0:00
The Press Box is here to catch you up on the latest media stories hosted by Brian Curtis and David Shoemaker.
These guys have the Insight on the biggest stories.
You care about.
Check out the Press Box on Spotify or wherever you get your podcasts.
Hello and welcome back to plain English.
0:17
We have done a lot of heavy topics recently Omicron inflation, future democracy, and I wanted to talk about something fun today and fun to me is the future of entertainment.
The Future of movies, movie theaters, streaming TV ESPN, Disney Netflix, all that stuff.
0:35
As, you know, if you’re a regular here, you know, I’m a theory guy and I have two big picture theories about entertainment and media.
And I think if you squint actually, you can see these are really big picture theories, about every business, and every industry Theory.
0:51
Number one, is everything changes and that’s okay.
In the 1940s, the average American bought more than 30 movie tickets per year.
That’s right. 30 movie.
Tickets per person per year in the 1940s by 2019, before the pandemic that number had fallen to about 3 in 2021 during the pandemic it fell to about 1.
1:15
So that’s 1 history, the movie industry that you could tell yourself per capita annual ticket sales have declined by more than 90% in the last 80 years and that alone sounds like death.
If that’s the only thing I told you about the movies per capita annual tickets.
Sales have declined by more than 90%, you’d say.
1:32
Wow.
So movies pretty much died.
Basically, but the movie industry didn’t die.
It just changed the Studio’s.
Found new streams of Revenue like VHS and then DVDs, and then cable TV, and then streaming and the movie theaters, didn’t die, either to stay in business.
1:50
They responded to declining ticket sales by making the screens bigger by making the sound systems, more fancy by making the seats.
Cushier by making the tickets more expensive average ticket price tonight.
He sex was four dollars and 42 cents average ticket price in the u.s.
Today.
Nine dollars and sixteen cents.
2:05
Average ticket price in Washington DC where I live about $13.50.
So the business of movies and movie theaters survived by doing the thing that every surviving business does by changing Theory.
Number two, the history of media is the re bundling of unbundled bundles.
2:26
But yeah, one more time for good measure the history of media.
Is the read bundling of unbundled bundles?
So, for example, music, 25-year history of Music.
Here we go.
In the 1990s, people bought CDs.
These were called albums.
Then iTunes comes along in the early 2000s.
2:42
They say, hey, join us and you can buy individual songs.
The album gets disaggregated.
The music album is unbundled, but then what happens Spotify comes along?
Hello Spotify Spotify says Hey pay me a monthly fee and get access to 30 million songs, and so music albums.
3:00
Having been torn apart by iTunes and Napster get thrown together again, in this Mega package.
So that is the history of Music bundles, unbundled.
And then we bundled, you’re like, dude.
I will pay any amount of money to get you to stop saying the word bundle, but too bad because we’re moving onto TV.
3:19
A few years ago.
There was a common critique of cable television.
It was that it shouldn’t cost. $120 a month to watch TV.
So Millennials and others cut the cord.
They Ditched cable.
They said we’re just going to stream television.
Thank you very much.
But if you’re like my household, you started to subscribe to Netflix and then hpo Max and Amazon Prime video and Disney plus, and Showtime Anytime.
3:43
And you thought about Paramount plus and you thought about peacock and you thought about Discovery plus and now you’re thinking about CN n plus and because you need to watch football and you need to watch The Bachelor, you gotta sign up for who live and one day you’re looking at your credit card, bill wondering where all the money is going and you add up the price of all these streaming services that you’re paying.
4:00
Or, and you realize that having avoided the fate of paying $100 a month.
You’ve now aggregated all these independent streamers to pay the monthly sum of $120 a month.
And so a lot of people have successfully unsubscribed to the Cable Bundle.
4:17
In order to pay the same amount for all these unbundled sites.
You can say we get more for our money.
We get more shows, more on demand viewing and you’re right.
Of course, we do, we do get more For our money, but this isn’t sustainable as prices rise.
4:34
People are going to look at this mess and say, I don’t have time to actually watch half this stuff and you’re going to get consolidation.
The lower tier of streamers will merge with the upper tier, and you’ll get the reconstitution of little mini bundles.
So the history of Television, like, the history of music will be the re bundling of unbundled bundles.
4:59
My question is, what happens now who wins this war?
What streamers are going to get eaten?
And what happens to ESPN, and the future of live sports, during the upcoming merger, Feast?
I’m Derek Thompson.
5:15
This is plain English.
5:39
Today’s guest is Rich Greenfield.
Rich is the partner and media technology Analyst at light shed.
A research, firm in New York.
He is one of the smartest spiciest minds and attainment and it is an honor to welcome him to the podcast.
Hello Rich.
Thanks for having me.
5:54
We’re gonna get to positive predictions about entertainment and media in just a second.
But as somebody unafraid of delivering, Bad news.
I thought maybe you could help us start with the bad news.
So the movie theater business.
