The Big Tech Stories of 2022: Meta Had a Very Bad Year

Yesterday we talked about the crypto winter and how that has affected everything from n f t S to HAVE three hype. And today we're primarily almost exclusively going to talk about Meta's very bad two. But let's start off by talking about where Meta was coming into two, which means we got to talk a little bit about now.

It was in the springtime of one when Apple would deliver what would ultimately become a massive blow to Facebook, which is what META was called back then, and this was in the form of Apple's App Tracking Transparency or

a t T policy. So before this feature was implemented, app developers could potentially gather data about an iOS users activity on their phone, all by tracking Apple's I d F, a identifier that's an identification that's unique to each iOS user, then you could track what they were doing, how they were behaving on the phone, and use that information right But once the A T T feature went live, iOS device owners would get a prompt when they were launching

an app that was wanting to track their activity, and they would be given the option to allow that app track them or to opt out. Once folks had the option to opt out, a lot of them began to take it. By the way, Apple does not necessarily have to worry about adhering to this the same way that other developers do on iOS devices, which has led a lot of companies, including Meta, to accuse Apple of specifically launching this feature in order to hurt other companies while

not suffering itself, But that's a matter for another episode. Anyway, Apple's move was a big blow to Facebook because ultimately Facebook, the company, relies upon advertising revenue as the prime source of revenue for its business, and advertisers would pay top dollar to access Facebook's incredibly thorough databases on user activities and behaviors and profiles and and such, so that user information would provide a chance to target those users for

ads with incredible precision. But once Apple starts giving iOS users a chance to opt out of tracking. That cuts off the flow of some of that precious data to Facebook, and that would go on to play a big part in Meta's financial performance in tw two. Now, I don't know about you, but to me, it feels like it was an eternity ago when Facebook officially changed its name to Meta. But that was actually on October, so a little more than a year ago as I record this episode.

Facebook made that move at a pretty tumultuous time. This would be after Francis Hogan, a former Facebook employee, had come forward with tons of documents from Facebook. These documents showed how internally the company was struggling with problems like content moderation and managing misinformation and things like like political manipulation,

stuff like that. So these documents painted a pretty ugly and cynical picture of the company from within, and the timing of Facebook's name change left some folks wondering if maybe Mark Zuckerberg was trying, at least in part, to shrug off some of the dirt being heaped his way in the wake of these these revelations. Now, the official reasons for the name change, we're really number one to

distinguish the overall company from one of its products. So, in other words, the difference between Facebook the company and Facebook the platform. So this way you now have meta the company and Facebook the platform, because that's just one

of the company's products. Right. Two, it was a way to indicate the company's new focus towards this idea of the metaverse and that being the future of being online now towards the end of this metaverse concept was really at the height of the hype cycle, despite the fact that no one could really define what the metaverse was because it has not yet been built. So the general feeling was that the metaverse is going to be some sort of persistent online construct that people will be able

to explore. Uh, they'll probably be using virtual reality and or augmented reality gear to access it, and that's kind of the high level concept. But when it comes down to details, everything gets really fuzzy because we're just not there yet. In fact, we're not even close, and Mark Zuckerberg has said as much repeatedly. It's going to take years to get to a destination that will match up to the metaverse concept. We've got a lot of like

metaverse adjacent stuff. People have argued that Fortnite or roadblocks represent a kind of proto metaverse, and in a very limited way, I suppose that's true, but it's nowhere close to the scale of what people are talking about when they're really talking about the metaverse. So anyway, this is kind of where Meta slash Facebook was when it was heading into two. As the company started the year, its stock price was around the three dollars a share mark.

But in February of two, we heard about how the final quarter of one had treated Meta and the news wasn't good. So this was regarding Meta's financial performance at the end of one, but we didn't learn about it until February two. So, for one thing, the effects of Apple's app tracking transparency policy we're starting to become evident. Everyone knew that was going to have an effect, but

now we were starting to see. And the company referenced the policy a few times while delivering the earnings results to investors, saying, you know, part of this is because Apple has fired shots at us. Now. In that same call, Cheryl Sandberg, who at the time was Meta's Chief operating officer or CEO, acknowledged that the company was going to need to make some significant changes to its targeted advertising strategy, perhaps shifting two approaches that emphasize aggregate and anonymized data.

