Plain English with Derek Thompson - The Year in Media and Entertainment: What’s Broken (News), What’s Surging (Netflix), and What’s Next

Episode Date: December 19, 2023

Today’s episode is about 2023 in media—from TV to film, from the miracle of Barbenheimer’s to the superhero drought, from Netflix’s show of strength to Taylor Swift’s invincibility, from the podcast purge to so much more. Our guest is Matt Belloni, the host of Ringer podcast ‘The Town’ and a writer with Puck. If you have questions, observations, or ideas for future episodes, email us at [e-mail]. Host: Derek Thompson Guest: Matthew Belloni Producer: Devon Baroldi Learn more about your ad choices. Visit podcastchoices.com/adchoices

What's up, everybody. It's Austin Rivers from Offguard. And I've got some exciting news. Offguard hosted by me and my guide, Pasha Gigi, is officially moving to our own podcast feed. We are now dropping two shows every week. Me and Pasha go way back and talk so much hoops already that we figured it was time to fire up the mics and let you in on these conversations. Every week, Pasha and myself will hit on the biggest stories happening around the league. Tap into the show twice a week on our new Offguard feed on Spotify or wherever you get your podcast. Today's episode is about the year in media, from TV to film, from the miracle of Barbenheimer to the superhero drought, from Netflix to Taylor Swift to the podcast

purge and so much more. And today's guest is Matt Bellany, the host of the Ringer podcast, The Town, and a writer with Puck News. Before we start on Hollywood, I want to begin a little bit closer to home in the news media industry. There was another brutal year for journalists in 2023 at major publications. In the last 12 months, there have been major layoffs or buyouts at the Washington Post, NBC, Vox, BuzzFeed, Wired and the New Yorker under Condon-Ast, NPR, Gawker shut down in February. My feeling about industry cuts is that, first of all, they suck. And second, they typically aroused suspicion about the leadership

of certain specific companies. Now, to be clear, no boss is above that suspicion, and it's never hard to find leaders in journalism who are worthy of criticism. But the fact that this is happening across the board in TV and newspapers, and radio, and old media, and new media, that tells me the culprit is deeper than any one leader's bad decisions.

One major culprit, as I've said before, is the internet itself, the internet, which is wonderful in so many ways, which has made my career, which makes my job possible, which makes this podcast possible, before the internet, in the many decades before the 21st century, you had the age of the newspaper. And the business of newspapers, as the journalist James Fallows always explained it to me, was that newspapers were a cross-subsidy. The Washington Post would report on Congress and the Middle East, but most of the revenue did not come directly or anywhere close from the politics section or international war zones. They came from the classifieds, from car ads, from apartment listings.

And back when newspapers enjoyed a kind of local publishing monopoly, the classifieds and the car ads and the publisher listenings were bundled altogether with the weather and the sports in Congress and yes, Fallujah. And so the used Toyota advertisements subsidized the Pulitzer Prize winning journalism. That was the bundle, and it was a very lucrative bundle. The internet we call an unbundler, which is a word I've been told I shouldn't use too much more often. So instead, to avoid further mockery, I'll say the internet uncrossed the subsidies. Like today, if you want to buy a used car, you don't go to the New York Times website.

You go directly to CarMax or Edmonds. Or better yet, you just type the words buy used car into a search bar and click whatever blue link comes up first. At the same time, the internet made it harder to build a cross-subsidized public. Monopoly, like, say, the 1972 Washington Post, it also reduced the cost of producing the news. It's easier and cheaper to publish an article or publish a radio show. As the supply of news media has skyrocketed, the returns to individual media makers has, at the median, declined. If we are in the platinum age of TV, because there's so much damn TV,

then surely we are in the platinum age of news, where there is simply so much news to consume. never mind how much of it is passably intelligent. I've had a front row seat to the Internet's effect on the news media, so that's my expertise. But if I look around at media and entertainment more broadly, just about every marketplace of attention, movies, TV, streaming, radio, podcasts, music, they're all facing the same problem. What happens when your industry becomes digitized? The cross subsidies melt away. The barriers to entry fall. Lower barriers means more content, more competition. More content means less money for each individual article of content.

Isn't that exactly what's happened in music, where artists can paradoxically reach tens of millions of people and still struggle to get by? Isn't it true of podcasts, where the scale of competition is a godsend for listeners who want the choice, but it makes it harder for the typical show to break out? Isn't it true of streaming TV?

I mean, we just had a writer's strike that was in part about the fact that there's more television than ever, but the show orders tend to cover fewer episodes, which means less available work per writer. Now, all of this is happening in a world with power law dynamics. Last week, Netflix released six months of streaming data for its shows, covering January through June. The most popular show of that period was The Night Agent,

which was watched for 800 million hours. Ginny and Georgia, seasons one and two, were watched for one billion hours. By the way, that's 100 million people watching a show for 10 hours. Now, meanwhile, many Netflix shows barely registered any viewership at all. Even the average show barely registers as a blip compared to those giants. That is a power law. When audiences are connected by the internet, they can cluster around hits in ways that were previously impossible. So this is the general shape of things that I see in media and entertainment, from news to podcast, to TV and music.

