Future of Streaming and Market Consolidation

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Now streaming on Hulu and Hulu on Disney plus for bundle subscribers It is Wednesday, june seventeenth The late Paramount owner Sumer Redstone popularized the phrase content is king in the media industry. And for decades, that was pretty accurate. Thinking back to the big cable TV characage battles of the nineties and two thousands, the standoffs usually ended when a big show like Friends or CSI or a football game was about to air The content owners ultimately dominated over the distributors. Incidentally, that's how your cable bill ended up costing more than a one hundred bucks a month Right before the platforms for watching content went global and achieve scale never possible in the heavily regulated TV industry And by twenty nineteen, Jeffrey Katzenberg, the former Disney and Dreamworks mogul, he declared that while content is the king maker, it's not the king. The king is the platform, he said, in the modern media and landscape YouTube, Netflix, Spotify, Amazon, all our favorites on this show Jeffrey's point was that you need great content and a lot of it to be a player in entertainment, but ultimately the platforms are now the gatekeepers and they own that audience Do you agree with that We see it playing out all over the Hollywood landscape, Lerea, a low rated time travel show that NBC aired a few years ago. That's now the most popular acquired show in America, according to Nielsen. Why? It recently dropped on Netflix Similarly, why is Fox acquiring Roku in a twenty two billion dollars deal After all, Fox has some of the most valuable content in the world in Fox News and the NFL license. And Roku is a platform and technology company It barely produces any content at all but it has a platform one hundred million users Iheart and the Ringer, which produces this very show They took a bunch of their very popular podcasts off of YouTube and put them on Netflix. Did YouTube even blink for a second Will we see any decreased engagement for YouTube on the monthly streaming chart It's basically too big to fail at this point, and that's a scary fact for Hollywood content owners and producers Or is it Is there anything that could be done about this at this point? That's what we're discussing today with John Mass. He's the president of Content Partners, which is a big film and TV library company. They just did a big billion dollar re upp with Carlisle. They own or co own major movie libraries, the CSI franchise, a bunch of others. Today, it's forget whether content is still King Is content still in the royal family? From the Ringer and Puck. I'm Matt Bllany and this is the town Okay, we are here with John Mas, president of Content Partners and returning champion on the town third time on the show. Welcome back. Thank you. goodood to be back.. Do I get like a mug, a town mug, or a hoodie or something like that for being on the third time? We can maybe arrange for you to have one of the A twenty four hats that they keep sending Craig All. No, we do have some merch. We have some stickers and we have some some mugs. I can get you a pu hat. I'm sure. it will be like the five timers C club at SNL. You'll get a jacket after your fifth time. That is a good idea, Craig. We need to come up with something for like, well, Lucas, obviously, but like the Rich Greenfields and like you're on your way, John, someday, we'll get you there I like it I like Why I like having you on the show is because you are a fantastic avatar for all of the content industry You buy and sell assets movies, TV shows, the essence of the business and you see where the money is made throughout the waterfall going on deccades after some of this stuff is made And we've had you on to talk about how money is made on films, how money is made on television But what we haven't really discussed and I want to today is how money is made in distribution because it is such an important part of the Hollywood ecosystem and one that is arguably more important than ever. this notion of whether content is king or distribution is king. That's been a tug of war for decades and it feels like The distribution people have basically pulled the content people into the mud and are doing a little dance in victory. Do you agree there? Well, I think they're inextricably linked and very sort of symbiotic relationship between the two, obviously, right? Katsenberg s Jeff Gatsenberurg, I think is such a smart guy said and I'm going to paraphrase this. I think he said something like content is king, but distribution is king maker. And I think deal with Roku and Fox yesterday is sort of emblematic of that So I think they recognized how important distribution is going forward because For years, you know, the last few years, we haven't really thought about distribution. used to be Our business was based on distribution. Everybody in television, you wanted to go five years for a TV show and then it would go into syndication, you, off network syndication, you'd see it on your local TV stations and then it would get into cable and go through all these windows. And that's where the real money was made. Exactly. And it's ended, right with