Paramount Prevails, Netflix Keeps Looking In The Rear-View Mirror

1. Paramount Prevails

Much to the dismay of the antitrust activists, California AG Rob Bonta caved to Paramount this week.

There’s really no other way to put it, Bonta came charging out of the gate waving all sorts of flags about how evil Paramount was and how we the peopler not going to let them get away with it.

Rumor was he had Bernie Sanders on loop saying “billionaires’ with the same intonation people use for words like “pederasts” and “Hitler” but that can’t be verified.

What we do know is that many of the people on whom Bonta was counting on for support turned out to support House Ellison instead, the unions and the movie theater chains in particular, all of whom were motivated by the need to actually work.

Another big cave-motivator was the fact that California’s political class was allegedly taking Ellison’s threat to move the company out of state quite seriously and none of them wanted to be the ones whose attorney general was responsible for the state losing 30K jobs and a whole lot of face.

 Meaning Bonta was increasingly finding himself out on a lonely little island, with no support except for some law school professors and policy wonks.

And then decided this was not the hill he wanted to die on.

Why It Matters

The deal, or another one like it, was inevitable.

People hate when I say that, but they also know it’s the truth.

The legacy media business simply lacks the funds to compete with the likes of Google and Amazon, for whom media is a hobby business, something that creates another profit center for sure, and gives their execs something cooler than cloud storage to talk about at parties, but it’s never going to be the main thrust of their operations.

Meanwhile back at the ranch, the concessions Bonta seems to have wrung out all seem largely toothless, the wording on things like the news oversight board that will ensure “journalistic independence” for CNN and CBS News being vague enough to accommodate a world of sins.

And so all those people who have made hating on Bari Weiss their personality can continue on as they are.

Mostly it means that Paramount and Warner will be able to cobble together something that could compete with Disney for everyone’s number two subscription slot—number three if you count YouTube—and that it will dominate the movie industry, or what’s left of it anyway.

Because we can go on pretending that movies have not largely fallen from grace, that after decades of pumping out the same “IP”, people have grown bored with them. Which means that movies no longer have the cultural impact they once did during monoculture days.

It’s a syndrome I spend a lot of time on in my book, Welcome To The Age Of Feudal Media: What Happens Once The Monoculture Collapses, which is due out next weekn (pre-order here)—the loss of serendipity, of any chance that, rather than serve us up something it knows we won’t hate (another superhero movie), it serves us up something we might love, something we didn’t even have on our radar. (E.T.).

Meaning that while movies are not going anywhere and the amount of money they generate will continue to be substantial, their cultural capital bank account will never be anywhere near where it once was.

So there’s that and it’s not nothing.

There will be job losses as the two companies solidify, office and other jobs that the new company will not need two of, which will suck for the people involved, but unfortunately that is what happens when industries right-size. 

The whole thing becomes like a giant game of musical chairs and all too often the wrong people are left standing.

What You Need To Do About It

 If you are in the industry you need to wrap your head around the fact that this is just the first of many more mergers and acquisitions as the industry contracts, and with it, the number of players who can realistically be successful.

This means legacy media companies and broadcasters will have to join forces and that some/many of them may even get snapped up by the tech giants.

Twas always thus as that is just the way of markets.

If you are an employee of one of the two companies, you have my sincere condolences. It is NEVER fun to be that situation and the stress of so much uncertainty can take years off your life. 

So just grit your teeth and try and let it wash over you. Or get another job if you know that “letting it wash over you” is not how you were wired.

2. Netflix Keeps Looking In The Rear-View Mirror

Netflix thought it was comfortably out ahead of all its streaming rivals. And then YouTube happened.

It was not something most people had projected, but millions of people started watching YouTube on their TV sets and treating it—or, more accurately, parts of it—just like TV.

And suddenly Netflix found itself at number two.

To remedy this, the company, which has always been savvy about reacting to industry shifts, began recruiting YouTube talent, doubling down on podcasts, experimenting with vertical video and other #WhipYouTubeNow type ploys.

Wall Street was not impressed and HSBC downgraded Netflix from “Buy” to “Hold.”

The main fear is that Netflix will become too much like YouTube without having the DNA (or breadth) that allows YouTube to be YouTube.

Worry number two is they stopped making all those “snobby shows that no one watches” meaning that the pendulum swung too far in the other direction and they are sorely lacking in the sort of high-profile culture-shaping originals that helps convince people they should continue to subscribe.

Because damn, did Apple smoke them at the Emmys this year.

Why It Matters

Netflix can’t be all things to all people. It simply does not have the breadth YouTube has. 

So that while any new categories or growth on YouTube appears to be additive and does not impact what else is on there, 

Netflix is a different story.

Focus too much on podcasts and the average viewer is going to notice.

Ditto vertical video which runs the risk of seeming like it’s your dad asking “what’s up homies?” Or that meme of Steve Buscemi with a skateboard saying “Hey, fellow kids!”

As for Wall Street, granted they have never really gotten Netflix, but all this wannabe stuff goes against their narrative for what Netflix is supposed to be and it freaks them out.

What You Need To Do About It

If you are Netflix, you need to go back to the words of William Shakespeare: to thine own self be true.

Meaning you are never going to beat YouTube at their game. So take away some lessons, but continue to do what you are good doing, which is finding and promoting great 

Which reminds me—a couple of those “snobby shows no one watches” would do you a lot of good right now, while HBO is in its end-of-series trough and is dealing with merger mania.

You’ll mostly be up against Apple then, so just figure out what they’re doing and zig instead of zagging.

Trust me, you’ll be glad you did.

If you are YouTube, you might want to keep an eye on the situation, if you aren’t already. The YouTube-ization of Netflix is unlikely to go much further but you never want to be the hare getting smoked by the tortoise.