How Netflix Turned Alex Honnold's “Life-or-Death” Climb Into a Calculated Business Bet

What's up everyone, I'm Joe Pompleano and this is the Joe Pomp Show. I hope everyone's having a great week so far. For today's podcast, we're going to talk about how Netflix turned Alex Honnold's life or death climb into a calculated business bet. On Sunday, January 25th, Alex Honnold became the first person of free solo Taipei 101. With nothing more than a bag of chalk around his waist, Honnold battled heavy wind to climb the world's 11th tallest building at 1667 feet in one hour and 31 minutes. Honnold is the world's most famous climber. He broke into the mainstream after becoming the first person of free solo Yosemite's 3000 foot granite wall, El Capitan, which was documented in Jimmy Chin's award-winning film, Free Solo. That led to endorsement deals with the North Face in Rivion, a television commercial with Apple and enough speaking engagements to warrant full time agent representation. But while El Cap is widely regarded as the most dangerous free solo attempt in history, Honnold's attempt of Taipei 101 was challenging for an entirely different reason. Thousands of people gathered in person to watch the climb, including his wife and the mother of his two children, with millions more watching live on Netflix. Turning a life or death stun into a global production has raised serious ethical concerns. According to The New York Times, Honnold was paid only about $500,000 for the event. That means, after accounting for agent fees and one-third of his income that he donates a charity, Honnold risks life in front of millions of viewers for less than what Stephen Curry earns playing half a single regular season NBA game. This realization produces legitimate questions. First, why would a multimillionaire risk his life for a seemingly insignificant on money, at least to him? Considering the risk, why would Netflix broadcast it? And given that free soloing is one of the world's most dangerous sports, is it even responsible to promote such a risky spectacle on a global scale? The answers to these questions certainly involve a lot of nuance. But after speaking to people in both the climbing and media space, I believe it can be broken down as follows. Honnold didn't think that the climb was that hard and would have done it for free. And Netflix felt that there was an arbitrage between the perceived risk on television and the actual risk that Honnold faced, creating a risk reward surplus in their favor. Let's start with the climb itself. For those who don't go rock climbing right, literally, there is something called the Yosemite Decimal System. This is a five-part grading system used to rate the difficulty of climbing routes. Beginners can usually handle anything between a five and a five point six. As you become more comfortable, you can work your way up to a five point one zero. A very good athlete with extensive climbing experience, maybe able to break into the five point one one to five point one to range with the world's hardest climbs reaching five point one five D. The Yosemite Decimal System is a subjective scale. Whoever sets the route usually determines the rating without accounting for differences in body type, athleticism, ability, or climbing experience. In other words, a five point one zero climb can feel very different for two separate people. The scale doesn't tell you how likely you are to complete a route. It's just an estimate of the route's difficulty based on the athleticism of the movements. Without getting too far into the details, the important part is that Honnold's route of bell Capiton was rated a five point one three A. Type A 101 doesn't have a rating because only one other person has ever climbed it and they used a rope on a different route. But leading up to last weekend's climb, Honnold estimated that his chosen type A 101 route would be rated five point one one C. That provided a two grade margin of safety versus his proven capability. With the expectation that type A 101 would be a relatively easy climb for him. Type A 101 is considered a quote easier climb because it has structural advantages. The building's eight identical bamboo box sections require the same three moves repeated rather than unpredictable rock formations. Type A 101 also has rust edges every eight floors giving Honnold a natural recovery point every 120 feet. Horizontal beams enabled strong grip positions, especially compared to unpredictable rocks and every balcony served as a bell out point where Honnold could take an elevator back down if he didn't feel 100% comfortable. I don't want to make it sound like this was an easy achievement. It would obviously be incredibly difficult for the average climber and impossible for the average human. But do me a favor for anyone who hasn't seen free solo just go ahead and google Jimmy Chin's photos of Honnold on Al Capitan. Honnold spent a decade training on that route versus just two to three climbs with ropes of type A 101. You don't have to be a professional climber to recognize the difference between those two climbs. But I intentionally took more time than necessary explaining why Honnold's latest climb wasn't as technically challenging as others because this knowledge gap between how difficult a professional climber thought it was compared to the average person is ultimately why Netflix agreed to host the event. It all came down to risk calculation. With several bell out points, repetitive movements, extensive rest opportunities and comprehensive safety protocols, Netflix commissioned a visually spectacular event with genuine perceived risk but minimal actual risk given Honnold's skill level. Free solo attempts always carry some level of risk. However, Netflix believed that it had reduced the risk enough that the probability of a live catastrophe was exceptionally low for a global brand. While the perceived risk remained sky high for its viewers. That perception gap then became a business opportunity. Even though the climb was relatively easy for Honnold, millions of people still tuned in because free soloing is always a life or death stunt. And by working with local government officials who created culturally relevant moments specific to the region, Netflix could boost two of its biggest business initiatives, growing its live events business and expansion in Asia. Asia is one of Netflix's fastest growing regions but it still accounts for just 12% of the company's revenue. With average revenue per user sitting at just $7.34, less than half of North America's $17.17 This represents both the challenge, lower average revenue per user and an opportunity price optimization as the market matures. With high profile events like Alex Honnold's climb, building brand value that helps support eventual price increases. Plus, it definitely doesn't hurt that a 13-to-16-hour time difference turns a Sunday morning climb in Taiwan into a prime time viewing opportunity in the United States. Now given Honnold risk his life to generate millions of viewers for Netflix, many believe he should have been paid more than $500,000. While probably true, it's also important to remember a few things. First, one off events don't usually add a ton of net new subscribers for a service like Netflix compared to a series. Two, Netflix did all of the legwork, communicating with local officials to put on the event, the production, etc. And three, Honnold has routinely said that he would do it for free as he has always wanted to climb the building, but the inability to secure a climbing permit has stopped him. Some people also say that Netflix would have hired someone else if Honnold had wanted more money, but let's not kid ourselves. While several other climbers could have completed the climb, Honnold is the world's most recognizable free soloist by a mile, and the event wouldn't have been nearly as successful without him. The economics on this likely weren't a game changer for Netflix since they couldn't run commercials during the broadcast, but that doesn't mean it didn't serve a purpose. Live stunts translate culturally, with how the deep narrative context. Rather than spending hundreds of millions to secure live sports rights, Honnold's climb was relatively cheap to produce and requires no prior sports knowledge to watch. He either makes it to the top alive, or he doesn't. Everyone understands the risk-reward value proposition. A successful live ropeless ascent of an iconic skyscraper also guarantees earned media, which is important because it's one of the few scalable customer acquisition channels that isn't purely paid marketing, and even if we wanted to disregard the fact that a live stunt like this still provides long-tailed viewership opportunities through clips, highlights, and behind the scenes access. Simply putting on an event of this caliber gives audiences, and more importantly, advertisers, more confidence in Netflix's live streaming capabilities. This perfectly exemplifies Netflix's event-based live programming approach, a global spectacle with universal appeal because it required no sports knowledge, minimal ongoing rights costs, and massive attention spikes that generate earned media. In the end, Netflix wasn't placing a bet on whether or not Honnold would survive the climb. They were betting that the rest of the world would believe he might not. That's it for today everyone, thank you so much for listening to this podcast. If you enjoyed it, please share it with a friend, otherwise I hope everyone has a great weekend, and we'll talk next week.