The Fast Approaching Death of Hot Ones

0:00The Colin and Samir Show is supported by Microsoft Copilot. This is something I thought I would never say, but can I share with you my favorite prompt? I mean, like when you say something like that, I have to say yes. Were you going to say no? No, but okay. Just let me hear it. So when I'm researching for a guest or I need to know a lot about a subject matter, I say, make me a podcast about. And when you do that, you're going to get a short blurb about that subject. And then in like two minutes, you're going to get a podcast. So check this out. Welcome to Co-Pilot Podcasts. Picture this, a guy working the front desk at a hotel, making lacrosse videos in his spare time, completely unaware that he's about to become one of the most influential voices in the creator economy.

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1:10Try it for your research. Try it for getting variations of your titles, your ideas. It's one of my favorite tools on the internet right now for our creativity. And now back to the show. BuzzFeed struggles to sell hit YouTube show, Hot Ones. Several parties are interested, but bulk at$70 million price tag. In this episode, we're going to tell you the four reasons why we think it's not selling. And we're going to make predictions on what we think the future of Hot Ones is. Whether it sells or not, we think this could be the beginning of the end for Hot Ones. And on this episode, if you make it to the deep end, you're going to get some hot takes from our showrunner, Hot Take Dave.

1:49Oh, no. Strike one. Two more strikes and you're off. All right. If you make it to the deep end, let us know.

2:01I'll be honest. I was actually kind of surprised to see this headline that BuzzFeed was looking to sell Hot Ones. In my mind, like Hot Ones is just the premier YouTube show. It's always intrigued me that it is owned by First We Feast, which was owned by Complex, which then got bought by BuzzFeed. And then BuzzFeed sold Complex, but kept First We Feast. That's right. Yeah, it's all muddled. Watching Sean Evans on that show, he feels so like it's his show, but it's not his show. He feels like an independent creator. Yeah. Especially when he has other creators on the show. Like there's actually a lot of YouTube-centric creators who've been on the show, whether it's like Marquez or Phil DeFranco or Emma.

2:43Like it feels YouTube at the same time that it feels traditional Hollywood. I think what was really interesting was when we were at a Chargers game here in LA and And we went with YouTube and Sean Evans was there as well. And they announced that his presence at the game on the Jumbotron, they said the host of the largest show on YouTube, Sean Evans, and the entire arena erupted. Yeah. And it was crazy. And then he came up and hung out with us for a bit. And he was super nice and clearly very into YouTube as well. But it was this moment where I was like, this guy is the host of the largest show.

3:21It's not his show. It's not his show. So we should get into some of the history of the show itself. Yeah, a little bit of context and history on Hot Ones. Back in 2015 at Complex, this is when Hot Ones starts. And it actually was the idea of Chris Schoenberger, who is the founder of First We Feast, which again is the food vertical of Hot Ones. He's looking for a host for this new concept he's come up with where they will interview celebrities and they'll eat increasingly hotter, I think he called it like violently hot wings, right? As it goes on. And Sean works at Complex. He's cheap because you're not going to invest a lot, right?

4:01In a brand new show. And he's the host in the very beginning. Now, the format itself, probably, you know, Chris didn't even realize that this format was going to like intersect with YouTube's algorithm so well. meaning that it optimizes really well for long retention because it utilizes what's called Jenga storytelling. Yeah. Where essentially as time goes on, the stakes increase. Is Sean going to ask this really vulnerable question that the guest didn't think he was going to ask? And is this wing going to take me so out of my comfort zone that I can be nothing but authentic? It's like when we make the predictions on who's going to buy it, we're going to try the last dab and you're going to be curious to see how each of us react to that.

4:48Yes. news to me that we're trying the last day out again again yeah it keeps coming for us why would buzzfeed even want to buy a show like hot ones and a company like complex in the first place like what is the business of buzzfeed first that would make them want this show what makes it valuable yeah if you zoom out like all media is is the acquisition and monetization of attention right that's like that's the cleanest way to describe it is you are trying to um acquire attention and then find ways to monetize that largely that's monetized through sponsorship and advertising and the other way it's monetized is through commerce and buzzfeed actually had some pretty good proficiency in acquiring attention they did this in the early days if you remember like through the quizzes right do you remember that that was like like which harry potter character are you?