Right now is obviously brutal in the pandemic 2021 box office was about 4.5 billion, that’s down, 60% from 2019, but I think things might be even a little bit worse than they seem from that statistic.
6:20
It seems practically impossible.
These days to have any non-sequel CGI, heavy hit.
I just looked at the top nine movies from 2021.
They Are as follows Spider-Man nine, Marvel Venom to Marvel Fast, and Furious 9, Marvel, James Bond, 25, quiet place to, and Ghostbuster.
6:41
I guess you could call it three.
And you look at the bucket of prestigious non sequels.
West Side Story.
I saw it in theaters.
I thought it was fantastic.
It is clearly a bomb.
Putting all of this together, the decline of movie theater revenue and Rising Monopoly.
6:56
A franchise sequels, Rich.
What is your outlook?
For the future of movie theaters.
Look.
I think, as long as parents want to get away from their kids and kids want to get away from their parents.
I think they’ll always be a movie theater business, right?
I mean, I think it is a fun activity to get out of your house and to do something whether it’s a date or group of friends, but I think there’s a lot of competition for time and attention.
7:22
And this is something we’re seeing across the entire media and entertainment ecosystem.
And I think if you’re thinking about the movie theaters, the price value, Value and what?
What warrants a trip to a movie theater?
Right there.
Certain movies, a scream, you know for a quiet place and Avengers.
7:43
There’s going to be a Spider-Man.
No way home that you just pointed out.
There’s going to be certain movies that are actually better experienced with a crowd of people.
West Side Story.
If you think about in canto the, you know, the animated Disney film or even sing.
8:00
Are these movies really dramatically improved by having an audience or having other peers around?
You does it really make a difference?
And I think that’s what you’re starting to see.
Is that there is a very small number of movies, Quentin Tarantino calls it.
The collective like we’re movies benefit from that Collective.
8:17
Or shared experience.
How many movies a year benefit from that collective experience?
My guess is it’s 10:20.
Not the 400 movies that are released.
And so the real answer to your Kitchen dark.
Is that the movie theater business is going to exist.
8:33
My guess is forever, but it’s going to be a smaller industry, far, fewer screens far, fewer, theaters.
Probably, what ends up happening is that companies, like IMAX basically become the theater industry, like, where the large screen experience that, that event ties, experience of going to the movies becomes what the movie business is.
8:55
Rather than, you know, you go to your local Movie Plex and there’s 20 screen.
Like I just think that’s going to be a much, much tougher experience going forward because I think most movies don’t really benefit from that.
And I think the reality is the consumer.
I meant exactly, right?
9:12
I think, what’s interesting about the movie theater business.
It’s the rare industry where the business seems to be getting worse.
While the product itself is obviously getting better.
So like when I went to the movie theater to see West Side Story and again, this is not a movie that is ideally, engineered to be seen him like an IMAX screen.
9:28
It doesn’t need to like entire.
Elise around you.
You don’t need a subwoofer to listen to Bernstein, but the seats were extraordinarily comfortable, like the food that they’re serving at.
A lot of movie theaters is getting better and better.
So the experience has had to reach a higher threshold in order to pull audiences out of their living rooms.
9:51
And that’s interesting to it speaks to an industry that might get a little bit smaller and a little bit more luxurious in a way, which you That?
Yeah, look.
I think the other part of it is that the price value is also getting really tough.
Right?
So they have to offer you something really special to want to leave because they think about it, the in-home Movie experience is actually gotten pretty good.
10:14
I mean, what’s a thing about what the price of a 55 inch or 65 inch TV, and how low it’s gotten on Black Friday and competition has driven prices down dramatically so you can get an incredible home entertainment experience.
And when you subscribing to Netflix for $14 a month and think about how many movies you can watch, you know, don’t look up with an incredible all-star cast that shot up to number one on Netflix available at no extra cost.
10:41
So you think about that relative to what is the cost in New York for a family of four to go to the movies.
When you’re talking about just on tickets alone $60 layer in popcorn soda, or if you’re a date a babysitter, whatever it may be like These things add up very very quickly.
11:02
And so the price value really is struggling for the movie theater business right now, relative to what’s happening on streaming.
And again, it doesn’t mean people aren’t going to go to the movies, Spider-Man proves.
You create something that is Iconic that people want to see, they will leave and buy a ticket at any price.
It’s just they’re going to be more and more selective of what justifies a movie theater.
11:24
And I think the end result of this to your point on, it’s going to get worse.
Is that the fewer?
Movies that make money in movie theaters like when West Side Story loses 100 million dollars or when eternals loses 100 million dollars in a theater.
I think the studios will go wait.
11:39
How many movies should we actually put in movie theaters, fewer movies and movie?
Theaters means box office.
Yes.
It’s going to bounce up to probably eight or nine billion dollars this year because you have a full year without the full pandemic, but my guess is that’s a lot lower than eleven plus billion in 2019, and it’s probably going lower from 2022.