As competitors and regulators alike, we're pushing back against the you know, more established method of just scooping up all the information you can about every specific person you can. So Litling Meta was acknowledging this is an unsustainable approach because there's growing resistance around the world and competitors are actively taking advantage by throwing monkey wrenches into the works,

like Apple was. So they're saying, well, we need to change our strategy because one, this is not really palatable that we're getting into more and more hot water from the way we're collecting people's data, and too, companies we depend upon to supply us information have gotten wise and they're cutting off those avenues. So that's kind of what she was indicating. Then there was the matter of Meta's commitment to developing the metaverse. Zuckerberg had tried to get

ahead of this. Towards the end of one he indicated that building this vision of the future of the online world is going to require massive investments, and that this investment was going to eat into profits as a result. But I think investors were still taken aback when they saw a decline in profits in the Q four results, because here's the thing. Investors really like seeing certain numbers go up and not go down. So it's not enough for your company to make a profit. That's not good enough.

You've got to make more profit than you did the last time you made a profit. Otherwise you're a loser. And as I get older, yes, I get more and more bitter about our peculiar approach to capitalism. Or maybe maybe it's not our peculiar approach. Maybe this is just where capitalism ultimately leads. But anyway, I think you know this. This belief that it's not enough to profit, you have to profit more than you did before is inherently destructive

over time. Anyway, enough of my soap boxing. The decline and profitability sent a couple of messages to investors, and one was that meta for at least the near future, is itself going to be an investment mode in order to make this vision of the metaverse become a reality.

This is a future that a ton of companies were already starting to gloam onto, despite the fact that there's not much there there and my own company does this at least to an extent, and I do understand it, even if I don't fully like get on board with it. I understand it if the metaverse ends up being the future of the Internet, which is a big if, but if it does, then you want to be in on

the ground floor. Because back when smartphones took off and people began to access the Internet more and more using smartphones than they were on laptops and desktops, that really shook things up because suddenly all these companies realized they needed to cater more toward smartphone users than desktop users. And this is where we started to see an explosion and app development, because everybody had to have their own app,

even if it didn't make sense. Everyone had to to uh to create websites that were mobile friendly because otherwise it was a pain in the butt to navigate these websites on your smartphone. So a lot of web based companies had not anticipated this change, and it meant that they were left playing catch up when it happened. So I do understand the desire to not let that happen again and instead to be a leader in the metaverse space rather than too you know, hold back and then

find out that you're left behind. You have to try and regain relevancy later on. The only problem is, I'm not really sure that the metaverse is actually the future of online That being said, I could just be shortsighted and that you know, I'm the one who's totally in the wrong here. It's it's fully possible. In fact, it's lightly that that's the case. I just it's hard for

me to see it anyway. Another bit of news that shed some light on Zuckerberg's hard push for the metaverse was that, for the first time in its eighteen years as a platform, Facebook posted a loss of active users quartered a quarter. At the end of one the number of active users on Facebook was down by about half a million people, a lot of them in places like

Africa and India. Now, keep in mind, Facebook still had more than one point nine billion active users, but there was a concern that this drop might indicate the beginning of a slide for Facebook. And I I'm sure several of you out there are saying the same thing I said when I first read this, is that one point

of data is not a trend. Yes, you know, it's not good to have lost a half million users over the course of a quarter, but you can't be certain that this is the start of something from one point of data. However, that doesn't stop investors from doing just that,

