.

So, where are they?

56:32

Why is that technological barrier?

Such a hard nut to crack.

So, we should first First highlight that VR really stands for virtual reality which is any computer-generated simulation of a virtual environment.

Super Mario is virtual reality when we use the term conventionally.

56:50

We mean an immersive virtual reality headset, that is not the metaphors.

Any more than a smartphone is the mobile internet but it may be the best most popular and preferred way to access a 3D environment at some point in the future.

But why is it so technically challenging?

57:06

The answer is Faces more constraints and we’ve ever encountered consider a PlayStation 5 very far from being able to pull off what we want to do in the metaverse, but it has advantages that wearables don’t.

It can have a constant access to a power source so it doesn’t need a battery.

57:24

It can sit under a credenza not on your face.

That means the site leanness of it doesn’t matter.

The weight doesn’t matter.

It’s not resting on your spine and the heat.

The heat is a big one.

It has multiple fans in it because it can cool itself in the space, doesn’t matter.

57:45

Having an ultra powerful, lightweight pleasurable to look at device that sits on your head and doesn’t melt your face or break your neck.

We just have not encountered those problems before, and we imagine that these devices need Myriad things.

58:03

No consumer electronics.

Require today such as dozens of sensors.

And so forth.

Let’s talk about education.

This is a topic that I’ve changed my mind on more than almost anything else in the last decade.

Like 10 years ago I think I would have said like yes college is expensive but it’s a product that basically works.

58:22

It’s worth it for the vast majority of people who think it’s a program and there’s nothing fundamentally broken about this industry despite the fact that the price tag has gone higher and higher.

I feel myself becoming a little bit like the Joker on this topic, like with every passing year, I find myself a little bit more radical on the The idea the price inflation that we’ve seen in higher ed is utterly out of line with the value of so many programs.

58:44

I wonder how you see the metaverse intersecting with the future of Education.

Why could this technology that you’re obsessed with make education for the masses better?

So you’re spot on education is the category.

I get most excited about for three reasons.

59:00

Number one, it’s of utter importance economically but mostly societally, number two is we’ve long expressed To disruption in the digital era.

Harvard will come out with an online course that reaches 10 times as many people for 100 of the cost doesn’t happen.

59:17

And third is what you just spoke about the consequence of non disruption.

In the digital era has been extraordinary.

Since the internet was formalized in 1983, it is the single major cost category in the United States that has experienced the highest cost increase its up, twelve to fourteen hundred percent Health Care Is only up six hundred percent.

59:39

Why, because as useful as technology seems, we have not actually seen productivity improvements.

Why?

Because we don’t teach more students effectively per teacher than ever before, we don’t teach faster than ever before and the cost or time required to teach has also not changed.

59:58

The pandemic was proof of how digital Solutions today aren’t sufficient.

We know what you lose, not having eye contact with the teacher matters not have You’re pure beside, you matters not having a tactile experience matters.

We have hopes that 3D simulation in shared environments can actually improve the number of people who are taught by teacher, the efficacy of a lesson and will give you an example.

1:00:25

I learned about physics, most effectively by watching a NASA Commander, drop a feather and a hammer on the moon and they fall at the same rate and then your teacher does the same thing.

We’ll still do that in the future, but kids today, in Roblox and Fortnight and unreal or building complex, Rube Goldberg machines, where they learn about physics under multiple different gravitational environments.

1:00:49

Some students are able to dissect a cat if their school board can afford it but now you can do a virtual dissection and if you so choose go Magic School Bus shrink, down to the cellular level and travel its circulatory system.

1:01:06

This Plus the sorts of experiences were used to, with Travis Scott, a single concert being performed for Millions live, that’s endlessly.

Repeat purposeful with no incremental cost, that is still individualized starts to give us.

Hope.

1:01:22

I agree that there would be something very special about a future where remote learning felt equivalent to in classroom learning.

Because when you learned remotely, literally felt like you were in the classroom next to your peers in front of your teacher.

I think that’s pretty neat.

And I’m interested in it.

1:01:39

But one thing that always makes me skeptical, about the argument that technology is going to change education Norms.

Is that at least certainly before the pandemic, technology didn’t really change education Norms like YouTube existed mobile video existed, webinars existed, but the lecture hall was still the bread and butter of Education, right?

1:01:57

This technology from 500 BC Greece.

So yes, I see now that the pandemic has accelerated certain Six of remote learning but they haven’t necessarily been successful.

So how do you get schools to embrace VR?

1:02:15

And the metaverse certainly.

But those policy changes our response to the emergence of substitutes or complements that need incorporation and what you’ve outlined is how those substitutes and complements are inadequate today, I would say that remote education is one of two things.

1:02:32

It’s Netflix that is to say, it’s offline or online playback of previously recorded content.

Aunt, or it’s a window.

It’s staring into a classroom that you’re not really in.

And yet we know what really matters.

Cole earning Co experience matters to education a profound amount as does tactility, how do you learn about math?

1:02:54

Teacher doesn’t say one plus, one equals two, they probably draw two apples separately and then together or perhaps they show you those two apples.

If you believe that tactility that hands-on experience.

