Morning Brew Daily - Netflix Launches Live Sports with WWE & Boeing Troubles Continue

Episode Date: January 24, 2024

Episode 242: Neal and Toby talk about the mega deal between Netflix and the WWE and what it means for the live sports landscape. Then, Boeing’s fallout keeps going as one major airline decides to take its business elsewhere. Next, surprised you got a call from President Biden? Well, it’s highly likely it isn’t actually him but an AI deepfake telling you not to vote. Lastly, Dunkin’ Donuts has a weird reason for charging more for milk substitutes, a popular new video game has Pokémon’s legal team scrambling, and the biggest surprises from this year’s Oscar nominations. Learn more about your ad choices. Visit megaphone.fm/adchoices

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pwc.com slash US slash brew AI. That's pwc.com slash us slash brewAI. Good morning, Brew Daily Show. I'm Neil Freyman. And I'm Toby Howell. Today, Boeing gets shamed by airline CEOs over its 737 max-9 debacle. Then a controversial new video game described as Pokemon with guns just dropped, and it's making millions.

It's Wednesday, January 24th. Let's ride. I know everyone has been begging for an update on that ginormous Oklahoma City skyscraper in the works. For the uninitiated, a few weeks ago, we mentioned that developers were building a skyscraper that would tower above the Oklahoma City landscape and come in as the second tallest building in the country behind the Freedom Tower. But the people behind the project said, you know what, screw it, we're going even bigger, and they just unveiled plans to make it 1,9007 feet tall, which would be the tallest building in the country. That 1907 number is a reference to

the year that Oklahoma was admitted as the 46th U.S. state, and that is just beautiful logic. That is beautiful logic. I say why stop there, though? Fifth, it would be the fifth tallest building in the world. Might as well go for number one at this point. I think it's brilliant, though, because it's almost like pricing psychology where you toss out one outlandish offer to make people choose the one that you really want them to choose. The taller they keep making this building, the more likely they'll be to get a shorter one approved. So I see to stretch it up 2,000, 3,000 feet. The funniest thing about this building is it's going to have an observation deck at the top. And I'm not sure what you're supposed to look out on Oklahoma City. No offense.

There's exactly some beautiful sites to see. It's mostly, once you get outside the city perimeter, I don't think there is a beautiful landscape. That is going to be an interesting and very flat view. Before we jump into the show today, we have a quick word from our sponsor, Vime. I have a wild stat for you all. 85% of companies have experienced at least one ransomware attack in the past year, and 82% are still using manual processes to recover their data. And that's where these companies should use VIM. VIM is more than just a backup for your data. It also offers clean recoveries that allow you not to only bounce back, but bounce forward. I can't drive a manual car, Neal, and I wouldn't bet my business on a manual recovery either. So that's why I'm heading to VIM.com today to discover more.

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Netflix had a busier day than an ant eater at a picnic yesterday after it reported earnings after the bell, as well as announced a shock entertainment deal that was in a word raw. Some highlights from its earnings first. Netflix brought 13.1 million new subscribers in the last quarter of 2023, which was its best quarter of growth since the early days of the pandemic. It beat projections in every region in the world and demolished Wall Street. estimate of 8.9 million new customers, but that Sterling earnings report isn't even the biggest Netflix news we got yesterday. The streaming giant also dove headfirst into the sports world,

signing a 10-year $5 billion deal with WWE for the exclusive rights to its flagship raw event, as well as other programming from the company. This is a total 180 for Netflix, who has notoriously been adverse to live events, especially live sporting events, but they see the fanatical WWE audience as the right partner to forge your way into this new frontier. And investors of both companies seem to love it. TKAO Group, which owns the WWE as well as UFC, saw its stock jump as much as 23% yesterday when the news was announced. This is Netflix putting its foot on the gas pedal. It feels like the streaming wars have been over for a while now.

And Netflix is the clear winner while you have NBC Universal, Disney, all these other media companies in retrenchment, trying to cut costs, scaling back, spending on content. You have Netflix just absolutely on the offense with signing, posting this incredible quarter of 13.1 million subscribers. It's one of its best quarters for growth ever. A lot of its initiatives like password sharing crackdown, this ad-supported tier, and now it's dive into live sports, are just having investors foaming at the mouth over this company.

I just can't trust Netflix, though, because think of what they've told us in the past, First, they said that they'd never do ads. They wanted to be an ad-free platform. Then they launched the ad tier to wild success. They've said, we don't want to do live events. We don't want to do live sports. Remember, their love is blind reunion.