So it's also no secret. In fact, it's a it's it's a Joe, it's a meme that Facebook's demographic is aging that the company is having a real hard time attracting younger people to its platforms, particularly Facebook, because who the heck wants to join a social network when they're a kid that their parents are already on or maybe even their grandparents are on it. That's not really cool if you're a kid, right, you don't want to be

where all the old people are. Meta needed to get young blood hooked on its platforms, which is one of the reasons I think that Instagram really started to launch features that appeared to mimic what TikTok was doing, so you could see the metaverse as another way to try and scoop up the next generation of users. So it might be a hard sell to get the younger folks of today on Facebook. That's gonna be hard to do

because Facebook is just not cool. Instagram might be a little more successful, but it looks like it's following the same trends as Facebook. At a one point, Meta was developing and Instagram specifically for younger users, but in the wake of those whistleblower events and at the end of the company had to backtrack on that because they have a pretty terrible record when it comes to things like content moderation and user privacy and safety, and when it

comes to kids, people take that stuff seriously. So Meta's plan to try and tap into that young customer market was waylaid quite a bit, and it was through all fault of its own. So you have to then go out there and invent the next big thing to get ahead of it, right, Like the ship has already sailed on TikTok unless TikTok gets banned in the United States, which will talk talk about in another episode. But unless that happens, then the only course open to Meta is

to invent the next big thing. So the metaverse might well be Mark Zuckerberg's Hail Mary pass to keep his company relevant over the long run. All right, We've got a lot more to say about Meta in two, but before we get to that, let's take a quick break. We're back. So while Zuckerberg is trying to create this metaverse. That dedication is costing a lot of money, and the company also has showed its hand when it updated its

revenue projections for the first quarter of twenty two. Wall Street had previously predicted revenue of around thirty billion dollars for Q one two of of Meta, but Meta's projections fell short. It was more like twenty seven to twenty nine billion. So this was also a message sent to investors of things are not going to be quite as

positive as you might have previously thought. The decrease in profits, the increase in expenditures, the loss of half a million Facebook users collectively, all this news gave investors bad mojo, and in aftermarket trading in the wake of this earnings call, Meta's stock prices dropped from around three twenty three dollars a share to two hundred fifty two dollars a share. That's a huge drop and things would not really improve

over the course of the year. As I record this episode, Meta stock is at around a hundred seventeen dollars a year. In fact, it dropped below a hundred seventeen at one point while I was writing this. So yeah, if you started off in the three thirties and now you're down to one seventeen. Things have not gone well, but it has been a more gradual decline through two. We saw that sharp drop in February after the Q one earnings call or Q four nings called excuse me. But since

then it's been more of a gradual decline. And there was one point in November where the stock price actually dipped below ninety dollars. So it's not as bad as it was back in November, which I guess is saying something. Now, one thing that Meta could not have predicted. You cannot blame the company for this, but it is something that very much has had an impact on the company. Happened

in late February two. That's when Russia invaded Ukraine. Now I'm sure that I'll at least mention this war in other episodes in this series as we look back at the tech news of two. Now, in March two, Russia's federal regulator Roscom Natzer, which I'm sure I mispronouncing, shut

down access to Facebook within Russia. So this was part of Russia, or at least the government of Russia, attempting to control the narrative with regards to the war in Ukraine, which the Russian government was insisting was just a quote unquote special military operation at the time. They would then go on to subsequently block Instagram in Russia, which was yet another blow to Meta. Russian representatives called Facebook and Instagram extremist, which the company appealed in June of two.

It lost that appeal. That is not really a surprise because the Russian court system typically sides with government prosecutors in court cases. Big shock there, and Meta missed a subsequent deadline in November to appeal the ban a second time. As a little side note, Russian reps said that Russians who accessed the platforms by relying on tools like virtual

private networks or VPNs would not be punished for doing that. However, Russia had also already restricted the use of several popular VPNs within the country, and in two even Kaspersky, which itself is a Russian company, announced that it was going to end its VPN service within Russia. It would honor any existing subscriptions until they expire or until the end of three So yeah, you know, Russia's really cracking down on people having a way of accessing or expressing information

that might contradict the government narrative around Russia's invasion of Ukraine. Anyway, the laws of the Russian market obviously would impact Meta's revenue, and of course that wasn't the only aspect of Russia's war with Ukraine that would have an impact on the company. As you might suspect, Facebook would have to deal with various misinformation campaigns aimed at spreading false news about the

ongoing war. In September of two, Meta announced it had shut down two networks of fake accounts designed to spread misinformation. One of them, the smaller of the two, originated in China and the other in Russia. The Chinese network, like I said, was relatively small and it was mostly aimed at influencing mid term elections, which had really no measurable impact.