Opportunity is super abundant and success is super scarce. Or to put it a bit differently, market access is democratic, but market returns are aristocratic. For creating stuff, this is the best time in history. For the making money from the creation of stuff? Well, that's a different beast all the That challenge is the story of the century in media. And it's the theme of the rest of this show. I'm Derek Thompson. This is plain English. Matt Bellany, welcome back to the show.

Thanks very much for having me. Happy holidays. Happy holidays. You are a busy man, and my vision for this episode is massively overstuffed. So let's do this as quick as possible. I want to do a State of the Union for TV and film and the Post-Strike future. of Hollywood. I want to talk Netflix in the streaming wars. I want to talk Disney and IP franchise burnout. I want to finish on podcasts and predictions. That's a lot. So let's start. And I thought we were talking about OZempic. Yeah, part three of the OZempic saga. It carries over into the

second week. Let's start on movies. And obviously, we're talking Hollywood. So, of course, there is always an OZempic angle that you can take this in. A couple weeks ago on the big picture, Sean Fennessey mentioned that for the first time in decades, the three biggest films by Worldwide Box Office this year, which were Barbie, Super Mario Brothers, and Oppenheimer, for the first time in decades, the three biggest films in the world are not sequels or reboots. And this happened at the same time

that the big Disney franchise plays had a very rough year. Marvel saw its worst opening weekend ever with the Marvels. Indiana Jones, the Dial of Destiny, was out of the top 10 entirely. Star Wars is doing some kind of hiatus reboot. I am tempted, I am tempted by a take that says that 2023 might be some kind of inflection point where franchise exhaustion combined with renewed demand for novelty to give us a new, brilliant age of original adult blockbusters.

I'm not sure I even believe this take that I am tempted to give. So I want you to interrogate this take in both directions. Let's hold the Barbenheimer lessons on ice for just a second. First, Disney, is the Disney creative machine in as much trouble as my brief history made it sound? I'm going to give you the dreaded yes and no answer because it's in trouble. Like, Marvel needs to fix itself. There is a malaise. The fans feel it.

The broader industry can feel it. I talk to people at Marvel. they can feel it. They are actively trying to fix this. And that is problem number one. When you noted those three films that are going to top the box office this year, you should have noted that none of those films is a Disney film. The top, this has not happened in more than 15 years where the top three films of the box office, none of them are Disney movies. This is a studio that has dominated the box office. for the past decade. And for them not to have anything in the top three is alarming for the industry. So Disney has to fix the Marvel situation is a creative situation.

They over-hyped and over-produced for many years, and it worked for many years. Now it's not working. And it's cyclical. These franchises go in and out. Marvel had an incredible run, unprecedented, but it can't last forever. Nothing can last forever.

So they got to figure it out. Now, the other areas of Disney are a little more complicated. For instance, feature animation. That is a huge question in the industry right now. Do audiences consider original animation to be theatrical? And when I say that, I mean that all of the successful animated films since COVID have been pre-branded, like Super Mario Brothers, or have been sequels to established hits,

like the Minions movies. We have not had a breakout that was an original animated film. And that is a huge problem because those movies tend to cost $200 million when Disney makes them. And they have justified that expense by the amazing run that Pixar and then recently Disney Animation has been on. Now, Elemental this year started horribly and ended up getting up to $495, almost $500 million. So that is not a disaster.

They made money on that movie. But it's also not a breakout hit. It's not a Moana. It is not a kind of movie that you can sequelize and consumer product dies forever. And that is a real problem. They've got to figure out how to bring down the cost of these movies if the theatrical market is not there. We don't know. There's a movie coming out next week, which is an illumination film migration.

And we'll see how that does. The tracking is not great. But if original animated films can no longer be counted on at the box office, then it's going to have reverberations throughout the industry, especially for Disney. I wonder, one more cut on Disney. Is this as simple as the parable or adage that excellence is hard to maintain? And that's true in sports. It's true in tech.

it's true in creative work, or is there like a business school case study here with Marvel and the end of its era of dominance? Like if you decompose the reasons why Marvel went from just being extraordinarily successful in a way that you would think would have all sorts of knock-on effects and Matthew effects, where they make big movies so more stars want to work with them, so more brilliant writers want to work with them, more brilliant directors, and the flywheel keeps turning, obviously, that stopped sometime in the last 18, 24, 34, 36 months.

And you can't just say it stopped this year because you know this obviously, but other people might not. Movies take forever to make. So the movies that come out in 2023 and don't do well, sometimes the seeds of their failures receded years earlier. But if you decomposed this

problem that Disney, the most successful entertainment company of the 21st century, is having creatively, like, where does it start? What's the business school case study lesson that someone could pull out of this? I think the business school lesson is the dilution of a brand and a successful strategy where you have a hit machine and you replicate, replicate, replicate, replicate, until you have stretched it so thin that the entire thing collapses.

