Dunking on Streaming Executives for Fun and Profit

The two thousand year catalog of Western philosophy is full of dire warnings about the dangers of pride and hubris, warnings like “pride goes before a fall” and “those whom the gods would destroy they first make mad”, to name just a couple. But all these years later, human beings are still ignoring these warnings and falling for the clever traps pride and hubris lay for us…. because humans gonna human.

The latest International Man of Industry, a true Master of the Universe in Tom Wolfe terms, to fall for one of the oldest temptations in the pantheon of Western Civ is Ted Sarandos, CEO of Netflix.

Poor Ted decided to do a public interview, like in front of actual people with eyes and ears, at the Time Magazine Time100 Summit and quickly fell into a pride trap when asked about the current state of Hollywood.

The interviewer, in a Greek myth they would have been some sort of supernatural creature, lured him in with the very first question… “have you destroyed the movie business?” His ego thus fully stroked by the mere suggestion that he might have the power to destroy the theatrical movie business, here are a few of the things he went on to say…

What is the consumer trying to tell us? That they’d like to watch movies at home, thank you. The studios and the theaters are duking it out over trying to preserve this 45-day window that is completely out of step with the consumer experience of just loving a movie.”

And…

“Folks grew up thinking, ‘I want to make movies on a gigantic screen and have strangers watch them [and to have them] play in the theater for two months and people cry and sold-out shows … It’s an outdated concept.”

And…

“for movie theaters, for the communal experience is an outmoded idea. I think it is — for most people, not for everybody. If you’re fortunate to live enough in Manhattan, and you can walk to a multiplex and see a movie, that’s fantastic. Most of the country cannot.”

First of all, if I were an investor, I’d be pretty alarmed that the CEO of a media company, who is supposed to have his finger on the pulse of the movie-going audience, thinks that one of the hallmarks of the movie going experience in America has been… (checks notes)… walking to the theater…

Second, I saw two movies in theaters this weekend, “Sinners” and “Until Dawn”, both in packed theaters with the audience going nuts for every kill, every scare, every action beat and every bit of sexy dialogue. Doing so renewed my conviction that the communal experience of seeing a movie with a crowd that is really into it simply cannot be beat.

Regardless, imagine saying these things two weeks after “Minecraft” became an unexpected juggernaut. One week after “Sinners” captured lighting in a bottle, on its way to an historically low 6% drop off in its second week. And two days before four movies, Minecraft”, “Sinners”, “The Accountant 2” and “Until Dawn” would deliver a $100 million weekend well outside the summer blockbuster corridor.

Talk about awful timing. “Man plans… God laughs” is another philosophical warning that springs to mind.

Look, everyone knows what the Netflix model is, and has for a long time. Create the Streaming Platform of first resort, build a massive library and then provide a safe landing spot for a captive audience when the theatrical film model eventually dies.

Not a bad plan, truth be told, but when looked at this way, it’s clear that the theatrical movie business is more than just a competitor, it is Netflix’s mortal enemy. People don’t just go to the movies, they often combine a movie with dinner out and, afterwards, a drink at a bar… which means they are everywhere on a Friday or Saturday night except home on the couch staring at Netflix.

Both models, streaming and theatrical, could co-exist financially, but for Netflix to achieve the world media dominance it truly desires, the theatrical model has simply got to go.

But frustratingly for guys like Ted, it just won’t.

To be fair, it was a good bet on Netflix’s part. The movie business has been struggling for a while. And not even a company as powerful and forward-thinking as Netflix could have predicted that the traditional studios would do everything in their power to hasten their own demise. First, Hollywood went woke and alienated half its audience. Then they sat back and said nothing as Governor Newsom (and others) forced movie theaters to close during the COVID nonsense, leading to audiences losing the habit of going out to the movies. The studios made this latter mistake because they were in the grip of a tech-based tulip fever. They were chasing Netflix, certain that an enormous pot of gold lay at the other end of the streaming rainbow… and now here we are five years post-COVID and all that gold turns out to have been nothing but dried turds crudely painted yellow.

Ted and his minions must’ve dislocated their shoulders patting themselves on the back for their luck.

But then peak TV, which is what really drove the explosion of streaming, died… murdered in its crib by overspending and a ludicrous and unnecessarily long WGA/SAG strike. We went from producing more than 700 shows a year to about half that number almost literally overnight. There is a growing sense now that consumers are scrolling across the Netflix homepage for longer and longer periods of time before finally settling on something interesting to watch… I know I am. And we all know what happens next… that terrifying question begins to worm its way insidiously into the mind of each and every subscriber…

“Is this still worth it?”

For the first time in a long time, we are seeing a strange reversal of fortune, where it’s the expensive premium streaming TV shows like “Rings of Power”, “Acolyte” and “Andor” which seem to be struggling to capture and maintain an audience.

The theatrical movie business, on the other hand, is on an upswing. Once more there is optimism throughout the well-appointed (if mostly empty thanks to remote work) corridors of power in Los Angeles. Movies are fun again and there has been a lot of great stuff to see already this year. What Trad Hollywood needs is for people to get back in the habit of going to the movies, and making fun genre flicks like “A Working Man”, “Black Bag” and even “The Amateur” which was just barely good enough to be enjoyable, are the best way to do that.

“Sinners” held tough in its second week not only because it is excellent but also because great word of mouth created a sense of FOMO in the audience. We desperately need people to go to the movies, especially when there isn’t a DC, Marvel or Disney franchise movie in the offing, and when audiences love a movie so much that they run out and tell their friends “you HAVE to see this movie as soon as you can”, that is exactly what happens.

Ted Sarandos, on the other hand, is hoping you won’t notice. He doesn’t want to work that hard. He’d rather continue serving up warmed-over “good enough” movies like “Carry On” and that fantastically mediocre “Axl Foley” sequel… movies you can watch with one eye while you scroll through social media on your phone with the other. Developing great original screenplays is hard, much easier to just buy up all the crap the theatrical studios rejected, for pennies on the dollar. Ted doesn’t care if you’re paying close attention, as long as he can sell the shareholders on ephemeral concepts like “total minutes watched” and “number of subscribers who finished”… which sounds a little too much like a pitch for pornography, to me.

At any rate, the movie business is winning again, although in a nod to the fact that pride and hubris can come for me just as easily as they can come for Ted Sarandos, I’m going to add a very pointed qualifier.

“For now”, anyway… it’s a good time to be a fan of seeing movies in a theater.

Hard luck, Ted… but it’s a tough old world.

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