Live event went horribly wrong. And they've kind of leaned into these sports documentaries rather than live sports. And yet, here they are signing this massive deal with WW. So I do think it's funny that they keep speaking out of two sides of their mouth. But it's working. It is doing every new initiative that they actually go back on their word on. They do great. Yeah, I mean, executives in the entertainment industry said this was an absolute game changer

that will fundamentally alter the entertainment landscape. Already you have these massive live sports properties migrating from cable to streaming. Thursday night football is now on Amazon. MLS is on Apple TV. Plus, you had a playoff game, an NFL playoff game exclusively on Peacock that drew 23 million viewers. Now you have WWE going over there. So people are saying this is kind of like what happened in 1994 when Rupert Murdoch at Fox bought the rights to the NFL and forever changed the entertainment landscape.

And the NFL now is the biggest media property maybe in the world. I do think that the WWE is the perfect sporting kind of arena for Netflix to get into because I mentioned that it's done some of those sports documentaries. We saw Drive to Survive, which was this awesome look into some of the drama that goes on behind the scenes of Formula One. And what is the WWE, if not just manufactured and scripted drama, but drama nonetheless? So I do think that there will be kind of this nice synergy between broadcasting the live events and then maybe broadcasting some of that behind the scenes action that WWE fans love.

And before we move on, we have to talk about one person who did really well yesterday besides Netflix. And that guy is The Rock. The Rock is joining the TKO board. and he's getting paid $30 million in TKO stock through 2025. And not only that, he finally gets the trademark to his name, The Rock. So he's turning into, honestly, one of the biggest businessman alive right now. We did invite him on the show yesterday. We did invite him.

So if anyone has a connection to Mr. Dwayne, the Rock Johnson, we'll have him on the show. Moving on, more than three weeks since a door panel flew off a 737 max-9 jet 16,000 feet in the air. Boeing is still in a world of trouble. Those planes are still grounded, while its biggest customer of that plane just gave it a very public spanking and warned it could rescind a future order. United is that biggest customer, and yesterday its CEO, Scott Kirby, said he was disappointed that manufacturing challenges keep happening at Boeing. On top of that, he said United is considering plans that don't include Boeing's next

generation 737 max 10 in its fleet. Back in 2018, United ordered 100 of these planes, but they have yet to be approved by regulators, and now Kirby said he might cancel the order. Kirby also said the grounding of the 737 Max 9 was the straw that broke the camel's back for the company's financials, and because of Boeing's problems, United would lose money in Q1. Later in the day, the CEO of Alaska Airlines, the carrier that suffered the door panel fiasco, flung himself on the Boeing pig pile, saying he was more than frustrated and disappointed. He's angry that Boeing can't get their manufacturing act together. Suffice it to say, Boeing is not being invited to any airline parties these days. Yeah, and it's totally justified. These Boeing's troubles are leaking into United's financials, leaking into Alaska Air.

So these CEOs are understandably frustrated. There were more incidents with Boeing, even in this last week, that we haven't even touched on this week. A Boeing cargo liner made this emergency landing in Florida on Thursday night after it literally had an engine malfunction and people bystanders filmed it, flying through the air engulfed in flames, which was a wild video to watch. And then a nose wheel fell off, a Delta operated Boeing 757 passenger jet and rolled away as it was gearing up for takeoff. So these are just two, it seems like literally every single week we have a new instance

and these airline operators are just fed up. Yeah, it does seem like the reputational risk for Boeing is growing. I've had numerous people tell me, like, I don't really want to fly on a Boeing plane right now, which is absolutely crazy to think because Boeing is perhaps the U.S.'s most important manufacturer. Like, we need Boeing to do well. And I think that's what you're seeing with the frustration from these airline execs. They're like, we are rooting for Boeing. Boeing. Like, you are so important to us.

We buy half of our planes from you. You know, the other half is from Airbus. But right now, Airbus is just taking into the woodshed right now. Boeing used to have 60% market share in the 60s. That has dwindled to just 42%. So this is a once iconic U.S. manufacturer that's seriously in decline. Yeah, Airbus is lapping it at this point. It was the world's number one airplane maker for the fifth straight year, and it's pulling away.

