Clash of the Streaming Titans

up from Bloomberg News and I heart radio. It's the big take. I'm West Cassova. Each weekday we dig into one important story, and today I'm going to talk about why TV is better than ever and yet it is somehow more annoying than ever. Remember when everyone loved to complain how there were a hundred and fifty channels on TV and nothing good to watch. It's pretty hard to

say that. Now there are so many good shows being made, and instead our new complaint is what a pain in the neck it can be to try to watch all those great shows. They're spread across all these streaming services, and most of them want a monthly payment for the privilege watching them. The Big Take podcast team here in the US actually wound up griping about this very thing when we were brainstorming about this episode, so we decided,

what the heck, let's turn on the mics. I have Hulu because I got a beta version forever ago that was supposed to be cheaper than getting cable TV, and I'm still paying that and now they have up the prices. It went from maybe fifty bucks a month now it's like eight five, so basically paying cable again. Yeah, I'm watching HBO Max, but I will come clean. I am

on my parents plan, so thanks mon Paw. And my dad's an i T security guys, so he's also texting all of the passwords and three different chats so the user name isn't matched with the past worry. So yeah, well I'm pretty sure both my daughters are on my Netflix. And now Netflix says they're gonna be cracking down on um, you know, sharing outside the house, so that me and

real soon. Yeah. And I have a case where I used to share a Netflix password with somebody, a former roommate, and at some point I just couldn't get into Netflix. But I felt like too hesitant to be like, hey, I've been bumming your Netflix for the last six to eight years. Um, could I continue bumbing your Netflix from you? Okay? What is your tale of woe when it comes to TV? Well, my sorrow came when Quimby was kicked off. Y, you're the person who watched Quimby. I was the one. I

had it. I loved it. My favorite movie for the youngest Helm's Worth. He was in the Most Dangerous Game. I don't know his first name, but he was in that. That was the very first movie Quimby put on and it was fantastic. It was in ten minutes segments and great. But yeah, after that, I was trying to get into some other content. But it's just quite what you're watching with services you have? Um, I have them all. I have HBO, show Time, I have Hulu, Apple Plus, got

that his near Bill, have Paramount. But since Big Brother is over, I'm gonna delete Paramount for a while and wait till Big Brother comes back. I have a lot, I do. I do. It's ridiculous. Okay, Michael, Yes, where are you watching and where do you even know? Yeah, it's got to be the House of the Dragon on HBO. Max to the Dragon Okay, so you're rolling old school with HBO. Yes, but it's a fight every single time because as much as I love the Continent HBO Max,

it's my least favorite app. I think it's navigation makes no sense and uh, I just feel like an app that has that much money behind it um would be easier to use. Okay, So how many people are subscribed to services that you just don't ever use but you just can't bring yourself to go through that, so we're trying to cancel it. I have them build on different devices with different things, So I have showed Time build as part of my Hulu package and I have HBO.

So there's really no way unless you really want to take half your Sunday to track what you're paying where and how much. That's how they get you. I have one or two that I subscribe to and share a number of which I will not disclose, right because you don't want the cable police coming actually or they, I guess the streaming police. It would be called exactly exactly, And when they become better experiences, maybe I will subscribe to them all myself. Prime was the one nice thing.

Prime was nice because we had it anyway, because my husband is an avid book collector. The TV is great, but you still have to pay for movies on top of it. So I watched You've Got Mail because you know it's fall in New York, and what else are you gonna do besides like pencils. I own up to it. Rebecca is coming clean. I'm coming clean about parental accounts

and Meg Ryan. So I've already seen You've Got Mail, god knows how many times, and I was like, what's another Meg Ryan movie that I haven't And there's one called French Kiss. I can't figure out where it is. I finally find it on Amazon and I click it, and I feel victorious for all about a half a second because it's not available in my region. And I don't even know what that means. Where is Blockbuster when you need it? Can't you just rent it? And they

send a tea in the mail. I do not miss those days standing in front of that wall of videotapes and you can't find anything. I don't know. I thought it smelled nice. It did have a nice smell. Yeah, they had the popcorn up front. This little radio production was brought to you by the US based producers of The Big Take podcast, Empire Malbaro, Michael Fallero, Rebecca Chasson, Sam Gebauer, Vicky Verglina. How did we get to this place? When we come back, my colleague Felix Chillette is going