I think the Russian campaign was far larger, and Meta said that the campaign had spent more than a hundred thousand bucks on ads both on Facebook and on Instagram in an effort to push pro Kremlin stories regarding the war in Ukraine. So they shut those down. So again, that war continues to have an impact on Meta, as well as numerous other tech companies. Now, moving on with

Meta's very bad year. It's earnings call in Q one met the adjusted projections Meta had made because the company brought in twenty seven point nine billion dollars in revenue, so it sort of hit the middle of the range it had predicted. It said twenty nine it got twenty seven point nine. Ad revenues were slightly down, but the company did say that more users had joined across all platforms owned by the company, so it was not showing a continued loss of Facebook users, so again there was

no trend there. However, in July, the company reported a decline in revenue. It was just a one percent drop year over year of a decline in revenue, but that was the first time Meta had ever posted a drop in revenue since it had become a publicly traded company. Profits were down significantly more than one percent. It was

backed down by thirty six percent year over year. But again, this is understandable when you start thinking about the ongoing huge expense of trying to make the metaverse happen, which is, you know, kind of giving me mean girls vibes. Stop trying to make the metaverse happen. It's not going to happen. Note I do not actually know if the metaverse will in fact not happen. It probably will, and I'll probably

be salty about it. Now. By this point in the year, the world in general was gearing up for economic uncertainty like that. There had been talk about this since the spring, right. There have been various people in finance and business who were starting to recognize troubling signs ahead. And whether you wanted to call it a recession or not is up to you. At this point, I don't even understand what

the qualifications are to call something a recession. But by the middle of spring and then into the summer, it was more and more obvious that economic belts were going to have to start tightening, and it would be no different for tech companies in general and Meta in particular.

In the summer, The Verge published a piece that cited a recording of Mark Zuckerberg saying, quote, realistically, there are probably a bunch of people at the company who shouldn't be here end quote, suggesting that maybe Meta was overstaffed, that they had more employees than they had work to do, and thus we're being inefficient. Around this time, we were starting to hear the about tech companies at least easing

off the gas pedal. When it comes to staffing. It wouldn't be much longer before we started hearing about hiring freezes at Meta and at other companies. We started hearing about Meta in particular, but other companies to increasing employee standards in an effort to kind of downsize and only keep the best workers. And then eventually we started hearing about layoffs. Now, again, this is not a problem that

was unique to Meta in two. A lot of companies in the tech space and outside of it we're going through similar stages. But Meta, being a huge company, had a lot of folks on the payroll, and in November, Zuckerberg laid out his plan to reduce headcount by which translates to more than eleven thousand employees. That is a lot of people. Now, one person who left Meta did so back in June, and in this case, it wasn't

that she was laid off, she chose to resign. That person was Cheryl Sandberg, the former chief operating Officer or CEOO. She had worked at Meta slash Facebook for fourteen years. She was instrumental in how the company grew and developed over those fourteen years. But according to the rumor mill. Things had been taking kind of a bad turn for

Sandberg over the last couple of years. There were stories that she and Mark Zuckerberg were increasingly at odds over company strategy and that the teams that she was managing we're being shifted around or reduced in size, so she was given less and less to do. It kind of reminds me actually of what happened to Steve Jobs in the eighties when they brought in a new CEO. Steve Jobs was kind of moved off to the side of Apple, and depending upon which version of the story you hear,

he either left in protest or was effectively fired. But either way, he had already been given the message loud and clear that the company didn't want him or the new leadership of the company did not want him. Now. Sandbird's reputation, as I said, was tightly tied to Facebook's enormous growth over the last fourteen years. Like this is a company that at at certain points is boasted at having over two billion users for just one of its platforms,

that being Facebook. Her focus on ad revenue, likewise, had become a core Facebook feature. But this focus on growth was kind of a double edged sword. You know, some people saw it as a huge positive because for a long time it was netting investors lots and lots of returns on their investment, at least until things started to

turn against the company. But others saw her as valuing growth over everything else and that this in turn would set up Meta slash Facebook for some of the big problems that it faces today regarding issues like content moderation and you know, regulatory agencies butting in on Meta's operations. So it goes both ways, and Sandberg was leaving the company just as the business world was really starting to get a bit concerned about where things were headed economically.

