In This Episode
Streaming video tempted us with a utopian dream of unbundling, where modern technology could let us build our own a la carte entertainment packages. Unbundling works for consumers in theory, but in practice, calling up what you want to watch when you want requires subscribing to several different increasingly niche services plus paying to rent or buy programming on top of that. Our new nexus of on demand technology and consumer impatience is somehow worse and often more expensive than when we all had DVD players and overpriced cable packages. Has unbundling failed consumers, artists, and the businesses themselves? If so, why are we doing it? How has it affected the quality of TV we get? And if we don’t want to go backwards, can we move toward a better, more easily shared experience of popular culture? Variety reporter Michael Schneider has covered the television business for 25 years, and joins Brian Beutler this week to talk about how we evolved to this point and what the next iteration might be.
Brian Beutler: Hi everyone. Welcome to Positively Dreadful with me your host, Brian Beutler. Okay, here’s a quick story about my childhood. When I was a kid. And so this must have been the late 1980s or early 1990s, The Southern California TV network that owned the rights to the Twilight Zone would broadcast a Twilight Zone marathon every Thanksgiving. Something like nine or ten uninterrupted hours of just the Twilight Zone. And I learned about this and of the Twilight Zone itself, because one year we went to visit my grandparents for Thanksgiving and my grandfather spent the whole day recording the episodes of The Twilight Zone on his VCR. Hour after hour until dinner so he could add them to his home movie or video library. And that was great for the time because there was really no other way for him to pull up a favorite episode whenever he wanted, let alone watch a few classic ones when his grandson came to town. It was either fast forwarding through videocassettes or just hoping that at some point we’d all be in the same place and the Twilight Zone would be on in syndication, and it had happened to be an episode we’d all enjoy. So back then, that’s how we did things. We’d buy some videotapes, the legitimate way, or we pirate things from television with VCRs. And if you did that enough, you can more or less watch your favorite movies and TV shows whenever you wanted. Over time, obviously, technology made this method obsolete by the time my grandfather died. Every episode of The Twilight Zone was available for purchase in a DVD box set, and televisions had TiVo so you could just record a Twilight Zone marathon and watch the episodes as time allowed. And that’s still more or less the reigning technology. Unless you happen to subscribe to a streaming service that currently has the rights to the Twilight Zone, in which case you don’t even need to bother with shelf space or DVR space or anything like that. Anyhow, I wanted to tell that story for a couple of reasons. One, because my grandfather was awesome and had great taste in television. The other is that I think his fastidiousness about recording TV marathons gets at something fundamental about pop culture consumers. That pop culture, producers and middlemen wish was not true. And that is, we want to watch and listen to what we like whenever we want, will pay for it or pirate it. But in the days before Spotify, the reason we’d amassed huge LP collections or CD collections or MP3 collections was to be able to call up our favorite songs and albums on demand without having to rely on the whims of a DJ or have special financial relationships with RCA or any other company. Now, obviously, consumers aren’t the only stakeholders in this equation, and I think in the realm of music in particular, the combination of on demand technology and consumer impatience has been pretty hard on independent artists. So even if we got exactly what we said we wanted or close to what we said we wanted, it’s had real consequences, some of which we’ll never see because it’s in the form of art that will never be made. But, but, but I started with the Twilight Zone for a reason. And that reason is, I think, where we ended up in the realm of television shows and movies our new nexus of on demand technology and consumer impatience is somehow worse and often more expensive than what we had when we all had DVD players and overpriced cable packages and TiVo. I’ve been thinking a lot about this lately, including the story about my grandfather and his VCR. Ever since I learned that HBO planned to stop hosting some of its own shows on its own streaming service, HBO Max to save money it might otherwise owe in residuals. This wasn’t a huge blow to me because I never really got into Westworld or any of the other shows that are, for the time being, at least gone. But if you did, then the wisdom of the VCR owning ancients probably strikes a chord right now. And even if you don’t, it kind of crystallizes everything that’s unsatisfying about the unbundled future. We’re living it. What do I mean by unbundled? Well, it’s an industry and policy term for what consumers seemed to want as of about a decade ago. We paid cable companies a lot of money every month for a zillion channels, most of which we almost never watched for the opportunity to catch the programing we really wanted to see. But to get access to all the good stuff, you had to pay more and more. And even then you’re at the mercy of the entertainment channels and whatever shows and movies they happen to be cycling through. Unbundling was the utopian idea that modern technology could let us build our own ala carte entertainment packages, kind of like building a sandwich at a Wawa. And the technology definitely exists to allow us to do this in theory, but in practice, calling up what you want to watch when you want requires subscribing to several different increasingly niche streaming services or paying to rent or buy movies or both. In our house, we subscribe to Netflix, Amazon Prime, Hulu, HBO Max, Peacock, and I’m probably forgetting one or two. And we nevertheless occasionally find ourselves paying for individual episodes of shows or movies, but not in a way that lets us own the content itself. Rather, we own the right to replay a video file that Apple owns whenever we want, so long as we have access to the internet and an account with Apple, it’s kludgy and exploitative. And depending on your habits, it’s no cheaper than just paying a boatload of money to Comcast every month. And yet, despite all the spending and proliferation of logins and passwords, I don’t think customers think it’s great. I don’t think artists like it. I don’t think the business guys like it. Which isn’t necessarily to say we should go back. But it does have me wondering if there’s anywhere to go from here other than backwards that will get us closer to a consumer experience of ala carte home movie and television watching. There’s more one stop than what we have without wrecking what we’re still good at, at least from time to time, which is making good entertainment. Michael Schneider is a reporter for Variety who has been covering the television business for 25 years. And I wanted to talk to him this week, both because I need a primer on how we evolved to this point and because I want to know what people in the know think the next iteration might look like. So without further ado, Michael, thanks for sitting through that endless windup.
Michael Schneider: No, absolutely. It’s a pretty good primer of what’s going on. It’s the classic be careful what you wish for [laughter] because the new reality is here and it’s not as great as we thought it might be.