to answer that question. M I'm here with my colleague Felix Charlette. He covers media for Bloomberg and he is also the co author of the upcoming book It's Not TV. The Spectacular, Rise, Revolution and Future of HBO. Let me just ask you. You know, we all hated the cable companies, and yet you could kind of find all the shows, and now we have better shows than ever before. And yet trying to remember where everything is is maddening, and

paying for all these services is maddening. I think that we're now in this weird phase where there's actually nostalgia coming for the cable bundle. Forever people were complaining, Oh, I just wish we could just get all these channels ala cart wouldn't that be great. Part of the reason I wanted to write a book about HBO was this whole era of home entertainment for the past forty years, the cable satellite era was coming to an end. How do you make that transition to this new era of streaming.

For a long time it was basically Netflix just completely was dominating the streaming space, right, And yeah, this proliferation of services that's happened in the past two years in some ways, like you said, it's amazing for consumers. There's just so much incredible programming out there. But it also is kind of confusing. Where do you watch this stuff? You know, do you have the subscription, do you remember

your past code? But in your book you kind of take us back to the beginning of how we got here, like why and the seeds of it seemed to be in HBO kind of realizing the future. But Netflix as the new player looking at the big dominant HBO saying we're gonna overtake them. Yeah, there's such big rivals now. It's fun to think back that for a while, HBO

and Netflix were really copathetic partners. Um. You know, in the DVD era when Netflix was a service that you went on the Internet and you you know, looked at your queue and you browsed all these different options and they would send you the DVDs by mail. Um, And during that era, Netflix bought a ton of DVDs from HBO because people wanted to watch the Sopranos, people wanted to watch The Wire, people wanted to watch Six ft Under, they wanted to binge them on DVD. They wanted to

get and they would get them through Netflix. And so Netflix was a great customer for HBO. All the shows you just named, they were all HBO. They were the place to go outside the Hollywood system. We didn't have all these independent content creators yet. It was kind of HBO was the goliath. When you saw that that statu y screen and you heard that signature intro sounded they played that, You're like knew you were in for something good. Yeah.

And then there's this amazing transition where you know, uh, Netflix decides, you know what, there's this new technology. We can send programming right into people's homes via streaming. You can click a button, your show will start playing. You don't have to wait for the DVDs to come in the mail. And they launched a streaming service. And what

are they going to put on there? Well, one thing they really wanted was for the streaming service was those HBO shows because they saw it in the data from the DVDs and HBO the executive said, you know what, we're not interested in in letting you have our licensed content for this new service. During that process us, it's sort of started dawn on the folks at Netflix that, you know what, it's really just a matter of time. Somewhere in the future, we're all of these big studios

and big brands. They're all gonna decide, you know what, we want our own streaming services. We want to go directly to the customer. We're gonna clawback our stuff. And it really dawned on Netflix executives that they were going to have to start making their own original programming. They thought, well, you know, we'll have a couple of years before we're

going to have to start doing this. And really within a couple of months, they saw this opportunity to license a new show that was being shopped around called House of Cards. And there's this great moment where basically Netflix swoops in and makes this huge offer and it was like more than anyone had ever offered for a show, had ever paid for something that hadn't been seen before.

We're gonna guarantee two full seasons just they offered a hundred million dollars for these two seasons of House of Cards UM and it actually ended up being a great bet by Netflix. I mean, people were astounded at the time, how could they offer that much? They're overpaying. It's such a what are they doing? And so now you have this new player on the scene and they have their

own kind of signature looking sound that's immediately recognizable. Yeah, and you know, House of Cards ended up being a very seminal show for Netflix because it really put them on the map and established themselves as like, we're going to be a player in original programming, in prestige drama,

the most expensive genre there is. And it was just kind of a fascinating moment, and that was really the start of this rivalry HBO Max, Netflix and what they anticipated did happen just in the past couple of years.