And that's, I think, what happened. There's an infamous investor call that happened in late 2020 at Disney. when the then CEO, Bob Chaypec, basically opened up the floodgates and said, oh, you like Marvel, do you? Well, we got tons of Marvel coming to Disney Plus. We're going to do, in addition to the three movies a year, we're going to do three big budget television shows,

and you're going to need to watch all of them because the movies are now going to have plot points seated by those shows. And you like Star Wars? Well, we're going to have three Star Wars shows a year. And we're going to do the same. It was basically a flex of the brand so much

that it needed, it demanded so much of the creative muscles of Disney. And we are now seeing that those muscles were sprained in the process. That they were not able to

keep up that level of quality and fan service while hitting those numbers of production. That's really interesting. I remember when I was working on my book, Hitmakers, I went back to the 1930s, 1940s, where Disney was moving from being just a movie company to really being in all of entertainment company. And Walt had this term, total merchandising and this flywheel diagram that is sometimes reproduced on the internet a lot where he essentially said, a movie's not just a movie. A movie should be a t-shirt. A movie should be a toy. A movie should be a ride. A movie should be a television show, which was a really novel idea in the 19th. where there are only a couple, you know, million television sets. And it's interesting to think that Disney in the last three years has come to see the limits of this total merchandising strategy, that you cannot infinitely reproduce something that is successful.

There is a limit beyond which you're going to have in your words creative. Absolutely. And diffusion. It has had significant repercussions. If you look at what happened with Star Wars, when Disney bought Lucasfilm, Bob Iger, CEO, got up and said, hey, everyone. we're going to be doing a Star Wars movie every year. There's going to be the trilogy, you know, the Skywalker trilogy that's going to be every other year.

And then we're going to fill them in with these original Star Wars stories. And it soon became clear that the leadership at Lucasfilm, Kathy Kennedy on down, they were not able to keep up that cadence. And, you know, Star Wars is a very difficult universe to adapt, or at least it has been. It's not like Marvel, where there are 10,000 characters. all ready for their own close-up. Star Wars is a mythology built around, you know, a brainstorm that George Lucas had in the 70s.

And they couldn't do it. And it was untenable. So the financial mandate that Iger had was not able to be backed up by the creative and the Star Wars movies imploded. They have had to completely reboot. They are now going to be, they're planning two movies in 2026. but it will have been seven years between Star Wars movies, and that is a direct result of the overmining of the franchise.

And I think Marvel has to do the same thing. They've got to figure out what is Marvel going forward and how do they re-ignite the fan love for this franchise? Part two of my take. Does Barbenheimer mean anything going forward? Is this the beginning of something, or is this, like, the analogy that occurred to me is, like, Pokemon Go when that came out and whatever it was,

2015, 2016, people were like, oh, my God, augmented reality smartphone games are going to eat entertainment, and they did not. It was Pokemon Go and Pokemon Go. What is the legacy of Robinheimer do you think going forward? I think the legacy is savvy social media marketing. And it's, you know, no one at either Universal or Warner Brothers or anyone involved will take credit for this. They did know, however, that there was

intense fan fervor around Barbie in particular, early on, and they seated that in a very smart way with a lot of influencer activity, with a lot of sort of self-deprecating, ironic

Barbie humor, and leaned heavily into that. So, you, the, legacy for studios is that you can't create a phenomenon like that. However, you can lay the breadcrumbs and hope and pray that it takes off. It's like they're all sort of like they're like want to be arsonists where you can light little fires and maybe it turns into an inferno, most likely it's just going to burn a little bit and then peter out. And that I think is a legacy because you cannot. Everyone is going to try to replicate. We've seen.

studios try to replicate it. We've seen them try to, like, you know, create memes off of movies. Sometimes it works. Sometimes it catches on. It actually caught on with this Five Nights at Freddy movies. That Five Nights at Freddy's franchise was a video game that was, you know, that was somewhat popular, turned into the biggest October opening of all time. Because it caught fire on social media. We saw it with Megan earlier this year, another Blumhouse movie, where,

The Megan TikTok dance became something that people cared about, and it really fueled the box office. The success of movies these days, if it's not pre-branded and it's not something you already know, is heavily dependent on social media activity. And that is terrifying for the studios because they can't control it. But it is also a place where they think there is growth. If they can get these franchises to appeal to young people, you know, I, I, had Chris Melodendry, the CEO of Illumination on the town this week, and he said that the Minions TikTok account has six million followers. And people, and they're not all children.

These are people who grew up with the franchise and find it funny. And then all of a sudden you see the gentle minions movement where these kids were dressing up in suits to go see a freaking minions movie because they grew up with it. They have owned it as nostalgia and that they are supporting it. Same, I think, happened with Barbie. They got people to own that franchise through nostalgia, and then Oppenheimer was just kind of caught in the title wave and benefited as well. As well, and I would also say, you know, I thought Barbie was fun. I thought Oppenheimer was brilliant. So I'm certainly not going to disagree with a movie I find brilliant making a billion dollars, even though when I watched it. the first thing I thought coming out of that movie was not, oh, this apocalyptic vision of the

future of nuclear warfare is going to make a billion dollars, not the first thought I had. I think you're right. I think those are good lessons to pull out of Barbenheimer, one that savvy marketing sometimes has extraordinary returns. Number two, that sometimes an asteroid falls out of the sky when it comes to cultural success, and it doesn't mean that if you try to do all the ingredients again, it's going to happen over and over. I think you're right. A lot of people are going to chase the Barbenheimer train and find they end up spending $70 million in marketing and barely make $100 million at the box office. I also think, and we're going to return to this theme when we talk about Netflix in a second, just there are power laws in everything.