11:58
And Beyond like this is, I don’t think it’s To get better.
I think a lot of people don’t appreciate the extent to which the movie theater business, has been by some definitions in structural decline since the 1950s.
Like, I’m pretty sure that since 2002 the number on a ticket sold basis, if you just look at the number of tickets Baht per person.
12:17
It’s basically been declining every year for the last 20 years.
Even before the pandemic.
All audiences were already beginning, the process of becoming more selective about where they spent those three or four movie tickets per year.
Whereas you look at, you know, before the Advent of not just streaming television and computers but TV itself Americans are buying like, you know, 30 tickets a year to movie theaters the 1950s.
12:40
What do you think is the future for movies?
Like, you know, luxurious Steven Spielberg films, Paul, Thomas Anderson movies, like there are, of course, tens of millions of Americans who love Marvel.
There’s also a lot of Americans who love complex dramas with Gorgeous cinematography on big screens.
13:00
Does the economic business model that you foresee for movie theaters serve those narrower interests.
Well, first of all, I think for all of your listeners everyone really should start thinking about what is a movie.
What is a TV show?
Because the mediums are sort of merging, right?
13:16
Like you think about there’s four and five episode episodic series.
Now, right, like movies are two or three hours in length, like the, I almost feel like the mediums are starting to merge and Obviously Talent, right, you know, you think about Talent.
13:32
Nicole Kidman was a actress and movies, right?
I think of Nicole Kidman now as a episodic television actress far more than a movie.
She’s amazing at it.
But like, absolutely.
Absolutely.
I don’t know.
I’m not denigrating.
I’m just saying, like, I think Talent has seen, you know, you can do a tremendous amount in episodic TV, and you know, you think about what was the biggest zeitgeist.
13:59
Piece of content in the last 12 months globally, it wasn’t a movie.
It was squid game.
A Korean television show, dubbed into lots of languages on Netflix.
Never played in a movie theater, like never played on a u.s.
14:16
Broadcast network or cable now, or and was by far.
The biggest most successful most watched talked about memed thing of the past 12 months.
And so, you know, look, I think the mediums are going to merge, maybe stories.
That would have been told as a movie become told as an episodic television, maybe a short form.
14:36
You know, limited series.
I met, I think all of those things become possible.
As you think out over the course of the next several years.
There’s a not entirely negative way of thinking about this.
That says that There are certain kinds of entertainment that will be, that will have specialized for distribution in movie theaters, right?
14:56
So, what is what is appropriate for most Americans to see in a movie theater, is a movie that is big.
That is a familiar update to a franchise that they are aware of, and that is Lush and loud.
And CGI filled, that is a kind of piece of entertainment that might specialize for the movie theater of.
15:17
Now, in the movie, theater of the Sure, but there’s all sorts of other Lush entertainment to just has the specializations that is just doing slightly different jobs and they’re going to thrive on different on different distribution platforms.
I mean, another way of thinking about it is think about the Star Wars franchise.
15:35
If you were to think back over the last decade of Star Wars, what has been more impactful on culture?
One of these recent Star Wars films or Mandalorian on Disney plus.
Hmm.
Right likes a great question.
15:50
I think most people would say Mandalorian and you know, like the baby Yoda had far more of sort of a cultural impact mean the Last Jedi.
Like, I mean seriously like I mean, I’m not yeah, I’m just saying like I think filmmakers creators are also seeing the power of global streaming services to impact culture is real and so far.
16:15
That’s mostly happen through episodic TV.
I think the big question is Can it happen on the movie side?
We haven’t seen a direct to streaming movie really become squid game, like, or stranger thing.
Like, or Mandalorian like yet, can it happen?
16:32
I think so, but it certainly isn’t proven to date.
Yeah, and the point that you make connects with your previous point about the sort of Nicole Kidman affectation of talent right now, that if you have a lot of celebrities, who are looking at how to sort of distribute their entertainment to the widest possible.
16:48
Our audience.
You look at Netflix, which is in what I do, 18 million homes, in America, 200 - 200 million in America, don’t know, probably 200 - 200 million globally a movie, that, that sells 200 million Global tickets is a movie that makes you have five billion dollars or something like there’s no, there’s no box office.
17:08
That’s that’s ever hit that.
So you have the potential of of buying into a distribution that’s already an avatar Levels by being distributed on Netflix and that might be encouraging a Celebrities to use platforms that have that that mass guaranteed distribution and then you can put money behind it.
17:26
That’s the same kind of money would put behind Lush entertainment.
That would be distributed in a movie theater by first place.
I think the right way of thinking about it is the biggest movie of all time is what like 2.8 billion dollars.
You have sort of Avengers and game Avatar like neck and neck right there, you know, if you divide that by sort of a seven or eight dollar, average ticket price, maybe it was a little less than that back.
17:46
When Avatar was there like it was 3D.
So, Probably was, let’s just say seven or eight dollars.
You’re talking about 350 million.