5:43But they were able to acquire attention in many different ways. When they got into video content, they got really good at acquiring attention through the talent that was there, the Stephen Limbs with Worth It, the Michelle Carres, the Try Guys, and then pairing that with different ways of monetizing through commerce. So BuzzFeed Tasty had a line of kitchenware. So when you zoom out, that has been the business of BuzzFeed forever. They were not able to hold on to the talent. They started to lose talent. They started to go in a direction where they were struggling to acquire attention, probably because of more macro trends on the internet.

6:19And they needed, like, they just were in a downward spiral over the past couple years, losing all of the top shows, not much IP anymore in BuzzFeed. Yeah. So media companies like BuzzFeed and Vice are in the business of gaining attention and building IP, right? Intellectual property that they can then monetize, like you said, through advertising or through commerce. Like pasty is the IP. IP de-risks the acquisition of attention. So just going back to Hot Ones, like seeing the Hot Ones logo, you're more likely to click on it. The more cultural relevance, the longer that brand is in market and builds more brand equity, you're more likely to click on it.

7:01So now - Yeah, the easier it is to have that attention. Yeah, the easier it is to acquire the attention. So that's why IP matters. So when you look at why would BuzzFeed want to buy Complex, which at the time owned Hot Ones. Hot Ones actually has experimented with all types of IP. Not only does it have a pretty significant advertising business where every episode is sponsored by either a major company like Walmart or a major studio, they did a lot to grow IP that you would assume was to de-risk itself from Sean Evans a little bit. Sure. first off you got to talk about the hot sauce sales like the show sells hot sauce that's number one two they started a show like on cable it was cancelled but they did do it they started a card game they actually did a licensing deal with Shake Shack for six months where there was like certain meals that were hot ones branded at Shake Shack and they started doing a lot of these episodes that were variations of hot ones that didn't include Sean Evans.

8:05So that was an attempt to push into all types of IP. And like it said in the article, First We Feast, which we are assuming is primarily Hot Ones at this point, does$30 million in revenue a year. So we don't know about profit, but there you go. Like you were talking about with BuzzFeed then scaling too quickly to try and build a lot of IP and gain a lot of attention and then not being able to do it, they're actually$100 million in debt, according to that article. So trying to sell Hot Ones and first we feast for$70 million, you would think it's a pretty good way to gain back, build back from that$100 million of debt.

8:44Dave, you read the deck. Anything notable in that BuzzFeed deck when they were selling Hot Ones? In terms of Hot Sauce sales, Hot Ones, the figures that I saw from a few years ago where it does 7 million in revenue in hot sauce sales alone, which I'm assuming a couple of years later, probably past 10 at least, which is not like a small number. That's pretty significant. Yeah. 7 to 10 million in hot sauce sales, like to be able to move product, these are not that expensive. So you look at that, like that's pretty significant. It pales in comparison to like a, you know, Feastables or like a Prime.

9:26Obviously those are like mass, mass creator led things. So you never know how much this costs, like how profitable that is again, but that's pretty good. If the revenue mix is, let's say, seven to 10 million on hot sauce sales, 15 million on, or 17 million in advertising, and then the rest in like syndication licensing and some weird other stuff that they're doing, sure, that's a healthy media business. The problem is it's not its own media business. You could make that work as its own media business. But as a part of a large company that's a public company that has pressured to do like in the hundreds of millions of dollars of revenue or potentially billions of dollars of revenue, it's potentially underperforming.

10:12So let's get into the four reasons why it's not selling because you started to touch on some of those. But again, like when I read the headline, I was like, why would you get rid of Hot Ones? I see no reason why a media company would not want to own Hot Ones. But the more we dig into it, the more I think I potentially understand. Now, the first reason I think it won't sell or it may not be able to sell is actually because of Sean Evans. Right. And because of how much people love Sean Evans. And you would think that's not a problem. Like, why? Whatever. Like, he's the host. People love it. But when you look back at the origin story, We actually found this clip of him talking to Ethan on the H3H3 podcast.

