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What’s Next in ‘The Streaming Wars’

January 6, 2024
Notes
Transcript
This week, I’m joined by Brandon Katz to talk about Parrot Analytics’s new report on the state of streaming and why the “winner take all” theory of the so-called streaming wars was always a little bit silly. We discuss what attracts viewers to the streaming services, what keeps them there once they sign up, and how Parrot Analytics measures “demand” for a show. If you love charts and data visualization, you’ll love Parrot’s new report; I highly recommend checking it out if that’s your cup of tea. And if you enjoyed this episode, I hope you’ll share it with a friend!

This transcript was generated automatically and may contain errors and omissions. Ironically, the transcription service has particular problems with the word “bulwark,” so you may see it mangled as “Bullard,” “Boulart,” or even “bull word.” Enjoy!
  • Speaker 1
    0:00:06

    Welcome back to the Bulwark Coast of Hollywood. My name is Sunny Bunch. Culture editor at the Bulwark. And I’m very pleased to be joined today by Brandon Katz, the entertainment industry strategist at parrot analytics, who is here to talk about their new report. On, the the new parrot perspective, which is a a really fascinating document.
  • Speaker 1
    0:00:25

    I’m gonna link to it in the email I recommend you check it out if you wanna know what the state of play is in the world of streaming. It’s very it’s it look, this is what gets me up. Every day. So we’re we’re gonna talk about it. Brandon, thanks for being on the show.
  • Speaker 2
    0:00:39

    Thank you for having me. And, you know, I wasn’t fishing for compliments right there, but I like what I caught sunny. I appreciate it.
  • Speaker 1
    0:00:44

    It’s it’s it’s good to have you on. So I wanna I wanna start this, show with with a quick anecdote. I have long been For years, I I’ve written in publications as varied as the weekly standard in the Washington Post about how much I hate cord cutting, and how terrible I think it is and how the, the industry is shooting itself in the foot and how consumers who argued for unbundling We’re basically creating a situation where we’re all gonna pay more for less, options, fewer options. And, as it happens, this month, I am coming a cord cutter myself. I’m I’m getting rid of the spectrum, cable, internet, phone package.
  • Speaker 1
    0:01:24

    I have a landline that I’ve literally never used. I don’t even own a LAN I don’t even know where I would plug in a landline. I don’t I don’t know where how that would work. But I’m getting rid of all that. Switching to AT and T fiber.
  • Speaker 1
    0:01:37

    This is not an advertisement for AT and T Fiber, by the way. I just want but I but it’s it’s, you know, I’m like, I’m finally doing it. And I’m doing it because I I just sat down and looked at my bills, and I was like, well, I’m paying two hundred bucks a month for Spectrum. I barely use cable anymore. I watched I watch almost none of these channels.
  • Speaker 1
    0:01:53

    I watch everything via streaming. I’m still paying for all the streamers. I don’t understand what I’m doing here. So I am joining. I am joining the ranks of the folks who are, you know, gutting the cable industry.
  • Speaker 1
    0:02:06

    Sorry to all my friends in cable land out there. And I am not alone, obviously. This is the big story of the last five years. Before we get into the report, let’s just talk a little bit about how that, has shifted because this is actually the start of the report start. It’s like Netflix Once upon times, like, we’re not encouraging cord cutting.
  • Speaker 1
    0:02:26

    That’s not a thing where we exist in in tandem with cable, And now they’re like, yes. Linear TV is dead. We rain on the ashes. And but they’re not alone, obviously.
  • Speaker 2
    0:02:40

    Yeah. I mean, to paraphrase emperor palpatine, now that you’re making the transition, let the stream flow through you, Sonny. Welcome to the dark side. Obviously, with the clunky cable bundle, and this this point has been talked to death long before, I ever joined this podcast today. But with the, you know, over expensive bloated bundle, consumers were frustrated that they weren’t getting the exact things that they wanted.
  • Speaker 2
    0:03:05

    They were paying for. Extraneous channels and networks that they never use and much like we’re finding out in streaming a very small collection of titles drove the majority of viewership and usage. And so I understand the the desire for debundling. I have been a cord cutter, almost almost nine years now, which is is scary to think about. We like that kind of on demand option.
  • Speaker 2
    0:03:30

    We like as consumers having troll and convenience. But as you noted, it has now created a precarious entertainment ecosystem in which the things that, you know, like you said, Netflix was saying upfront in twenty fifteen, twenty sixteen. We are complimentary to cable. We work with them. We we take their hits and we give them Sarah Longwell digital shelf life.
  • Speaker 2
    0:03:53

    To now, oh, no. We wanna drive you into the ground and to to the point where you have no other choice but to license to us, and we are still the dominant home screen when you turn on your TV, and we are the first option you choose for your entertainment media experience. So we are at such a a unique time because after, you know, nearly a a a decade or so of unbundling, we are now suddenly entering a period of rebundling to a certain degree, but it’s just various streaming services and various services outside of entertainment that I’m sure we’ll touch on in this conversation. So long story short, it’s a very funny transitional time to to be an entertainment consumer as we more or less are looking at a near future where we recreate the pay TV bundle just over the internet.
  • Speaker 1
    0:04:42