People bought a ticket to average bar, assuming there was no repurchased by the same person.
Let’s just say, let’s keep it simple. 350 million.
People Netflix to what you just said that has 200 million households.
18:08
Right?
Right.
There’s probably there’s probably 650 or 700 young people who have access to that Netflix account.
And so by making a piece of content available on Netflix, more people can see it on Netflix the day.
18:26
It’s released then can then have ever seen any movie in the history of the movie business?
That’s sort of like, you know, that in mind blowing pipe thought process, right?
Is that, like, if you’re talking about reach and impacting culture, these Global streaming platforms are incredible and reach far, more people than the movie business can do.
18:48
That is exactly the right way to think about it.
I’m glad we walk there together and that you help me with the math movie.
Theaters are obviously one casualty of the streaming Wars.
I wonder, which of the major streamers you think is set up for trouble in the next few years.
I look at this picture Netflix thrillingly successful.
19:06
They’re obviously going to raise prices again Disney Plus in tens of millions of households.
They’re going to have to raise prices.
Again.
HBO Paramount plus Apple TV, Plus Hulu peacock.
This is a really Crowded space in someone is going to lose and someone I think is going to lose Big Rich.
19:25
Who do you think the bigger losers will be?
Well in some respects, I sort of blame all of this on Bob Iger.
And you know, you know, it’s funny you laugh at that.
Are you smile?
I’m sure you’re smiling when I say that.
But the reason it’s true is that I don’t think a lot of the services that you just, you know, I know you didn’t name them by name, but when you talk to that, there’s Just too many of these streaming services in many ways, Disney was so successful in doing streaming in the stock despite the pandemic re-rating that.
19:59
I think it made everyone who is simply going to be an arms dealer in fuel, the streaming services.
It made them go.
Wait a second, we can do this too.
This is actually not so hard, but lots of content onto streaming Wall Street, re rates the stock Wall Street loves.
20:14
The story.
Streaming is the future.
Everybody can be Netflix.
Everyone can be The Off to the Races stock price.
Bam, we got to do this.
What do we got?
Let’s do it.
And we’ll put a plus after our name.
Discovery plus, we’ll take our logo peacock and call it peacock.
You know, you know, like everyone is doing their streaming service Paramount plus like, you know, which is the movie studio named.
20:35
The reality is, it was never supposed to be like this, right?
Like this was not the plan.
I think everyone’s sort of got addicted or excited that they could, replicate Netflix and Disney and to your point dark.
20:52
What I think is interesting now is we’re starting to start to see the early signs of this is really, this is really hard for everyone.
I mean, this is not an easy space direct-to-consumer.
Growing your sub base.
It’s easy, your One But continuing to grow your sub base retaining, your subscribers, charging them more making lots of content versus a little mental.
21:14
Remember, you know, most of the media companies, they didn’t make lots of content.
They made, they filled whatever hours of prime time.
They had a fill and then there was a lot of repeats as you probably remember late at night and they didn’t make lots of content, you know, Netflix and Amazon.
21:32
And now Apple they’re making crazy amounts of content because in a in a, you know, subscription streaming business, you’ve got to keep people engaged.
It’s a war for time.
And attention.
And if you can click cancel, your think about the old world of the cable ecosystem.
21:51
Canceling cable required.
You to make one of the worst phone calls in your entire life.
But if you dreaded, literally getting transferred put on hold, hey, you know, could you hold for the retention department?
And then you hold for the retention department and they give you thirty seven offers of why you shouldn’t quit and then they probably transfer you yet again in the ultimate insult to you and your listeners, right?
22:12
If they wanted to cancel their cables out of unplugged.
Whitman and then go return it in person, standing in line and service center, right?
It was like it was literally like being portrait versus canceling Netflix or canceling.
Any of these Digital streaming services Point, click cancel.
22:28
So all the friction is gone from canceling.
And so every day these Services need to make sure you’re engaged and using them because canceling has become so easy.
And so I think the answer, your question is, a lot of them are going to struggle.
You’re probably going to see consolidation like It’s hard to imagine that, you know, that Paramount plus and peacock and it mean look, Discovery plus is probably going to get merged with HBO Max as part of the merger.
22:53
Like I don’t think there’s any shot that there’s a separate Discovery Plus in 12 months.
Is there a standalone Paramount Plus or does it get merged with something else over the next couple of years?
Like there’s going to need to be consolidation if you’re going to see consolidation, if there’s just going to be mergers because some of these companies, the Paramount pluses of the world, the discovery pluses of the world.
23:14
Just can’t succeed for several years on their own without being sort of bundled up in something larger like HBO.
Plus what do you think is going to end up as the Mount Rushmore here.
I mean Netflix obviously is on the is on Rushmore Disney, plus seems to have had a really, really strong start and it’s just knees.
23:31
May be the most successful entertainment company and the last 100 years.
It’s hard to imagine them falling out.
HBO.
Apple plus.