Then you had the launch of Disney Plus, you had the launch of HBO Max, you know how Paramount Plus, you have Apple doing their own original streaming UM fall of two thousand twenty two, I think is this incredible moment, which I like to think of as kind of the blockbuster moment in streaming entertainment because you have Amazon Prime

rolling out their Lord of the Rings series. You know, they pay two d and fifty million dollars for the rights to make a TV series and they're gonna end up spending over a billion dollars on this by the time they roll out four or five seasons. At the same time, HBO Max has rolled out The House of the Dragon, which is this hugely expensive series. Netflix has UH The Sandman, which is also a big expensive sci

fi series. Disney Plus has She Hulk. So all these really big expensive UH programming landing on these streaming services, and at the same time, all of these services are under enormous pressure to try and start cutting their losses. What is like, what's the economics of this? Are they

actually making money off of these? Well, for a long time, I think Netflix benefited from kind of the you know, the dominant paradigm and tech investing, which was like Wall Street love to invest in businesses that we're losing money as long as they were gaining scale, just gain customers. You can charge below market rates for the product, but

you have to eat up market share. We just want to growth, growth, growth, growth, growth, And Netflix benefited from that for a long time because they can always spend and spend and spend and keep increasing how much they were spending on things. And really this year is the first time where all of a sudden, because of all this new competition from these other streaming services, Netflix stopped.

They actually lost customers this year for the first time and forever, and Wall Street is suddenly like, wait, if it's not if you're not growing, if you're not gonna have like huge growth, we're going to start looking at your margins a little bit more. We're gonna start looking at how much you're spending to feel. Like you mentioned these companies trying to stem their losses. They're making really

expensive shows. Can they actually pay for them or is it is the model that we just have to keep paying subscriptions to each ones to try to support all of this. I think that's there's a lot of pressure. And right now a lot of that money that goes into the streaming services to pay for these huge shows is coming from those legacy cable channels. So you know, Disney still has the Disney Channel, and even the less and less people are watching those cable channels, that's where

the money is still coming from. But obviously that era is dimming. They're going to need to figure out how to pay for all this stuff. One is that the you know, your subscriptions for all these services are going to go up, right, they're already going up. And they think also at some point, we're just going to see

more consolidation. When you say consolidate, do you mean that the bigger ones are gonna swallow their smaller ones, or that they're going to reconstitute the cable bundle just as a streaming bundle under one price, and then we just have cable again without the cable. I think it will be both. I mean, I think in the short term you're already seeing bundling happening. You know, in order to have enough customers, they need to have less services in

the marketplace. So it seems like what we're looking at is a future where we get a lot of great shows. Um, and maybe we're paying one price, but we're still not all that happy about it. Yeah, And I also wonder what's going to happen. I mean, the trend that we've seen in the movie theaters for the past, you know, twenty years, has been this move towards blockbuster movies. Right.

The Marvel Cinematic Universe is kind of the whatever everybody wants, But As you know, movie theaters have moved more and more towards blockbusters. There's been this simultaneous process where you know, less independent films get made, middle range projects don't get made as much, And I'm curious it'll be interesting to see if a similar um dynamic plays out and streaming too. Felix, it looks like one way that the services are trying to capture more revenue is cracking down on password sharing.

We've seen that from Netflix and other services. Uh, Or do you think that we're gonna start to see more ways where they're going to try and squeeze more money out of each subscription. Yeah. I think that for a long time they were pretty lenient. They didn't really worry too much about it. At this point, I think the pressure is ramping up to really monetize every single person that's using the service, and that does me and making sure that if you're watching it, you're paying for it.