    Well, I mean, and it’s it’s fascinating too because, I I am I’ve long been of the opinion that the, the the reason that the basic cable portion of the golden age of television took off was because it occurred at the same time as Tivo, more or less. Tivo and the rise of DVRs. Right? So it wasn’t just that shows on FX were great. It was that you could start recording them, start watching the show fifteen minutes in, and then fast forward through all the commercials because people did not love commercials.
  • Speaker 1
    0:05:13

    I don’t love commercials. But it seems like, all of the streamers, which had were all at one point with the exception, I think, of peacock initially, we’re all essentially founded on advertising free, promises, are now shifting to an advertising heavy model. And I I do wonder if that is going to change how consumers look at, what they wanna watch and where they wanna watch it and what they’re paying for and how many services they’re paying for.
  • Speaker 2
    0:05:41

    You know, Hulu started as completely ad supported. We’re looking at Amazon, I think, later this month, changing everybody’s plans to ad supported in which you actually have to opt out and pay three dollars more to ad free. And the early estimates are is that this is probably going to be the most successful quote unquote conversion to add supportive streaming out of all the major streamers. And I think as, you know, your Netflix’s, your max’s, and your Disney plus’s focus, on converting even more users to ad supported television. You’re gonna see their ad free prices continue to increase after what was a large amount of increases over the last twelve, sixteen months.
  • Speaker 2
    0:06:20

    I think it is interesting. I think Amazon’s actually well suited because their programming strategy really relies for the most part, on a lot of serialized serialized procedurals as I like to call them. You know, your your Goliath, your boss, your Reachers, your your Jack Ryan’s. They are taking kind of the CVS model and just modernizing it a little bit. That I think is well suited to TV advertisement viewing.
  • Speaker 2
    0:06:45

    Obviously Thursday night football is a huge huge draw for them. That obviously is going to have a ton of advertisements every week. I think, you know, Peter Churnin had had a great quote that said, basically, the entire world of entertainment is heading towards the two opposite ends of the spectrum where there’s blockbuster content and there’s niche content. And I think both in the right delivery mechanism lend themselves to ad supported. Now it’s a little bit harder, of course, for some blockbuster things, but If we consider NFL football blockbuster entertainment, which I very much do, and I think any list of most watched broadcast would support, then you see the the side door entry ways into, again, like I said, up top, recreating the pay TV model, just over the internet with familiar programming lanes and figuring out how to tweak what has become a heavy focus on serialized television.
  • Speaker 2
    0:07:39

    Like you said, FX has great pro programming. You know, the rise of Tivo DVR and I would say DVD box sets allowed for serialized programming to take off in a way that it never could before the late nineties, early two thousands. And I think we’ll see that shift a little bit back to that kind of early two thousands model, but still be a an intense focus. But everyone right now seems to be racing towards the middle. You know, they wanna be as broad appeal as possible.
  • Speaker 2
    0:08:07

    Netflix, I even say this in the parent perspective report. Netflix started off saying that they wanted to be HBO before HBO wants to be them. And now they’re basically, again, CBS, they’re gourmet cheeseburgers, elevated middle brow fare. There’s nothing wrong with that, but I think this kind of golden age of peak TV that we’ve so enjoyed over the last ten years is very much coming to a quick and rapid halt.
  • Speaker 1
    0:08:32

    Yeah. No. It’s it’s fascinating. I mean, at Netflix’s is is the best position to continue that because, you know, they they have They have such an enormous pool of money that they can throw eighty million dollars at a Maestro, and a hundred sixty million dollars at a rebel moon and they are going for two different segments of the market. You know, I I like it’s it’s it’s fascinating, to kind of look at what they’re doing.
  • Speaker 1
    0:08:59

    And I I sometimes get I have friends who yell at me for being anti Netflix, too too much, and I am not anti Netflix, but I am, I am I I dislike some of the things they do, particularly with regard to theatrical. That’s neither here nor there. The the in the in the report, one of the things that you you hit on early is this idea that there is not going to be a single winner of the streaming wars. This was, you know, A lot of the the valuation of Netflix for a long time was premised on, it’s going to be the last man standing in the streaming wars. And it has maintained much of that valuation despite the fact that I think now everybody realizes that, okay, it’s just going to be the biggest most consistent part of everybody’s streaming bundle.
  • Speaker 2
    0:09:47

    Yeah. I I think, you know, as a culture, we are so binary. You know, let’s take it to the gladiators of old all through sports today. We like single vic That is how our our brains and our culture tend to Bulwark, but that’s often just not the case in reality. You know, Netflix is the I I think this really comes down to also the the various different goals within the streaming industry and the the major premium rivals, you know.
  • Speaker 2
    0:10:13