the demise of syndicated television and the vertical integration deals that are being done by the big media companies, that sort of goes away. Now you make it for Netflix. It stays on Netflix, at least for now. Some of the others are experimenting more with different windows, but the heyday of two and a half men airing ten times a day That's over. That's gone. And same thing with DVD. you think about the DVD business, that's about distribution, right? They aren't making content. They're distributing content. And that went away But now what you have with distribution is you have data, right? We're getting a ton of data. We aren't getting data. And usually content owners aren't getting a lot of da. I don't have it. I don't own the pipes.. But now Fox owns the pipes, right? They have both TRC the Roku channel and they have the the app store, you know, that they own that's their two lines of businesses. And because of that, because of the Rokie stick and their integration in huge percentage of households here, you that are now are smart devices, it gives them data that they never had before. And that data helps them buy content because they're a licensor of content. They don't make a lot of content themselves, right Fox buy smarter And they'll sell advertising smarter, better, more effectively And I think I thought it was a bold, really smart move by them. So the important thing there is that Fox is buying not nothing content oriented. They're buying the pipes. They're buying the platform And there they believe that it's worth twenty two billion dollar deal. get in that game and I kind of agree with them Fox has been and also ran because they are the quintessential content owner They have very compelling content in Fox News for that audience and for football fans Beyond that, you know, maybe a hit here and there, like World Cup going on right now. Fox is not a player and now they are. and it's all because of this distribution that they now have. That's right. That's right. And I think we have to think I have no idea what's going on in the boardroom, but my sense is they look at Fox News, which is a jogernaut and you know huge ratings for cable, But that business is dying. Cable is dying. The audience is literally dying And the audience is aging out, right? They're getting older too. And the people who are cutting cords, right who are no longer subscribers to cable are moving to services like free streaming like a Roku channel and they don't watch that AVD is where it's at. Every company wants to have an AVD service and they see it as the growth engine for the next five to ten years. Right. So they're going to Keep raising your price on ad free television, right? And they'll have a strata of peoplee who are probably very affluent and do not care to watch ads. And then most people, I think ninety plus percent people more than that. ninety five plus percent of people are going to have advertising of some sort. even if it's just when you launch your home page, there's going to be advertising. People are going to be served up ads because The services can and people are willing to watch it. Well, we have a great test case in what Amazon did because Amazon turned on ads for everybody and you had to affirmatively Go to your prime video page and turn the ads off and agree to pay more. So the vast majority of Prime videoide subscribers now granted, those are people that are getting the service along with their free shipping. so they are less kind of motivated to make changes there. They for the most part took the ads. Can I just say one more thing about the whole Fox thing? I just thought of something.ure You know, their audience is not only aging out and there's cord kind of going on a cable. So People who might watch Fox News who are younger, have cut the cord, don't have access to Fox News. Okay Now they do, right? Because Fox News will be be available on Roku, right? So now you have access. So you may be able to get a younger audience to attract the youngerience Fox News and extend the life of Fox News The thing with with NFL and I think it's a big problem is they're so reliant on that. You know, there's going to be another licensing period that's going to come up, right? And they're going to go back into the market. And the question is whether or not the NFL does an exclusive deal with a broadcaster anymore, right?ight now they're doing co exclusive deals, right? But they will they do exclusive deal with a streamer going forward or if not is a coless of and what they do in the short term while the NFL is on Fox linear they buy exclusive rights to that, they'll be able to put it on the Roku channel or some other channel that they, you know, the Fox Ox channel on Roku. And you know, so you'll have that app. So the people who have cut the cord, do not have access to Fx sports, or do not subscribe to YouTube TV where you have the NFL package, the Sunday ticket. Now you've access to it again. Well, they have Fox onene. They do they do have a service now Fox onene, but I don't know how much penetration. They don't have the I mean, unfortunate, they don't have the install base that right, you know, Roku has. I just it's You know, it's fine. It's a bundle of Fx