Netflix vs Blockbuster - The Way We Watch | 7

Hey, business wars fans, have you heard? Audible subscribers can listen to new episodes of business wars early and ad-free. Right now, join Audible in the Audible app or by subscribing on Apple Podcasts. It's January 5th, 2016. Netflix CEO Reed Hastings and his content chief Ted Sarandos race across the flat straight highway between Orange County, California and Las Vegas and a rented SUV. Rain lashes the windshield. A store is grounded all flights from John Wayne Airport in Orange County, so the Netflix team set to fly to Vegas that day has to resort to something they'd been doing in their business for a long time now. They had to improvise. They rent a car and drive fast to shave off as many crucial minutes as they can. Because what's waiting for them in Vegas is the final rehearsal for the most important announcement in Netflix's history. News they painstakingly kept secret from the press for months. Hastings and Sarandos barely make it in time to the rehearsal. And the next morning, Hastings strides on to a darkened stage of the consumer electronic show in Las Vegas to cheers. He's delivering the keynote address. Nerds, who were there for the displays of the latest electronic toys, gather excitedly to hear what he asked to say. But even with the rehearsal, he stumbles out of the gate. He starts by rushing his speech, but he doesn't want to blow it, so he takes a moment to collect himself. He burrows his right fist into his left hand and speaks in an awkward, measured manner. We can now put consumers across the world into the driver's seat when it comes to where and when you want to watch. Great stories at your fingertips. You just click and watch. A simple but revolutionary shift from corporate to consumer control. The crowd is quietly rooting for him. Hastings begins to gather steam. He feels the kind of fire that must drive a preacher to deliver the hope of salvation. While you have been listening to me talk, the Netflix service has gone live in nearly every country in the world, but China, where we hope to be in the future. Excitement begins to pulse through the room. Behind him, a red and white map pops up on a screen showing Netflix's spreading world conquest. Today, right now, you are witnessing the birth of a global TV network. And I do mean the birth. In a single moment, Netflix goes live in 130 countries. From this moment, Netflix has become more than a streaming company. It's leading a movement in which consumers all over the world decide what they watch and when and how they watch it. The future that Hastings and Mark Randolph envisioned two decades earlier has arrived. The unfettered reign of cable television has ended. The war for streaming viewers will become richer and more cutthroat. Confidence. It's listening to your gut. It's moving forward even when the path ahead is unclear. 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Whether you're feeding your crew on game day or grabbing a quick bite, raising canes has you covered with tailgates of chicken fingers and cane sauce and meals the whole family will love. Order online at raisingcans.com. Raising canes chicken fingers, one love. Remember back when we started talking about the battle between Netflix and Blockbuster in our first episode? And we asked you to remember when you used to take that drive to Blockbuster on a Friday night and rent a video to pop into your VCR to watch with your friends or family. Well, the way we watch has come a very long way indeed, hasn't it? On this final episode of our series about Netflix's war against Blockbuster and HBO, we're taking a look at the complex media landscape we live in today. The Netflix Founding Myth claims that Reed Hastings first had the idea for his company. When he returned a VHS tape of the movie Apollo 13 to Blockbuster and had to pay a $40 late fee. Hastings thought there had to be a better way for people to get movies. That led him to start a DVD by Mail Service that year, 1997, and about a decade later, he introduced streaming over the internet. Well, that story about Apollo 13 and late fees is just that story. Hastings actually came up with it later as a good yarn to explain what he and his co-founder Mark Randolph were trying to accomplish with Netflix. But in the long run, he was right. There is a better way. And today, 20 years later, you could say we're all living in Reed Hastings world. Movies and TV shows you'll love, anytime, many plays. Because let's face it, what do you do on a Friday night these days? The video stores are pretty much all gone, that's for sure. And what do you watch? Think about it. How do you watch it? Yeah, you might watch a movie on demand from your cable TV or satellite box, or maybe you're watching an original show produced by Netflix. But on what device? It'd be an understatement to say that the landscape is more complicated than it's ever been. And a lot more competitive too. In our last episode, Netflix cracked open the premium content game with a $100 million gamble on house of cards, winning accolades and Emmys. And that's just the start for them. And while Netflix has moved on to HBO's turf with high quality