Netflix Has Beaten Hollywood

One of the biggest business stories of the year just happened and I have to catch a flight in 20 minutes. So, let's

uh let's get into it. For most of our lives, there's been five major studios in Hollywood. They all compete with each

in Hollywood. They all compete with each other over directors, movies, actors, whatever, to get the biggest box office hits of the year. And then along came a

scary outside threat, the dome, Netflix, and to a lesser extent Prime Video and Apple TV, aka the tech companies. They had huge deep pockets.

companies. They had huge deep pockets.

They wanted content and they started building these platforms that kind of went around traditional Hollywood.

Streaming was part of the future. Now

it's the only future, especially around COVID. And as CO caused streaming to

COVID. And as CO caused streaming to massively spike up and theaters to start to die, it became kind of existential.

And so all the different five major studios of Hollywood of traditional old Hollywood responded in their own way.

First was Disney, the biggest and most well- capitalized of the bunch. Disney

made Disney Plus. Then we had HBO Max from Warner Brothers. Then we had Peacock from Universal. Then we had Paramount Plus from Paramount. Sony, the

lagard, the the sickly gazelle at the back of the pack, realized they couldn't even muster up their own lowbudget streaming service. They couldn't do it.

streaming service. They couldn't do it.

So they became uh a farmhouse where they would make content for other platform.

They would just make movies and try to sell them to other streamers. This led

to Sony creating K-pop Demon Hunters for $20 million. That's all the money they

$20 million. That's all the money they made. They sold it to Netflix

made. They sold it to Netflix and it became the most popular Netflix film ever. So Sony is out of the race.

film ever. So Sony is out of the race.

They're out of the game and that part of old Hollywood is basically dead. They've

become a glorified outsourcing firm.

Okay. Then you look at Peacock and Paramount Plus. Both of them are

Paramount Plus. Both of them are severely lagging in subscriber numbers probably not going to make it.

eventually going to get folded up into something else. Then, as of today, HBO

something else. Then, as of today, HBO Max and Warner Brothers appears to maybe have just fallen. Netflix agreed this morning to an $83 billion takeover of

Warner Brothers Discovery. This would

give them access to not only HBO Max, but all of the Warner Brothers IP, including Harry Potter, The Matrix, Game

of Thrones, DC, Friends, I guess, Ben 10. That's, you know, much much more.

10. That's, you know, much much more.

The list goes much, much bigger than that. But this is this would all be part

that. But this is this would all be part of the Netflix arm, including folding HBO Max into them. And that was one of their last really standing competitors.

This leaves basically Disney Plus as the only major old Hollywood competitor still on the table. Streaming has

essentially totally won were this to go through. Now, there's a lot you can say

through. Now, there's a lot you can say about acquisitions this big and what this means for Hollywood, but if you ask people within Hollywood, and again, I know a lot of people don't care. You're

like, I don't care what an actor thinks or what a director thinks. They're

screwed. They're Hollywood. But there is a monopoly element to this when you have only like you know back in the day you as a talented director who makes a movie

could sell it to any one of these people and maybe even get a little bit of a bidding war you know to drive the price up of things you're creating. If there's

only one or two games in town they can charge whatever you want. You could make them the greatest movie. You can make a smash hit much like Sony did and they give you pennies. You give you pennies

and dollar and they get all the upside.

So, it's a risk. Some in Hollywood, especially indie studios, are calling it the death of Hollywood. Like, this is the final nail in the coffin because they'll have almost nowhere to go. Just

a few massive tech companies who can give them whatever they want for their content. Additionally, actors and stars

content. Additionally, actors and stars are speaking out against this, but only anonymously. This is from Variety

anonymously. This is from Variety Exclusive today. A-listers are writing

Exclusive today. A-listers are writing an open letter of alarm to Congress describing a potential economic and institutional meltdown in Hollywood. To

be honest, with Congress political makeup right now, they'd probably love that. They're probably salivating at

that. They're probably salivating at that. But from a from a business POV,

that. But from a from a business POV, Netflix would hold a noose around the theatrical marketplace. And that's just

theatrical marketplace. And that's just true. The key thing about this and the

true. The key thing about this and the interesting part is that they did it anonymously because they are all so afraid of speaking out. Netflix's

domination is now essentially complete and anyone that speaks out against them publicly could get blacklisted or black ballalled, not have their movie picked up, be iced out of of the industry,

which is now run through a few key streamers. There is a chance this

streamers. There is a chance this doesn't go through. The Trump FTC could block it. Not, I think, because they

block it. Not, I think, because they have a Lena Con sense of anti- monopoly and really want to make sure that there's healthy competition, but mostly because they're really in deep with

