Bloomberg Audio Studios, podcasts, radio news. Netflix is the largest paid streaming service in the world, but it's so much.
More when you think of the traditional film and television. Netflix is the biggest TV network. It is the most productive movie studio.
Lucas Shaw reports on the business of entertainment for Bloomberg, and he's covered Netflix closely for years as the company has grown from a DVD by mail service into a streaming juggernaut.
It's been making original programming for about ten years, and in that ten year span it has more from sort of like this small, cuddly company into the most powerful for us in Hollywood.
Today, Netflix is the envy of other paid subscription services, along with many TV networks and movie studios. But back in twenty twenty two, there were a lot of questions about Netflix's future coming out of the pandemic when streaming use skyrocketed then plateaued. The company had the worst six month stretch in its history, and it lost around two
hundred billion dollars in market value. But Netflix defied its critics and engineer to turn around, and Lucas says there is one person who's led the way through the company's rebound.
He's one of the most important and powerful people in the media entertainment business and someone that I think nobody knows anything about.
Greg Peters is Netflix's co CEO, an executive handpicked by Reed Hastings. He's the company's billionaire co founder who stepped aside last year. Well now Peters runs Netflix alongside Ted Sarandos, and together they've put Netflix on track to generate ten billion dollars in profit this year. On today's episode, who is Greg Peters And what's his vision for Netflix? And how we'll watch? Well everything, I'm David Gerret and this
is the big take from Bloomberg News. Bloomberg's Lucas Shaw recently sat down with Greg Peters for his first print profile since he became Netflix's co CEO last year. Can you describe what it was like to meet him and sort of how you thought about the scenes or the situations in which you'd want to show him in this role.
Well, I only had so much control over that, right, Netflix is a very controlling company. You know, Normally, if you profile someone, you want to spend a lot of time with them, you want to see them in multiple settings.
But you know, I knew I wanted something that was sort of more of a corporate event to see him interacting with peers, and so that ended up being going to this thing they have called New Employee College, which is like new higher orientation, and he gave sort of a basically a pep talk to this room of people.
The orientation happened at an art deco theater in Hollywood, and Peters started that pep talk by tracing Netflix's history, a history he helped shape.
If you look at the biggest initiatives for the company over the last few years, he has been the person leading those.
Peters is not exactly your average tech guy. He's a bit of a renaissance man. He speaks six languages and plays the Digeri do. After college at Yale, where he studied physics and astronomy, he got a job as an engineer at an online wine reed sailor, where he developed a taste for the finest barolos before the dot com bubble burst in two thousand and one. Over the next few years, Peters bounced around from tech company to tech company, and in two thousand and eight he got a call from Netflix.
They were looking for someone who could help get the service distributed on a lot more devices because Netflix started off only being available on your computer. You know, I watched it on my laptop in college that year, and Greg had a resume that was in many ways perfect for that because he was navigating this relationship between representing software and negotiating with consumer electronics companies.
Peters was part of the team that convinced the TV manufacturer Visio to put a Netflix button on its remotes, and that convinced Netflix co founder Read Hastings that Peters had potential.
Read takes a liking to him. He sees someone with broad interests. He sees someone who is sort of multifaceted because he understands the technical side very well and can do things that other people explain to me that I would struggle in explaining, and so I think that became attractive to someone like Read.
Hastings tapped Peters to oversee Netflix's expansion in Japan, and then Peters became the company's chief product officer, and in that role, Peters started looking into something that had become a problem for the company, password sharing.
Netflix started to study it. They tried to examine there are both ways to identify who was sharing and then how you would stop them from doing soak.
There are a lot of ways people share Netflix, like a family of four using the same account under one roof. But then there's the twenty something who's moved away from home and lets his two friends and his ex girlfriend us his mom's account. Peters and his team studied all those scenarios.
There's a lot of studying of building the algorithm to determine who is sort of unfairly sharing, and then how do you communicate that without pissing people off.
After rooting out the moochers, Netflix started to think about how it could launch a broader crackdown in twenty twenty two, but Lucas says there was this divide within the company about how to proceed.
They have a big disagreement basically about what the best approaches Read Hastings on one side, Greg Peters and most of his most of the executive team on the other side.
Hastings, Netflix's co founder, thought Netflix should charge by physical location. For example, if you are lucky enough to have two houses, you would need two Netflix accounts. Well, Peters thought that violated Netflix's core promise that if you paid for the service, you should be able to take it with you. Peters advocated for a model based on individual users. You could access Netflix wherever you wanted, but you'd have to pay to add new users to your account.
So they test both models in Latin America in sort of two distinct tests, and Greg's instinct proves to be correct.
By this point, Hastings had been thinking for a while about his next chapter. The fact that Peters's approach worked that led to more sign ups, fewer cancelations, and less online outrage was the last in a string of successes that convinced Hastings Peters could lead Netflix.
He was, as Read Hastings described, like kind of the battlefield generals. And so there's a reason that after they had settled on how to crack down and password sharing, read Hastings decides, now's my time. I can leave, and I trust Greg to succeed me.
In January twenty twenty three, Netflix announced Hastings would transition to a role as executive chairman. Peters became co CEO alongside Ted sarandos.