10:56And he gets into whether he owns the show or not. And I think it reveals a lot about the future of Hot Ones and why it won't sell. So let's listen to it. What about the IP? You own the IP? No, I don't touch the IP. I don't have IP is locked in a box with me on the outside. Is that a problem? No, not really. I mean, I don't know. what if you think about it in like terms of like your career being like a much longer time period you know like is this one project of many is everything you know what i mean and if it is i mean ultimately like uh you know maybe i'm an idiot for thinking this way but uh i was just like lucky to end up here and in like this position and i'm a chicken wing talk show host and stuff's pretty good so then you start thinking about that and yeah if i was you i would be bitter as fuck.

11:45Well, of course you would be like, you can always renegotiate stuff, no? Yeah, exactly. And it's a good team now. Well, last time I saw you, you were feeling underappreciated. Yeah, well, I feel a little bit better now. You're feeling more appreciated. That's good. At least there's that. Yeah, exactly. Are you feeling more appreciated or much more appreciated? Much more appreciated. Wow. I think that says a lot about the relationship between Sean Evans and the show Hot Ones. The fact that he does not have ownership, at least according to this, of the IP of the show means that he may not be that invested in the long-term success of the show unless he's continually compensated at a pretty high rate.

12:26He's almost like an athlete on a team, right? That like the better a player gets, the more the team has to spend to keep that player. What do you think you'd have to pay Sean Evans just on a yearly basis without any IP? I have no, it's a good question. I think like, I think you got to connect him to revenue. Yeah. I think, but like, if you think about like, if it's 10 % of revenue, it's$3 million. Like I think anywhere from three to four, three to$5 million would be like an unbelievable gig, but that might be too high. Like three, 3 million feels like, okay, that's pretty good. That's the thing.

13:00If you buy Hot Ones, you're now also, let's say Sean Evans doesn't have a long-term contract with the entity, the show Hot Ones. Let's say he has a two-year deal. if the show does really well in that two years great but now you also have to think about paying sean evans again also what if sean evans two years into you know you having bought hot ones decides i actually don't want to go more than five years i think like i think i'm done with this show can the show survive without him so this is our first point which is important to to give a term to this but this is called key person risk and this is a common thing when it comes to acquisition right Where if I'm a company and I'm looking at Hot Ones and I want to acquire it, I like the IP.

13:43I think Hot Ones is a great show. I think it's got a great format. I think I could probably repeat this format. But then the question is, can Hot Ones exist without Sean Evans? Or am I inheriting a risk, a key person risk, where if Sean Evans is removed, this IP is significantly less valuable? This is a debatable topic. I mean, you posted it on Twitter. The question is like, can Hot Ones survive without Sean Evans? And I think everyone in the audience should chime in on this. I think it's a really interesting question. Yeah, Marquez, who's been on the show, said, survive, yes. Thrive, unlikely.

14:23I mean, it's an interesting point. What do you think? Can it survive without Sean Evans? So one thing that I was surprised to see, as the show stands, no, I don't think so. I think Sean Evans is an integral part of that show. I think you can do Hot Ones without him. I think it can take a lot of different shapes. It can be like a short form show where you like, I don't know, ask people. Like you can do it in so many different ways. But I think people follow people. And Sean Evans is the heart of that show. Like I am also very creator. I'm very pro creator, right? So I look at that show and I'm like, the format is fantastic.

15:02I'm very pro creator. I'm going to play the devil's advocate and be anti-creator for a second. I think there is. Don't lie that you're pro-creator. No, I'm pro-creator. Everyone knows. Look, I'm pro-creator. You tried to kick me off this show many times, dude. Hey, I'm pro-creator. But I do think there is a world where Hot Ones becomes kind of like a late night show or Saturday Night Live. Okay. In that they will, or even The Daily Show, right? That's a great example. Like Jon Stewart, where they bring in a new host. And sure, some people are like, yeah, that show's no longer for me. But long-term, generations look back and they're like, oh, yeah.

15:39For you and I, it was the Sean Evans era. But for someone younger, maybe they believe in, you know, the next host was actually the best era because they also interviewed their celebrities. I have a counter for that. Uh-oh. Hit me. Because, so John Stewart leaves The Daily Show. It survives over the last five years. he starts coming back recently does his one a week episode those episodes are 60 percent higher in the ratings then yeah i think that makes i mean for me i only watch when john stewart does the daily show right now yeah again people are gonna have people follow people people are gonna have allegiance to the host look i'm just playing devil's advocate yeah i hear you i hear you on the top on like the late night talk show style like is this the um you know is it like when Conan had his late night show.

