Netflix Adds Podcasts and Makes a Deal With AMC Theatres. Why?

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1:45It is Monday, October 20th. Throughout its relatively brief history as a streaming service, Netflix has evolved its content pretty significant. First, it was just movies and shows from others. Then they started making original shows, then movies, then unscripted series, game shows, comedy specials, live stuff. They weren't interested in sports, and then slowly but surely they were interested in some sports. Forever, it was the, we're better than YouTube. We don't want that non-premium stuff. Then, all of a sudden, Cocomelon and Miss Rachel came to Netflix from YouTube. And now Netflix is evolving again via two new deals.

2:20First, it's going into the podcast business, or at least some of the video podcasts from Spotify, and more specifically, a bunch of shows produced by The Ringer, which, yes, makes this very show. No, the town is not included in this deal. I'm very upset with Craig about that. But big shows like the Bill Simmons podcast, the Rewatchables, Big Picture, a bunch more, they'll all be available on video on Netflix. And importantly, the full episodes are coming off of YouTube. So why is this happening? For Spotify, they get money and they get a premium distributor for the shows, and Netflix gets a regular stream of cheap and often topical content, the kind of programming that subscribers might turn on and leave on for hours and hours during the day or at work.

3:02And perhaps most important, it allows both these big tech platforms to take aim at YouTube, the dominant video platform. If this experiment works, I'd expect Netflix to go deeper into podcasts and other cheaper forms of content to challenge YouTube. But it's not without risks, of course. Namely, who's tuning into Netflix to watch podcasts? And is the cheaper YouTube-style content going to sully the premium brand of Netflix? At the same time, we got news last week that Netflix just broke its long-standing feud with AMC Theaters, our good friend Adam Aaron. They agreed to play K-pop Demon Hunters, the movie, when it returns to theaters over Halloween.

3:40If you remember, Adam refused to play Demon Hunters when it was in theaters last month. The movie went to number one anyways. So why now? And what does this thawing of the icy relations mean for more Netflix movies in theaters? Lots to discuss, so we've got our Monday guy, Lucas Shaw, from Bloomberg here to talk about it all. Today, it's why Netflix jumped into bed with Spotify and the evergreen movie theater question. From The Ringer and Puck, I'm Matt Bellany, and this is The Town.

4:10Okay, we are here with Lucas Shaw, our normal Monday guy. Big week for Spotify slash The Ringer. Wouldn't you agree, Lucas? Big week for you. You're going to be on Netflix. I am not going to be on Netflix. The town is not part of the package. Craig, however, is now a Netflix star based on his fantasy football podcast and rewatchables. Craig is basically Millie Bobby Brown at this point. Right, Craig? I think we're going to try to get her on the show for our first episode. You absolutely should. Would you, Craig, care to revise your opinion of Happy Gilmore 2? Yeah, upon second watch, I have to say there were some things I missed, and I came around to it.

4:49It's now going to be on your year-end 10-bath list. Yes. The global smash Happy Gilmore 2, we are required to say at this point. Yes. Obviously, big conflicts of interest. The producer of this show is part of the Netflix deal that we are going to be talking about extensively today. So take that with a grain of salt. Just know that I'm happy to savage both sides. Yes, exactly. And neither Lucas nor myself works for Spotify, although Craig does have a Spotify email address. So email him. All right. So, Lucas, why is Netflix doing this? Let's start with that side of the equation. An experiment? You know, they have talked openly, in particular, co-CEO Ted Sarandos, about their desire to dabble or try video podcasts.

5:34Yeah, we've been talking about it. We've been saying Netflix is becoming YouTube. They see how popular podcasts are. They see the growth of podcasts on YouTube, which is their biggest competitor for time and attention. And podcasts involve famous people. And Netflix loves putting fame. Like if you think about stand-up comedy, that was one of their ways into original programming because it was like a low-cost way to get super famous people on Netflix. And so there's a relationship between the two companies. Ted Sarandos is on the board of Spotify. For how long? I'm not sure. They're basically competitors at this point.