It constructing in a sandbox matters.

1:03:10

If you believe that having a personal connection with the instructor and the person beside you matter, then those are things that have not been made available and for which having 25 Hollywood Squares, one of which is a teacher and twenty three of which are your peers.

1:03:26

Just simply does not cannot and will not the last question I have for you is about meta the company.

I wonder how Important.

It is for the future of this technology that a company like meta formerly known as Facebook is becoming relatively synonymous with it.

1:03:49

So there’s a cynical read.

I think that says that Mark Zuckerberg isn’t interested in the metaverse as a technological Frontier.

He’s interested in the metaverse as a defensive maneuver because of apple, he doesn’t control any hardware in the current web to World.

1:04:05

He’s essentially, he’s a tenant apples.

Landlord.

And when the hardware landlord, the iPhone says, hey, we’re changing privacy settings.

And now, your ad business is screwed because it’s harder to track behaviors and Target psycho demographics.

Facebook can appeal, right?

Facebook is stuck as a tenant.

And so, Mark is thinking Zuckerberg screw this.

1:04:22

Like I’m moving to another city where I can be the hardware landlord I want to build.

I do I’m not going to be able to build just like a better iPhone.

But with the right Runway I might be able to build better.

A r VR glasses which could be the next Generations iPhone.

So I wondered like, how much do you think this sort of cynical read is wrong.

1:04:40

That, like, Mark Zuckerberg is only pivoting to the metaverse, be out of fear rather than out of a positive vision of what this next internet could be, I think it would be wrong to say that it is a response to what he can’t do.

Now he has certainly been stymied than almost any other their app tracking and transparency problem.

1:05:01

Absolutely cost him ten billion in profit.

This year alone they’ve tried to launch a cloud gaming service for years.

Not Loud.

They want to have a ugc Creator platform.

Well, if you have to pay 30% to Apple and then, at least, 15% to yourself, it’s pretty hard to appeal to creators when they’re getting at best half of what a consumer tries to give them.

1:05:20

And so he certainly has reason to want a new platform, but that’s not reason enough to try and build something that isn’t ready.

And that’s where we get into the second element, which is, it is clear that he has been focused on this long before Apple became a business.

1:05:36

Blocker, In long before the term came up in 2012, they bought Oculus for twice what they spent on Instagram in 2015, we know he tried, but failed to buy the largest gaming engine globally in 2018 later.

1:05:51

But again, before most of the primary problems, we know that an internal memo came that said the metaverse is quote, unquote hours to lose and while anything can change at a technical level.

1:06:07

What Mark has released thus far?

Even if people don’t want to hear?

This is actually the most open console operating system operating globally.

They have openness to alternative app stores to Alternative payment.

They use common standards that no one, not Microsoft, Sony Nintendo, Apple Google that no one uses those policies might change, but it actually does seem like he is setting up to say, I’ve been on the wrong side of the equation and I will not build a system that does the same to others.

1:06:41

This is my very, very last question for you very last and it is my biggest fear about the metaverse.

So you look at a book like ready, player one, which feature something very much like a metaverse, and it’s a dystopia.

And the fact is that the more immersive social internet has become the more dystopian certain elements of it have become.

1:07:03

I wrote recently about how Young Americans are more sad And depressed then ever.

And there’s a lot of circumstantial evidence suggesting that the only big thing that has changed in all the different countries where Young Americans have become more, sad, hopeless and depressed.

1:07:18

The only thing that’s changed this much is the fact of social internet that all of these kids are trading the physical world for the digital world and losing something psychologically in that exchange.

So why is more internet the answer to what ails us So I think that there are two things.

1:07:39

The first is to recognize how we live our lives today.

The average American is awake for 14 and a half hours per day.

That spans three different uses of time.

Leisure work in this Essa.

T necessity is sleeping.

Going to the restroom eating we spent five-and-a-half hours of our fourteen point, four hours watching television. 75% of Television is done alone.

1:08:04

It’s almost all done when you’re setting.

Hollywood actually describes it as lean back entertainment as though disengagement is aspiration interview.

Actually look at the use of time.

The primary substitution has to come from TV.

1:08:20

If you believe that we’re going to access the quote-unquote metaverse, a lot outside of work related to use cases.

I would consider substituting time that is alone.

Not moving to Social and more active and engaged a positive substitution.

1:08:37

In of itself, we are a TV species, which means we are a species of private stagnant entertainment.

The second thing is to recognize that interest cycle changes are tough.

We don’t like a lot about the internet and digital existence today, but there’s very little we can do about were entrenched in certain social networks with certain software.

1:09:00

No one’s getting rid of the iPhone today, there’s marginal shifts in terms of tracking and data collection, but it’s hard Ugh.

But as we’ve seen over and over IBM, destroyed in consumer Hardware, Microsoft displaced by iOS and Google Internet Explorer destroyed as well between Cycles.

1:09:20

We have extraordinary opportunity to change and so my final point and part of the reason why I wrote this book was to better, educate on how we can affect the future.

If you don’t like today’s Paradigm, it will be different.

It might be worse, it can be better.

1:09:37

And we get to make that decision that he.

Well, thank you very, very much, thank you.