There are power laws and everything. And the same way that the most popular Netflix shows are just so much more popular than the average Netflix show, sometimes you get sort of above threshold on cultural awareness and a cultural phenomenon just goes to the moon. because it passes that threshold that people are talking about it and then it becomes unavoidable. Everyone in media, if you look to the New York Times,

CNN, the ringer, everyone for two weeks just talking about Barbenheimer and sometimes those moments of sort of cultural, you know, monoculturalism do happen when you just weirdly get everyone talking about the same thing,

but it's a power law. It's like it's once in a year. It's also a kind of, an kind of asteroid comment event. If you had asked me in January, whether a movie of a concert by Taylor Swift would gross $250 million worldwide, I would have said, like, what?

Like, oh, you mean, like of her concert tour that's about to come out? But then now that seems totally normal. Like, oh, of course it did. Because the tour became a huge phenomenon. She became, you know, the main character of the internet all summer. She then decided to put the footage into a movie and go directly to theaters.

and all of her fans and, you know, some people that were just looky-loos or participating in the culture showed up, made perfect sense. But, you know, nobody nine months ago would have ever predicted that. Yeah, good point. So one more question on film in Hollywood, which pulls us into television a bit. The actor and writer strikes. So in the past, I feel like strikes have served as historical markers of important moments of technological change. So in the 1950s and 1960s, the strikes were about the opening of the TV market. They were about how do we get writers a cut of this new thing called television. Residuals.

Residuals, right. In 1980s, more residual strikes. These were mostly about how writers could get compensation from TV reruns or VHS sales, as VHS was becoming a huge part of the business. Yep. in 2007-2008, the strike was partly over residuals for DVD sales and content made for the internet. And I feel like there's a narrative that you can disagree or agree with that the 2007-2008 strikes have this legacy of having helped to accelerate the rise of unscripted TV. And because they helped to demonstrate the popularity of reality shows that were running when the scripted shows were shut down.

When we last spoke, you mentioned that the new writer deal, could change the shape of writer rooms in ways that could have an effect on what we see on our screens. I'm interested now that the strikes are over, widened down. Decades from now, 20, 30 years from now, what do you think will be the legacy of the 2023 strikes? I think there will be two legacies, because the way I look at strikes, maybe in general, but particularly in Hollywood, is as a check on technology. often something new comes along and the powers that be want to exploit it, often to cut costs or to generate revenue.

And the labor movement is all about allowing the laborers to participate in that revenue or to protect against the technology that might hurt them. So what was the technology that was fueling this? And I think twofold. One, it was the end of the peak TV era. The peak TV era, which led to 600 scripted shows on TV, the rise of internet-enabled television through Netflix, and then all of the other companies adopting the Netflix model

and trying to catch up led to an incredible boom in content over the past decade, a bubble. and the economics of particularly television but also film were changed by Netflix. This is the Netflix model that they brought to Hollywood. And we can go into all the different ways that changed where people were paid up front. They were not given back ends. The episode counts on shows came down from 22 episodes on broadcast, first to 13 on cable, and now to 8 or 10 on streaming because the value is bringing people into the streaming ecosystem,

not selling advertising against 22 episodes. So that changed the economics, whereas the deal structures had not changed. They were all based on episodic payments that would go to 22 episodes, but now it's eight, so you've got to get three jobs to make the same amount of money. So the feeling there was that technology had enabled this revolution in the consumption of television, yet people that actually created were left behind. And here we had a bubble that was bursting. You know, you look back, I look back at things like the Great Depression in, you know, the 1930s.

There were things that were going on in the economy before the official stock market crash and the start of the Great Depression. But we have that marker that we always look back on after decades and say, oh, the Great Depression was the end of the roaring 20s and the start of this Great Depression was the stock market crash. I think the strikes will be looked at as the end of the peak TV era, even though the factors that gave us the end of the peak TV era were happening even before the strike. There was this great Netflix correction where all the sudden Wall Street turned on the streaming model. It can't just be about gaining massive subscribers and going into debt to spend, spend, spend to create all these shows. All of a sudden investors wanted to see profitability. of the streaming business because the television business is dying at a pretty aggressive clip. That was one factor.

The other was simply that you couldn't sustain this level of spending on shows that not that many people were watching. So it was a correction there. But the strike just solidified all of that, brought it into focus. The guilds articulated their fears and anxieties about the changes in the economic model. And they got some concessions in this strike to protect against technology. I don't think it's going to protect against AI taking over the industry. The legacy of this year really is the start of the AI age in the entertainment business, which I think is going to play out over the next five to seven years in a pretty significant way.

I don't think we're going to replace actors like some fear. But the automation of many aspects of the creative process is only beginning. It started with visual effects, animation, some of the more technical aspects, but it's going to go to production. We're seeing, you know, the LED screens taking over for, you know, going to Malta and shooting a Star Wars show there. Now they do it in Plyivista in front of a screen. That's not, there's AI elements of that, but that's much more of a technology change and that's going to impact over the next five years. There's many of those things. And I think this year is going to be looked back as the catalyst for a lot of that.

Obviously, on this podcast, you can't say something like the start of the AI age in entertainment without me asking at least one follow-up question. One follow-up question is, what does that mean? Second, sort of nested follow-up question is you're talking about, at least here, AI being used to accelerate and maybe even cut labor out of some of the technical elements of making television and film. I have to imagine there exists some kind of union for workers on the technical side of television and film. Have they struck?