    Netflix is the only pure play streaming service among the eight major premium SVod services. Everyone else is either a legacy media company that has other divisions that generate revenue, you know, like Disney subsidizing their streaming efforts with parks revenue, or they’re a big tech company in which streaming is not the primary business. So Now just because streaming is not Amazon, Google, and Apple’s primary business, that doesn’t mean that they are all going to light billions of dollars on fire every single year as a loss leader on an endless timeline for streaming. But if these companies deem that these services are providing added value. They are providing potential conversion pathways and necessary framework for other current and future ambitions then their runways are likely longer than a traditional entertainment streamer.
  • Speaker 2
    0:11:03

    You know, we we saw from reports from antenna that churn rates are in twenty twenty three across the spectrum. And it suggests that kind of premium entertainment libraries name may not be a cost effective asset on their own to maintain consumer interest long term. I think that’s one reason why you’re seeing a couple different bundles, a couple different kind of rival companies potentially. Discussing partnership opportunities such as Paramount Plus and and Apple TV plus. And at the end of the day, when you look at the differing goals, when you look at the mounting competition, when you look at supply and demand inefficiencies in terms of specific programming lanes and you look at the ability of Netflix rivals to address consumer needs as good or even better, than Netflix, you see a situation in which there are gonna be multiple vectors None of that is to say that Netflix isn’t obviously the undisputed streaming champion.
  • Speaker 2
    0:11:57

    You know, right now, they are the the Golden State Warriors and the New England Patriots, it’s dynasty champions of the industry, but that doesn’t mean others can’t win as well. Yeah.
  • Speaker 1
    0:12:07

    I mean, this is a this is kind of a an interesting point. You the the the report is full of, lovely graph by the way, if you are a data vis person, you will enjoy, checking it out.
  • Speaker 2
    0:12:19

    Shout out to our design team who will love hearing that and who deserve all the praise.
  • Speaker 1
    0:12:23

    But it’s, so there’s the one of one of the first charts is, is about total, movie and series demand shares. And I I I’m fascinated by this chart because it, it gets at a point that I think about a lot with the streaming wars, which is the split between movie demand and series demand. I have always thought it makes a lot of sense for Netflix to spend a hundred million dollars on a ten to twelve hour TV series. Season of television that lasts ten to twelve hours. It makes almost no sense for them to spend a hundred million dollars on a two hour movie.
  • Speaker 1
    0:12:57

    Because the same amount of money is being spent on something that will, you know, if their if their goal is to capture eyeballs for numbers of hours. Right? The television series makes more sense because it lasts longer. And that kind of bears out in this chart more or less. Right?
  • Speaker 1
    0:13:13

    I mean, I most of most of the streaming services get more of their demand from TV than from movies. The the exceptions being, I think, what was it? It was prime video, and interestingly Disney Plus, which I was I was kinda surprised by.
  • Speaker 2
    0:13:30

    Yeah. I I tend to agree with you. You know, if you’re spending that sort of money on a, movie, I tend to believe. Okay. You’re gonna need to have some theatrical component in order to kind of hone in on a reasonable ROI even as you invest in certain loss leader angles.
  • Speaker 2
    0:13:46

    I I I get that, but, you know, Netflix still has significant movie demand, you know, between their originals. And their license titles, but they have the largest gap between movie demand and TV series demand of any streamer, which does speak to that golf which does speak to also the susceptibility of being like, okay, hey, we have originals that don’t necessarily generate a ton of ROI Then we have licensed titles that may or may not be able to be reliably counted on for the short and long term. We know that as every other streaming service clause their way towards profitability, that eventual accomplishment may change strategies. And even as the licensing market is reopening after years of consolidation in house, there is a potential change on the horizon. Let’s say Disney plus or Max hypothetically reaches consistent profitability in the next year and a half.
  • Speaker 2
    0:14:40

    Will they wanna continue licensing to Netflix and to, you know, paraphrase Bob Eger. He he said, obviously, it is like, selling nuclear weapons to a third world country that’s gonna use them against you. And even though Bob Agger is then a one eighty and they’re, now net licensing, I believe, fourteen titles to Netflix, how long does that strategy last? And how how can you rely on that? And does that not leave you vulnerable to massive price increases?
  • Speaker 2
    0:15:06

    Remember, to keep friends on for one more season before HBO Max launched, The price went up to a hundred million dollars for just one additional year. I mean, that is even for the engagement it generates. That is a very concerning trend. So It it is interesting to look at. When you look at total catalog demand, which as you mentioned, it it it counts for both original and licensed movies and TV shows.
  • Speaker 2
    0:15:31

    That, Netflix’s share in the US as of q three actually fell almost a full percentage point compared to q three in twenty twenty two. And if you combine Disney Plus and Hulu into a single app, which is gonna go wide later this year, they actually account for the largest share of any streaming service at twenty four point four percent while Netflix sits at seventeen point three percent. If we switch over and we look at kind of Nielsen’s the gauge, which measures monthly US TV screen time. Netflix’s share in September of two thousand twenty two with seven point three percent and its share in November of twenty three with seven point four percent. So a very negligible increase.
  • Speaker 2
    0:16:08