Brian Beutler: It definitely isn’t. I mean, that’s about as much as I know is that, you know, at one point I was really excited about Netflix becoming mostly streaming and and now it’s a few years later and I’m poorer as a result. And I it didn’t really pan out the way I expected it would or was hoping it would. So that’s my weakness here, is that I really only see and understand the consumer side of this topic. And so I wanted to start by asking you what that blinds me to like. Is there is there a happy story to tell about sympathetic stakeholders anywhere in the streaming world, or is it all just kind of everyone’s is dissatisfied with where we ended up?
Michael Schneider: Well, you know, it’s interesting talk about timing. If we were having this conversation two years ago before sort of the great course correction we’re now undergoing in the streaming business, then I would have argued that, well, this is where Wall Street is. They really are rewarding this new streaming age. Look at Netflix. And it’s, you know, just nonstop growth, the amount of investment that they’re putting into content. And it does seem like that’s the future. Well cut to 2022. And suddenly Netflix stumbled a bit in terms of, you know, their earnings report and the fact that they had lost a few customers in the United States. Well, that caused a great panic on Wall Street and it had a ripple effect on the entire business. And it’s where we are now in realizing, oh, this great, you know, future of streaming that promised every show you ever wanted at any time and unlimited growth. Well, that wasn’t going to happen. There is no such thing as unlimited growth. And now everyone’s realizing, oh, wait, the genie escaped the bottle and now we can’t put that genie back in. This is the new reality. And it’s not as, like you said, profitable as we thought it was going to be for this industry. It’s it’s you know, the one good thing that we’ve seen is still a real growth in storytelling, a real opportunity for unheard voices to to finally have a home. And some of the most interesting shows on television right now are. Still being produced on streamers. And so from an entertainment perspective, it’s been a really good decade. But going forward, the business is really going through, like I said, this course correction.
Brian Beutler: You alluded to Wall Street and you also alluded to the, you know, the proliferation of quality entertainment on streamers and elsewhere over the last decade or so. And I want to get back to both of those things. But first, I want to turn back the clock to a decade or so ago, when the most common consumer complaints were, at least from my perspective, about cable companies and their prices and bad service and how little sense it made to pay that much for a bundle of products when most people only liked a tiny fraction of what they were paying for. How did we end up there? As of, you know, 2008 or whenever you want to start the clock or end the clock. And was it just dumb circumstance or or was it an intentional outgrowth of business decisions and public policy that landed us in that unhappy place?
Michael Schneider: Well, there’s a couple of things. One thing is the cable companies, which they helped kill the golden goose because of bad customer service, like you mentioned, and and just their pure hubris. And also they felt like they had a business that, you know, there there would be never any sort of downside. They didn’t predict the streaming revolution. You know, they they got really greedy out of their hubris and out of their power and started putting out a product that was really subpar and really dared consumers to quit, too, to move on to something different. And then when consumers found something different, they did move on. They started cutting the cord. But, you know, from a bundle perspective, you know, that’s that’s business. That’s business 101, which is, you know, in order to fund all of these different channels, no one watches the same 30 channels. You know, plenty of studies are out there. Back in the cable days where most cable subscribers watched 15, 16 channels at most, but your 15 or 16 channels were different than your neighbors, 15 or 16 channels. So in a way, much like, say, insurance where everyone is paying into the pot. But, you know, you’re not necessarily sick, but you are helping your neighbor who is sick maintain, you know, certain prices. And so and it’s insurance for maybe the day that you will get sick. It’s the same thing with cable where maybe you didn’t watch IFC, but someone else did. IFC was doing great programing. But if IFC were, you know, if they were all a la carte, no one would buy IFC. It wouldn’t exist. Not enough people would, because everyone is paying for, you know, ESPN or some of the news channels, etc.. But bundling allowed some of those cable networks to, you know, basically exist and produce some great content on top of the mainstream, large channels that everyone knew and watched. And so rising tide lifted all boats, and that allowed 500 channels that allowed some really interesting programing in the 2000s to happen and really give broadcast a run for its money. So, you know, in hindsight, bundling maybe wasn’t so bad after all, but people didn’t like it at the time because they’re like, why am I paying for this channel that I’m not watching? Well, it’s part of the deal. It’s, you know, you’re paying for cable as a whole so that there are those options and maybe one day there might be something on that channel, like an AMC, which was able to turn into a programing powerhouse because of those fees and move on from just showing old movies and suddenly showing Mad Men and Breaking Bad and The Walking Dead. Well, that’s because there was money in cable. FX, same thing. You know, a lot of these channels that came out of the boom of the 2000s is because they had those cable fees and it allowed them to reinvest in programing and do some great stuff.
Brian Beutler: So I remember the conversation about unbundling and thinking that from my perspective, it would be great. This was 15 years ago or something like that. And what I’m what I’m taking from you is that unbundling was a solution sort of offered to people like me to solve a different problem, which was really just how crummy it was to have to work through the cable companies as they operated and less about any specific problem with how what consumers paid in went to go finance the creation of good media. Right. Like if we were unhappy with the service cable companies were offering, the solution should have been about regulating how they conduct themselves rather than with how they pool resources to make it possible for for so many channels to proliferate on their platform.