Yeah, IATSI. Okay, I didn't know that acronym. Have they struck yet? Is a strike there inevitable in the next 12 to 18 months? Is that the next shoot a fall in this age of AI and entertainment? Their deals are up next year. Oh, boy. Ayatzi and the Teamsters have deals up next year.

And the question is now that Hollywood has gone through this pretty painful dual strike of six months this year, how much appetite there is for another strike. But they're going to have their own negotiation. But when I say, you ask what it means. I mean, this time last year, we were only starting to talk about chat GPT. This time last year, chat CBT was 18 days old. Yeah. So in a year, it's gone from nothing to. the existential threat to the industry and something that was a cause of a pretty substantial

writer's strike. And the writers got concessions there where, you know, they will, a script must be authored by a human for credit purposes and payment purposes. The studios can experiment with chat GPT and use it to inform, use scripts to inform their language learning. But we're only seen the beginning of this, both as a tool for creative people to use, much like Google became a tool of screenwriters. Can you imagine being a screenwriter before Google? I mean, you had to employ researchers when you wanted to set a, you know, a scene in a, in a, you know, let's say a, in 1893. Yeah. Yeah. Or in a, you know, in a surgery in a doctor's office, you had to know what kind of equipment and things like that.

The internet changed all of that for screenwriters. And I think chat GPT is going to do the same in a different way. But the screenwriters now have at least some protections against being replaced by that technology. And that is a direct result of the strike. This past week, the big news is that Netflix revealed finally audience numbers for almost every TV show and movie in its library, 18,000. titles, and their total hours viewed between January and June of this year. The top shows were The Night Agent, Season 1, Ginny and Georgia, season 2, also season

one of Ginny and Georgia, which my wife quite likes a lot. I believe in the top 10. Wednesday was number four, and that might even be undercounting Wednesday because it came out last year, and it's only counting the first six months of this year. A lot of data, I mean, just reams and reams of it. This would take years to read every single Excel. a little table. Tell me one thing that surprised you in these numbers

and tell me why you think Netflix did this at Long Last. I guess the thing that surprised me most is that the top shows don't have any stars. Yeah. I mean, Netflix has spent so much money courting big stars to be in their shows. And the top two shows, as you mentioned, are these very fast and,

watchable and lean back type shows that don't have any stars and just play and play and play and people love it. Now, I'm just going to jump in and read the top 10 just for people's edification. Number one is the night agent season one. Number two, Ginny and Georgia season two. Number three, the glory season one. Is that a set of Korean show? Yeah, that's a Korean show.

Thanks. Number four is Wednesday, which again, an asterisk's there because it's probably among, it's probably the most popular franchise that they have. Netflix has said that Wednesday is its most. most viewed show of all time. Right. Number six is Queen Charlotte, a Bridgetton story. Then You, Season 4, La Reina del Sur, season three.

I'm assuming that's a Spanish show. That's a telenovela. I believe it's Mexico, but I don't quote me on that. Mexico, okay. All right, Outer Banks, well, unfortunately, you're quoted. It's a podcast. Outer Banks, Season 3, Ginny and Georgia, season one, and Fubar, season one. I mean, yeah, there is hardly a star to be seen here.

I mean, there's one or two. Well, Arn-Schwar is in Fubar. That is a star. Okay, there we go. There we go. Yeah, that's a huge movie star. Yes, but what it says is that Netflix is not dependent on movie stars. Now, the caveat on this that we should say is that this is only a six-month snapshot.

It heavily favors content that was dropped on the service during that time period, because what we have seen over and over is that the Netflix audience loves new. It loves things that are fresh to the service that are either new or new to them. And it's very different from like the Disney Plus audience, where if you look at their top titles, it's typically the classics. Moana and, you know, the Pixar movies and things like that. And then the Marvel and Star Wars stuff. But Netflix, people demand that firehose of content from Netflix and they reward it with this viewership. And yeah, it's not stars.

The top movie, though, is the mother, which is a Jennifer Lopez movie. So she is a big star on Netflix. Yeah. Why do you think Netflix did this? They didn't have to. I guess you could argue that the strikes might have been one of many tail wins in their motivations here. Why do you think they finally dumped all of this in December 23? Well, there is what Ted Sarandos says and explains why they did it, which he came on the town this past week and explained that they thought there was an air of mistrust.

between the talent and Netflix, which I have been harping on for years. By hoarding all of their ratings data, Netflix has a gigantic advantage, all the streamers do when they negotiate with talent. They know the value of the show. When you're playing poker and you see all the other side's cards

and nobody sees yours, you got an advantage. And that had created an element of mistrust. And Netflix says that they want to, you know, have good relationships with creative talents. But what's really going on here, I think, is that for years, Netflix hoarded all this data for competitive reasons. They did not want Ted said to leave bream. Ted said on my show that he didn't want to leave breadcrumbs for competitors to be able to analyze all the data and come up with their version of whatever was a hit on Netflix or strategize how to hire certain talent or whatever. And now, I think the competitive advantage for Netflix is they're gigantic. No other streaming service is going to be able to match these numbers.

People are watching the crap out of Netflix shows. And at least according to the third-party data services that provide data on shows, the viewership on the other services is not anywhere near that. And tell me, what do you think is the best? of being so big? Is the benefit of being so big for advertisers? Beyond the sheer fact of there's a bottom line that's just all the money that the subscribers are giving Netflix.