I mean, what’s your outlook for that sort of second-tier of streamers?
Look, I think the thing you have to think about is, and this is an issue that Disney has Viacom Comcast, NBC Universal Warner media Discovery or Warner Bros Discovery.
23:59
Is it gets created later this year?
They’re all balancing.
Meaning, they all have to they all sit around, they have Executives at sit around in these conference rooms and go.
Hmm.
Does this movie go to the movie theater?
Does it go to our streaming service?
24:15
Does it go to a movie theater, 4X days and then tour streaming service.
Does?
This TV series is a code of broadcast television cable, network, television, director streaming.
Does it go to cable network?
And then go over to our streaming platform?
Does it go to our streaming platform?
Then we re are it on our cable network?
24:31
They have all of these intellectual debates because they have These different outlets for their contents.
Netflix, Amazon Apple, they don’t have any Outlets.
They have one.
Their goal is to drive streaming they wake up in the morning and the goal is how do we drive our streaming subscription business?
24:48
So I guess where I’m going with this is just this idea that like part of the answer to the question is, is like Who really is going all-in on streaming.
You have a lot of executive change, right?
You’ve got David zasloff coming into Warner media through the discovery transaction, Bob capek, just to COBRA Disney.
25:06
Everyone is sort of wondering, which of these Executives who’s going to be the most aggressive, who’s going to really go quote unquote?
All in?
What does that look like who?
You know, there’s obviously some near-term Financial pain to making those types of big decisions because you’re, you know, you’re cannibalizing revenue and profits in the short term to build for the long term, but I think Really the question, I’d say the the Dark Horse, but I think there aren’t enough.
25:30
People paying attention to is Apple Apple TV.
Plus they’ve got what Morning Show.
Ted lasso, Mythic Quest, right?
Like it didn’t exist. 27 months ago.
There was no Apple TV +.
They won an Emmy Award.
25:47
They’ve had quite a bit of content that I mean Morning Show just renewed.
Like there’s a 42 year old service.
Not a bad hit ratio.
Obviously, they’re taking much more HBO like bats, you know, meaning very high quality, focused pets.
26:05
But as you look forward to 22, we think one of the big themes is going to be there movie business because they’re starting to invest a lot in the movie side.
Aisle.
Tremendous amount of high-profile content, you’ve got people like Ryan Reynolds and Will Ferrell and Al Pacino and Scorsese directed mean, it’s just a Jennifer Lawrence.
26:26
Like, it isn’t like it’s us who’s, who of Hollywood talent and directors all coming to Apple for Apple TV.
Plus on the movie side, not to mention, you know, very quietly.
I don’t think they’ve made a lot of noise about this but on the animation side, sky dance.
26:45
Is exclusively working on the animation front with apple.
And so if, you know, you may not know skydance specifically their the studio behind things like Top Gun for Paramount and Mission Impossible, but on the animation side, they hired John Lasseter from Pixar.
27:01
And John Lasseter has a 1000 person, Animation, Studio creating Pixar like movies at skydance, that will be exclusive to Apple TV plus.
So the Apple TV plus bull case is that It you need to spend like 20 billion dollars to compete with Netflix and apple makes twenty billion dollars between the time.
27:20
I began the sentence in the time.
I finish it to add that Richard plepler.
Who was the longtime genius overseeing HBO and it launched Game of Thrones True.
Detective big little lies.
He has a first-look deal with Apple TV plus now, so that might explain part of why that streaming service has that HBO shine to it, but there’s a better case to and the bear case is that you were just talking about Focus being Court whose success in streaming.
27:44
Well, Apple as a company who’s like 20, 40, 100 things to focus on before it, focuses on TV.
So, how do you balance that sort of bull bear case for Apple?
You know, first of all, I’d say, I think.
What’s so interesting about this conversation, right?
Is that Apple can deploy all of this Capital into this space and they’re not looking at it through a lens of, oh my God.
28:06
What’s our ebitda?
Or even our subscribers this quarter?
Right?
Like it doesn’t make a dent in apple.
And so it’s what makes Apple so scary as a Derp Dee and Amazon, the same way, right there, looking at the impact of streaming, not in terms of subscribers, not in terms of profitability, but on holistically, what does it do to the brand in many cases?
28:27
Like, when, you know, this is the side that I wanted to talk about in terms of the second part of your question, which is, why don’t they just walk away from it?
I think the answer is, or what’s the risk that they just walk away from it.
One day is, they see the brand halo effect.
And so, I don’t know if you went out and did a lot of trick-or-treating on Halloween.
28:44
I don’t know.
Oh, your Halloween game, but but if you know, I went to a Halloween party and there were multiple Ted lassos.
And if you just Google like Ted lasso Halloween, like it was pretty crazy.
Like, how many people were dressed up as Ted lasso?
And, you know, when the, you know, at the Grove in LA, which is a big outdoor shopping mall in La.