content, but it's not the same installed base that Roku has. Right. And you're talking about these Sunday NFL packages. And I do think I said this with Lucas that I think having Roku If this deal closes, we should caveat that. Having Roku will give Fox ammunition in those negotiations because they do have a bigger platform. And They Don't need it as much. because they have this extended platform that obbviously they still need NFL. But it's not an existential question for the company like it would have been if they had just been an NFL and Fox newews company And this gets to the question of the power of this distribution because I continue to marvel at the Nielsen chart. when it comes out and a show like Lerea which was kind of a joke NBC show. It did get three seasons But it was like a lost rip off and time travel show that aired during COVID, notot a huge hit. Goes on Netflix immmediately shoots to number one The Netflix audience continuously has shown that it will gobble up older shows when it's put in front of them And to me, that is just such a flex by the distributor. It just shows that in this modern marketplace where all platforms are not created equal like they were in the cable TV era where you had all of them presented to you at all times on equal footing and you chose which one you wanted to watch Now The platforms kind of choose for you Yeah, I mean Look at suits is a great example of that, right when suits went on there Um, you know, it's either in the new to, you know, the service or, you know, even though it's algorithmic, right They still where they place the carousel and what they stack first like Nonon Netflix or top ten or whatever it is depending on what placement is on their carousel, people watch it and certainly suits had not been talked about for years right had been on here for years and had been talked about for years and was not getting much play on Peacock. Now of a sudden it's a top show and people are binging, you know, suits. Same thing for Breaking Bad, right? Yeah, that was the original. It was a very good show, critically acclaimed, but was not very successful Right? Yeah. But who made it a King? Netflix. And then people, they not only that, they drove viewers over to ABC, I mean, excuse me, AC. So it's a very powerful. Distribution is a powerful mechanism for making kings. So you control some of those libraries and some of those shows Can you negotiate in your platform deals to get that carousel placement? We don't distribute ourselves. We use third parties to do our just. Even the libraries that we own will use usy or Lineesgate or Warner Brothers, Universityal or Disney will distribute them on our behalf. And so we aren't involved in those negotiations. But have you I mean, is that a thing in the licensing world. I haven't heard I have not heard that. I think that's in the discretion of the platform because they want to control that and they want to be able to say that it's organic evenven though we all know it's not. Right. It's not, but I mean, imagine what we go back to Fox again and Roku. Iagine what they can do with, you know, the Roku Avenue. you know when you launch onto Roku City, you know, you're going to be able to promote your shows, you're going to be able to promote advertisers and you're going to get a ton of data not just about how your content plays on Roku, which they never had before But they're going to understand how other studios content plays because Roku is an aggregator of other studios content.. So they're going to see what works and what doesn't work with their competitors as long as their competitors keep the content on Roku, right? Right. They could pull it all off. But it's a pretty powerful platform. you know, you do that your own peril. A, reinforcing the power of a distributor like this. Ture. But you know, we live in a it's a very competitive environment. You know, we've gone from like twelve companies that were pure play media companies that were greater than five billion dollars in valuation ten years ago to like six, right that are pure play meter companies that are greater than five billion dollars. So there's been a lot of consolidation And I think with that kind of consolidation, it breeds a lot of competition for you know, the eyeballs and content. And so wouldn't necessarily be surprised if someone to put their content because of that competitive nature between them, right Well, I do feel like we've gone away from the walled Garden era during COVID though, where it was hoorde hoord horde Now it's make as much money as you want as you can while you can. 