That bottom line is the bottom line whether or not Netflix releases this data. So I'm trying to think what's the motivation for releasing this data? Is it to make transparent the bigness of Netflix to advertisers because you're essentially advertising your own scale? I mean, they could theoretically just give advertisers these all. all this information privately. Which they do. Which they do.

Is it also to make public a sense of Netflix's scale relative to other streamers? That is exactly it. Maybe I'm saying this point from you, when you're dealing with, you know, the next show that, you know, Matt, you and I, like, come to them and we're like, we have this show that we want to do about, like, you know, two big, strong podcasters who save the world from shore destruction of AI. And, you know, we're talking to Apple and we're talking to Netflix. And Apple's like, hey, we'll give you, you know, $5 million for this project.

And Netflix is like, we'll give you $2 million to this project, but it will be seen by 20 times more people if you put it on Netflix. And if Matt, you and Derek want to write any other scripts in the future, don't you want that to your first project to have been seen by 100 million people rather than like 17 people including extended members of your family? Like, is part of that the equation. Absolutely. That is, you know, when Netflix first got into original entertainment, their proposition to talent was, hey, we're the new guys here. We can't compete with broadcasting cable television, but you know what? We're going to pay you a shit ton of money. We're going to overpay you.

What's your quote? We'll give you 20% more than that. And yeah, we own it forever and there's no backends, but we're going to pay you more. Now the Netflix argument is, okay, you want to go to Peacock? God bless. You know what? They're going to do a nice little show. Nobody will watch it.

And if you want a real audience, you can come to Netflix. And if you want to see exactly what kind of audiences we can deliver, here's a handy 250-page document that shows exactly what we can deliver. It doesn't happen for everyone, but it happens enough where if you, major creator, want a cultural phenomenon, come to Netflix. I mean, Netflix right now finds itself in bidding wars often with Apple, with Amazon Prime Video, and with HBO slash Max. those are the prime, you know, the real, sometimes Hulu and Disney, but they often buy from their own studios.

So they are looking for a differentiator. And they have it now. They have it, you know, they've always been bigger, you know, not always, but recently have been bigger. But they have found value in keeping it secret for competitive reasons. Now I think the value in releasing it is more valuable to them for competitive reasons than it is, it. And this is the argument. Apple has, what, 40 million subscribers worldwide? Very low engagement. If you look on the Nielsen charts, the only show that charts on Nielsen really is Ted Lassau, and that's over. You know, maybe the morning show will pop up there, but like,

they can't give you a massive global audience, but Netflix can. And it's like, what are we doing here? Why did you get into television, if not to reach an audience? So come over to Netflix, and you'll reach a huge audience. That's the argument. Right. And advertising. The future of Netflix right now, the growth plan is heavily dependent on moving people into the advertising tier and selling them advertising.

Netflix makes more money on the ad tier subscribers than they do on the no ads subscribers. Even though the ad people pay less, they are monetized more. So Netflix really wants to move people into the ad tier. and then sell a bunch of ads to those people. And they want the advertising community to be aware of the scale of the product and the engagement level. Because that is another differentiator,

Apple, Disney, all those others, they do not have the engagement that Netflix has. People watch shit on Netflix. They don't watch as much stuff on the others. I have a quirky question that's inspired by our mutual friend and contributor or colleague, Julia Alexander. So I am a washed geriatric millennial when I'm, you know, feeding the baby.

I literally just put on Law and Order and just watch it over and over and over again. Oh, no. Seinfeld. You hate Law & Order? No, I don't hate it, but that's not millennial. That's like boomer. Oh, sorry. Ironically, I actually really, really like the early stuff, like the 1990, 1991 seasons.

Oh, God. In any case, I wonder why. As someone who's nostalgic for Seinfeld and Friends, Law & Order, everything on Netflix is a miniseries now, right? Where are the Netflix original procedurals? Like, Netflix buys suits or the Blacklist, New Amsterdam, and brings them onto its platform and makes them re-popular. But Netflix, I think Julia pointed this out,

doesn't really make procedurals. Is that related to writer room size? Is it related to the way Netflix finances it shows? And with the new deal slash emerging new reality, is there ever a world in which Netflix makes more of these kind of procedures? Because I kind of don't get why. If you have a show that has enormous engagement for 10 episodes, why wouldn't you make 25 in the same season?

So are we ever going back to this world of 20 to 23 episode seasons for really, really popular content? I think a couple things going on there. First of all, Netflix is not about just engagement. The overall business of Netflix requires people to come into the Netflix ecosystem and stay there. So there's customer acquisition, and then there is preventing churn. And what Netflix has found is that a bunch of original series, something new on the platform, is bringing people in and saying to them, this is the Netflix proposition, a new show from Shonda Rhymes, a new show that all your friends are talking about,

come in. Now, what keeps people there, what they find prevents churn, is often these library shows, where there are 200 episodes of something that you can just put on at night. And those are readily available to be licensed from traditional broadcasters. There are 200 episodes of CSI, Miami. There are, you know, hundreds of episodes of Law and Order where they could get. And if they can bring those into the ecosystem of Netflix and keep their subscribers happy that prevents churn. They don't necessarily need to make all them. If you look, most Netflix shows are done by three seasons because, and that's not a coincidence.