29:03
When the, with the new Apple store opened up at the Grove who showed up for a Q&A that afternoon at the Grove.
It was Tim Cook.
Eddy cue and the entire cast of Ted lasso.
I just think that there’s this overall brand Halo of when you have really high profile content and it ties to the Apple brand.
29:25
It just makes one plus one equal more than two.
Two ways to think about brand Halo.
Here one is that if people like Apple TV, plus they’re folded more deeply into the whole Apple Universe.
They’re more likely to buy the iPhone 14 or 15, but there’s a less sophisticated.
29:42
Way of thinking about brand Halo here.
I’m not sure if it’s the dumb way here, the Galaxy brain way, but CEOs are people and people like compliments and positive attention.
So if you’re Tim Cook Apple’s CEO or Eddy cue vice president of services.
29:58
It feels really good.
If a lot of people are talking about your company in a wonderful way you want to feel like you’re churning cultural Waters.
And you know, as long as the company is selling, you know, a gazillion iPhones a year.
Why not spend Percent of that budget on a TV show that people want to wear on their face.
30:19
But okay, enough apple.
I want to move on a Disney and I wanna start a little bit of Disney history here.
Actually, this is a very old company, a 99 year old company.
That has been surprisingly good at Reinventing itself in the 1920s, to the 1940s.
30:34
It’s basically an animated film company.
Then it Trail blazes into amusement parks in the 1950s with Disneyland.
It Trail blazes into TV with the show Disneyland under the outgoing CEO Bob.
Iger the company.
Totally.
Damped its Content Library.
30:51
They bought Pixar.
They bought Star Wars.
They bought Marvel.
And today, you look at the Disney catalog and you’re like, yeah, Disney is Pixar Star Wars and Marvel, but it’s kind of crazy to think that the beginning of this Century, the Walt Disney Company was 73 years old, and it didn’t own any of those franchises.
31:10
So now, we’re transitioning from Bob Iger, who was the acquisition King to Bob capek, the new CEO.
And I’m so curious to get your Report card and how you think this transition is going.
So let me put the question to you this way.
If the Bob Iger philosophy was by strong franchises and turned them into Global Empires.
31:32
What is the philosophy that will Define the Bob Shaye?
Peck era of Disney?
You know, it’s somewhat Interesting, how you frame the question?
Because I think I actually agree with you that what defined Iger was not Disney.
31:47
Plus, you know, if anything, what I think you can actually say is that I ge in many ways waited too long.
A queue is sort of he was conflicted, right?
Because he had this incredibly profitable Legacy business.
I mean, let’s go back.
32:03
Netflix, launch streaming went 2007.
Disney plus launched in 2019.
So, you know Netflix had a 12-year head start on this porch, a pick.
32:19
You know, I think the issue is clearly the future now is all about streaming.
So, you know, I agree may have started this but what is going to define the shape Akira is recognizing the massive shift in consumer Behavior, has taken place and that Disney needs to move even faster into that streaming World.
32:39
Worry less about movie theater, Partners, worry less about broadcast television Partners in cable network Distributors and recognize that.
What the Zoomer wants is all of this content in an easy-to-use environment at a clicker, their fingers anywhere anywhere in the world, at any time.
32:57
How do you accomplish that?
And I think the reality is you have to make Disney plus, which has been a huge success, you know, with over 100 million subscribers worldwide.
Now.
Probably 40 plus million in the u.s.
You’re going to need more diverse content.
33:14
I mean right now, Disney plus is great.
If your kids are under 10, if you’re a huge Marvel or lucasfilm fan, it’s great, but it’s certainly not something for everyone.
And I think that diversification of Disney plus is what’s going to define the shape Akira.
33:30
Meaning he’s gonna have to figure out.
How does he Buy in Hulu?
How does he integrate Hulu into Disney plus?
How does he create?
A service that you never want to leave and I think if you’re sitting at Disney right now, if you’re over the age of 10, you come in for one episode of Bubba Fett or of Hawkeye or a Mandalorian and you come back a week later for the next 50 minute episode.
33:58
That’s not capturing or that’s doing pretty crappy in the war for time and attention.
That is quote, unquote, not winning.
Right like Netflix where you binge an entire Series in the span of an evening.
When my when my wife says, I stayed up until 2 a.m.
34:15
The other day to finish made because I couldn’t, I couldn’t put it down right?
Or I watch squid game over the course of like, you know, seven days because I watched an episode or two every single night, you know, late at night like That’s how you win the war for time and attention and you just need a diverse array of content.
34:33
And, you know, I think whether it’s Hulu, whether it’s investing a lot more in content, like, Champions got to figure out.
And I think what will Define the shape Akira is how he evolved ‘s Disney plus, from where it is today to be a much more comprehensive service because it’s not that today.
34:49
So Netflix has something Disney doesn’t have, which is a global distribution web that can pull surprise hits from around the world like squid games from South Korea.
Loop am from France, money, Heist from Spain and it can popularize these foreign hits in the US.