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Unlock a better way to make with Adobe Firefly This podcast is brought you by the Madison from Paramount Plus and executive producer Taylor Sheridan Michelle Peiffer shines in this epic drama about resilience, transformation, and the family ties that bind Variety proclaims, Michelle Peiffer gives a powerhouse performance in a show Rogerebert. com touts as gripping Emmy eligible in all categories, including drama series, Michelle Peiffer Ostanding lead actress, Kurt Russell Outstanding supportpporting actor, and Will Arnett outstanding guest actor All episodes available for Emmy voters at paramountfYC. com From your perspective as a content owner Does this evolving landscape scare you Does it show you that this asset that has always been the North star. of the entertainment business owning the content, that it is less important now than perhaps it has ever been on an individual basis. Or do you disagree with that? I disagree. think I think like I said at the beginning, I think it's a symbiotic relationship between content and distribution. It's push pll. you know sometimes distribution has more leverage, sometimes the content owner has leverage. But look at YouTube Any one piece of content, any thousand, any million pieces of content on YouTube. does not matter. It just doesn't They're so big and so powerful and the engagement machine is just so dominant You can be mrter Beast and pull your content just doesn't matter for YouTube. True. but there are what what backrooms and obsession proved is that you could take someone who is a content creator from YouTube and put them on another distribution channel, you know, so to speak in theatrical distribution and get an audience that YouTube has nothing to do with, right? They don't participate any step of the way. So I don't I think YouTube is unbelievable. It's a joggnaaut. It is you know, it is it is television. I think people fail to realize that what you are watching is television. My child, you know, does not watch traditional television or programming. All of his content is consumed via YouTube, and a lot of it looks like traditional television And but I don't think it's the only place you're going to get your content going forward. And as powerful as they are and you the fact that they take a forty five percent fig for stuff that they don't own, right? They They don't pay anything for it. It's pretty amazing. But there's always going to be other distribution channels to compete with YouTube. And there's also the sort of quality level, you know that certain, you know, channels are, you know, HBO is known for. So people gravitate toward HBO because it's got a certain type of quality and it filters through. It just feels like there is going to be a point where your libraries, you're doing deals with YouTube because that's kind of where you need to be. What we already do. O fil our films are already on YouTube. Yeah. and I guarantee you the economics of that are not as good for you You know, you'd be surprised you know, depending on, know like certain content that we have We're generating an incredible amount of money from YouTube. Okay That's good to hear. And yes, it's a forty five, fifty five, you know, sort of split on some of that content. U it's not exclusive to YouTube, you know, so our distributors are very smart and how they slice and dice the deals to maximize value. So some of the parts is greater than the whole. Okay, well, that's good to hear You know, the opposite of this and the argument that content is still king despite the power of these platforms is the behavior of Netflix over the past two years Just the mere fact that Netflix went after Warner Brothers as hard as they did There was a report this morning from Semaphore saying they're interested in lionscaate I don't know how real that interest is They were in on Roku Netflix is lookingoo for deals And the question is why are they looking for deals? And I think the answer is They need IP, they need library, they need content because they see their engagement slowing. Yeah, I think look, content' really important to You know, it's it's they can create a great show like Stranger Things and people will flock to it for a period of time But it doesn't create a lot of library, right? Because It's just not a lot of episodes versus licensing a modern family or Seinfeld Gr's Anatomy gives him a lot of heft, right? So it's a very sticky sort of it's form of content that people will go to to go through every episode of the show and then repeat it again It's comfort food. So when you can't find anything, which is quite often for me when I can't find people spend average of twenty minutes trying to find something to watch and these platforms, Netflix included that you go you always revert to comfort food, which is, I'm going to watch an episode of Law and Order. I'll watch an episode of CSI more predictable, you know, I know what I'm getting U So yes, that's to answer question. Libraryies really important. so I'm not surprised that they went after Warner Brothers. not I think that some of it was just to stir things up with Paramount. I don't I think ended up that they bid up the price and I think effectively, they won in certain ways But the same, you know, they could get a lot of library when they if they were to buy Lionions Game. Sure. Yeah, it's not the same that library is not nearly as good as Netflix and it's a lot of overexploited stuff and Slocky horror and things like that The TV library is pretty good. They've got Madmen and they've got they distributute a lot of our content. so Oh, they have some of your content. no offense. They're a great partner of ours. I'm sure they're wonderful Um, The the other thing they have is data. Netflix knows exactly how the Warers' movies perform on the service because They