Larry Ellison, who owns Paramount, and have been kind of setting up for him to get control of everything. Like, he's

about to buy I mean, he might get Tik Tok, he might get CNN, he might get, you know what I'm saying? There's a lot of like uh news organizations are trying to funnel up into Larry Ellison, who's the second richest man in the world, big

Trump donor, and again, the owner of Paramount. I think that's what they were

Paramount. I think that's what they were trying to to funnel towards and this Netflix um Warner Brothers thing is out of that wheelhouse. Larry Allison's

gonna hate it. So, it's possible this gets blocked on purely political grounds, but from a business POV, I think they won't block it. And that's

where they should be looking at. The

closest analog I can give you, maybe if you're a gamer, is this is very similar, not only in in scope and and scale, but in like dollar amount. 83 billion is not much different from the Activision

Blizzard takeover to when Microsoft bought Activision Blizzard. Basically, a

big tech company like Netflix came in and bought an established competitor in the gaming space. And immediately what happened was the extreme sticker purchase price. You know, Microsoft has

purchase price. You know, Microsoft has spent a lot of money on this and when they didn't get immediate returns, well, first of all, if they did get immediate returns and they dominated the marketplace, they'd raise prices. But

even when they don't get dominated uh market share, they had to raise prices anyway because this was so expensive. So

immediately gamers saw Xbox consoles up, first-party console prices up, and then massive Game Pass uh price hikes, 50% price hikes, 38% more on PC Game Pass.

So I think most gamers now that the dust is settled has regarded this takeover back there in Blizzard actually a massive failure. There was layoffs,

massive failure. There was layoffs, there was um no, you know, major game updates or releases and then there was huge uh huge price increases.

And let me tell you something. If

there's any company that likes to increase prices already, it's the dogs at Netflix.

They've been doing it. They've been

doing it without a reason. You're going

to give them a reason. You're going to give them more market share, fewer competitors, and a massive bill they need to make up on of $83 billion. The

the most likely outcome is rampant price increases, and more consolidation. And

this is the first domino. Look, we've

talked about this for a while, but there is no doubt in my mind that eventually Peacock and Paramount Plus fold into something else. They aren't big enough

something else. They aren't big enough on their own. So, we're down to a world where it's Disney Plus versus the tech companies.

And I don't know how much more longer they can stand. I like Disney Plus has a lot of fan goodwill right now. And I

guess there's one person really glad about this and that's the dog David Zazlav because he became CEO of Warner Brothers Discovery and has so far had

one major business decision which is to change the name to Max then change it back.

And I think that's one of the most frustrating parts about this to me because much like Bobby Kodic who essentially ran Activision Blizzard into the ground and then punted it off to Microsoft and made a $400 million

personal payout, Zazloud is about to come in uh shutter some movies for tax reasons, changed the title twice, and then make $500 million from this sale.

It's just a little sickening. You know,

it's a little frustrating.

Uh, I don't necessarily have a deep love for old Hollywood and the way things were done, but it was at least somewhat competitive and

allowed a variety of things to get made and for a an ecosystem of directors and talent and staff and um, writers to make some money. And in the streaming era

some money. And in the streaming era where it's cons consolidating, it really feels like the only people making money are guys like this. That's the major update for today. We don't really know what's going to happen. It is just the

announcement that both boards have agreed. The last thing I'll say is they

agreed. The last thing I'll say is they seem to think they're going to get it through. Netflix is so confident this

through. Netflix is so confident this deal will get through that they offered a $6 billion termination fee. Aka, if

the deal doesn't happen for any reason, they have to pay $6 billion to Warner Brothers. So, they seem to be very, very

Brothers. So, they seem to be very, very confident they can get this through. It

should happen within the next 12 months.

Uh, that's the major update I wanted to give you guys early. Uh, if anything new happens, I'll cover it here on the Big Eclipse channel. Thank you for watching.

Eclipse channel. Thank you for watching.

Appreciate you. Bye.