Michael Schneider: Yeah. And cable became a victim of its own success because, you know, more people were watching cable. These channels were producing better programing. So they kept raising their fees. And, you know, you can’t underestimate the, you know, the issue of sports fees as well, because that was the lion’s share of, you know, your cable bill was paying for all of these, you know, both national channels like ESPN, but also your local channels as well that were carrying your local sports teams. Suddenly they were asking for a lot more money, too. You combine that with more cable networks producing more original content, they’re asking for more money. So suddenly your cable bill gets bigger and bigger. And, you know, at some point that started to really, you know, upset people. And really right around the time that streaming came, people were like, is there another solution? Is there another answer to my insane cable bill? So along comes Netflix. And they say, well, we’ve got it all. And we’re only, you know, back in the day, you know, 7.99, 6.99 a month. And because at that time they were the only ones in this space, all the other cable networks were selling their, you know, their back end, which is basically the reruns of their hit shows to Netflix. So at that point, Netflix really did have a lion’s share of all the great content from all the networks. And it looked like, well, why am I paying for cable when I could just get Netflix and I’ve got all the shows all the time. And ironically and I know we’re jumping around here, but ironically, it was, you know, the cable networks looking to squeeze every last dollar out of their shows and thinking, okay, here’s some extra money beyond syndication, beyond everything else that we could get from Netflix. They gave all their good stuff to Netflix and that allowed Netflix to grow into this behemoth because they were the first in and the classic first in, they became a utility, sort of seen as a necessity by the mid 2010s where you needed to have Netflix in order to watch everything in reruns.
Brian Beutler: So I get the impression what you’re saying, that the unbundling dream, at least the utopian version of it that I first heard about back in the aughts was not practicable. Like this is mostly just a fantasy. But at some point Netflix stopped being just like blockbuster video by mail and streaming became the central part of its business. And so that because it was like the only game in town, did that create the illusion that unbundling could work? Like if no other companies had ever joined the market to compete with Netflix, might it have evolved into this one stop streaming behemoth that really did fulfill the promise of getting to watch what you want when you want? But basically, because it was a monopoly and there was, you know, no one to hive off pieces of its library, basically.
Michael Schneider: Yeah, Yeah. But it was never going to last long because quickly the traditional conglomerates, you know, Disney, Paramount, Universal, etc., they, they, they quickly NBC Universal, Comcast, they they quickly realized that, oh, wait, we are now basically funding this operation that is siphoning viewers from our golden gooses, from our traditional linear cable and broadcast networks. That’s a problem because, you know, we’re we’re basically allowing this this company that will one day control us, one day can can consume all viewership. We can’t let that happen. We still need to be in control of our destiny of our back end and we need to figure out what to do. And that’s when they started to create their own streaming services, which then, of course, continued to eat away at their traditional linear businesses. And so even though these became all a la carte, you know, it was the unbundling. At the same time, they’re watching their cable networks, which are the moneymakers for a lot of these companies continue to decline and hasten that decline and, you know, at that point, you know, again, where do you go from there? That’s sort of been the dilemma the past couple of years as they’re replacing a model that made them billions upon billions of dollars with a model that gives them millions upon millions of dollars. And that’s not sustainable.
Brian Beutler: I mean, it sounds pretty sustainable to me if anyone wants to give me millions as opposed to billions of dollars dollars, I will not complain.
Michael Schneider: [laughter] Right. But when you’re used to those billions of dollars and you have an economic model that requires billions of dollars coming in, when you’re losing that and there’s no replacement, then that’s bad shakes the entire system that that impacts the entire ecosystem of Hollywood.
Brian Beutler: Right. That puts jobs at risk, too, right?
Michael Schneider: Yeah. [music break]
Brian Beutler: Do you have a sense for why the monopoly model for giving consumers on demand what they want seem to not work, I mean, it’s seems stable in music. You get Spotify, Apple Music, you can basically make a playlist for any occasion with any artist and almost any song. It’s not like you have to have your special monthly contract with RCA and a separate one with whatever other recording company to get the music that you want patched together. That hasn’t happened on the movie and TV side of things and I. Because I’m just somebody who pays for this stuff. [laughs] Don’t know why.
Michael Schneider: Yeah, I mean, they’re very different businesses. And. And you could argue that the music industry had already been just decimated. You know, much earlier than than any of the other industries because of, you know, downloads, illegal downloads, you know, everything that happened early on in the Internet revolution. So they they they’re coming in at a very different place. They’re already at a much weakened we can stage than the television and film industries. And so just a completely different model there. And, you know, arguably just, you know, not as a profitable business as TV and movies. And so that’s where, you know, it’s just operates differently over there. And, you know, as we know. You know, for especially for artists, they make their money now on touring. They make their money on everything but the actual music that they put out because that that industry just fell apart, you know, early on in the Internet evolution, partly because it was much easier. The technology was there by the end of the nineties to download, whereas the technology wasn’t there as soon for visual mediums.
Brian Beutler: Is the situation with streamers and movies and TV that they make, is it as precarious or is it becoming as precarious as the the problems that decimated the music industry? Are we are we going to witness a collapse and then rethinking about how we produce and consume that kind of media?
Michael Schneider: Yeah. Yeah. We’re we’re seeing that right now. You know, these these next couple of years are transitional years because, you know, the linear the linear model, it’s you know, linear television hasn’t gone away. You know, there’s still billions of dollars in advertising that goes to the traditional linear networks. So you’re in this weird transitional stage where the conglomerates, they can’t just get out of the linear business and they they shouldn’t because that’s where they’re still making a lot of money. But at the same time, ratings are minuscule. Now, people have cut the cord penetration of cable in U.S. households, I think is down to around 60% now where, you know, it had been much higher back, you know, ten, 15 years ago. So it’s never going to be the same. You’re not going to suddenly see a return to it’s not going to be like vinyl where people sort of like, hey, I’m, the hipsters are suddenly going to resubscribe to cable because that’s where the cool kids are. So that business is, you know, it’s managing declines and it has been for the past couple of years and all types of programing except for sports, which you know, still is the one bright spot in linear TV. I just did my annual list of the top programs of the year in in linear, and I would say 90% was sports and 85% of that was probably NFL. You know, it’s it’s so so everyone is sort of adjusting to that and the economics of, okay, we can’t do as much for the traditional linear as we used to. A lot of the networks that were doing scripted programing have already pulled out of scripted programing. You have, you know, certain networks that have already sort of segued to over to a more streaming universe like effects that are still programing and producing a lot. But then you have networks like AMC, which hasn’t figured out their streaming strategy. They tried to they created a entity called AMC Plus, they haven’t been able to crack that subscription but. So as a result, they’re struggling right now. They’ve just canceled a whole bunch of shows, a lot of things that they’ve even produced that will never see the light of day because they’re they’re now trying to, you know, basically, you know, use those as tax write offs. But you’ll have certain networks like AMC that will downsize and not maybe not completely get out of the scripted business, but definitely pull back. So that’s one thing. The other thing that came out and I’m sorry, I’m jumping ahead—
Brian Beutler: No, no, no, no, no, not at all. This is great.