One thing that anyone in the ad business can tell you is that when things start getting tight, marketing budgets frequently are one of the earliest ones to get scaled back, and they typically get smaller until things improve. And for a company like Meta, ad revenues are the chief source of income. So the company was already struggling because of

the blow that was dealt by Apple. It was having the issues because of these increased expenditures in developing the metaverse, and now it was looking at the potential of advertising companies decreasing their marketing budgets, which means fewer customers for Facebook. Remember, like Facebook and Instagram, we aren't the customers, We're the product. The customers are advertisers, and what they're buying is access

to us. So that's when I talked about Facebook having fewer customers, it's because all these companies are cutting back on their advertising budgets. Meanwhile, Meta was also facing a lawsuit from the US Federal Trade Commission, or FTC, accusing the company of practicing a buy or barry approach to competition, which means that they were saying Meta's approach to competition is to either buy up a rising competitor before it's a real threat, or attempting to squish a competitor out

of existence, maybe by mimicking the competitor's own products. And I think that's pretty darn fair to say that Meta has been doing that for like all of its existence, pretty much. The FTC would also get involved in an effort to try and block Meta from acquiring a VR company called Within Unlimited Incorporated. I talked about a little bit on Monday, uh That company makes a VR fitness app called Supernatural. That particular story is still unfolding as

we end out two. So uh, still no word yet on whether or not the FTC's lawsuit to block that acquisition will actually be successful. Uh. The FTC has refined its lawsuit to make it a little more specific, but yeah, we still haven't got to the end of that story yet. Okay, but let's talk about VR for a little bit. With regard to meta so VR or virtual reality, it's been a developing technology since the late nineteen eighties, at least at least as far as the general public has been

aware of it. There was a brief hype cycle around VR in the nineties, but that deflated pretty rapidly once people saw the limitations of the technology at that time. So back then, your typical VR headset was massive, and it was heavy, and it had to be suspended from like a frame by cables in order to support the weight because it would be too heavy for someone to

just wear for any length of time. Graphics were really primitive because we just didn't have the processing power to handle something more sophisticated, and folks got disenchanted with what VR was compared to what it was promised to be. Thus, interest faded in VR in the nineties, and as a result, the people who had been working on the technology to turn VR into our r by what which I mean, to make VR a real reality found themselves either with

reduced budgets or completely out of a job. And it took years before folks in general were ready to entertain the idea of VR. Again. Development didn't stop, but it was severely hampered. Then you get eventually to the arrival of the Oculus VR headset, and things began to change. Uh. The Oculus was relatively lightweight compared to earlier VR headsets.

Processing capabilities were much better because you could pair the Oculus with a significantly powerful computer and thus take advantage of that computer's abilities, and the headset would just act as kind of an interactive display um. And then it looked like VR might actually stand chance of catching on at least a little bit. Meta, which at the time was just Facebook, purchased Oculus in two thousand fourteen. Uh,

that story is complicated in its own right. It doesn't really matter for our episode here, so we're gonna skip ahead of bit. In October twenty twenty, Meta would release a pair of headsets called the Oculus Quest two as you might guess this was a follow up to an earlier Oculus quest. When Facebook rebranded into Meta In the Quest To also got a rebrand, it dropped the word

Oculus entirely. Now it's the Meta Quest too. Well. When the company launched those headsets back in there was a sixty four gigabyte version which sold for two hundred nine dollars and a two hundred fifty six gigabyte version for three dollars. And on Facebook phased out the sixty four gigabyte model, replaced it with a hundred twenty eight gigabyte model, but kept the price point at to Now skip ahead

again to this year two. Over the summer, mark Zuckerberg announced that the company was going to increase the price of the two Oculus two models by one dollars each. Nothing else changed, so the headsets didn't get more features, they didn't become more powerful, they didn't introduce models with more storage, They did not provide more immersive experiences. Someone who bought a base Oculus well in this case Meta Quest Too, at the end of July would pay to it.