6:09And Spotify is looking to push video and rather than give its video to YouTube, which is, again, also for Spotify, its biggest competitor, It can instead try with Netflix, which is the second biggest platform. So it is a mutually beneficial experiment that seven people will experience. All right, so you don't think anyone's going to watch. But my take on this is that I think that if we look at the history of Netflix here, they have systematically gone after every single part of the TV ecosystem. They started doing originals, started with scripted. Then they're doing reality. Then they're doing game shows.

6:44Then they're doing sports, even though they said they would never do sports. then they're doing you know every single thing and now this is them going after daytime they're going after the audience that turns on the tv and leaves it on and does laundry and does their treadmill and does all these other things it's not necessarily appointment viewing but it's companionship viewing and that's essentially for a lot of people what these long podcasts are is companion media and adjacent media. Well, it's also another way of going after topical programming, which they have largely failed at and struggled with so far.

7:20News without news. Yes. And the Ringer in particular is about pop culture, and Netflix sort of likes programming about pop culture, because they are part of culture. They get to experiment a little bit in sports, which is an area of increasing interest for them. When I've talked to them about this, they say that it's essentially the appointment viewing after the sports. They don't have to pay$11 billion a year like the NFL rights require of all its partners. But if they can get some of that audience who likes Bill Simmons talking about the NFL. I wake up on Monday morning often and will listen to Bill and Cousin Sal talk about the football from the day before.

7:57But are you flipping on Netflix to do that? No, and when I'm using Spotify, I'm deliberately hitting, just give me the audio, I don't want the video. But there are people who do like to watch the video and will put it on their TV. and the Netflix can cater. It's the ESPN shoulder programming. It's SportsCenter. It's NFL Live. It's all that stuff which doesn't rate nearly as highly as the games, but also costs a tiny fraction of the price. Right. And people usually go to YouTube for that stuff. The question here... Or Spotify. Or Spotify, yes. The Ringer shows are actually, I think, much bigger on Spotify as a percentage than they are on YouTube from everything that I've seen.

8:34But the general thought about Netflix is that you don't go to Netflix for this type of programming. And the bet I think they're making, or the experiment, as you call it, is whether this type of programming is going to work on Netflix. Right. And do we have any evidence that it will? Well, the reason I use the word experiment is you talked about the history of Netflix for swallowing category by category, right? And if you look at the history of them with each of those categories, they always start with one show or one slate or one little thing to test it. And then if it works, like with House of Cards.

9:10House of Cards being the first example. But if it works like with stand-up comedy or with the sports follow-along documentaries, then they like flood the zone and they do everything. And if it doesn't, like their whole interactive programming experiment, then they pull back. And so they'll try this. I'm sure we'll see a couple of other, like they have the arrangement with Tony Hinchcliffe. They're going to keep doing some smaller podcast deals. I think that there are more coming. Every indication I've received is that there are more coming. it, including ones that Netflix will produce themselves.

9:41Sure. I mean, look, they've taken meetings on a lot of these people, right? They took meetings on Alex Hooper. Alex Hooper just wanted way more money than Netflix was going to pay for an experiment and for a show of that size. So why is Spotify doing this, is the question. Is this an admission that maybe the shows weren't doing that well on YouTube? Or is this just a pure money play? Netflix is writing a big check, and this is how Spotify has chosen to monetize its podcast initiative that is largely pulled back from? Or is this Spotify looking for a way to grow its audience for these shows in any way possible and Netflix can provide them that audience?

10:22Can it be all of those things? I mean, Spotify is still in the early stages of trying to bulk up its video business, right? Like Spotify is the biggest audio service in the world. and they have tried several times to make video a thing on Spotify. It has not worked. They are trying again with a focus on podcasts and creators who already have an audience for the most part, rather than trying to create original programming. Even though they shut down a number of their studios they bought. Correct, which is somewhat ironic. Yes. And they know that their platform as right now is not big enough in terms of video to be the only place to put these shows.