Disney has something Netflix doesn’t have, which is sports rights.
35:08
Disney owns, ESPN two years ago.
A lot of people were saying, Disney should spin off ESPN.
Like Millennials were fleeing the Cable Bundle.
And so, ESPN had gone from being the sort of soaring eagle to an albatross.
What do we do with ESPN?
35:23
Now?
What’s the smart way for Disney?
To integrate ESPN into the streaming strategy that you’ve just outlined.
I was one of those people calling for ESPN to be spun off.
I actually, in my heart of hearts, like, I still think it should be, but I also recognize that Disney needs to buy out, Hulu from Comcast, needs to invest heavily in Disney, plus and ESPN generates a tremendous amount of cash flow.
35:52
And so I’ve sort of pause my view because I feel like they have so much cash.
AIDS is this the right time to separate out ESPN?
Look, it’s not lost on me.
That wench a pic wrote his sort of internal.
Happy New Year letter to his whole team.
36:09
He never mentioned the word ESPN.
He eluded at the very end.
He alluded to sports and news but like ABC ESPN never mentioned.
Disney was mentioned like, five times as a word like, you know, I do, you know, it is ESPN’s an interesting point in time.
36:26
If you think about it that the challenge with sports streaming, forget about ESPN The Challenge with sports, in a streaming world two, huge issues for your audience to Grapple with number one.
You don’t own the content, right?
You’re renting the content and every 357, whatever.
36:43
The length of the contract, is soon as that contract ends.
All the content can go away.
So, like I just, You mean like the NFL essentially rents the content to whatever CBS Amazon for?
Let’s use a real world Irish theater.
Yeah.
Go ahead.
Let’s just use the example of what’s coming up right now.
36:59
The NBA is on ESPN and Turner in 2025, that could go elsewhere because if somebody bids more than ESPN or bids, more than Turner that content will go someplace else.
I mean, Thursday Night Football.
It’s on fought was on Fox this past season in September of 2002.
37:17
It’ll be on.
Has on it won’t be on Fox and so Sports dreaming is hard because you don’t have access to the content in perpetuity.
Whereas, when you create a show, Netflix control, stranger things, Disney has Star Wars.
37:33
Those are forever.
Right?
Like I mean, unless they sell the IP, like they own and control that that content.
So Sports is hard number one because you don’t control the content.
So that’s just really high and really important as you think about the second piece.
Is that Sports is something that you pay a tremendous amount for in the bundle, right?
37:55
Like, so embedded, like, when you’re paying for ESPN?
You’re probably paying, like, were you listening?
You pay your bill to Comcast or Charter or YouTube TV ESPN, and all the different sub brands of, you know, ACC Network, Big Ten.
I mean, not Big Ten.
38:11
I’m SEC network.
All of those sort of sub, channels of ESPN.
They’re probably getting 12.
Dollars out of your $80 $75.
Bill every single month is coming just from ESPN and it’s channels.
And so, You know, when you think about in a direct-to-consumer world where only the people that want Sports would pay for sports?
38:35
It’s not 75 million homes.
It might only be 30 million homes.
So like let’s just keep the matter easy.
If it was half.
The number of Homes at 75 goes to 37 and a half an inch chart set of charging 12.
You better charge 24.
So would you pay $24 a month for ESPN to have it direct to Consumer, but it gets worse than that Derek.
38:55
And here’s where it gets really nasty and ugly for your listeners.
How many people would pay $24 a month for ESPN for the entire year?
How many of them would only pay for football season?
How many would only pay for baseball season?
How many people are fans of football and baseball like, you know, spanning sort of football baseball and basketball.
39:16
So you span all three seasons, like how many people in America really fit into that?
Have at least one person their household, who was such a die-hard of all three sports that they would pay for a twenty twenty five dollar a month service.
All Year-round.
I just don’t think it’s a huge number and I think that’s sort of the intellectual challenge or the mathematical challenge of sports going to streaming.
39:38
I wouldn’t want to be the CEO figuring this out for you SPN.
I think this is really hard and if I was Disney, I’d be going.
Whoa, wait this is not worth it.
I don’t know how to predict this.
This is hard.
Let’s focus on what we can control.
If we execute on Disney plus, we control our own destiny.
39:53
If you put the Eiger and shape it flashes, together, it cashes out as by exclusive.
To really really valuable franchises and merchandize the hell out of them with movies and TV shows and spin-offs of spin-offs and spin-offs.
That is the Eiger.
40:09
Jpg.
Philosophy braided together and renting NFL rights for fifteen billion dollars or something.
Is not a perfect easy extension of that core philosophy.
So it might, it might make sense.
40:26
I’m not predicting that ESP.
That Disney spin-off ESPN.
ESPN is still incredibly valuable to Disney.
I’m personally a huge fan of ESPN, but it’s just interesting to Think Through the fact that yet, when you, when you spin for where these philosophies, it does get a little bit harder to see how he has pockets into it and take it even one step further.