    And then if we zoom out one more time, Netflix’s share of global demand for streaming originals has decreased twenty percent since q three twenty twenty as competition has mounted industry wide. So all of this is a dense and numbers heavy way numbers heavy way of saying that the trend lines of viewership and demand don’t really support the idea that only one company can win. We also haven’t even gotten into subscriber growth where some believe Netflix is likely to plan till again this year after its password sharing crackdown reaches saturation. So if there’s only supposed to be one winner, only one company left standing, then logic would dictate that that company is hoovering up the vast majority of of revenue, of viewership, of demand, and subscribers, on a consistent basis. And that’s just not what we see even though Netflix is a market leader.
  • Speaker 2
    0:17:01

    And then just also baseline as we’ve seen across most, not all, but most consumer facing industries, they usually support two to three to four major players in the same space. I think it’s reasonable to assume a similar eventual turnout for the streaming industry.
  • Speaker 1
    0:17:18

    Yeah. No. I I it’s it’s fascinating. I one thing can we I I wanna take one step back here and just talk a little bit about parrot analytics and how you guys determine demand, viewer, viewership demand. Cause it’s an interesting, it’s an interesting stat.
  • Speaker 1
    0:17:30

    It’s it’s kinda unique to you guys. When you’re when you’re looking at this, what what are you actually measuring?
  • Speaker 2
    0:17:35

    Yeah. Very important question. So essentially, Sunny, let’s say, I I get a screener for something and I’m like, wow, this is great. I’m gonna recommend it to you, buddy. You gotta check this out.
  • Speaker 2
    0:17:46

    The first thing you might do is Google that title. And then you might go to Wikipedia or IMDB to learn more about it. Then you might watch a trailer on YouTube, then you might watch the actual thing itself, and then you might talk about it on social media. We track every single one of those interactions because we feel it better reflects how the modern consumer is engaging with content. In today’s kind of digital multifaceted ecosystem.
  • Speaker 2
    0:18:12

    And listen, hey, there there’s no replacement for just raw viewership. That’s always gonna be the most important. And we wait raw viewership the most important. We wait social media, the the least important because at the end of the day, it’s not necessarily the highest ask of a consumer just to go tweet about something or or what have you. But when you combine all those data points, and and we’re bringing in, you know, five hundred million peer to peer file download, data points a month.
  • Speaker 2
    0:18:38

    We’re bringing in two billion signals per month over that entire ecosystem. We feel it provides this kind of three hundred and sixty degree view of a show’s, you know, fandom and impact. And I think it particularly helps with highlighting shows that maybe punching above their weight yet flying a little bit under the radar. And so when when you zoom out and you take it from that perspective, It’s just a all encompassing holistic look at a show’s performance. And I think in the streaming era as great as raw viewership is, it isn’t the only metric of success, particularly if we wanna draw it back to the various different goals that we talked about a little bit earlier of these different streaming companies.
  • Speaker 1
    0:19:21

    Well, I so let’s let’s talk about how these, these these two, formats, movies, and TV, and also how demand help shape what the streamers really care about here, which are, a, acquiring new subs and, b, holding on to old subs, you know, reducing churn. How when you’re looking at the when you’re looking at the data, what, are the most important factors for getting somebody to sign up for a service, and then be stopping them from leaving that service.
  • Speaker 2
    0:19:54

    A a really important question. I I think a lot of people have covered this well over the last, you know, five to eight years. We know that generally speaking exclusive new breakout broad appeal shows, your stranger things is, your mandalorians, you know, your the boys is, those are the best at driving new subscription growth, whereas library titles, you know, your your suits, your friends, your office, your NCIS and criminal minds, those are really good for retention and engagement. And, you know, retention and engagement are quite attractive to advertisers. And as we pointed out, that’s becoming an increasingly important element of streaming.
  • Speaker 2
    0:20:33

    I think it’s not an accident that you’ve seen pretty much every other streaming service besides Netflix Bulwark from streaming exclusive films of mid to larger sized budgets. I think there’s always going to be a place for those smaller budgeted movies. Obviously, streaming has kind of become the major pipeline for independent cinema in a lot of ways and those are usually smaller, more niche, projects. But generally speaking, no one besides Netflix is investing in SVOD exclusive big budget films at the moment. They are trying to attach theatrical components.
  • Speaker 2
    0:21:12

    And as we’ve seen across the data as well, you know, from various data sources, ours, Nielsen, others, a theatrical release typically leads to as good or even better streaming viewership than SVOD exclusive. So I think that’s a really important reality that most major players have, you know, learned and adopted.
  • Speaker 1
    0:21:34

    Yeah. I mean, just today, I think news came that Apple TV plus is finally going to be, debuting killers of the Flower Moon. Which, of course, had been kinda pitched as, like, it’s Martin Scorsese. It’s gonna be on Apple TV plus. But first, it’s gonna be in theaters, and then it had a VOD window.
  • Speaker 1
    0:21:50

    I don’t think everyone was expecting. And now it’s it’s heading to streaming, which I can only imagine will increase, the viewership there.
  • Speaker 2
    0:21:58