The gap is not getting smaller. Airbus delivered 7 and 35 commercial jets last year compared to 528 for Boeing. In total, it delivered 40% more jets and won 60% more order. So again, that number is only going to get bigger. I do want to mention you said friends have told you, I don't want to fly on a Boeing plane anymore. Kayak, which is kind of that travel sorting website, says that they have seen a 15-fold increase in use of this filter

that allows you to filter by airplane type. And they rolled this out back in 2019. No one used it. It's a very esoteric filter to use it. Maybe you used it. I do use it. Well, I don't use it, but if I could get on the 777, it's a nice plane. Exactly.

But now people are using it because, like you said, there's a lot of anxiety around flying on Boeing airplanes. All right, let's move on. We all know that the rise of AI is likely to fundamentally change our world for better or worse, but heading into election season, there are already some alarming trends developing on how deep face could shape politics right now. Earlier this week, the Office of New Hampshire's Attorney General said it received complaints that an AI version of Joe Biden's voice

had been robocalling voters encouraging them not to vote in the same. state's upcoming presidential primary. Now, part of what makes it so scary is the proliferation of easy-to-use tools that anyone can access for a small fee, but also how new of a medium it is. People are way more adept at spotting visual deepfakes because editing software like Photoshop has been around forever, but audio deepfakes are a whole different ballgame with a lot less awareness around them. Meddling with New Hampshire voters is just the tip of the iceberg here. audio deep fakes will be a serious issue when it comes to election misinformation this year. Right. This year is the biggest election year in history, and it's become clear that audio deep fakes are the AI thing to watch that could disrupt elections.

It already happened last year. In Slovakia, there was a fake audio recording of a candidate saying that he wanted to rig the election. This came days before the vote. It also happened in Nigeria, where there was an AI-manipulated audio clip of vote rigging claims. we know that that has been prevalent in the United States anyway, so that's certainly raising alarm bells. What is also really interesting to me about this is even if you do have something damning or embarrassing come out, there's the opposite effect here because now we're just questioning anything is true. You have plausible deniability to say, hey, that's, that was an AI deep fake. Like, I didn't say that. So Trump said that recently. They aired an ad of him saying a few gaffes, and what he said was, hey, that was AI. That didn't.

happen. And so even if it did, the fact that there are AI deepfakes all around us creates what experts call this liar's dividend. Yeah, it is just an era, this era of uncertainty around a lot of things right now. These tools, though, are just insanely powerful. Microsoft's team just announced a new AI model called Val E that can clone a voice from just three seconds of recordings. And also, TikTok is a breeding ground for these things, too. There's this research group that found a network of TikTok accounts that were pretending they were legitimate news organizations, but in reality, they were using these AI-generated voiceovers, peddling all sorts of misinformation and conspiracy theories, too. And I think the problem is you can just do it for

so cheap. It doesn't take, you can do it for under 100 bucks or under. I think 11 labs, which is an Andreessen O'Hurwitz-backed company, which many consider to have popularized the audio devig because they just have really good technology. I think you can sign up for a dollar a month. Right. It's crazy that you have that much power at your fingertips. One other final thing, too, is that it's harder to detect AI-created audio than it is even video, because video has these telltale signs like glitches, or you can see just some strange quality to it that people usually can recognize. Audio has none of that, and especially when you use maybe background noise or background music to cover up some of the less clean audio clips, Then it makes it very hard for even technology to detect these things.

So cyber protection companies are having an issue with that as well. So whole Pandora's box that is going to be interesting to watch going forward. Okay, this is not an AI version of us telling you that it's time to take a quick break. Studies and play. Come together on a Windows 11 PC. And for a limited time, college students get the best of both worlds. Get the Unreal College deal, everything you need, to study and play with select Windows 11 PCs. Eligible students get a year of Microsoft 365 premium and a year of Xbox GamePass Ultimate with a custom color Xbox wireless controller.

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Book it with Priceline. Download the Priceline app or visit Priceline.com and book your next trip today. People who've ordered coffee at Dunkin' Donuts might have found it frustrating that you get charged extra to swap in oat or almond milk for dairy. But some customers who are lactose intolerant say that surcharge isn't only frustrating. It's discriminatory and illegal. They filed a class action lawsuit last month against the coffee chain, accusing it of violating the Americans with Disabilities Act and demanding up to $5 million in damages.

Their claim is this. Lactose intolerance or milk allergies is considered a disability under the ADA. And under that law, Duncan is required to make reasonable modifications for those customers. such as swapping in oat milk for whole milk and not charge extra. This is the second class action filed against a coffee giant in recent years over pricey vegan milk. The same law firm brought one against Starbucks in 2022, and a court is currently weighing Starbucks's motion to dismiss it.