Michael Schneider: Stream of consciousness here. But, you know, the other thing, when we talk about sort of the the economics of television in particular, and when you think about huge shows from the nineties, like Seinfeld, Friends, which were just billion dollar shows that were huge in syndication, that every few years would be resold in syndication. And the creators of those shows, the stars of those shows would have another windfall that, you know, that’s that’s like winning the lotto. But that wasn’t even you know, those are the high end. But there would be plenty of shows that would go for seasons would be sold into syndication. And the producers behind those shows would make a nice living, probably a lot more money than you and I will ever see in our lifetime. [laughter] You know, that was sort of the goal and that happened quite frequently. You know, even though the landscape is littered with, you know, canceled shows, there are plenty of shows through the years that would go the distance for seasons would be sold into syndication. Ever want to make a nice tidy profit and, you know, that’s what would fuel this business. So those those big syndicated hits would then fund other shows. You know, the creators of those shows would sign over all deals with studios and networks and then create new shows. And you know that that system worked, you know, and it made everyone involved, especially with a hit, hugely profitable, hugely rich. But we’re living in an age now where syndication basically has dried up. You know, those those days of doing a show for four seasons, 100 episodes, which is rare to begin with, because in streaming, you do ten episodes of season at most. Maybe you do three seasons, maybe that’s 30 episodes. That’s not you can’t sell that in syndication. There is no back end. So at this point, the the gravy train that writers used to look forward to and expect and success isn’t there anymore. A lot of times folks are paid upfront. It’s called a cost plus model where, you know, you get what could be your back end upfront. So you make a nice, nice amount of money, but you don’t make the riches. You’re not Scrooge McDuck anymore jumping into the vat of gold coins. You know, you’re probably buying a nice home still in Pasadena, but the age of those massive paydays have kind of gone by the wayside for all but the biggest of, you know, producers like a Ryan Murphy or a Shonda Rhimes. But what happens now is that middle class of writers, the ones who write and dream of that day, of maybe creating something big, they’ve sort of been squeezed out. And there isn’t that that that sort of promise of success or hope of success that there once was for, for that level of writer.
Brian Beutler: Right. It’s it’s so funny, while we were waiting for you to come out of the waiting room, like what you just said about how below the Seinfeld tier there was just a ton of shows that most people probably don’t remember that did well enough to sell into syndication to make small fortunes for large numbers of people. And we, Ben Savage, Fred Savage’s brother, who was on a show called Boy Meets World, that I watched when I was like a pre-teen and a teenager is going to run for the House of Representatives, probably on the basis of having been on a mediocre [laughter] like coming, coming of age, you know, on the money that he made from being on a mediocre coming of age story in the 1990s that like obviously never reached the Seinfeld heights but like I watched it, I can probably still sing the theme song from memory along with like 20 other shows that were just like that. And now I don’t know if that tier of television really even exists because I never I never watch network TV. I don’t know what’s on it.
Michael Schneider: Yeah, there’s, there’s, there’s, you know, there’s only a few left, you know, for, for a long time it was the domain of Chuck Lorre who, you know, dominated CBS schedule for a long time with sitcoms and did quite well and continues to do well, even though he’s seen his sort of domain shrink as this whole world shrinks. But, you know, there’s there’s a handful of shows out there right now that sort of fall under that Abbott Elementary on ABC. Ghosts on CBS are sort of the two sitcoms right now that are saving broadcast TV. Those are two shows that will go the distance, will go into syndication because they’re still doing 20 odd episodes of season. But that’s a rarity rather than, you know, there used to be a ton of those shows that would come out, you know, every couple of years.
Brian Beutler: So last year you wrote an article sort of wondering whether Better Call Saul would be the last basic cable serial to sort of clean up at the Emmys. And you compared in your article the way prestige cable shows like Better Call Saul had had sort of elbowed broadcast television shows out of relevance to what streamers are now doing to the cable shows under the under the paradigm that’s emerging now, the sort of crisis collapsing paradigm that we were just talking about could could shows like Better Call Saul or Mad Men actually be made today or make it past one season?
Michael Schneider: I mean, they could, but, you know, more likely than not, they probably would be on a streaming service know because you even you know even in examples of, you know, traditional linear networks like FX most of their content now moving forward. Is premiering on streaming instead. So, you know, FX, you know, because of their common ownership by Disney. Most of FX’s new content premieres on Hulu instead of the actual linear network. So, you know, you still have those kind of shows that are out there. But the future continues to be at least, you know, investment of that level caliber show. It’s all sort of moving to to streaming. And you have an interesting case of, you know, I mentioned FX on Hulu where a lot of these companies now are just taking those those cable brands and focusing those cable brands on their streaming service. So Paramount Global is a good example of a company that has basically turned a lot of its linear networks like MTV, VH1, Comedy Central, into more or less most barker channels. You know, they’re they’re zombie cable networks now where they’re mostly just playing repeats. And even a lot of their original programing is premiering instead on the streamer MTV shows. MTV branded shows are pretty much all premiering now on Paramount Plus instead of on MTV. If you turn on MTV, it’s all Ridiculousness all the time. All they do is air that show nonstop [laughter] because they found that that’s the easiest way to sort of, you know, keep that channel going. But knowing that that demo isn’t really watching linear. They’re putting all that stuff on on Paramount, and you’re finding more and more that even cable brands are kind of exclusively living on streaming now. And so that sort of that came out of my Better Call Saul is, you know, AMC is one of the last of these major cable networks that’s doing original content that still focuses on linear because they don’t really have a streaming play. But with Better Call Saul going away, I don’t see how they can create a new show that’s going to have that same kind of resonance in 2023 that gets awards attention. So.