    By the way, sorry. Just to quickly interject. I love that because with the streaming revolution, everyone totally totally issued windows and Windows is great because it gives you multiple monetization opportunities. So the fact that even though killers of the flower moon didn’t necessarily kill it in theaters at the box office, I love that they had a big, huge worldwide global marketing push for theatrical release, then VOD to to generate some secondary income, and then ideally in the in the minds of Apple, I’m sure, driving new subscriptions and retention, on Apple TV plus when it finally arrives there for, quote, unquote, free to subscribers. So I love that they are re re adopting windowing.
  • Speaker 1
    0:22:39

    Well, I and also, I mean, look, it it You know, it is a it is essentially found money for for paramount and and I think to a lesser extent Apple because Again, this was originally kind of talked about, this and Napoleon were talked about, like, these are gonna be, we’re just gonna put these on the service, and it’ll be fine. And everyone’s like, no, don’t do that. That’s that’s foolish. So let’s, let’s let’s talk a little bit about the different goals that the streaming services here because I think, you know, if you look at Netflix, Netflix is a global, you know, player. They are they are trying to be everywhere.
  • Speaker 1
    0:23:17

    You know, with some some exceptions like China or whatever, but they are trying to be everywhere. And others are pulling back from that a little bit. I mean, you know that Disney got rid of their Indian cricket package, which in turn is leading them to consider offloading HotStar entirely, which would suggest a retrenchment to more domestic or or western audiences. What are what are the streamers, looking at in terms of where they want to be and what they want to be providing.
  • Speaker 2
    0:23:45

    Yeah. And sticking with that global theme for a second, we know infamously or famously depending on what side of the line you you sit on. Max pulled back and stopped, operation and production in several European territories. We know Paramount Plus and peacock, kind of have combined for that sky showtime joint venture in a lot of different European markets. Amazon’s global, Netflix is global.
  • Speaker 2
    0:24:09

    Apple TV plus, I think hopes to be global, but doesn’t nearly have the scale right now. And everyone else seems to be reassessing where they want to be, how they wanna spend that capital, and what is the best way to scale up to international, audiences. It’s very tricky because we’ve seen that, you know, local language programming is really important for that international scale. And yet it’s very hard for foreign language titles to permeate the American market to the extent of hit status. You know, everyone said squid game is gonna usher in this big change.
  • Speaker 2
    0:24:47

    I I was guilty of it as well. And even though non English titles have a demand for non English titles in America has risen considerably over the last four years. We have yet to see a hit on the scale of squid game. And we probably won’t anytime soon. The thing is then why that’s so important is because traditionally speaking, production outside of America is cheaper than entertainment production within America.
  • Speaker 2
    0:25:14

    So it suddenly becomes about, efficiency of resource allocation for of major major global streamer like Netflix as they are are dealing or they’re they’re essentially saturated in growth. In the American market. The Ucan market is the most competitive. It’s got the highest average revenue per user, but it’s for the most part tapped out, which means, you know, seventy percent of their quarterly ads, quarterly subscriber additions are coming from international markets. They have I have to figure out a balance between continuing that growth and getting that content to appeal to American audiences, which is very, very difficult And at the same time, there’s no doubt that, it’s the one stop shop.
  • Speaker 2
    0:25:59

    It is really important for Netflix. It’s it’s a great advantage. They’re they’re massive library. And I’ve always, but at the same time, it’s also a weakness from a certain perspective. I’ve always kind of likened it to Samsung’s hair in Greek mythology.
  • Speaker 2
    0:26:12

    Yes, it makes it a true global, four quadrant service. There’s something for everyone. But unsurprisingly, it does have adverse effects on quality control. And Netflix actually has the lowest average per title demand of the eight major streamers. We know that entertainment has always been a hit driven business.
  • Speaker 2
    0:26:31

    And the majority of Netflix’s audience demand is is going to be drawn to those hits as it is for all these streamers. But the the reality is that Netflix due to its library size and that approach and its kind of global ambitions, it actually the the majority of its audience demand is actually concentrated among a smaller collection of titles and other streamers. So it’s not as evenly balanced. It’s more top heavy. And when you are shelling out seventeen billion roughly annually on content, you would like to see a more even distribution of demand across your library.
  • Speaker 2
    0:27:04

    This is not some sort of anti, Netflix stance. It’s something that all streamers deal with, but because they’ve chosen to be the the Walmart of streaming, it is a problem they’re gonna consistently deal as opposed to, you know, Disney plus, which has a much smaller library. And, yes, Marvel of Star Wars and Pixar deal with the majority of generate the majority of demand, but they have a more even distribution across that because they aren’t throwing as much at the wall to see what sticks. I know that was a long winded rat. So I’m bringing that to a close.
  • Speaker 1
    0:27:37

    No. No. It’s it’s good because I I I think I think about a lot with the streamers is how they, identify themselves within within the market. And net Netflix obviously is the biggest player they are trying to appeal to everyone. And doing a fairly good job of it.
  • Speaker 1
    0:27:50