Toby, this is a pretty fascinating case that really hinges on a person's reading of the Americans with Disabilities Act. Yeah, this suit is kind of using Duncan's own existing accommodations against them because it points out that it already modifies its regular, coffee to remove caffeine or sugar with no additional cost for people with diabetes or weight control issues or something like that. So the coffee company is asking customers about their allergies, they're saying, hey, do you have any lactose intolerance or something like that?

But then going on top of that in imposing a surcharge, and that's where this suit feels like they have some footing here when it goes back to the Americans with Disabilities Act. Yeah. And there was a pushback by this Bloomberg opinion writer, who's a professor of law at Yale, and he said, well, this lawsuit is doing some magical economic thinking to think that Duncan can just call up its oat milk or almond milk suppliers and say, let's get a lower price. Hey, guys, let's get a lower price here because the lawsuit says that Duncan is so huge, that it has a lot of pricing and leveraging power over its milk suppliers. And so, hey,

why doesn't it just get something for cheaper? This guy points out that Duncan is locked in a fierce battle in this giant market or in this coffee market with McDonald's and Starbucks and if it could offer something cheaper than it would because that would probably give it a leg up over its competitors. Right. His point was if Duncan could do that, then Duncan already would have done that. They're a cost-making enterprise. They're trying to maximize profit.

So if they could keep the input cost down and charge less for them, they absolutely would. So he was saying that it's a little bit of a fantastical thinking when you drill down to the market argument. for this class action lawsuit succeeding. So it is interesting, though, that he's basically, the lawsuit is saying, like, well, just act like kind of a monopoly and just team up with your competitors

and drive down the prices. So there's definitely two ways to look at this. Yeah, this has been, this cost of vegan milk has been a point of activist campaigns for a long time. The actor who played Uncle Ewan on Succession glued his hand to his Starbucks in New York City in 2022, protesting the,

surcharge, what they call the lactose intolerance tax. Actually, in response to a lot of this activist campaigns, Starbucks and the UK dropped its surcharge, and Tim Horton's in Bluebottle also don't charge extra. We'll see if these increasing challenges to Duncan and other coffee companies will make them lower their prices for oat milk. Right. When you see that one brand can do it, then it makes you say, well, I can't do it as well. Okay, for our next story, I want to tell you guys about a new viral video game that has been described as Pokemon with guns. It's called Powell World and has already garnered millions of players worldwide in a fair bit of criticism from people who don't want their beloved pocket monsters wielding firearms.

This game is huge. Its developers said they sold 5 million copies in three days and at 1.1.6 million people were playing the game concurrently on the game's marketplace platform, Steam, which is the third highest total ever. The actual gameplay is pretty different from Pokemon with a lot more survival and multiplayer elements. But the biggest departure from the kid-friendly Pokemon is that you shoot the so-called pals with guns to catch and train them. That along with the fact that the designs of a lot of characters are eerily similar, has Pokemon fans up in arms. Neil, Pokemon with guns, you in or out. It does look like a lot of fun.

I got to say, like handing RPG to a little cute monster. But it is interesting to look at this in the context of video game development. Obviously, Powell World is not, someone didn't conjure this out of thin air. It does seem like there at least was a fair bit of inspiration from Pokemon. And this has happened for the past few decades with video games. Super Mario Brothers borrowed from Pac-Man, Fortnite borrowed so many elements from previous Battle Royale games. And this is, you know, defenders of Powell World, defenders of the developers here, say, This is just another instance of what makes our medium so great.

It's combining elements from Minecraft. It's combining elements from Pokemon. It's combining elements from so many other game legacies and combining into this one thing where people are in January, there's not a lot of other video games out. They're inside, and that's led to this being a viral hit. Right. They're certainly not the first video game to borrow from one of its predecessors. But I will say some Twitter users have been kind of overlaying power old designs overpokymon

designs and kind of like melting them in and out of each other. And some of them are extremely, extremely similar. Of course, when you rile up the Pokemon audience, like there is a very fanatical audience there, so people are coming to defend it. And yeah, you don't want necessarily this IP kind of being corrupted by adding firearms to a game that is very kid friendly and a lot of people have a lot of emotions around. So I can see both sides of it for sure. On the flip side, apparently there hasn't been a really good Pokemon game in a while. And they're hoping that this, the success of Powell World, will kind of spur the people over at Pokemon to kind of up their game a little bit. So, you know, the Pokemon fans can actually get something that's Pokemon-branded and actually

as fun as Power World. We are going to end on a topic that will surely be popular water cooler talk today, the Oscar nominations. Yesterday, the Academy Awards released the movies and actors shortlisted for its upcoming ceremony, and here are the highlights. Christopher Nolan's Oppenheimer picked up the most nominations with 13, including Best Picture. Next after that is the 11 scored by Poor Things, the movie about, yeah, honestly, I have no idea what it's about from the trailer.