40:45
I’m a big New York Giants fan.
They say sorry to God this year, right?
You exactly.
I think I can say sucked.
I probably could use a worse word and they’ve just fired their coach.
Joe judge.
You never should have been there coach but likely let’s leave that aside.
Would I have kept paying for that, you know, Ellie give if of all NFL games, like all my local games were even on what I’ve kept paying for the full season, right?
41:07
Like if your team all of a sudden starts to not perform.
Well, how does that change your perspective?
Right?
Like all of these things are sort of unique to sports that are are different than other forms of entertainment content.
And so I guess it comes full circle to Netflix, probably has the best information and Data on streaming of any company out there.
41:31
If doing sports was so, obviously, a smart decision in a streaming world.
You probably would see Netflix in the sports arena and I think, sort of Netflix is opting out of sports, is a pretty clear signal that.
There is no great model for sports streaming right now.
41:47
That’s obvious.
You can try, people are continuing to try and you see Amazon putting more dollars in obviously with Thursday night football and you certainly see Paramount Plus.
And peacock putting dollars, but you know who literally is it a great strategy, you know, to take ESPN and just move it directly over.
42:08
The top.
Seems like a very risky BET right now given where we are in the streaming world, doesn’t mean it can’t work, but it seems very, very hard.
I have one last question for you and it’s a technical question.
It’s not a business.
Question, is sort of a Vibes question, when I think about fragmentation of media and the losers of fragmentation.
42:27
And I feel like one of those losers might be the very existence of a cultural mainstream.
Like I wonder, will there ever be another friends, another Seinfeld like people wax nostalgic about, you know, 100 million Americans used to watch the same thing at roughly the same time and now that’s kind of true about the Super Bowl but it’s not true about almost.
42:46
Anything else.
Do we just have to accept that those products that the friends of the past are cultural fossils and It’s okay that we’ve lost them or do you think that there is a some other future for the re-emergence of of a shared cultural mainstream?
43:06
Well, I believe that there would be shared cultural moments.
And I think if you looked at squid game, did we all watch it the same day?
Do we all watch it in the same Cadence?
No squid game.
Certainly shows that we are going to have cultural moments from streaming just like they occurred, you know, do we all sit down at 8:00 and watch Rossi?
43:27
Rachel.
No, I don’t.
I don’t think we’re all going to sit and watch at the exact same moment, any of this content, but I do think that streaming is going to produce mean, just even just look at all of the online shatter around.
Don’t look up, which is sort of the climate change movie that Netflix, you know, just put out a few weeks ago with DiCaprio.
43:47
Like I’m not saying it was a great movie, I’m saying it truly created a cultural conversation where everyone over the span of a few weeks was talking about what the show.
The movie was about, but the second piece, which I think is the far more interesting.
44:03
One friends.
What was ten Seasons to?
I forget how many seasons, but it was a long time of, you know, sort of everyone being invested in those six individuals.
I do think that those sort of like generational type shows that run for a decade more.
44:20
I mean, I think Grey’s Anatomy, just greenlit season 19, I believe of Grey’s Anatomy, which makes my daughter’s very very Yeah, just so you know, after all your podcast listeners.
My daughters are ecstatic about that.
Thank you for ABC and Shonda Rhimes, but I don’t think we’re ever going to have series that go that long because I think in a world where so much content is being created.
44:45
I think the reality is keeping the momentum on any of these shows past few seasons is very hard and I think you’re going to see just this continued tendency of like let’s focus on making two or three seasons.
Best we possibly can, maybe it’s just one or two, but let’s just make them as good as we possibly can.
45:03
And then move on to the next idea to think keeping, how many shows have you watched where, you know, seasons one and two are great, three, four, five, six were not great.
Then they tried to reinvigorate.
It may be say, you know, I think of like Homeland like great start dead in the middle.
45:18
Great ending right.
Like, but like, and there’s so many like that.
And, you know, I’ve heard so many producers talk about like keeping it going and you did it in the old world because of syndication and all of the ways, the economic system of Hollywood worked now that you don’t have to support that economic model.
45:34
I think you’re just more apt to Kill series and move on and find the next big idea.
And so I don’t think I would, I would posit on this podcast.
We are not going to see something like big bang.
We’re not going to see any of those like things that run for seven, eight, nine, ten Seasons.
45:52
I don’t think it’s possible anymore.
I just don’t think the economic system, isn’t there to support it anymore, right?
Yeah.
No, a, a future of cultural churn as a as a final prediction of leave us with.
I like that.
Rich.
Thank you.
So.
So much for letting your intelligence to the podcast.
I really appreciate it.
Thanks for having me.
Derek.
I look forward to doing more with you planning this with Derek Thompson is produced by Devon.
46:12
Manzi.
Thank you so much for listening this show.
If you like us, follow us on Spotify rate and review on a podcast.
We will be back with our second episode this week.
On Friday.
We will see you then.