Brian Beutler: The reason I asked is, is because, you know, we at least until a couple of years ago were were living it through what it in critic land they call it the golden age of television or of prestige television. And I think because it overlapped with the flourishing of these streamers that in people’s minds it was the advent of streaming, it was Netflix. And then Netflix’s competitors that were responsible for this profusion of high quality linear television programing. But talking to you, I get the sense that really the two things were sort of coincidental and that the the dawn of the prestige television era was an artifact of the of the cable bundle and the expensiveness of cable.
Michael Schneider: Yeah.
Brian Beutler: And then the streamers actually broke that up and maybe ultimately responsible for the demise of the golden age of television.
Michael Schneider: Right. Right. I think, you know, it’s that Jeff Goldblum quote from [laughs] from from Jurassic Park. Right. Which I won’t try to mangle now, but sort of similarly, like how know one thing begat the other and that ended up killing the first thing. In the case of prestige TV, I mean, really, you know, a lot of people really put that marker and, you know, it’s debatable because there were plenty of great shows before The Sopranos.
Brian Beutler: Right.
Michael Schneider: But The Sopranos was a moment in time in 99 that heralded this new generation of, you know, shows, networks. You know, really these companies got serious suddenly and investing in prestige TV. And that’s when cable especially got serious and doubling down on prestige. You know, FX came along a few years later with The Shield and heralded the dawn of prestige on basic cable, which up until then was doing mostly, you know, procedural shows doing low cost, low budget shows. But suddenly, oh, we can invest in really quality programing, spend, you know, several million dollars on an episode instead of like 500 grand on an episode. And you saw that start to really work with FX and then with other networks, including AMC coming along too. And they were able to then really bolster their subscription fees as a result with cable companies, they would renegotiate these higher fees and also ad rates, which were very important to suddenly they’re getting premium ad dollars and really playing in that game and suddenly, you know, as they saw doing that, then you had other networks kind of wanting to jump in and do the same thing. And suddenly you even had networks like E! which has no business doing scripted television. [laughter] E! should, you know, stay in your lane E! [laughter] But even, even they were doing scripted shows. It was there was a moment in time in the early 2010s where suddenly everyone wanted to be in this game because they knew that’s where the dollars were. That’s where they could up their sub fees. That’s where they could up their advertising fees. And as a result, we got some great programing, but it also stretched the business to the limit. And that’s the moment actually, when FX’s head John Landgraf first made his big proclamation that this can’t be sustainable. We are reached. We have reached peak TV. There’s no way that this business can just support this amount of, you know, high quality, high end, expensive, scripted television. You’re going to start to see that decline. He predicted that in 2015. It’s like, okay, we’ve reached the peak, we’re going to go down. That was back when he was counting around 400 original scripted shows in on on television, in primetime, on broadcast cable and pay. What he didn’t account for was the arrival of streaming and the amount of money that companies like Netflix were going to invest. Netflix spending $18 billion a year in original content and then others coming to follow. So he didn’t predict that. And as a result, instead of peak TV declining, it just went up more and more to this very year, 2020, to reach 599 original scripted shows. That’s English language only. And that’s not including unscripted. That’s not including kids content. That’s just primetime adult scripted shows on streamers, cable, broadcast. Pay. Now, he is predicting that that has reached the peak because as we briefly alluded to, you are seeing finally the streamers and some of the networks pull back, cancel some shows that they’ve already picked up, you know, shelve some shows that have already been produced because of this course correction that I mentioned earlier. So we kind of have finally hit the peak. And I think I think Landgraf is right now that the business has reached that threshold. But yeah, it took a lot longer to hit the peak than we thought.
Brian Beutler: And to what extent is the peak like a bit of a bubble? Like, I mean, I don’t my, my sense is that, I mean, you alluded to the difference between how AMC creates television because it hasn’t cracked the streaming code and how the streamers make television is different. Where. A network like AMC will, you know, maybe not greenlight all five seasons of what they know will be a critically acclaimed hit show, but they’ll have a plan in place for a, you know, pretty literary show to be produced, and then they’ll put out the first season and then the plan will be for a second season, Plan B for a third season. On the streamers, my sense is it’s it’s more like, let’s make a season and if people watch it. And we get subscribers as a result. We’ll do another one. And so you get these sort of like like swing for the fences productions that maybe they’re you know, maybe they’re really good, but they because they don’t have some huge impact, they never make it past one season. I mean, that’s that’s my sense of like what I’ve seen from trying to watch TV shows on cable that seem to continue for a few seasons versus on streamers where it’s kind of no one knows when if if the show you really just got into or stumbled across is ever going to see another season. And is that right? Is it is the medium of streaming changing? What kind of programing gets made and is that does it have to be that way because of the economics of streaming? Or could could the streamers try to do things the way HBO did with The Sopranos and AMC did with Breaking Bad?