Someone who bought one in the beginning of August would buy it for three and there would be no difference between the two headsets besides that price tag. Uh And obviously if you were to buy a two D fifty six gig by version then it would set you back four. Zuckerberg tweeted that this was done quote in order to continue investing in moving the VR industry for for the long term end quote. We'll talk more about that strategy

after we come back from this quick break. Okay, So this past year, Meta increases the cost of the Meta quest to headset. It is not often that a company will actually boost the price of a tech product, particularly a tech product that's debuted nearly two years earlier. And just as a side observation, any version of the metaverse that is going to feature VR exclusively or extensively is also going to have to solve the problem of making

VR equipment accessible and affordable and attainable. So one of the big advantages Facebook and Instagram and WhatsApp have is that these are all products that are accessible on mobile devices, and these devices aren't necessarily super expensive. Some of them are, but some of them aren't. You don't have to get a flagship phone model if you don't want to. But I bet you can run Facebook on it if it's

a smartphone. So these are affordable portable devices, and most importantly, in my opinion, you don't have to wear them on your face if you don't want to. VR is a tougher cell. It's harder to see the value of VR unless you try it out for yourself, and in the process of trying it out, you might encounter issues like motion sickness. Some people are more prone to it than others. I am extremely prone to It didn't used to be, but as I get older, I fall victim to motion

sickness more and more frequently. So I think there's always going to be a smaller market for VR, and probably a R two at least in headset formats. It is an expensive peripheral. It has lim it in use cases,

so making it more expensive is a tough measure. It's a and it's it's a hard thing to tell potential customers, right like people who might have been looking into VR, and you tell them, oh, well, this thing now costs a hundred dollars more than it used to, but it doesn't do anything more than it did before we hiked up the price. That doesn't necessarily go over well, but we're not done yet. Meta also introduced a new VR

headset model this past year, the Quest Pro. Zuckerberg unveiled this in October two, and this headset is meant to show off how VR headsets could potentially be used in settings outside of your typical VR experience and VR games. It's meant, in part to open business owners eyes to the potential use of VR in professional settings. This headset costs a hefty five hundred dollars, but again, Meta has been positioning it more as a professional tool, not something

that's meant to attract gamers and hobbyists. Now, some early reviews of the Quest Pro, we're pretty quit critical of it, um not really praising it so much, And in a curious move, Mark Zuckerberg and met us seemed to kind of acknowledge that the Quest Pro isn't, you know, really

very good yet. Instead, the messaging is more like the Quest Pro is an early model and that something a bit more practical will have to wait for a few iterations down the road, like maybe the Quest four or the Quest five, Which I mean, that's that's a weird message to send out to potential customers, right, I mean, it could be the truth, which you know, great for them being transparent about it, but it's weird to tell people, hey, yeah, this one kind of stinks, but it's putting us on

the path to where we want to be, and hey, you want to buy one for smack a ruse? Now. The Virgins review of the Quest Pro was fairly critical. Addie Robertson doesn't mince words and says, quote, the problem is the Quest Pro isn't very good. It's device seemingly launched without plan or purpose, highlighting vrs persistent drawbacks, without making good use of its strengths, and topped off with

some irredeemably bad software. Yikes. And y'all, if I'm honest, it's really hard to convince me that VR has a real place in most business settings. I can definitely see it for some use cases. For example, if you wanted to show off a three dimensional virtual model of a product, VR or a R could come in really handy. If you could make real time tweaks and changes to this model while people are looking at it and giving you feedback, that could be really valuable. It potentially speed up the

design process considerably. It would be even faster than three D printing, which has revolutionized the speed of developing new products in lots of different industries, but for any businesses that aren't in product design, it's harder to sell the idea of VR to me, Like, I don't really like the idea of having to put on a VR headset in order to attend a virtual meeting. I mean, I don't even like having my camera or my microphone on for most virtual meetings unless I'm presenting something or I'm