    I mean, you know, the the the success of Cocomelon, on Netflix cannot be underappreciated, but, you know, everyone thinks of Disney as the the place for families, the place for for kids, and I think Disney sees themselves that way to a certain extent, which, you know, we can we can discuss a little bit how the Hulu merger is going to to shift that perspective and and change it a little bit. But also, like, prime videos is, is, I think, the perfect example of a service that doesn’t that I think strains against what it naturally is. And and what I often say to people is that prime video is the the dad Bulwark. It is the it’s the place where you go for Reacher or Jack Ryan football. You know, your colleague, Julia, Alexander wrote in Pop in puck this week that they’re looking at picking up a bunch of regional sports networks and and gonna bring some of that to to the service.
  • Speaker 1
    0:28:42

    And I find I find all of this, like, all of this makes sense in a in a in, again, under a broad umbrella that I think of as, like, dad TV. And it I get the sense also that they don’t want to be seen that way, that they want to more like Netflix, more like a service for everyone, with some prestige stuff and some, global, global, you know, global aspirations and all that. How do how do the streamers think of themselves as brands appealing to certain groups? Or or audiences.
  • Speaker 2
    0:29:13

    Brand perception in any industry is so important to a consumer’s perception of value. Of whatever that service or product is. And you bring up such a good point. You know, Amazon’s original programming strategy for years has been somewhat unclear, I would say, to to analysts such as us, to to, I think, the everyday consumer, and what a a streaming company necessarily wants to be known as and what they are known as, there is often, a divide unless you’re really committing significant resources to it. So for example, Apple TV plus wants to be associated with premium programming that really reflects that kind of I don’t wanna say squeaky clean Apple brand, but Apple brand is known as kind of an elevated product, and that’s what they want for their TV and film.
  • Speaker 2
    0:30:02

    Listen, there there’s nothing wrong with that. That is great HBO has made a massively successful and lucrative track record off of that. But when you’re talking about being a global service that appeals to four quadrants of consumers and is adopted at scale in the market, you’re gonna need more middle brow programming. And I think they’re reluctance to dive into that lane is putting a ceiling on their subscription growth. And that’s an example of where you know, brand perception and and brand ambition internally clashes with market realities.
  • Speaker 2
    0:30:39

    I think or if we look at kind of, rewind the clock and look at Disney plus and Hulu, I think initially Disney when it was announcing plans to roll out Hulu internationally, They thought Hulu would be their generalist service, and they thought Disney Plus would be their specialist service because of its family focus, a family franchise focus. It’s very, you know, significant emphasis on franchise brands. But then in the first day, Disney Plus added ten million subscribers, I think it was twenty five million in in the first month. And the growth completely overshot even the most optimistic internal expectations. And that caused along with, you know, cost with Comcast and everything and a lot of other outside factors, that caused them to, I think, reverse, their track and basically say, okay, we’re gonna make Disney plus our quote, unquote, generalist global service to a degree, and Hulu will be more niche, even though it’s gonna have general entertainment.
  • Speaker 2
    0:31:36

    So you see how not only internal ambitions and plans have to react to market realities, but also how they can kind of contrast and con and conflict with market realities, and it’s very, very hard to nail down a status quo, a homeostasis that bridges both the internal hopes for your service and what the audience and and consumers are telling you your service can or can’t be.
  • Speaker 1
    0:32:04

    Yeah. No. That’s a it’s it’s it’s an interesting way to to look at the differences between hopes and dreams and reality for some of the services, but Hulu, I mean, Hulu remains the larger service. Does it not compare to Disney Plus?
  • Speaker 2
    0:32:21

    In America. Yeah.
  • Speaker 1
    0:32:22

    Yeah. In America. That’s right. Yeah. Sorry.
  • Speaker 1
    0:32:25

    I so the another, another really interesting little nugget in in this report is the, is a look at the percent of titles that account for fifty percent of platform demand. Which I find I find really interesting because it really gets it, a key point, which is how top heavy so many of these services are. You know, we with during the strike, there was all the talk about. We need we need to really reward the series that overperform, you know, these series are making tons of money for the services, and the actors aren’t really seeing anything. So there were bonuses written into the contracts to reward.
  • Speaker 1
    0:33:03

    Shows that hit a certain viewing metric, but the simple fact of the matter is that most shows are not big hits. On these services. Right? I mean, like, I think the number for Netflix was like eight percent. Of new titles accounted for fifty percent of platform demand.
  • Speaker 1
    0:33:20

    Right? I mean, like, what what are what are what so what what are the what is actually driving the viewership, I guess, is is the question?
  • Speaker 2
    0:33:26

    Yeah. I mean, even as entertainment has always been a hitch driven business, where the home runs compensate for the strikeouts, you still want a somewhat more equal distribution of demand throughout an entire library. Again, especially for for Netflix and Amazon that are spending tens of billions of dollars on on programming. But it is I think Netflix’s engagement report that they released, and that they plan to release every six months is a really good example of how many titles are receiving very, very little viewership. And the reason why these streaming companies resisted performance transparency for so long is because it would reveal a how much inefficient spending on program is is going on based on what is driving viewership first, what’s not.
  • Speaker 2
    0:34:15