Now you've got this structure where you've got Greg Peters seen as sort of the tech Silicon valley guy in many ways, the air to read Hastings working alongside Ted Sarandos, who's the Hollywood guy running this massive company.
Netflix is now thriving. It's adding subscribers and advertisers even as other streaming services struggle, which is something Lucas saw Peters brag about when he was on stage at that new employee orientation.
Greg is basically saying, you know, all these traditional media companies with cable networks, they are screwed. Their cable networks are shrinking and that's depriving them of resources, and their streaming services don't make any money, and so these aren't
sort of real threats to us. And the companies that have the money to compete with us, the Apples and Amazons of the world, they don't really care about entertainment like Amazon's been at it for almost as long as Netflix, and Netflix has probably released more hit shows this year
than Amazon has released in its entirety. And I think he wants to say it's ours to win, but he feels that Netflix has always been more effective when it has seen itself as the underdog, and so he sort of ends this by saying it's ours to lose.
It's ours to lose. Uz coming up after the break Greg Peters's strategy to win. Lucashaw oversees media and entertainment coverage for Bloomberg and writes a weekly newsletter called screen Time about the business of pop culture, which means he knows a lot about the competitive landscape Netflix is in. Lucas says, one part of co CEO Greg Peters's plan for Netflix is pretty simple. It's to focus on what the company is good at.
I think that they want to continue to be the best and most popular streaming service in the world without getting distracted by a lot of other potential initiatives. But there's a recognition that they need to evolve the business and have sort of multiple levers for growth.
Peters isn't pushing Netflix to expand into movie theaters or build theme parks some other media companies, but Lucas says Netflix is entering a new phase. One we're making more money from its current model is as important as adding new subscribers, and the company has identified three ways to do that. To sell ads, to make video games, and to raise prices. When it comes to the first one, advertising, Netflix has a pretty straightforward strategy.
If you can get people to spend more time watching Netflix, you can sell more ads and make more money.
And one way to get subscribers to spend more time on Netflix is live programming. That company announced last week it's acquired the rights to stream two NFL games on Christmas Day, the Chiefs versus the Steelers and the Ravens versus the Texans. Netflix also acquired the rights to air professional wrestling, and there are plans in the works for award shows and more comedy specials.
I would anticipate you'll see just more and more live programming and get to the point where they have something live almost every day.
Are there signs that that's strategy branching in live events is working for them.
It's really too soon to tell, because their early live programming didn't matter, didn't move the needle. The Chris Rock Live Comedy Special it did fine, right, but it's still a live comedy special. There's only so much you can get from that. They had a Lover Is Blind reunion that was a technical failure. They had like this Mark Twain Prize, who cares. They had a celebrity golf match with golfers and F one drivers, like sort of more
of a stunt test. These are all I think Netflix trying to figure out what could work and not spend too much money because live sports can be prohibitively expensive. I see all of these as what works and how should we do it.
Then there's Netflix's ambitions in the world of gaming.
They have a very nascent investment in video games, which is also something that Greg is in charge of. They don't make any money from it yet, and it's still really unclear if that's working.
So there's advertising and gaming, and then everyone's favorite charging more money. We've seen the price increases, and I wonder are we at the end of that. No, how do they think about how much more they can raise prices and maintain audience or continue to build audience.
Well, their argument is always we feel comfortable raising prices if we are giving you more that you like and care about. Right, Because if you think about the start of Netflix, and it was very affordable, and because they had so many licensing deals with so many other studios, it was in many ways a replacement for cable at a fraction of the cost of cable. It's still a
fraction of the cost of cable. We can argue over whether it has as much right they're not getting as nearly as much licensed from others, but they make a ton. If you really wanted to just watch Netflix, you wouldn't get all the news and sports, but you could replace all the entertainment programming anywhere on just Netflix. So I think as they invest more, you know, they bring in wrestling,
they bring in football, they bring in gaming. As they add more of these elements, they feel comfortable raising prices. But it's a tricky balance.
So what are the odds that Greg Peters will succeed? Lucas says that from everything he's heard about him and what he saw as he reported on him, Peters is not someone people tend to bet against.
There were stories of you know, a company off off sites where they would play sort of fun and silly like family feud type games, and he would take it very seriously and you would know that if you were
on his side, you were going to win. Actually, like I had one of these awkward moments you have when you're profiling someone where I was like, you know, I talked to someone who said that you would play family feud and jeopardy in these games and that you would cheat, and he both categorically denied ever cheating while saying, you know, if you're going to do something, you might as well do it to win, which I thought was very telling.
You know, I drew a comparison to how you might sometimes like you don't want to spoil your kids by making them think that they could always win and losing on purpose, and he did verify that he has routinely lost on purpose to with children, but I think when facing other adults, Greg Peters does not like to lose.
You can sign up for Lucas's screen Time newsletter at Bloomberg dot com. This is the Big Take from Bloomberg News. I'm David Gera. This episode was produced by Thomas lou It was edited by Aaron Edwards. It was mixed by Blake Maples. It was fact checked by Adriana Tapia. Our senior producers are Kim Giittleson and Naomi Shaven. Our senior editor is Elizabeth Ponso. The cole Beemster Bor is our executive producer. Sage Bauman is our head of podcasts. Thanks
for listening. Please follow and review The Big Take wherever you get your podcasts. It helps new listeners find the show. We'll be back tomorrow.