Michael Schneider: Well, it’s it it’s a different business model. So so part of it is just, you know, and also a different style of of, you know, how they track audiences. And, you know, in the case of a Netflix, for example, you know, it it is all about maintaining that as that that subscription level maintaining that, you know, and trying to stop churn from happening from from, you know, having people cancel their subscriptions. And, you know, if a show doesn’t necessarily resonate with the audiences that they’re trying to. You know, really target it toward, then there’s less of a reason to do a season two. Now to back it up real quick, I think that’s changed with streaming in the beginning. I do think they actually were more lenient in terms of giving a show a second shot, a third shot, first off, because they didn’t have as much in the pipeline. So they were more patient with with those shows. But also, you know, and the money was free flowing early on so they could, you know, try a show for a second season or a third season because, you know, maybe it has a small but loyal audience or they they they they’re hoping maybe it’ll take off in a second season. And people have more episodes to binge, though there is more latitude than there is now where these these companies now have to think much more business minded. And if something’s not working, they’re much quicker to cut bait. That’s why you’ve seen streamers cancel shows more because, you know, if if a season one doesn’t resonate, then the feeling is, well, season two is not going to move the needle in terms of signing up new subscribers or holding on to current subscribers. So we need to quickly move on to the next thing you know. Interestingly, I think it’s different in linear in that, you know, if if a show has a loyal audience and it’s humming nicely and it’s part of your portfolio and it’s a part of your brand, then you do want to keep it going for as long as possible because, you know, that’s that’s what’s sort of keeping the lights on. That’s what’s allowing you to then launch other shows. So you don’t want to give it up as quickly as maybe in a streamer world where once you have, you know, 30 episodes of a show, well, you’re not going to get any new subscribers. The people who are going to watch that show are already watching that show. So if you greenlight a fourth season, are you going to add any more subscribers? Well, no, you’re not going to get anyone necessarily new there. So, you know, maybe it’s time to move on to something else. You already have that show in your library. It’s there. So there’s less of a need for, you know, say, 100 episodes or something versus 30. It’s less of a difference to them. [music break]
Brian Beutler: I asked you earlier whether Mad Men or Better Call Saul could actually be made today. I take from what you just said, that a show like The Wire would never have made it past one season if it had been if its first season had been a streamer. Right. Like I think famously was not widely watched until it got deeper into its run and people realized what a creative and good show it was and it became more popular. And then like has had multiple lives sort of since then. And I don’t know why it is that that. It managed to survive on cable despite not having a huge audience, but that as a streamer, they would have cut they would have cut—
Michael Schneider: You know, it’s so hard to say because, you know, as as a linear network, they probably should have cut bait on the wire. But they didn’t because they really saw something they believed in on that show. They they they clearly felt like, okay, this means something. This is branding. Maybe, you know, from a awards perspective. I mean, there’s there’s a lot of different things that, you know, may still keep a streamer like hooked into a show. You know, if if you know, a streamer had a show like The Wire and it suddenly won best drama. Absolutely. It’s coming back, even if it’s, you know, sort of a tough sell, they’ll find a way to resell it. So there are so many different things. And, you know, this day and age, we don’t have access to the data that they have internally that tells them why they think a show is worth continuing or not. You know, if a show doesn’t have completion rates that are worth keeping it going, that’s one thing. You know, they the Netflix will quickly see, okay, did people just drop this after the second episode? Well, they’re not coming back then. This this show’s a dud. We’ve got to move on. Or was it that the audience was small, but the audience that did watch this show, they watched it to the end. They loved it then. Okay, there’s something here. The people who watch this show really stick with it. They really love it. So we just need to find a new way to get this out to the masses. Then they might stick with it. So it is hard to say in this day and age. And it’s frustrating as someone who covers this business because we don’t get the kind of data that we used to get in the linear world to really get a sense of what’s working and what’s not working. And we kind of have to rely on the streamers a lot more to tell us.
Brian Beutler: I mean, which way do you think is a is a you know, they’re both sort of relying on a mix of market forces and the whims of the people who happen to be in charge, I guess making sort of gut decisions, but which is a better way to make sure like that the average quality of content that you’re getting is higher?
Michael Schneider: Oh, in terms of rat– It’s. Hmm.
Brian Beutler: Like I mean, like if we’re thinking that the streamers maybe killed the golden age of television, I mean, it seems to me that like probably the oh, the old way was better but—
Michael Schneider: You said that not me. I mean, I’m not ready to say the golden age of television is over. I think there’s a lot of great content as we’re talking. I’m actually at the Apple TV Plus day at the Television Critics Association press tour. They’re paneling a lot of great shows. And, you know, I continue to be impressed on a lot of the new stuff that’s coming out from folks like Hulu and Apple and Netflix, by the way. So, you know, I think from a consumer perspective, it’s still a great time.
Brian Beutler: Yeah.
Michael Schneider: At least from a program perspective. Now, you could argue it’s not as great if you have to spend all that money on all these different services that you didn’t feel like you needed to a couple of years ago. That’s a different conversation. But at least from a, you know, is there too much TV to watch? There’s still a lot of stuff. And, you know, if for the folks who say, oh, there’s nothing good on TV right now, I disagree.
Brian Beutler: Right.
Michael Schneider: I think you’re just not looking hard enough. There’s there’s there’s too much good stuff. Still.
Brian Beutler: I didn’t I didn’t mean to suggest that. What, what, I guess what I was trying to get at is more like are the metrics that the streamers are using and the metrics they’re making about whether to continue a program. Are are they snuffing out more quality in the crib than the linear TV folks were in the previous status quo? What’s better for generating quality creative content like at a high ratio?
Michael Schneider: You know, that’s a good question because it’s so funny we talk about that since, you know, traditionally the feeling was broadcast was snuffing out, you know, good quality shows because they were so reliant on ratings and advertisers and certain other characteristics. They’re trying to be too broad. And then they were trying to be too narrow. And there was so many things knocked against linear TV and snuffing out great television and and streamers. You know, to some degree, were sort of the antidote to that. You know, came in and if you had a niche story to tell, that was, you know, not broad enough for broadcaster cable, well, streaming was a great place to go. And, you know, there are a lot of great stories being told now, shows like Reservation Dogs, which is FX on Hulu or Mo on Netflix, unique stories from people whose stories hadn’t been told before. And, you know, on the flip side, you know, Mo’s going to end after two seasons, which is a bummer, but at least we did get two seasons of Mo that maybe we would have never gotten if, you know, we had just all lived in a broadcaster cable universe, not a streaming universe. So, you know, I still think we’re getting a lot of stories told now that we didn’t get before. And that’s just been good for television, for storytelling. So it’s hard to argue against that. But, you know, it’s it’s just a different age where we’re getting smaller stories and we’re not getting 100 episodes stories. We’re not getting ten season stories. We’re getting quick bites and then moving on to the next thing. It’s different. Is it better? Is it worse? I don’t know. It’s just different. And it is amazing to me how quickly we’ve changed and how quickly the environment has changed, that we now live in a world where we only get these quick bites unless you’re still watching broadcast and you’re on the 20th season of Gray’s Anatomy [laughter] or you know the hundredth season of NCIS. But, you know, that’s a different world. That’s a different kind of show. That’s a different model. Those are the shows that aren’t getting awards, but they are workhorses that a lot of people still love.