are currently airing some of them. You know, that was the big David Zazlov cash grab was to start licensing out the Warner' movies and the HBO shows to Netflix to pad the bottom line to pay off their debt. and in the process they have now given Netflix a lot of data on what exactly performs in the Warner library. And I think that informed a lot of what they were going after there. And if they were to buy a big studio, big studio library They would be able to get all of the stuff that they've been tracking for years data wise. That's why I think ultimately if Sony comes for sale Netflix will go in on that in a second. They're already in business with Sony on the pay one deal They know exactly how those movies are performing. They knew so much about that deal that they reupped it for a bunch more money. It's billions of dollars And if Sony ever became available, Netflix would get that. Yeah, it's that's why it's an exciting time, right? So I don't think, you know, I can't say it's distribution or content. You know, both of them have a role and an important role. And I think We collectively are beneficiaries of that content owners or beneficiaries of it. And I think the best is yet to come because You know, imagine what? You know, this relationship we didn't even talk about. Imagine all the advertisers and the relationship with advertisers that Fox brings to Roku in this transaction. and the ability to now sell more, you know, you're selling more services, more offering, more ways to reach eyeballs in a smarter way to the PNGs, the Genal motors, the, you know, the big Coca Colas, the big advertisers that they have relationships with. So Yeah, I think that every there this's a good time. It's a lot of consolidation going on right now and probably some more that's going to happen, but it's a pretty exciting time. You seem not very disturbed by the power of the platforms You don't, I hear it all the time. you know, we're going we're going to whittittle down to three Master platforms B are global. can just bend everybody over and do whatever they want And it's going to be awful for content owners. Well Maybe you're an optimistic guy. I don't think it's going to be that much consolidation, but I hear you, right? But we do have these all these deals you know are based on contracts. You saw them when you were a lawyer. those contracts inssure or supposed to insure deals are made on an armss length basis between distributor and ultimate buyer And whether even if that's co owned, right? it's owned by the same comp entity. It's a different pocket and the same pair of pants And we rely on it. And so far it's been, even with all the vertical integration, you know, we've been fine And you sue if they don't We're not litigious. We don't sue. We have a conversation, right? Oh, come on. Yes, you do Abitration, that's the same thing. We don't you We're the nice guys in town we fortunately have enough we own enough movies that we can and we can ask the right questions and hopefully it's resolved that way. And of course, you audit, you know, as your right it's your right to make sure books are accurate, but before you go Give me a good movie or show that's doing really well right now. I remember you blew me away last time you're on the show talking about white chicks and how well it does on Netflix What's doing what's doing really well? that would surprise me? I gott to tell you, White Chicks is still doing unbelievably well. We just got some data on White Chicks at Netflix. It's unbelievable. That is the And for those fans of White Chicks and hopefully Craig is a fan of White Chicks because they should have that on the rewatchables, you know, there the Ws would really like as would we, we'd really like to do a sequel and we're working on that. We've had a lot of inquiries from the studios and streamers about doing it And it's just, you know, finding the time and putting something together. So you know what else does really well, Matt is Blackhawked downown. Ridley Scott produced and directed an incredible movie, Jerry Prohammer produced it. It is it's a great movie and you know, just continuous. same with Made Manhattan and thirty going at thirty. you know, there are a lot of movies that we own that, you know people, even though they're twenty years old or plus old, they just continue to block I, for one am excited about a White Chicks sequel. I would love to see how the Wans is although they're very hot right now is scary movie Maybe we can get that done. It's not for lack of you know, people' interests. We just got to figure it out. All right John, in your assessment Who is best positioned right now as one of these big distributors Is it YouTube and then everybody else? Is it Netflix? Is it Amazon? Who is it in the poll position? I think there are different know different in some ways, those businesses are so different. YouTube is so different than Netflix in many ways, right? The user generated content versus these high premium content, whether that's TV shows films or games, you know, it it's just different businesses. So I think in many ways, both Netflix and YouTube are extremely well positioned. and I don't see them being dethroned, you know anytime soon. But