critically acclaimed series, Time Warner finds itself having to move into Netflix's territory, streaming. It is March 9th, 2015. Thousands of people wait in a darkened San Francisco auditorium for the arrival of a tech superstar. Apple CEO Tim Cook. Apple product launch events bring surprises yet at the same time are pretty predictable. But today has an unusual surprise. For once, Cook will just be the opening act. Someone else will be the headliner. Cook casually strolls on stage in blue jeans and a sweater. He smiles as waves of cheers and whistles wash over him. He paces loosely back and forth across the state. On a giant screen behind him, blow the logos of dozens of media channels, including Disney, ESPN, Showtime, A&E, and Fox. Now of all the great channels on Apple TV, there is one I'd like to talk to you about this morning. And that is HBO. The audience settles down. They are wrapped and impatient. We love HBO. They have really become part of our culture and have helped shape our culture. Lush publicity photos of the sopranos, sex in the city, entourage, beep and game of thrones appear behind them. Today we've got the CEO of HBO Richard Pleppler here with some exciting news. Richard? And then Cook ambles off the stage. The crowd strains forward in their seats. Pleppler and a dark blue blazer and open neck dress shirt walks purposefully onto the stage. Unlike Cook who paced the stage, Pleppler stands stiffly and speaks formally. He does not seem to be in his element. We are thrilled to announce our standalone streaming service, HBO. so now, and we couldn't be prouder that Apple is our exclusive partner at launch. The audience applauded wildly. They doubted this day would ever come. Now they can cut their cable subscriptions and scream HBO like they've been asking to do for years. This is a transformative moment for HBO, and we are so excited. And as Plepler is delivering good news, he looks and sounds uncomfortable. Because HBO now may already be too late to the streaming party to matter. And this might explain the awkward pairing today of Plepler and Cook. Plepler hopes some of Apple's cool factor will rub off on HBO and millennials will return to the premium channel. This Plepler walks off the stage. A trailer for HBO's Game of Thrones plays on the screen. The beautiful white hair at Rebel Princess names her rivals and declares how she will seize the throne of the Seven Kingdoms for herself. HBO now unnerves its allies in the cable TV industry. See, there's a good reason why HBO is taken so long to offer a standalone service like this, like HBO now. And the cable companies who carry HBO to subscribers who generate $4 billion in subscription fees, well they hate the idea viewers could just get HBO alone. Tom Rutledge, the CEO of Charter Communications, had this to say about HBO. Anybody who sells their content over the top through streaming and also expects to exist inside a cable bundle, I think is really deluding themselves. That's a call to arms from Rutledge. See, as a cable subscriber, you don't get to pick and choose the channels you want. You pay for a package of hundreds of channels, even when there are only three or four you really watch. This is what they call the cable bundle, and that costly bundle is what has kept the average cable bill in the triple digits for decades. If you start pulling out the most popular channels and letting people pay for them all a card, well the whole thing unravels. HBO is the first major cable channel to bode from the bundle. It sets off alarm bells among the cable companies. Millenials and other cord cutters are jubilant over HBO now. HBO's own late night television host John Oliver pretty much sums it up. HBO now offers everything you love about HBO, like sports and comedy specials and full frontal nudity. The hatchery, the trifecta of HBO. It's a lot like HBO go, except you don't have to rely on your parents' password. Aha, HBO plays along. Remember Jake Caputo? He's the guy who launched TakeMyMoneyHBO.com? Well HBO Game Lee did a promo for HBO now featuring him. Tough guy characters from the sopranos arrive to pay a little visit to Caputo. What does this Jake could say HBO take my money? Yeah, big balls, huh? We'll take it already. We had to take your money, give me a wallet. There's not much in there. What's this? How much we got? Yeah, for the subway. Limelon. Hey, tweet a man. I'll be seeing you. Meanwhile, the programming field in 2016 is becoming an economic arms race. HBO is in for $2.5 billion. Networks like CBS are in for $4 billion. Amazon Prime pushes $4.5 billion into content. And Netflix? Well, Reed Hastings is in for $5 billion. To the average viewer, this just means, hooray, more great programming. But if you're a shareholder in one of these companies, well, you might be thinking, show me the money or keep rolling the dice for higher stakes. See, shareholders expect HBO as part of a big legacy media company like Time Warner to deliver profits regularly. And if they don't, well, investors stash their money elsewhere, right? That means HBO can't take high dollar gambles on content or risky growth strategies unless HBO's also delivering reliable profits for its