    And b, it would kind of confuse the narrative that they were trying to craft for for Wall Street and for public media. And we are starting to see that balance of transparency, even out a bit and we’re starting to realize what is happening. So, you know, you you look at any kind of in most in demand TV show and movie, list that we put out at, you know, at the end of each year or or most watched from Nielsen or most watched from Netflix And you see, it’s going to be a a handful of kind of broad appeal originals, like, the, I believe it’s, the night agent if yeah. If I’m yeah. So night agent is their most watched, title for for twenty twenty three, I believe.
  • Speaker 2
    0:34:57

    And that is Ron DeSantis, like we talked about before. Kind of an elevated serialized procedural. It is something you could have seen in another era on CBS with a few tweaks or or on broadcast television with a few tweaks. And so you you see programs like that really breaking out. You see you see the kind of anchor series like mandalorian and stranger things, breaking out.
  • Speaker 2
    0:35:17

    And then you see just a mountain of really easily rewatchable license programming often with long libraries like friends, like the office, like NCIS, like supernatural, you know, shows with a hundred plus episodes that can be put on as background noise. I think FX president John Landgraph has kind of consistently said and and very recently said in the last year that roughly eighty percent of television is lean back. You know, that’s laundry folding TV show, snackable TV show, things that you put on just to occupy time, and twenty percent is lean forward. You know, your Game of Thrones is, your your sessions, things like that. So when when we look at the zoomed out landscape, and what has happened over the last five, ten years in which I believe, in twenty twenty two, five hundred ninety nine scripted English series aired across broadcast, cable, and streaming, which was a record.
  • Speaker 2
    0:36:15

    Just the the the spenditure on content budgets and the volume of programs we’ve been inundated with has been unfortunately for companies a massive over extension of their resources that didn’t provide necessary ROI. For consumers, it’s been great. We’ve been swimming in a sea of endless high quality choice, but that now is coming to an end. We will never have it as good as we did at around the end of twenty twenty two.
  • Speaker 1
    0:36:44

    I I mean, I would I would push back on that slightly. I don’t think it’s great for the consumer to have that many choices. There are too much too much choices just as bad as too little choice because you end up having this fractured landscape where, like, five hundred people are watching this great show, and nobody else knows about it because there’s just too much. There’s too much stuff.
  • Speaker 2
    0:37:01

    Yeah. I will say that we’re seeing subscription fatigue and and paralyzes of choice when we log on to our streaming apps and don’t know what to watch and we and we essentially scroll for thirty five minutes before throwing friends on for the umpteenth time out of frustration, that is bad. But I think for for fans of quality entertainment, having this much choice, has been good because we never run out of good things to watch. And I think to your point, having a great show that five hundred people watch, every time someone talks about that, my mind immediately goes to rectify. Which is I think one of the most underrated TV shows of the last ten years, but also no one watched it whatsoever.
  • Speaker 2
    0:37:36

    It was very much a product of peak TV.
  • Speaker 1
    0:37:39

    I have no I don’t even know what that is. Exactly. See, I’ve gotta I gotta write it to rectify, writing it down right now. Alright. One last one last question.
  • Speaker 1
    0:37:48

    Was about licensing. You mentioned licensing a little bit earlier and and the, the shift back to, studios realizing that they cannot make money with their streaming services just by having these vast libraries that they need to sell them either to Netflix or to other com com competitors to generate a little revenue. How is that going to change, how how the streaming wars look, yeah, for a lack of a better word because I I I do think that, I I I just yesterday. I saw somebody saying, Paramount plus doesn’t have all of the star trek movies? What’s the deal with that?
  • Speaker 1
    0:38:27

    Why? Why? Why why can’t I subscribe to Paramount plus? I should have access to them all the time. I’m just like, that’s not how it works.
  • Speaker 1
    0:38:34

    That’s not how it’s ever worked. That’s like, that is not how licensing has ever really worked. But I I do think that I I guess my question here is, I I think that smarter consumers look at like a Warner Brothers title and they say, this should be on HBO Max because this is part of the Warner Empire, or they look at a paramount studios moving there. Like, why isn’t this Paramount movie here? I subscribe to the Paramount streaming service.
  • Speaker 1
    0:38:58

    I should have access to it. I I I think those people are going to start getting confused and frustrated while the general population is going to be like, well, it’s where it it it is where it is. What’s where is it on just watch? Like, what what, you know?
  • Speaker 2
    0:39:13

    I I think the fragmentation of entertainment has absolutely been frustrating as the streaming industry has matured, you know, early on when it was really just Netflix, Hulu and Amazon, it was pretty easy to find whatever you wanted whenever you wanted without much difficulty. Now that everybody has a streaming service, now that titles hop around from Netflix to Max to this. It is a little bit more difficult. But what we’re seeing too, particularly when it comes to Netflix is co exclusive or non exclusive licensing where a title is available on both Netflix and Max or on both, you know, Paramount plus and Netflix. That is actually punching way above its weight.
  • Speaker 2
    0:39:53