asking a question. And it's super hard to imagine VR helping out when I don't know, when you're talking about a spreadsheet or a power point presentation. I'm not sure there's any added value to what you could already do with just various virtual meeting software suites that work on regular old computer screens. Now, I assume Meta's goal was to start getting businesses on board with the idea of adopting metaverse technologies and concepts. I'm not sure the company

has been successful in doing that. Perhaps it's just too early to kind of make Meta's sales pitch for VR, And with that comes a danger that going so hard, so early and so publicly, that Meta could be shooting itself in the foot, because again, We've seen it happen in the nineties when people got unenthusiastic about VR because they saw the limitations. If you push VR too hard before it's capable of doing the things you wanted to do, you run the danger of repeating that all over again.

All right, So to put a pin on where META is so far, I figured we can look at it this way. At one point in two Mark Zuckerberg's personal net worth fell one hundred four billion dollars from where he started out at the beginning of the year. He went from being the third well beiest person in the world to the twenty nine. But I mean he's still made the cut, right I didn't, But yeah, that's still

that is a massive drop. Now. To be clear, since that time, Meta has rallied a little bit, because it was at its lowest when it dropped below ninety dollars a share, and a lot of Zuckerberg's wealth is tied up in shares of his company. But since then we're now, like I said, around a hundred seventeen dollars, So it's a little better than what it was at its lowest. And I'm not sure where Mark Zuckerberg ranks in the

list at this point. Plus you know, we have other complications, right because Elon Musk was the wealthiest person in the world, but his values kind of taken a nose dive because Tesla shares have been dropping and I don't know, maybe we're gonna see is a race to the billionaire bottom and I will spring for popcorn if that happens. Before I wrap up this episode, I want to talk just for a short bit about a one of other companies that had a rough time in and a really big

one in that category is Netflix. And you could argue that Netflix's struggles have had a massive ripple effect on streaming in general. So we go back to April of this year. Netflix holds an earnings call, and the company reveals that for the first time in its history, it had lost more subscribers over the previous quarter than it had added. There were two hundred thousand fewer Netflix subscribers, and boy howdy, did that set off an investor panic.

The company's stock price, which had been at around six hundred dollars a share at the beginning of two dropped down to around two hundred dollars a share in the wake of that earnings call. So Netflix's value took an enormous hit over the last year. The company had a load point of a hundred sixty two dollars or share, so that's where it kind of bottomed out. It has

since recovered quite a bit. It's now just a little bit below three a share, still not where it was at the beginning of this year, but at least it looks as though it's pulling out of a nose dive. Now. Netflix's investors were showing a lot of concern and you can kind of understand why when you start to really critically think about the streaming content business. So to attract subscribers,

you need content, right, you need good content. Netflix initially built up its domination in the space largely by featuring content that was created by other studios, but gradually the power players in the entertainment industry started to get worried about Netflix and started with whole deals of some of its most popular i p So Netflix is finding it more and more challenging to land contracts that give it access to the types of stuff people actually want to see.

So then Netflix starts to make its own content, and it starts making some premium, prestige content and of course this started several years ago, but now people know about it. People know that Netflix makes tons of content of its own, and it really became a production company, not just a distribution company. Well, here's the thing, producing good stuff, or at least good looking stuff. The content itself might not be good, but it's expensive. Netflix produced a lot of it.

So there have been some questions about whether the amount of money Netflix has spent on producing content makes sense. Because if your business strategy revolves mostly around adding more subscribers, you eventually hit a point where you really aren't going to be adding many more folks because you're meeting market saturation. The cable companies ran into this problem decades ago. Streaming

services are running into it now. And of course there's also way more competition in the space, right because now everybody has a streaming service. So Netflix, in the wake of this, starts to cut costs. Entire departments were gutted. Just take a look at the number of animated projects that got the acts at Netflix over the last year.