I think they offer something different to each viewer. And can anyone Break into that club. That's the question You know, you've got these also ran services like Paramount plus, HBO Max Peacock, what is the future for them? Consolidation Well I think the I think the integration of Warnerrothers discovery with Paramount is going to be really interesting to watch. And you know, it's all it's It's all in the execution, right? as they say. I mean, easy for me to say, but I like that management team at Paramount. I think that they have made some really bold moves They're getting some great assets, incredible content and distribution through Warner Brothers Discovery acquisition and also acquiring great management they're coming with who run all those divisions. So I think it'll be interesting to see what they do and You know, how they refocus Pluto, which I think is a gem that is inside of the Paramount assets. Yeah the free service. that they have bought all these businesses, they can really focus on that. It'll be interesting. I'm looking it's exciting. All right, well, we will have you back. We're gonna get you that five timer mug at some point. Thanks for coming on. All right. Thank you. Thanks for having me We are back with the call sheet Toy Story five. This one is going to be really hard to predict. once you get up overver one hundred one hundred and fifty likeike All bets are off on this one. Yeah. I mean, if it opens to one hundred and sixty, which is the tracking, it would be the third largest domestic opening for an animated film ever. Lion King from twenty nineteen is in first and incredibles too open to one hundred eighty two twenty eighteen So this would be third. And it would be a big improvement over Toy Story four, which came out in twenty nineteen and had that opening was one hundred twenty point one. I just think I think the premise of this movie is so much bigger and broader than Toy Story four. Like the whole iPad the tech versus the toys plus the Taylor Swift. Yeah, the Taylor Swift factor is meaningful Definitely can't hurt. It is. It just is. Yeah. There will be probably a lot of people who love Taylor Swift who might not have gone to see this in the opening weekend that will now A lot of curiosity. I got to take the over, right? Like how do you bet against Toy Story It is the premier animated franchise that in Minions, which is coming out later this summer And it's, I mean, Could it get to Incredibles two? I don't know. this is the fifth movie. Like you think that interestnterest would be waning at least a little bit, but I think they've reinvigorated it with this amazing iPad premise. Like its just it's just a great idea. Well, and what's nice about Toy Story is the IP is not watered down at all. There's no TV shows. there's it is just every seven to ten years, there's a new movie which is very smart. I mean, Toy Story four came out in twenty nineteen. so it's been seven years. Um I guess the question would be how high would the number have to be for you to take the under? Like if it was one seventy one eighty. If it was one hundred eighty, I would take the under Okay, you think anything under one hundred eighty is in play? I think so. Yes. Yeah. And I think maybe the World Cup game, the US. game on Friday hurts it a little bit. It has the benefit of Friday being a juneenth holiday. It's a federal holiday So maybe people will be out and willing to go to movies, but there is a daytime game the World Cup game that might hurt it a little I don't know. I just think that If you have kids And you grew up with this franchise. Now there's like two three generations of people that have grown up with this You're going. You got to go Yeah. It is the ultimate millennial IP forget Millennial. It's like GenX. like I was, you know, I was in college when this movie came out and we all went opening weekend like when the original came out. like this is thirirty thirty one years now of Toy Story. It's kind of amazing. Yeah. Every young parent to old parent has a relationship with Toy Story Totally And we're all just going to forget about light yearear. years ago. Didn't happen. Didn't happen And the reviews for Toy Story five seem to be good. Yeah, it'll be massive. I think we easily take the over on one hundred and sixty. Yeah, we're not going to talk about this anymore because we're both taking the over and if we And you're seeing it this weekend, right? Oh ye, I'm seeing Frid afternoon. Are you kidding? practice. You get taken to court by your own kids if you don't go. So we're going All right, that's the show for today. I wantan to thank my guests John Mask, producer Craig Horlbeck, ditors, Jesse Lopez and Matt Pevick. And I wantan to thank you. we'll see one more time this week Window treatments change everything, your sleep, your privacy, the way every room looks and feels. At blinds dot com we've spent thirty years making it surprisingly simple to get exactly what your home needs. We've covered over twenty five million windows and have fifty thousand five star reviews to prove we deliver. Whether you DIY it or want a pro to handle everything from measure to install, we have you covered. 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