11:01And so yes, Netflix offers some money, more than they are going to get paid from YouTube. They offer the second biggest audience potential exposure after YouTube. And Netflix is not really competition for Spotify. Not yet. Not yet. But it gives them some money and some reach. And it also pulls their shows from this site and YouTube that they're incredibly competitive with. Now, I would argue it's probably a net negative for the reach of those shows. But to your point, most of these programs aren't huge on YouTube yet. And you could see Bill and others experimenting with YouTube. It seems like they've had sort of mixed results.

11:41Well, they went all in. Listen, I'm one of the only Ringer shows that doesn't have video. But notably, these shows now will not be available on YouTube because they will be exclusive to Netflix. Clips will, but not the whole thing. Yes. And that's a big deal. You're essentially, if you're Spotify, you're gambling that the reach of Netflix is better than the reach and monetization on YouTube. And the promotion, something that YouTube doesn't do. Yeah, not something that Netflix also doesn't really do. But algorithmically pushing. Well, YouTube has the algorithm as well. Yeah, but there's a sea of things on YouTube that can be pushed to you versus what's available on Netflix.

12:19It's just a more premium environment. I mean, if you're watching a movie that has a rewatchable episode. So maybe it helps with the CPMs. Yeah, but they're not selling it. I mean, the Spotify ads are going to appear in the Spotify pods. But Netflix, at least at the start, is not selling ads on the ad tier around this. No, yeah, I meant that the halo of being on Netflix versus YouTube would help Spotify brand. It's just a cooler thing. Honestly, it's just Netflix is cooler than YouTube. Everyone's on YouTube. Not everyone's on Netflix. Do you think Netflix is cooler than YouTube? I think so. Yeah.

12:48I don't know if I agree with that. Every single podcast in the universe is on YouTube. But now Bill Simmons can say, we are the cool studio. We are on Netflix. Netflix is more exclusive than YouTube, and being first in something is cool. Yes. But that brings up the other question, which is, does podcasts dilute the premiumness of Netflix? Is Netflix dragging itself into the sewer of YouTube? No. No? Why not? One, there's a lot of stuff on Netflix. Netflix wants to have a little something for everyone. They do, but they also have a bar for what is Netflix. They do, but there's a lot of unscripted programming that they have that I would consider of lower quality than podcasts.

13:36The other thing I'd say is they made, at least in this case, a partnership with, sounds stupid saying it because it is their show, but like, people tend to like and respect The Ringer. The Ringer is not indulging in like really crass, gross stuff. It's not Barstool or one of those. Well, now you're just pandering to Bill. Well, no, no, no. But listen, I have no horse in this. I know Barstool as like Dave Portnoy's sex video. They're not airing like a bunch of conspiracy theories. They're not, for the most part, doing a bunch of tabloidy stuff. Yes. It's writing. It's like talk. It's supposed to be somewhat intelligent talk about sports and culture.

14:13They say that they're the smartest guys at the bar. And that fits on Netflix just fine. Okay. I think the real question is, will Netflix really push it? And how many people are going to want to engage with this? Or is it going to be one of these things that's like it's on Netflix, but most people don't know it's on Netflix? I think that's the case. Like how games have been for a long time, and they're trying to change it, right? But Netflix has had games for almost four years, and if you ask the average person, I still don't know if they would be aware that Netflix has games. How dare you? Boggle.

14:42Boggle. I'm excited for Boggle. Someone texted me this weekend about your interview with Greg Peters and said, if you're talking about Boggle, you've got problems. You know, Jimmy Kimmel was very excited about Boggle. Maybe it'll become the words of friends of Netflix. But I do worry a little that this is not premium enough for Netflix. But I think that the way it's going to be served is if you watch a movie that has a rewatchables, you will be served a rewatchables after you finish the movie. If you watch something sports-related on Netflix, you will get Bill Simmons talking about the Pats game right after you watch the Pats sports documentary.