The company also laid off employees. It announced plans for a couple of new types of subscriptions, one that lets existing accounts add additional households for a few dollars extra per month, and this was an effort to crack down on people who are sharing their Netflix log in credentials with friends and family who you know aren't actually part

of the same household. The company also announced plans for an ad supported tier of service that would have a reduced subscription costs, so people who either didn't want to or couldn't afford the full subscription cost could go at a lower tier UH and just endure ads and not have access to all the content that's otherwise is available

on Netflix. Now, over the course of two Netflix was actually able to reverse the trend of losing subscribers, and it was kind of a trend for Netflix because by the second quarter they were down almost a million, but they were able to reverse that over the last half of the year, and they even beat out projections in the process. They added more people than they even predicted. Right now, for Netflix, things are in a better place

than they were in April after that earnings call. But across streaming in general, we're seeing companies struggle with this problem of how do you produce content that attracts customers and keeps the existing ones happy while you also are able to do it in a way that makes a profit. And it's complicated, and it's made more complicated because it's

harder to ascribe numbers to this stuff. Did someone subscribe to your service just to access a spece civic piece of content or did they happen to access that specific piece of content because they already subscribed to your service. This isn't like the movies, where box office is a pretty decent indication about whether a film is resonating with audiences or not. We've also seen another company struggle with this over the second half of two will close out

with this. That would be Warner Brothers Discovery UM. Warner Brothers Discovery was not struggling with any problems in the first half of two because it didn't exist yet a T and T spun off. Warner Media and Discovery merged with Warner Media in April of this year and thus

formed Warner Brothers Discovery. Of course, we knew this was going to happen because it was announced last year, but it was this year when it finally concluded and David Zaslov, the head of Discovery, became the head of the newly merged company and started making some serious changes now, y'all. At one point, when I was recording Tech Stuff back in the day, it was part of Discovery COMMU Dications.

Discovery Communications was daddy to Tech Stuff and to all the other how Stuff Works podcasts back in the day, and it was led by Mr David Zaslov at the time. And I'm pretty comfortable saying that nothing he has done since taking charge of Order Brothers Discovery has surprised me. That includes him, uh acting the Batgirl film which was almost finished and then writing it off for tax purposes

didn't surprise me even in the slightest. Didn't even surprise me when he started doing things like having Westworld pulled off of HBO Max not just canceled, but pulled from the service. Uh, didn't surprise me when he shook up the leadership over at d C. He still has to cut billions of dollars of debt from this merged company, So nothing he's gonna do is really gonna surprise me. We are not all the wood's by far with the changes for Warner Brothers Discovery, but zas Love has said

the streaming business is a tough one. He's coming at it from the cable business, which similarly has become really tough as it's hit saturation. So to make financial sense out of streaming is challenging, and changes have to happen. You can't just go on producing super high end content for streaming without some other way to monetize it, or else you'll eventually go out of business. And I think

he's right. I think zas Love is on the right path here in the sense that you've got to figure out a way to make this make financial sense, or else you'll ultimately produce yourself out of business. You'll you'll spend too much money, you'll overextend yourself, and you'll collapse. I do think zas Love is taking a much more brutal approach than what I or a lot of other folks would like to see, especially fans and creators. But I do think this reckoning was a long time coming.

It was just a matter of when and who was going to launch it, and we're starting to see it play out across other streaming services as well. Anyway, I'm sure we'll talk more about Warner Brothers disc coovery in as well as other streaming companies and how they navigate waters moving forward. But really, I think Netflix is bad. April of two was kind of the the bit that got the snowball rolling down the hill. Okay, that's it for this episode. We will continue our look back on

two in the next one. Hope you're all well. Please reach out if you have suggestions for topics you would like me to cover. Things to look forward to in three. You can do that on the I heart Radio app. Just download the app. It's free to use, free to download. Navigate the Tech Stuff use that little microphone icon. You can leave me a voice message up to thirty seconds in length, or reach out to me on Twitter. The handle for the show is tech Stuff H s W

and I'll talk to you again really soon. Tech Stuff is an I Heart Radio production. For more podcasts from I Heart Radio, visit the i heart Radio app, Apple Podcasts, or wherever you listen to your favorite shows. H