They feel that the value starts diminishing after three seasons because you don't need the show anymore. You've got the people who are interested in that show. and with exceptions like the crown and like Grace and Frankie and all these they've done more but most shows end because they've gotten what they need out of them and they can license

these other broadcast shows to fill in that need for people like you to watch the comfort food of it's basically like syndication you know where you used to turn on channel seven at 11 o'clock to watch an episode of friends or whatever now you know on on Netflix you

know those library shows are there or a show like suits that they can just pick up. It doesn't mean that they won't start doing that. But when I talked to people at Netflix about this issue, they say that it, it really, their model is originals, original originals, and then license the library stuff. And keep in mind, these other companies are much more inclined to license shows now than they were even a couple years ago. There was this whole phase in Hollywood where all the studios pulled their content back, did not license it out. I mean, Bob Iger at Disney famously said we were giving nuclear weapons to a third world country that was using them against us.

So they stopped doing that. And now they started doing it again because they need to because these companies are all in financial peril and they need revenue. And they don't care as much about winning the streaming wars as much as much as they do. making their quarterly numbers, Disney just licensed 14 series to Netflix. So you're going to be able to watch tons of ABC and free form and, you know, all the Disney stuff on Netflix. Warner Brothers put a bunch of HBO shows on Netflix. That would have been unheard of a couple of years ago.

But they need money. And Netflix knows that they can bring an audience to these shows that did not exist. Band of Brothers and the Pacific were doing well on Netflix. Those are 15 and 20-year-old shows that, you know, millennials like you didn't, weren't watching HBO in the early 2000s. So it's new to you and it's a big, you know, doesn't age.

It's a World War II show. So it actually chart, the Pacific charted on Nielsen. And it was kind of remarkable because it was already sitting there on Max, a service that has pretty good penetration. but you bring it over to Netflix, and it makes it a hit. And this goes to show that Netflix famously said they wanted to become HBO before HBO could become Netflix.

And instead, they've just become cable TV. And not just... The entire bundle. They become tape. Yeah. And not just because the numbers stand head and shoulders above the competition. But also, and I think this is very much to your point, because of discoverability. Like, within the cable bundle, you can discover anything with the menu button.

and Netflix is becoming this place where, you know, these shows like you or the Pacific that have been languishing in undiscoverable territory, wherever they previously existed, suddenly come on to Netflix and they chartered Nielsen. They suddenly become discovered. And that is just such a valuable moat for this company. Closing the chapter on Netflix, I want to pivot to podcasts before we close out. Podcasts about a really weird year. And, of course, the obvious disclosure here, that this is a.

Spotify podcast owned by Spotify, ringer owned by Spotify, et cetera. We've seen celebrity shows that are canceled. We've seen popular, highly edited shows that are canceled. There have been layoffs at Spotify. You made a really interesting point in one of your recent shows

where you said there are about, I think this might have been a, was it a Deloitte study maybe? 1.7 billion people listen to podcasts worldwide. And that number is growing linearly. It's still growing quickly. The annual global revenue of podcasts, however, is only 3.5 billion. Simple math, that's $2 per listener per year. And when you compare that to the music

industry or the audiobook industry or radio, it's like between five and 15 times worse on a dollar per listener basis than those other industries. And you can either be lugubrious about it and say, oh, well, that just means podcasts or terrible business, or you can weirdly be optimistic about it and say there's a lot of room for growth. Give me your sort of state of the union of podcast. because there's so many narratives out there right now saying that because these layoffs and these big name cancellations, it's been a horrible year for podcasts, maybe it has, maybe this business just sucks. How do you see it? What's your state of the union? I see it as a sign of the full democratization of a media business.

When everybody can do it and there's literally no barrier to entry in an aspect of the media, then necessarily the monetization across that wide swath of people is going to be low. I mean, if you look at how the top people in the podcasting industry are doing, those people are doing amazing. You know, I just saw a list that said that Alex from Call Her Daddy makes like $25 million a year on her show. Like, okay, that, I mean, that's the, my point is, the podcast industry is going through a period where it is figuring out what the actual business is and who should be doing this as a business and who should be doing it for his or her mother. And that is going to

shake out, I think, over the next couple of years. It's pretty clear that bringing celebrities into the medium who have no history of doing anything in audio or doing anything in comedy or production and just saying, hey, here's your podcast, that probably isn't the strategy that will work. And shows that are very expensive to produce and don't necessarily have an audience built in, that is probably not a good business. You know, with Spotify bought these studios like Parcast and Amazon bought OneDry, and they make great products, but are those shows monetizable in a way that a always on podcast with a host such as yourself that is offering your insights and bringing on guests and it doesn't cost a ton to produce and is sponsorable way in advance

and the advertiser knows exactly what they're getting and there is a brand halo around you as a public intellectual and someone that they can feel good about sponsoring. That to me is a business. That's why I think, I mean, conflicts aside, a company like The Ringer that focuses on those kinds of pods where they are identifying people that have a potential to break out as, as personalities and building shows around them that are always on, that seems like a much better business than trying to produce narrative podcasts and hope that they become viral hits. that does not seem like a good business. And I think we're seeing that shake out. Yeah, I can imagine someone listening and wanting to aggregate that last bit, you know, headline, colon, ringer, guys, say ringer, business, a good business.