15:24And that episode of Bill Simmons cost them like$5 ,000. That's the thing. It's just cheap shoulder programming that generates engagement. And they will be able to capture whatever engagement they get from this. I think you're right. It's an experiment. And it will go towards their number every month. Is there, because you keep harping on this premium thing, and I'm a little confused. is there like a podcast that you would consider more premium? Like if they had Smartless, and we know Ted Sarandos loves the Smartless guys. Like, is that more premium than The Rigor? No, no. Or like Smartless versus Good Hand.

15:55I'm talking about the format. Like they are going to make these videos look better than they currently do. But at the end of the day, it is two people sitting in front of a computer talking, right? And that doesn't feel premium to me. It's the same reason why Pat McAfee doesn't look the same as some of the other studio shows that are on ESPN. But he's a bigger star. I agree. And they are fine to have three hours of Pat McAfee because it's cheap as hell and it rates and nobody cares anymore. Like, I mean, I used to have to go into the studio to do a hit on a cable news show post COVID. I'm doing it at four in the morning, rolling out of bed and on my home studio.

16:37Like nobody cares anymore about this stuff. YouTube has brought down the expectations for people of what they want to see out of video. So I think that it's okay to put that stuff on Netflix now, whereas maybe five, seven years ago, people would have blanched. Listeners take note, Matt has a home studio. I don't. It's my living room. But you know what I'm saying. Okay, so let's talk about the YouTube angle. Does YouTube give a shit about this at all? A little bit. You think so? Yeah. even though the Ringer shows coming off YouTube is like... Will not matter. Infinitesimal for their volume. I don't think...

17:16I think it's a big flex by YouTube. I think YouTube is sort of the winner here because all it does is show that Netflix and Spotify, two of the biggest media companies in the world, are kind of freaking out about YouTube. Yeah, I think they pay attention any time talent that they care about leaves the platform, especially with like Neil Mohan, the CEO of YouTube, is a big sports fan. He's definitely aware of Bill Simmons. He's aware of The Ringer. He likes The Ringer. He wants people posting on YouTube. They've made podcasts huge priorities. So I think they're aware of it and I think they notice it and don't love it.

17:50At the same time, to your point, it's not going to matter to them at all. You could take a bunch of top podcasts off YouTube and it just wouldn't impact the business very much. Interesting you say that. Nick Kwa, the podcast expert at Vulture, he wrote a piece with Joe Adai in this past week And he said of Netflix and YouTube that, quote, both seem to be continuously finding value in framing themselves not around specific types of content, but around being the default destination for any kind of viewing experience. So that's what's at stake here. Netflix has basically conquered the rest of the traditional entertainment companies and streaming.

18:30And they're looking at the landscape and what's left. They're now going after YouTube. And this is putting a toe in the water to try to do more YouTube-style content. I think it would trouble YouTube a lot more if you saw YouTube stars pulling off of YouTube and doing exclusive deals with Netflix. But as we've discussed before, I don't think that will happen. Yeah. We were texting about it, and you said Hot Ones will never be off of YouTube. It will always be on YouTube and then maybe elsewhere. Yeah, they had conversations with Netflix about doing a series of live specials that never really came to be.

19:06Because what is that for Netflix? That's just, oh, more of the thing you already get on YouTube. The value in this ringer deal is it's being pulled off of YouTube. And I don't think Hot Ones can monetize that as well. What does Netflix have to pay them to go off of YouTube? So much money. Because their audience is on YouTube. And why do they want to forsake that? Yeah. For money. Yeah, but they make enough money from YouTube as it is. Most of these YouTube channels see Netflix and other avenues as ways to add to the audience they already have on YouTube and the money that they get from YouTube.