And simultaneously, the other way that Netflix is dealing with all this is they've announced, you know, we're going to launch a advertising on the service on the platform for the first time. That will allow them to offer a less expensive Netflix, you know, instead of paying fifteen dollars a month. Let's say you'll pay seven dollars a month

and you'll see some ads. UM. And broadcast television which was advertised and supported and commercial supported, they are always limits on what you could do artistically on television because advertisers would get nervous about you know, uh, violence, moral complexity, um, you know, stories about addiction. They didn't want stories about prison. There are all sorts of things you couldn't do on

broadcast television. If you moved it to format that was advertising free, suddenly there was a lot more creative freedom, and that led to this huge, um, you know, revolution in the art of television that happened on HBO. UM. And it'll be interesting now to see almost the reverse process as uh service like Netflix that has also operated in this ad free, commercial free environment for you know,

it's twenty five years of existence. Suddenly they're going to have advertisements while they're also going to have sponsors looking over their shoulders. And what that will do the programming we'll have to see. Felix, thanks so much for being here, and good luck with the book. Last, thank you so much. When we come back, I talked to my colleague Luk at Shaw, and he's gonna tell us what does all means for which shows get made and which ones don't

the best time. The following movie is rated R. All right, I'm here with my colleague Lucas Shaw. Lucas covers the entertainment business for Bloomberg, and one thing I kind of want to ask you is somebody who really watches this close up is have all these new streaming services had a big effect on the kinds of shows that are being produced. The biggest impact that they've had has been on the volume of shows being made and on the

money going into every show. So you know, you had a certain number of shows being made on broadcast, let's call it a hundred fifty a year. Then cable comes in, after the success of HBO layers on another hundred fifty. We get the three hundred shows a year. The Netflix comes in. Now we're at more than five hundred shows just scripted being made every year. You add hundreds of unscripted to say nothing of news or sports. It's a good thing for a lot of creative people because it

just means that there's more buyers, more opportunities. But it also means I think that less care tends to go into every single show. Um. The The other upside if you're a creative person, and to some extent if you're you're someone at home, is that a lot of these companies are spending more per episode, at least on the biggest show, and so the quality of what you're seeing on TV looks more and more like film than it

might have before. That must mean that the kind of middle of the pack and the kind of lower end of the tier really aren't getting much of an audience at all. You have a lot of programs where you you have to wonder who is watching them. I mean, look, I cover the business of entertainment for a living. I watch a fair amount of television, although I at least hope I have other interests, and there will be so many shows that come and go that I've never heard of.

So what happens to those shows? You know, a network TV, the shows would get kind of canceled if they didn't perform because there were only a few networks and those slats were really really precious. Now that you have so many of them, so many slots, so much time to fill, do shows live on forever? So the good news if you're a creator a fan of a show, is that most streaming services will commit to a season, and if

there's big talent involved, they'll commit to two. Um and so shows do last or the bad shows last a little bit longer. The counter to that is that the good shows don't last as longer, don't stay on forever. I mean, you look, you know, across the board on TV and they'll be a Law and order show that's on for twenty seasons, or Grey's Anatomy is now in its eighteenth or nineteenth I forget which season. There's no show like that that's last that long. And streaming now.

Some of that, of course, is because streaming is newer, but but by and large Netflix will cancel its biggest or end its biggest hits after five or six seasons. I think Grace and Frankie this show with Jane Fond and Lily Tomlin is the longest running Netflix original at

like seven or eight seasons. So it's the biggest change from the old days, when you know it was it was broadcast TV or kind of nothing else untill now, in the way shows are kind of created and and the marketplace for different kinds of shows the process has traditionally been instill is at a lot of places that you you sell a script or a series of scripts for a show, and then you develop it, and then you make the pilot that first episode, and then based

on that pilot, they decide if they want to continue, and if they choose to continue, then they'll usually pick it up for a season, and then they'll make that season and then it will kind of continue or not. Netflix has not historically believed in pilots, and a lot

of streaming services. Amazon is similar in this, where it will just pick up a season and that sort of gets back to what we were talking about before with kind of even the bad shows will last a little bit longer, and part of that is because they're not they're choosing not to make a pilot up front because that is seen as inefficient. One thing that we are seeing is a lot more diversity in the kind of

shows that that are shown on TV. Yes and no. You know, I think when you if you see an increase in the volume being made, that does create more opportunities and and as a result of various social movements over the last few years, there's been greater efforts on the part of all these companies to make shows written by, created by, directed by starring both women and people of color. So I think the numbers have generally moved in the right direction. They're not where most folks would like to

see them, but they have uh, they have improved. The one area that hasn't really changed all that much, as the executive suites where almost all these companies are are still run by white men. Kind Of a companion to that that I would say is there has been this globalization of media and entertainment um and so I'm in the middle right now of watching a Korean drama now part of that because I'm working on a story about