parent Time Warner. But Netflix? Well, Netflix operates more like a tech company. These shareholders aren't worried about profits. They want growth. They take a long view, believing it's okay for companies like Netflix and Amazon to break even or even rack up a loss for a while. They'll wait for their reward. Big growth and a big pop in the stock price. That means these newer companies can spend money on producing content. And not worry too much past that. Over the past few years, the breadth and diversity of stories being told has been expanding. The first wave of great television in the 90s in 2000s, one critical acclaim for lots of white male anti-heroes in shows like The Sopranos, Mad Men and The Shield. But now, viewers are seeing a wider range of characters represented on hit shows. Amazon's features transparent about a family that adjusts to the father transitioning to becoming a woman. That show racks up multiple Emmys, including Best Comedy. In Narcos, viewers get deep into the dark and bloody family lives of Colombia's Medellin and Cali Cartel leaders until the DEA gets dirty working mildly to finally take them down. The Handmaid's Tale from Hulu is one of the most unconventional of the new shows. Its success announces Hulu is a major player on the scene. The story takes place in a dystopian time that looks a lot like now or at least the near future, when a toxic environment has rendered many women barren. Fertil women become the prized property of the elite, with armies to hunt them down and abduct them. And their barren vibes, you will bear children for its family. It's the first streaming series to win an Emmy for Best Dramatic Series. It won three more in major categories too, another first for a streaming company. As the traditional cable bundle continues to unravel, a slew of providers have arrived. There's YouTube, Sony's PlayStation View, and even the networks have caved in stream. Even… Yes, that my friend is the familiar sound of an NFL game streaming on Twitter. Yes, even Twitter figures out a way to get in on this action, buying the rights for Thursday night football. Now, if Twitter is a player in sports rights, well, it's got to make you wonder, where does this all end? You stepped out for your morning jog, except it's not your usual morning jog. You started listening to an epic sci-fi book Unaudible. 30 chapters later, you've accidentally run a half marathon. You lost track of how far you've run, somewhere just past the city limits. You can't stop. You have to find out what happens next. Then it's over. The universe seems bigger. You feel different. You feel like you have no idea where you are. Audible. Stories that speak to you. Hey, I'm Cassie Depeckle, the host of Against the Odds from Audible Originals. In each episode, we share thrilling, true stories of survival, putting you in the shoes of the people who lived to tell the tale. In our latest series, we track the story of Hugh Glass, the real-life revenant that inspired the 2015 film, "Sternly in Art or DiCaprio." In 1823, Glass was brutally mulled by a grizzly bear in present-day South Dakota and left for dead. His survival depended on trekking through 350 miles of wilderness, alone with grave injuries, but he was driven by his thirst for revenge. Follow Against the Odds wherever you get your podcasts. Audible subscribers can binge all episodes of Against the Odds early in ad-free right now. Join Audible in the Audible app or by subscribing on Apple Podcasts. In trying to figure out where this all ends, it's worth taking a moment to recall where it all began. Though actually that might be a tough call. Maybe it was Charles Dolan, who in the middle of a 1972 hurricane, saw the future of cable television in Wilkes-Bera, Pennsylvania. Maybe it took the battle to the death between Blockbuster and Netflix to teach viewers to go online to watch movies and TV. Maybe the likes of Ted Cerandos and David Fincher showed that rolling the dice big could pay off handsomely. But would we have quality content without Jeff Buches raising the bar so high? Probably not. It certainly took the epic expensive grueling fight between HBO and Netflix. flex to grow massive worldwide audiences. But if you pull back a little bit wider, it occurs to you. It probably took all of this to create a new age of television. A new age we are in right now. Will this world change? Absolutely. Disney plans to come on the scene with its own Netflix killer, a streaming service that will draw from Disney's enormous library of TV shows and movies, the Star Wars franchise, the Pixar films, Frozen, Moana, and the massively successful Marvel superhero movies among others. If its proposed deal with 21st Century Fox goes through, they'll also control tons of other popular shows and movies. Oh, and if any of these titles happen to currently be on Netflix or Hulu, they'll be pulling them off. But you know what, some things don't change. When Netflix CEO Reed Hastings is asked about Disney, he displays his trademark cool and confidence. We don't see Disney as a threat to us any more than Hulu has been. I'm sure it will be very successful. I know I'll be a subscriber of it. It's great content, but