19:40I've heard about people who Netflix has tried to go exclusive with. They say no. And they say because the audience won't follow or because it's not worth... My audience is on YouTube. Well, it's like Coco Melon and Miss Rachel didn't leave YouTube. No, they didn't need to. And that is the model for all of these companies. Yeah. and Spotify, I forgot to even mention that they just did a deal with Samsung to put the Ringer shows on a fast channel. Yes, you can tell Spotify is trying to push their videos other places because there's not enough video consumption alone on Spotify, which is really interesting because they have cut off or forsaken a lot of their original owned programming, which is what you would use in these other places.

20:21And the Ringer is basically what they have left because the Ringer was working and a lot of the other stuff wasn't. No, I get it. Do you guys think this is a harbinger for late night eventually landing on Netflix, if this works? I think Ted Sarandos is waiting for Lorne Michaels to retire. And when that happens, he's going to go full on after late night, SNL type shows and things like that. I think out of respect to Lorne, Ted is not doing that, in my opinion. Well, but they've tried late night. Right, but not in a serious way, in my opinion. They've done niche type shows, Mulaney, Hasan Minhaj.

20:56they have not dropped a bunch of money on Jimmy Fallon to get him to leave or dropped a bunch of money on half the SNL cast to start a new show. Like Colbert is going away. If Kimmel's not on the air in three to five years, like will one of those two or somebody else be on Netflix? I think yes. Sure. It already happened. Doing everything else. It already happened with Letterman. Yeah. Letterman has a show. Yeah, but it's not a late night show. It's an interview show. It's like 10 a year. I mean, it's completely different. It's not the same. Netflix would want something that would eat up hours and be live nightly daily stuff like that Netflix doesn't do daily or nightly but a couple times a week or maybe John Oliver style 40 weeks a year something like that I think they will they're gonna keep trying topical because Ted loves it yeah and they need the and they need the and they want the engagement they want the same way that they now show WWE once a week because it's good for bringing people in they'll do the same with some type of topical programming

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22:4221 plus and present in select states. Opt-in required. Refund issued as non-withdrawable bonus bets that expire 7 days after receipt. Minimum$5 wager required for 5 consecutive days. Max refund$200 per day. Restrictions apply, including token expiration. See full turns at Vanduul.com slash sportsbook. Gambling problem? Call 1-800-GAMBLER or 1-800-MY-RESET. All right, so let's talk about my good friend, Adam Aaron. I think I'm prepared to say that he is our good friend because you were there for the live show. Our good friend. He's our good friend. I think you spend a lot more time talking to him than I do.

23:11I am very excited for him because he got to announce that the standoff with Netflix is, I guess, over or thawing. The icy relationship is thawing. AMC, which refused to play the Demon Hunters movie when it was in theaters last time, went to number one anyways, they are going to put it in theaters for Halloween. Will presumably be big again because this is a huge movie and kids want to dress up and go see it. But probably not as big as it was in August when it was the first time. Probably not. You're right. But they get to say that, quote, this is Adam on Twitter where he likes to speak. While the two companies have not had a commercial relationship in recent years, both Netflix and AMC are intrigued by the mutually beneficial opportunities that could arise from this and future collaboration.

24:01Very convoluted way of saying we really want to do more deals. So what does this mean? And more importantly, what does this not mean for AMC and Netflix? Well, you wrote the initial story. So what do you think it means and not means? I think it means more stunts to start. Netflix is not backing away from the, you know, not our model. Theaters are outmoded for most people. You're not going to see Netflix movies exclusive to theaters for four to six weeks. No. They did the IMAX Narnia thing as a favor to Greta Gerwig. And, you know, it's a specific IMAX thing. That is a month-long window, even though it's only two weeks in theaters.

24:35I don't think Netflix is going to start releasing their movies in theaters for four weeks and wide releases. Don't think that's going to happen. But I think we are going to see more stunts. I know they're already talking about additional things. And you'll see some of these bigger movies go one weekend. And, you know, a couple weeks after the fact, I do think we might see a couple day-end dates where the movie is big enough where they will play it that opening weekend in some kind of a stunt situation. The key for AMC is to manage this without blowing up the relationships with the traditional exhibitors.