I know. But listen, I would hope that my, you know, credibility on this subject is a little, that will overcome the obvious shilling for the parent company. The conflict of interest is so glaringly obvious that I don't even need to mention it. Yeah. Exactly. I do think an interesting lesson. I mean, do you, do you, I mean, I'm not the only one to say that.

Like, it's, it's so much easier to have a hit like a smartless. Smartless to me is the example, and that is not owned by Spotify. Smartless was three guys who are celebrities, who are friends, who everybody has probably been telling them, you guys are great together, you should do a podcast, they do a podcast. It becomes a huge hit. Amazon's for some reason willing to give them $80 million for exclusivity. and to put stuff behind their paywall for a week. And that is the model.

Not everyone's going to be able to do that, but those guys have a talent and a likeability and an ability to book great guests that translates to the media. Now, Kim Kardashian, does she have that ability? Did she have any idea what she wanted to talk about on her podcast other than social justice, which is probably not what Kim Kardashian's fans want to hear from her?

that is probably not a good business. My feelings about podcasts are very similar to my feelings about news that I made clear in the open. I think the barrier to entry is low, but the barrier to goodness is high, and the barrier to success is high, and the rewards to extreme success are extreme. And one of the tough things is you cannot confuse in the news business, quote, oh, this is so important, end quote, for an inevitable business, just because you think you're doing. something important doesn't mean anyone has to listen to it. And in the same way, oh, this podcast host is so famous. Well, that doesn't guarantee any kind of audience at all either. That just means you have a famous person in front of the mic and people might feel like they can get that famous person, say Kim Kardashian through another channel called The Kardashians, a show that they might like.

So, yeah, I think that, I think you're right about the fact that often on these big celebrity shows, they have a high tune in and then it flames out because people are like, this is boring, next. Yeah, I think that I think you're right to point to the fact that the, the dark side of democratization is extreme competition. And in the news industry, I find that extreme competition actually has other weird externalities where the more news media that exists, the more, I think I've done this at this point before, but the more news media exists, the more different, you know, podcasts and newsletters and websites there are, the more that each next marginal entry into the market has to demonstrate its worth by arguing that all the existing options

suck in some way. Otherwise, why would you enter the market? And that means that you have the situation where on an individual basis, you have lots of consumers who love their media, but hate capital T, capital M, the media. So trust in media is very low, even though love of individual media is very high. And it's precisely because democratized media means abundant media, means competitive media, means antagonistic media, means you've got a bunch of consumers running around or walking around here saying, I love the guy that I listen to, I love the woman that I listen to, and he or she is totally right that everyone else sucks. It creates a really weird dynamic. That's been the case since the rise of the blogosphere in the early 2000s, when finally

everybody was able to put stuff on the internet in an easy way and quote unquote compete with the traditional media, all of a sudden the traditional media sucked. The blogs were amazing. And you know what? Some of them survived. Most of them did not. And it shook itself out in a way that I think the podcast industry, and to a certain extent, the influencer industry will be doing as well. So let's finish on predictions. I know you are working on a prediction newsletter right now, and the last thing I expect you to do is give us the goods of something that you have not press publish on for your other bosses. But maybe give me a prediction that's like, still in the oven.

You're still working on the recipe. The souffle is still rising. Insert other food metaphor here. You're working on the prediction. You don't know how strongly you feel about it, but it feels like a hot take that's developing some juicy momentum. What's the prediction for 2024

that you're starting to feel curious about? I think 2024 is going to be the year of live in streaming. Live content. All the streamers have, dabbled. We've seen everything from a Chris Rock special on Netflix. They did a live golf tournament. We've seen that some of the others will, you know, Amazon has done a couple live award shows. And they're tipping their toes in as experiments. But I think, you know, in this ongoing transition from the television age to the streaming age, next year is going to be the year that live events

really takes hold in streaming. And there's a couple of other things that are going on that I haven't confirmed yet, but I would not be surprised that the big players really invested here. And it makes sense because when you are now head first into the advertising business, which all of these streaming services are,

you want events. You want things that are going to not just make people watch, but watch them now. And what does that? It's a concert you really want to see. It's a sporting event, even though Netflix has claimed that they're not going to be

in the sports business. Nobody believes them. Everybody thinks that Netflix will be in sports within five years. It's getting into perhaps the awards show game. Netflix has already said

they will be airing the SAG Awards in February. So that's a big award show try for Netflix. The streamers that have traditional television networks have simulcast things like the Grammys you can watch on Paramount

Plus even though they air on CBS. The Oscars still, for reasons that are beyond me, do not air live on Hulu because of the affiliates and all the ABC nonsense. They do not, but perhaps that will change soon.

It needs to change soon. We'll see more of these kind of stunts that Netflix is doing where now they're doing a Carlos Al-Karaz tennis match live on Netflix. So, 2024, the years of the streamers dive into live. The Year of Live. I love it.

Matt Bellany, thank you so much. Thank you. Thank you for listening. Plain English is produced by Devin Biroldi. We've got new episodes every Tuesday and Friday. If you like what you're hearing, give us five stars and a nice review on Apple Podcasts or Spotify or wherever you get your podcast for feedback and episodes. suggestions, email us at plain English at Spotify.com.