we are able to grow without it just fine. And you know, you just know he's saying that because he's already thought about this and has come up with a plan. And you know, you'd be right. Netflix is already making content deals directly with producers and directors, locking up everything they make for the next decade or so. Our exposure is significantly less than it used to be. Yeah, talk about understatements. There is one imponderable in all of this. Apple. Steve Jobs, when he was literally on his deathbed in the fall of 2011, he told his biographer Walter Isaacson that he wanted to do for television sets, what he had done for computers, music players and phones, make him simple and elegant. In one of his last bedside interviews with Isaacson, Jobs said that he regretted that he had cracked the idea for Apple TV, but wouldn't live to see it realized. I'd like to create an integrated television set that is completely easy to use. It would be seamlessly synced with all of your devices and with iCloud, no longer would users have to fiddle with complex remotes for DVD players and cable channels. It will have the simplest user interface you could imagine. What might have been? Let's just think about it for a moment. If Jobs had survived his bout with cancer, a game changing Apple design TV and original content programming would likely not have been far behind for Apple. But instead, under Tim Cook, they pretty much sat on the sidelines. Not anymore. This year Apple opened its own content studio in a major way. Last year they paid big bucks to get new series from the likes of Steven Spielberg, Reese Witherspoon, Wineth Paltrow and other A-list talent. And to run their studio, they hired the top executives at Sony who had overseen Breaking Bad, Mad Men and the Shield. These splashy shows will start premiering this year. And they are the first moves in Apple's initial $1 billion investment in original content. That number will climb to $4.2 billion by 2022. And what about HBO? HBO. It was the first to realize decades ago just how lucrative and powerful quality programming can be when it's delivered easily to customers over a new technology. Today, HBO's subscriber base continues to grow and get younger, and no one, not even Netflix, can touch the audiences for their massive epic game of thrones. With all these new adversaries, it's worth noting that the number of original scripted series have tripled in a decade to more than 500. With all that programming, HBO's plupler says the smart move will be to make fewer but better shows. We're not trying to do the most. More is not better. Better is better. Maybe better is more profitable too. In 2017, HBO hauled in $2.2 billion compared to $839 million for Netflix. And what does Reed Hastings have to say? Well he has a few predictions. Hastings says he will personally deliver the last Netflix DVD by mail, and broadcast TV will go dark for good by 2030. Then comes a century or more of internet television. It's mind blowing to imagine where that will take us all. Especially if you recall that just 10 years ago, most of us thought nothing of hopping into our cars to go rent a movie. In the end, there are only so many ways that HBO, FX, Amazon and the others can compete because there is one thing none of them can change, no matter how much they spend. There are only 24 hours in a day to eat, work, hang out and check your social media. On that note, Hastings has one more prediction. Perhaps it's already happening to you. What about when there's a movie or show you're really dying to watch, and you end up staying up late at night, so we actually compete with sleep and we're winning. Yes, the final frontier just might be sleep. Be sure to follow business wars on Audible or wherever you get your podcasts, and audible subscribers can listen to new episodes of business wars one week early and at free right now. All you have to do is join Audible in the Audible app or by subscribing on Apple Podcasts. I hope you enjoyed our first series of business wars. In a few days, we'll have a special interview episode about the series you just heard. In our upcoming series, a German company becomes the giant of sports shoes after African American Jesse Owens flashes across the finish line at the 1936 Olympics in Germany. Meeting the challenge is a runner and businessman who big-footed them in the American market. Join us next for Nike versus Adidas. I'm your host, David Brown. Gina Keating, the author of Netflix, wrote this story. Karen Loa is our senior producer and editor, sound designed by Jeff Schmidt. The theme song was composed by Lindsay Graham or Airship. Our executive producers are Marshall Louis and Erdogan Lopez for Wondering. Imagine you're reading Pride and Prejudice, except you're not reading it. Harris Dickensom, a Marissa O'Bella, are reading it to you on audible. Her Barb sting you. His coldness sends a shiver up your spine. Your heart aches, your ears burn. You yearn for Elizabeth and Mr. Darcy to profess their undying love for one another. You can't bear it any longer. Well, maybe a chapter longer. Performance is so good. You'll give love a second chance. Audible. Stories that speak to you.