    It doesn’t make up a significant percentage of Netflix’s library supply, but it does make up nearly I I think an identical percentage of its demand to exclusively license, series on Netflix. And I think having multiple, options, multiple viewing options, really just increases a show’s total addressable market. It it’s really good for raising kind of the brand profile. And to your point, It’s never how it’s worked where we we have a show at Netflix original. Right?
  • Speaker 2
    0:40:24

    And let’s just say it runs two, three seasons, solid show. Then ends because the viewership wasn’t there. Well, now it just sits on the digital shelves gathering dust on Netflix and that is an inefficient use of resources if it’s not really generating a ton of continued viewership and engagement on Netflix. For decades syndication was the absolute best model for TV. Talking about windowing with with movies.
  • Speaker 2
    0:40:51

    Same thing with TV. You know, Seinfeld ran, it it hit that magic kind of a hundred episode number, started running on on TBS and and other Bulwark, and more people to discovered it and it was almost this wonderful feedback loop in which it helped the the ongoing seasons attract more of an audience and it helped the long tail monetization opportunity for the rights holder Sony. So it is very strange that we have become accustomed and frustrated to shows only being in one place, although I understand it from a kind of consumer con convenience standpoint. But, yes, we we are going to continue seeing more licensing shows will be popping up on multiple services. And I think in twenty twenty four, non exclusive licensing, you know, co exclusive where where two two or three platforms have access to the same show is gonna become even more prevalent.
  • Speaker 1
    0:41:44

    Yeah. I mean, it does feel like and this is one thing I love about. I so I have an Apple TV and, it is extremely convenient for when I want to watch a a thing and I’m not sure what it’s on. I just go to the search and I look for, you know, where is where’s Mad Max fury road playing right now. And It will tell me, except for Netflix.
  • Speaker 1
    0:42:03

    I don’t think it works with Netflix, which
  • Speaker 2
    0:42:05

    Netflix and Apple have some, technology beef.
  • Speaker 1
    0:42:08

    They have their they are not sharing their data. They don’t. They don’t want anyone anywhere. But but it’s, but it’s it’s it’s fairly convenient. And I do think that is the next step is basically Once again, recreating the cable TV experience where you go to your guide,
  • Speaker 2
    0:42:21

    you
  • Speaker 1
    0:42:22

    hit the guide button on your TV, and it pops up with the, you know, tiered list of shows, and you scroll through it, we’re just going back. We’re going we’re we have to return. To the to the past. Alright. I always like to close these interviews by asking if there’s anything I should have asked, if there’s anything you think folks should know about About the report, the new report or streaming in general, something I forgot to ask or did not know to ask.
  • Speaker 1
    0:42:46

    What should the folks know?
  • Speaker 2
    0:42:47

    As a former reporter. I love that question. That’s always a a good one. You know, I think I would just say back to our our a little bit of our our our pushback I think you’re right in the sense that too much choice can be overwhelming and that at the end of the day, cost and convenience are major in deciding the winners plural of the streaming wars, but I do think we are losing something sadly with this, retraction and contraction of the industry. We’re not gonna see six hundred shows, ever again, probably.
  • Speaker 2
    0:43:20

    It makes sense from a financial standpoint from these companies. But it is said that something as niche but wonderful as rectify or or other smaller but beloved shows won’t have as much of a chance to break through the clutter or even get made. You know, we we are entering a period where a lot of these networks and streamers are gonna be focusing on broad appeal, and that isn’t as creatively daring. It doesn’t mean there’s not gonna be good TV. HBO and Apple TV plus will still be pumping out premium shows.
  • Speaker 2
    0:43:52

    But I do think for the next few years, there might be a a bit of a disappointing middle ground for people who love really boundary thought pushing entertainment. And I think that’s we we lose something in that. But, hey, entertainment in a lot of ways is cyclical. So perhaps we’ll we’ll get back through that in five years. We’ll be back to pumping out, you know, white lotuses left and right.
  • Speaker 1
    0:44:15

    Yeah. No. I mean, I I I well, I it’s interesting. Again, thinking about Apple, I do think Apple is is trying to fill that kind of HBO niche from the from the late nineties early aughts where they have, lesser viewed, but very, very highly expected, shows. And I I get
  • Speaker 2
    0:44:37

    it from a business standpoint. Don’t, yeah, don’t get me wrong. It’s the analyst in me and, like, the former critic in me that are always doing battle.
  • Speaker 1
    0:44:45

    Yeah. No. I mean, that is that is the difficulty is trying to figure out what what is happening in the industry versus what you want to happen in the industry. Exactly. Two different things.
  • Speaker 1
    0:44:53

    Alright. Thank you very much for being on the show, Brandon. I really appreciate it. Again, the the name of the report is the parrot perspective unraveling the myth of a winner takes all streaming war. I I will link to it in the email.
  • Speaker 1
    0:45:04

    You should click it. It’s it’s it’s really interesting stuff. And, I hope you I hope you check it out. Thanks Brandon for being on.
  • Speaker 2
    0:45:12

    Thanks for having me, man. Much appreciated.
  • Speaker 1
    0:45:14

    My name again is Sunny Bunch. I’m culture editor at the Bulwark, and I’ll be back next week with another episode of The Bulwark goes to Hollywood. See you guys