16:26And then you, I don't know. Can you swap a host? The thing I did want to bring up is I went to the first Feast channel and I looked at an episode that was released this week, which is Billy Eilis versus Phineas. This is a offshoot of the IP called Hot Ones Versus. There's no Sean Evans, not even Sean Evans voiceover, which is kind of interesting. It's someone else's voiceover. And then I went to, I got the view stats extension, went to the ranking. It's a two out of 10 and the two, three and four out of 10 are all versus. And you look at the mix of the performance of these videos on YouTube. Shane Gillis is number one, big star with, you know, Sean Evans, but you look at this mix and you're like, okay, that's kind of interesting that the versus.

17:09So the top five best performing videos of the last 10 videos, three of them are Didn't include Sean Evans? Three of them did not include Sean Evans. Okay. So that is - So you've come over to my side. No, I have not. I think this is a different show and it's very celebrity focused and it's a great format. I think this is First We Feast making a case in this sale process that there is less key person risk than a buyer would think. So I think this makes the case for that, but let the record show I'm pro Sean Evans. Yeah. Look, I was just playing devil's advocate. I'm also very pro Sean Evans. I think he is incredible at what he does.

17:51So that is part of the reason why I think people are not as interested in buying Hot Ones. There's too much key person risk. All right. What's the second reason that people would not want to buy Hot Ones? The second point is the IP extension ability. So what that means is like Hot Ones as the IP. What we just saw, we just talked about, Hot Ones versus. So where can this IP go from a content perspective as well as from a product perspective? So the first part is from a content perspective. Like Hot Ones did try and turn into a streaming show, a cable show. It didn't work, right? Hot Ones versus now, okay, this is kind of working, maybe.

18:32Interesting. Can it go any deeper? Like when I think about the hot sauce, When I think about the last dab and these hot sauces, they're uncomfortably hot. So I think they're a novelty purchase, but they're not like a, I need to buy this, like it's ketchup. Like I always have to have this in my fridge. I don't think that's the case. So that's not that interesting. Even at like seven to$10 million of sales. They haven't turned into like a Buffalo Wild Wings. Yeah, it's not like, and then like this, the card game, kind of interesting maybe, but not that interesting. The licensing deal at Shake Shack is over.

19:07TV show was canceled. I think this is a big one. I think if BuzzFeed thought that there was a lot of ability to extend the IP, they would keep it. Yeah. Right? I think this is an interesting part of being a creator right now. If you are looking at your business as like a media company, the question is, where does the IP extend into? The first question we asked is like, do you have key person risk? Is it like, can this thing exist without you? The second question is, where does this brand go? without you and also as a brand. But I think with Hot Ones, it's a little tough to extend the IP. Well, they've tried.

19:44They've tried. I just don't know where else. So that's proof to a buyer. Unless you really believe that you can do it better, they've kind of showed you over the last five years, here's where we tried to extend the IP and it didn't work. I think as an example, just for the viewers, of a brand that BuzzFeed owns that does IP extension really well, that we were just talking about and is in this deck that I think surprised all of us a little bit is how valuable Tasty was to BuzzFeed and the fact that they can take all of the kitchen utensils that show up in their videos and sell them in different stores and just the variety of products that you can sell compared to one single hot sauce or a certain variety of flavors of hot sauce is huge.

20:29Yeah. I think it's a good point that Tasty kind of surprised us in how well it's able to extend its IP into kitchenware. So that's the big question. But that is a pretty competitive space. That is. And that actually has to do with a third reason why someone may not want to buy Hot Ones, and that's replacement value. If they're trying to sell Hot Ones for$70 million, that's a lot of money. Some companies may go, look, there's a lot of celebrity interview shows. There's a lot of shows that are actually even somewhat similar. They follow that Jenga storytelling now, right? With celebrities. Could you spend 10 million and try, at least try to create your own?

21:11Yeah, it's way cheaper than buying it. Because Hot Ones is not the only game in town anymore. Yeah. It does have a great brand. It's got a great brand. It has brand appeal. Brand equity is great. But the obvious example of this is Last Meals from Mythical. Last Meals, celebrity talk show that's food-based, that has outperformed Hot Ones episode to episode at times this year. I actually think it's a great point. I think a better example is Amelia de Moldenburg. Chicken Shop is not even like, Last Meals is a part of Mythical, right? Which is also a media company. Yeah. Chicken Shop date. Amelia just had SZA on the show.