Brian Beutler: So we still have a lot of good TV to watch. If we happen to be on the right services or still plugged in. But just in the past couple weeks, right, I’ve read about the fewer customers on Netflix. Right? About I read about a studio executive who thinks consumers aren’t paying enough for streamers, about the potential for a writers strike over streaming residuals. Is is anyone actually satisfied outside of whether they think the quality of the of the output is good with where things stand as as like a business sales consumer relationship thing? Like who is winning right now.
Michael Schneider: Yeah you know it’s so funny because I think about this sometimes where you know now that now that I’m the grizzled vet [laughter] you know, I’ve been doing this for over like you mentioned in the intro over 25 years. I can’t remember a time when we weren’t talking about, oh no, the industry, it’s struggling, it’s trouble. Things are changing. What’s going to happen. And it is amazing to me that we’ve you know, we continue to, you know, still see all this great content out there. But the industry seems to forever be in one crisis or another. You know, when I first started this business, it was, you know, the erosion of network TV, which is so funny to think back now, back in the nineties when shows like E.R. and Friends were still getting 40 shares on television [laughter] still doing these amazing ratings that, you know, just don’t exist anymore and would never exist. But even back then, we were like, oh, no, here comes cable. Cable’s going to kill broadcast. What does that mean? What does that mean for storytelling? And then, oh, no, here comes reality TV. Oh, no. Reality Survivor came along and it was going to kill scripted television. That was the end of it. It was all reality for the future. Well, there are there’s never been more reality TV than there is now. But because there are never there’s never been more outlets, it just means there’s never been more of everything.
Brian Beutler: Right.
Michael Schneider: So the business has changed. It’s adapted and there’s always been winners or losers. But it has it has managed to survive. You know, we are in this interesting place right now where, again, like I was telling you two years ago, that answer would have been easy. The streamers are winning. They’re. They’re killing it right now, but. Right now it’s harder to say because the streamers are going through these growing pains. You know, Netflix completely going through growing pains right now. You know, a lot of these obviously HBO Max, going through growing pains because Warner Brothers Discovery is going through growing pains now that’s something different. That’s partly sort of, you know, that’s self-inflicted because of, you know, the ownership structure, the changes that went on there. That’s, you know, Wall Street, you know, impacting things as well. But Warner Brothers Discovery merging and realizing that they’ve got even more debt on top of debt now. And they have to, you know, massively cut costs and massively save money. And so they’re having to go through and make all of these budget cuts and changes that, you know, really, again, are of their own doing. So that’s you know, that’s partly because of the business, but partly because of just where they stand, but because they’re having to do that, that that has a ripple effect throughout the industry. Netflix, you know, seen its stock price decline. That has a ripple effect effect through the entire industry. So you have this space right now where no one’s really happy because everyone is dealing with these these these, you know, economics problems. And, you know, now there’s this concern that there may be a writers strike.
Brian Beutler: Right.
Michael Schneider: Because, you know, like I mentioned, the writers themselves are not happy because they don’t feel like they’ve managed to, you know, you know, come out on top after all these changes, syndication going away, and also those potential riches, like I mentioned, going way back end going away and this entire middle class of writer now, you know, not, you know, having the kind of steady work that they once did because working on a ten episode show not the same as working on a 26 episode show where you have steady income throughout the year. And so suddenly this entire class of writer that’s feeling squeezed and not really feeling like they there’s any answer going ahead. Well, if enough of them say, you know what, let’s just blow it all up. Let’s just, you know, let’s let’s just go on strike and let’s let’s see what happens. If enough of them decide to go on strike, then there will be a strike and then who knows what happens? You know, that strike in 2007, 2008 was devastating to the business, to writers, to networks, to everyone. You know, no one came out unscathed and it took a while for things to adjust back. And some would argue it never really adjusted back well. We could see that again.
Brian Beutler: It’s it’s funny hearing you talk about the way, the ways these changes have sort of made consumers less happy, also made the people who run these individual streaming services like they’re just piling debt on top of debt as they merge because their individual niche digital products aren’t sustainable on their own. And those things together have hurt. Writers. So basically everyone’s unhappy. But it makes me wonder is like, are we the the whole set of us? Like making demands of each other where we’re we’re pushing ourselves into a corner where the only way we everyone can get what they say they want is through more like consolidating again. But you said, you know, like that going back to the to to the cable era as that path seems to be closed up at some some other form of consolidation where some faceless monopoly or duopoly, you know. They probably, by virtue of being a monopoly or duopoly, will start fleecing customers and degrading service again. But everything would still be under one house, so people wouldn’t be paying for 17 different things—
Michael Schneider: Yeah.
Brian Beutler: Is that is that where we’re headed?
Michael Schneider: That that does seem to feel like that’s where we’re heading. I mean, you already see little sort of hints of that with bundles, you know, mostly within different companies. You know, Disney obviously offers a Disney Plus, ESPN, Hulu bundle. You know, that makes sense because it’s all within the same family. But I mean, you can go to Amazon now and subscribe to their channels and a la carte you know, buy most of the services right now in addition to Prime. Everything pretty much but Netflix. HBO Max, I think is going back on that Amazon channel service now and to some degree there’s a version of that where you know, you’re still you know, you’re paying one bill, you’re still paying all of those those different channels cost, but it’s sort of in one place. So that’s sort of, I think, a prelude to a larger re bundling of the industry where maybe these different companies start to get together and come up with some sort of price point that looks more attractive to consumers, that allows you to maybe get, you know, five or six different streaming services at the same time. You know, that’s partly why, you know, there’s still talk of, you know, is it a question of when Apple buys, you know, does it buy Netflix, does it buy Disney? You know, Apple has for a long time wanted to be in that game of being that company that’s your one stop shopping where you buy everything through them and it filters through them. You know, Amazon doing the same thing. So, you know, and funny enough, those are the two companies we talk about which companies are, you know, doing the best. Well, neither Apple or Amazon. This is not their core business.