a Korean production company. But you've seen a surge in viewership and interest in international television, most of which features people who don't look like us. If you're someone with an idea, it is still possible to kind of come from the outside and assume, especially if you have an agent or manager, and try to sell it to a studio,

try to sell it to a network. You'll see bidding oars for you know, unattached projects, but by and large, most writers or producers of any renown have an overall deal at a studio, which gives that studio, whether it's Sony or Warner Brothers or Disney or Netflix, the first

right to make whatever idea or project that they have. Oftentimes, that person is also attached in some way to a TV network or streaming service, in large part because most of the TV studios are now owned by companies that also have a network or service, and they're trying to funnel all the best ideas from their studio to the service. Disney is probably the ultimate example of this, where pretty much anything you see on Disney Plus or Hulu has

come from one of Disney's TV studios. Lucas Felix had also talked about this kind of blockbuster phenomenon starting to take hold more and more in the streaming television roum too, where they're really looking for a big, big hits. Um, how is that affected, you know, just your sort of moderate,

normal television show that isn't a monster hit. Well, I think there's there's some concern among the average writer, writer, director, writer, producer that streaming is gonna resemble the movie business a little bit more. There was um sort of an outpouring of of creativity or a willingness to take risks on projects because when Netflix or Amazon started, they were relatively unknown.

People didn't know what a show for them should look like, and so they had to they had to take bigger risks to get shows made that either meant financially, so Netflix committing to you know, two season of House of Cards on a hundred million dollars or betting on a kind of a relatively unproven talent or an idea that was you know, outside the box. And I think this led to a lot of really great and interesting television in the early phases of streaming that has continued since then.

What you're seeing now is a lot of these networks get more and more conservative because part of it is they're bigger, right, so they're trying to find the shows that can appeal to as many different people as possible. I think after Netflix had a big hit like Bridgetin you know that, which was sort of like the type of show that you would have seen on a broadcast network instead of the type of show you've seen on you'd see on HBO, it wanted more shows like that.

When it has a squid Game, which is, you know, this unprecedented global hit, it wants more shows like that. The tricky part, of course, is that the biggest hits are always surprised. Nobody ever sees them coming, and so you get conservative and try to plan for the big hit, you might actually be likely to miss whatever that next great show is because you're you're looking for something that resembles something you had before instead of looking for something

that nobody's ever seen before. Are you optimistic about the kinds of shows we're all going to get to watch? I'm a little bit torn. On the one hand, I think there's been too much television made over the last few years, and some of the quality filters have have gone away, um, because you have creative executive these companies who are overseeing too many different projects. And I do

think that some brilliance comes out of limiting yourself. And so if we're entering an era of greater fiscal responsibility, as weird as it sounds, that might be kind of good, um, because it will force people to be more selective about what they make. On the other hand, you know, it does feel like a lot of these companies are going to get safer and safer streaming will feel a little bit more like broadcast. It will feel a little bit less fun, but there's more money and energy going into

television than ever. For on a more optimistic note, there's gonna be more and more emphasis on overseas territories, which means you'll see more and more investment in storytelling from other parts of the world, and that's, without question been one of my favorite parts of kind of the streaming revolution in Hollywood is that you now can watch shows from Japan, South Korea, France, Brazil, Mexico with relative ease. Lukashaw,

thanks so much for coming on the show. Thanks Wess, Thanks for listening to us here at The Big Take. It's a daily podcast from Bloomberg and I Heart Radio. For more shows from my Heart Radio, visit the I Heart Radio app podcast or wherever you listen. Read Today's story and subscribe to our daily newsletter at Bloomberg dot com slash Big Take, and we'd love to hear from you. Email us with questions or comments to Big Take at Bloomberg dot net. The super rising producer of The Big

Take is Vicky Bergalina. Our senior producer is Katherine Fink. Our producer is Rebecca Shasson. Our associate producer is Sam Gobauer. Raphael M. Seeley is our engineer. Original music by Leo Sidrin. I'm West Cansova. Have a great weekend.