Netflix versus HBO, Apple, and Amazon

If you're running HBO today, how do you go from producing 20 good shows a year, that they spend a lot of time on, to producing shows at the scale that Netflix produce for a global audience?

It may be that you need different groups to do those things. Maybe, the answer is, you don’t change HBO; you try to keep that as your blue-chip brand. In the same way that Disney didn’t come in and suddenly say, hey film studio, you’ve been producing 10 or 12 films a year; you’re now going to produce 100. They had different groups pick up those things and so you have Turner as a resource, you have Warner Bros films as a resource. You have lots of assets that can be developed. It’s largely a question of expectations in traditional media, of now that you’re part of this integrated pipe and content business, what are the expectations for shareholders?

They could do it. Any of these groups could say, we’re willing to forego, $5, $6, $7 billion in profit, for the next four years, to get to scale. But that’s very scary, as a decision, I’d imagine, for a chairman of a board to make. We’ve been driving down one path, for 50 years, about it means for shareholder expectations and profitability, and we’re just going to wipe that out for five or six years.

It’s why, by the way, people have lots of questions about what Apple is doing, but I don’t. I think Apple is in a very, very different position. This is a company that has $60 billion in profit, per year. For them to say, we’re going to spend $1, $2 or even $3 billion on content, you could practically view that as a marketing expense. If it just makes their hardware that much more compelling and the brand a little bit more engaging, that’s a much less scary decision than a media company that is expecting a certain type of profitability out of their branches.

Apple also has almost instant global distribution.

They do. Apple Plus, who knows what it looks like. It may be an experiment, it may be something that they go more aggressively into, but it’s not such a risk. Amazon, I think, is more like Netflix and more like Apple, in its ability to say, we’re just disrupting ourselves, but our business has always been to disrupt bigger businesses. Given the skill of Amazon, as a business, if it makes all the other parts of Amazon Prime that much more effective, it’s a pretty compelling reason to be in the content game. Those three feel very different from Disney and Peacock and HBO Max and the decisions that they need to make.