Brian Beutler: Right.
Michael Schneider: You know, we we like to joke that, you know, content programing, it’s like a rounding error.
Brian Beutler: Exactly. I was going to say the same thing. Rounding error for them.
Michael Schneider: Yeah. And for Apple as well. So they can continue to spend, spend, spend. And you know, Apple and Amazon, you know, are still, you know, spending as much as they ever did because they can because this is not their core business. And and yeah so again it’s these different businesses have different business models and so that allows them to operate differently and that’s why they’re all operating so differently these days.
Brian Beutler: So last question then. Apart from the duopoly of mega-corporations that can give us our content that we crave so much as sort of like a loss leader for their for their other businesses. Have you heard has any leading light or hidden genius or policy maker pointed you in the direction of a different way or a better way that this might look like? Is there a is there a new utopian idea out there for that’s both unbundling but also good for consumers?
Michael Schneider: I think VHS tapes [laughter] I think we just go back to recording on the VCR, go back to those simpler times where, you know, you had the the 12:00 that was flashing. Now, you know. I, I feel like people quote that nobody knows nothing. Nobody knows anything. Quote that William Goldman quote more often than ever these days because it is that interesting time where no one really knows for sure where things are going and there are interesting things going on in all sorts of different pockets of the industry. You know, one one segment of the streaming revolution that we haven’t talked about yet, which I find so funny as well, are these fast channels, you know, about the free ad supported television channels that you probably see now all the time on either your smart TV or if you look at Pluto TV, you know, these different services that basically are just, you know, these these, you know, channels that air nonstop, you know, maybe a certain show like the Three’s Company channel, the Twilight Zone channel, which does exist, I believe, on Pluto TV. And, you know, the Paramount especially has really embraced the fast channels. And other companies are sort of going all in on these as well because they’re ad supported. People tend to spend a lot of time on these. But the irony of ironies is with fast channels, they basically look like basic cable circa 1984. Back in the day when, you know, TBS was airing nothing but black and white repeats. And so it reminds you of that. But the funny thing is, people aren’t paying for them. People aren’t subscribing to fast channels. You get them for free. So I’m like, what did you do business? What did you do? You basically, you recreated 1984 cable, but you made it worse for you by not charging people for it. So now you’re basically giving it away for free. And the only thing you’re making is advertising dollars as opposed to ad dollars plus sub fees. So I don’t know what you did here, but you kind of you played yourself. [laughter]
Brian Beutler: I mean. A you know, in a weird way, a service that is ad supported. So it’s like watching TV in your living room in the 1990s in some sense. But instead of having to like, live and die by the TV guide, you get to make your own programing list. Maybe that wouldn’t be so bad. [laughs]
Michael Schneider: Yeah. I mean, I think all things considered, it is for a consumer. We’re talking consumer, you know, because we mostly been talking about the business challenges that that this business is facing the next couple of years. But for a consumer, I still think it’s a great time. I still think that, you know, on balance, you know, you do have access to more great programing than you ever have before and more opportunities to watch more things than you ever did before. Back in the day when, like you said, you did have to wait for a show to come on and then record it or just hope that, you know, one day something would pop up again or, you know, you never dreamed in your wildest imagination that A-list movie stars would suddenly appear in a eight episode, amazing, scripted TV show. Well, now all of that is true.
Brian Beutler: I think that’s a good place to end it. Michael Schneider, thank you for spending so much of your time with us. I learned a lot.
Michael Schneider: Absolutely.
Brian Beutler: So here’s a little glimpse behind the scenes. My producer pitched this episode based on his own familiar frustrations with where the great unbundling has taken us. And we greenlit it because basically everyone on the team had the same frustrations. And those in turn have been articulated by professional writers and lecturers in articles and speeches going back years. That’s not scientific evidence that we took a wrong turn somewhere. It may be that if you polled Americans on this topic, the vast majority would say they’re satisfied with their viewing options, that they like Netflix more than they like their cable company, etc., etc. In a way, I’d be surprised if that weren’t the case. But consumer unhappiness is widespread enough to have spillover effects like Netflix losing subscribers and executives whining about spoiled customers and creators unhappy with the way streamers have changed their livelihoods. It all adds up to an unstable equilibrium. And honestly, my main hope when we scheduled this conversation was that it would key us into cutting edge thinking about how to stabilize it. Where do we go from here? That’s better than what we have now and better than what we had before. And Michael definitely delivered that. It’s just that the improvement in this case would stem from corporate consolidation and increasing the reach that giant technology incumbents most likely Apple and Amazon, have into our lives. The economics of that arrangement would definitely work, but I think particularly among this audience, it would also give rise to new conundrums and frustrations without belaboring all the misgivings that critics have with those two companies. I think it’s fair to say that a future where they control the production and distribution of most television pop culture is one where those same critics will face an irresolvable tension between their moral commitments to, say, labor rights and their basic conditions as members of society. If you want to shop without spending through Amazon now, you can, but at some point soon, being entertained and having common cultural touchpoints with your friends and family might make avoiding that impossible. So what then? Well, nothing terribly satisfying, but it’s a reminder that the ways corporations conduct themselves, the rules they’re supposed to abide by are at some level established by us, not as directly as they should be, of course, but directly enough that to coin the great cartoonist Matt Bors, people can improve society somewhat while still participating in. [music break] Positively Dreadful is a Crooked Media production. Our executive producer is, Michael Martinez, our producer is Olivia Martinez and our associate producer is Emma Illick-Frank. Evan Sutton mixes and edits the show each week. Our theme music is by Vasilis Fotopoulos.