21:52Yeah. It's doing incredibly well. And she's an independent creator. Yeah, but the comp is more media company because if you're going to buy it, if someone - But I mean like in terms of competition, Yeah, sure. Like these shows exist and some of them are just run by like independent creators. Totally. They're sharing the airspace. Yeah, you're now sharing. Yeah. I mean, I was talking to Phil Edwards, formerly of Vox last week, and he was telling me the story of when the Vox video team in like 2017, 2016 realized that their biggest competition was starting to, the first time they noticed a video from this channel called Wendover Productions.

22:29And that's when he was like, that was like an aha moment for the Vox video team, he said, when they realized they were now competing against just individual creators who can make quality content for a fraction of the cost. It's a good point that if we're talking about the goal of a media company is acquisition of attention, then the cost of acquisition is something to consider, right? Like again, if someone can acquire the same attention or the attention away from you for a lower cost. Yeah, replacement value. Yeah. That's point three. like Hot Ones is now unfortunately more replaceable than it used to be.

23:02Than it used to be. Yeah. This is what Jimmy, Mr. Beast says all the time. Like his advantage is being able to use the money that he makes to do crazy big things that other people cannot do. Yeah. As a creator, that's another question you got to ask yourselves. Are you replaceable? How replaceable? And what do you do that makes you irreplaceable? And some of those things, that matters whether you're building like a big media company or not. That's just a brand. Yeah. But that does have to do with number one, because a lot of times what makes you replaceable is your personality, which is the key person risk, right?

23:38Which then gets into the question of like, how acquirable are these things? How do media companies actually sell? Right. Yeah. And that comes to point four, which is just like the overarching macro trends of the media industry. All these things have to do with the fact that right now, mergers, acquisitions, all this stuff in the media business is the lowest it's been since the 2008 financial crisis. Money is very expensive, high interest rates. There's geopolitical tension. There's all kinds of factors that are making it not a great time to sell a media company. But I think one of the biggest factors is the fact that other people can attract attention at lower price points.

24:20Yeah. Right. Like building a company with high overhead and you're competing with a kid on TikTok who's generating 15 million views. Yeah. And you have like a bunch of salaries of employees and an office and all this stuff that you're paying for. And you're trying to attract the same eyeballs as that person who's just working on their phone. Do I believe that Sean Evans could stay with Hot Ones and maintain the relevancy of the show for the next 10 years? I absolutely do. Whether that means though, like you were saying, it's valuable to a media company who needs to generate a lot of profits from these shows for like shareholders and to get back from$100 million in debt?

24:59No, I don't think like it can be the thing that gets you back. Yeah. But I think, yes, if Sean was on his own with a small team, this is a great, incredible business for Sean and a small team. And that seems to be where the future is going is like much smaller little media companies that are incredibly powerful for those people who are involved. Yeah. I mean, think about who's making money in just the media industry today. It's Netflix at like the very top, but not even Netflix's competitors are profiting. Disney Plus, Hulu, they're not making money. And then it's individual creators. The gap between there used to be filled by Vox, Vice, Group 9.

25:37They're all losing money now. Yeah. Yeah, it's actually similar to, I think, Cleo Abram and Johnny Harris, when we did a Creators on Creators conversation, they talked about like the barbell right now, how there's like the independents and then the large winners. And in the middle, it's just like nothing basically. And I think that's totally true. The question is though, what does Sean Evans do next? Because I will say, if I'm Sean Evans, I actually think this is one of the best gigs on YouTube. This is a great gig. Yeah, and you listen to him talk about it. He likes this gig. It's a great gig.

26:14I would take, I told Jimmy this when we talked to him, I was like, I would take the gig of being talent on Mr. Beast on that channel because owning the IP and owning the business, sure, it's exciting, but it's also a lot. You're like running a company. He doesn't have to run that company. And I think that we should all as creators think about the difference between running a company and running a show. And then you have Sean, which is like being the star talent of that show. It's like you talked about being an athlete. It's like, do I want to be the star player or do I want to own the team and be the star player?