Barbie, the highest grossing movie of the year, is up for eight awards, but it was Barbie snubs that at everyone talking. Margot Robbie, who is literally Barbie, did not get nominated for Best Actress while Greta Gerwig was left out of the best director category. People incredulously pointed out that Ryan Gosling, who played Ken, was nominated, but not the actual heroine of the movie. but Barbie did get nominated for Best Picture, and for the first time ever, three best picture contenders, Barbie, anatomy of a fall, and past lives were directed by women.

What were your takeaways from the nomination? I mean, you gotta be kidding me with how the Barbie nominations went down. You cannot make this up. The fact that Ken, it's like a sick joke that Ken is the only one nominated from the Barbie movie along with America Ferreira's character as well.

But, I mean, I wonder if Greta is happy in a way because it kind of reinforces is like the main message of the movie. It was like a self-fulfilling prophecy in a way. So some of the other big snugs, though, snubs, Leonardo DiCaprio for best actor in Killers of the Flower Moon, no Bradley Cooper as best director for Maestro. And I do want to dig in a little bit to the streaming wars. Like, that's always kind of the subplot to award season. Netflix versus Apple, Netflix came out on top with 18 nominations, including one for Best Picture for Maestro. that topped Apple, which only got 13 nominations.

I do have a little fact for you, though. Technically, Disney, usually nabs the most, but since their kind of entertainment brands are kind of divided up into Pixar and Marvel, a lot of news organizations don't consider them one monolithic studio. So technically Disney did nab 20 nominations. If you want an underdog story, here's one, Godzilla minus one. This was a $15 million movie. It had 35 people working in the crew on visual effects, and it was nominated for a visual

effects Oscar. And so if you want to root for something, I think this is just such a great underdog Cinderella story because no one really expected much of this movie, and it blew up at the box office in Japan, came over here, and, you know, they really didn't. They had a real skeleton crew compared to the marvels and the D.C.s of the world, and they're up for the Oscar. I saw the movie. It is truly incredible.

Like, it makes you feel stuff that you didn't think you'd be able to feel in a Godzilla movie. I highly recommend watching that one. I do want a prediction from you, though, Neil. Oscar's viewership, do you think it will be up or down this year? If we want to look at the trend, last year it brought in 18.8 million viewers, up 12% from the year prior. But that was the Will Smith slap year. So, oh, my God. Up or down.

I forgot about that. I'll say up because I think it's directly correlated with, if you've seen the movie, you want to tune in. And Barbie and Oppenheimer, I mean, brought in billions at the global box office. And so many people saw those movies. I think in general was a really good year for movies, and a lot of people went. So I have to think, I mean, last year also had a ton of big box office for Best Picture. But I think the Barbenheimer trend is just going to continue from last summer into the Oscar season and help it out. We can't escape Barberthheimer.

One final thing, I have to give a shout out to the actors of May December. I'm sorry you all got snubbed. That movie was incredible. Okay, that is our show for the morning. Hope you all have a great Wednesday halfway there. Toby, what is our swing thought for the day? Today's swing thought is, the more particular you make something, the more universal it becomes. That quote comes from none other than Greta Gerwig.

And I love it for so many reasons. It's a reminder to always create first and foremost for yourself, make something you'd like, or your mom would like, or your best friend, create for a specific person, and you'll find more people will relate to it than you can ever imagine. I'm thinking that Netflix might want to borrow that because now it's just getting into literally everything and maybe it's becoming too big for its own good based on what Greta Gerwig said. Okay, if you have any thoughts on the show or just want to say, what's up, please write to our email Morning Brew Daily at MorningBrew.com. Let's roll the credits. Samantha Velas is our editor and producer.

Raymond Lou is our associate producer. Eugenoa Ogu is our technical director. Billy Minino is on audio, hair, and makeup. 2025 is your year for an Oscar nomination. Keep your head up. Devin Emery is our chief content officer and our show is a production of Morning Brew. Great show you that, Neil.

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