Marketing BS Podcast: Streaming Grab Bag
Plus some Marketing BS updates
Essay and Briefing production has been low the last few weeks as I have been spending more time on building a GPT-3 powered comedy writing tool (and writing “business comedy” with the tool). If you have not checked out ChatGPT in the last two weeks, you should really do so. It is much slower now than when it launched, but still mind blowing. If it is too slow you can just use the GPT Playground, which is powered by the same back-end. GPT itself moved from 3.0 to 3.5 right around when chat launched. 3.5 is very impressive (it can rhyme now!). Spend some time playing around! It’s not often that the most interesting, most advanced cutting edge technology can be in your hands this early (and practically free).
Marketing BS is on vacation the next two weeks. In early January I will be back with another podcast episode (moving to Fridays), and hopefully some more text. Have a great holiday!
Edward: Were you a Westworld fan, Pete?
Peter: That first episode in the first season was one of the most awesome pieces of television I ever saw. I was hooked with the first season and maybe watched one or two more episodes. That was it. How about you?
Edward: One or two of the first season, or finished the first season and then one or two of the season?
Peter: Finished the first season, that was, must watch tv. And then in my view, it jumped the shark very quickly after that. In fact, when I saw that news that H B O is gonna give up on it I thought they were just killing the program, but I didn't realize they were actually killing the, getting rid of the catalog too. That, that's crazy.
Edward: Is this the first example of hbo? So HBO has pulled stuff from their catalog before, like they, they pulled some Sesame Street episodes people were upset with, but is this the first time they're pulling their own content from...
Peter: It's the first I know of and indeed, the Sesame Street thing is different because that's not their content, but for them to have stuff that, that should be uniquely associated with them and still does, and on catalog basis, we'll have some value for them to say, nah, we don't need this anymore. It does have me scratch in my head.
Edward: So there's no actual cost for them, whether they put it on the platform or not. There's no cost. But what there is an opportunity cost, and I think that opportunity cost has really been ignored in the past. And now they're saying, Hey, we can take this product that we have and instead of using it on our own platform, we can turn around and sell to some, sell to Netflix, sell to Amazon, have someone else owed it exclusively instead of...
Peter: But it does make you wonder, like sometimes you'll sell content outright and say, here, it's yours now. Or sometimes you'll just license content. Or access. You think about lots of examples where, I don't know where Verizon will let Comcast use Verizon's phone services as a private label kind of play. So they're not giving up on it, but they're saying, Hey, we can have other access points to it as well. I just wonder if, maybe providing broader access rather than giving up on their own access makes sense.
Edward: HBO has done that before, they kept Sopranos on their system, but they offered Sopranos to Amazon as well. So you can go on Amazon Prime and watch Old Seasons of the Sopranos. But what was happening there is it was non-exclusive. It was still available at hbo, but also available at Amazon. I think what's happening here is that there is a higher value in a piece of content that's exclusively available someplace else, and HBO's gonna try to realize that with Westworld.
Peter: So you think it's an opportunity play for them that they'll make more money by auctioning it off to the highest bid. you don't think a kind of a cost cutting move
Edward: No, I don't think there's any cost. The cost to have more video on your platform is as close to zero as it comes. The storage cost is you're storing it anyway. And I think this and the streaming cost, if they're not streaming, that they're streaming something else, or they're streaming a competitor and you don't want your customers to do that. That's how you churn your customers. And so there's no actual cost for them to have it on there. There's an opportunity cost where they can go to Amazon Prime and Amazon Prime may pay, I don't know, 10 million to stream Westworld or 30 million if they get the exclusive rights to it.
Peter: It's all about exclusivity. But again it's interesting how sometimes, people do put a premium on it and other times they say, nah, come on we don't care what door you come through.
Edward: I think what's interesting is that all these streaming services are effectively competing with each other, but they're finding ways that they need to cooperate at the same time. And so you can go on Amazon. Amazon Prime is competing against HBO and Disney Plus and so on, but you can also buy HBO and buy Disney Plus when you're on the Amazon Prime platform. If you go on Hulu that's owned by Disney, you can buy HBO on through Hulu and so they're both, what's that word? Where you're competing and your friends at the same time?
Edward: Frenemies. They're frenemies.
Peter: Yeah. And that whole thing about the these kind of affiliate acquisition things that are going on just as you described that the companies getting some kickback from the content providers for selling subscriptions to it, that's something that we as consumers don't really understand a lot of money, a lot. Here it is company like, I dunno, Comcast will pay a bunch of money to get access to the HBO content, so get paid every time they bring subscribers in. It's weird how it goes both ways.
Edward: I've tried to dig into that and I don't know what they actually pay. So when you buy HBO through Amazon, you pay your $15 a month, Amazon gets paid for that. I don't know if Amazon's getting a lump sum for getting the new subscriber, or they're getting like $5 a month for one subscriber. As far as I can tell, that data has not been shared publicly anywhere.
Peter: The data's not shared. And again, I think very few consumers are aware that these things go on. So when a company starts calling attention to it, like Verizon is now doing, you want, maybe you want to elaborate on that a little.
Edward: So Verizon, that is they offered a new deal yesterday. I believe that if you go and use their marketplace, I didn't even know Verizon had a marketplace. Like it never would've occurred to me to go and buy my HBO through Verizon. I have a Verizon phone, but that's not how, if I wanted to buy hbo, I'd probably do it through. Go to hbo.com or maybe I'd pull up my Amazon fire television and buy it. I don't think I'd open my Verizon app on my Verizon phone to go and buy hbo, but that's what they want me to do. And if I go buy HBO through my Verizon app, the. Verizon's gonna give me Netflix for free for a year. So they must be making something from that .
Peter: Oh, clearly they are. And you gotta wonder what the play is there that maybe if they can be your gateway to more and more services, then you'll consider adding others and see them as a bonafide, app store in a way, even though we're, blissfully unaware of it. Maybe that's what they're thinking.
Edward: I assume that once I subscribe to HBO through the Verizon store, I'm not, I'm still using the HBO app to watch my shows. I'm not going through the Verizon app to get the HBO stuff, which I think is what happens on Hulu. I can buy HBO through Hulu and now all of my HBO stuff is available right inside my Hulu app.
Peter: So in a way they're trying to build a walled garden of sorts. But it's not so much financial considerations or even exclusive access, it's just that one, once you're seeing it through gateway, you're just not gonna switch. And then while you are using that gateway, you might access other things through it. Very different than, the traditional approach that apple's taking.
Edward: It's customer acquisition, right? So if Verizon can get me to go buy my HBO through the Verizon app, and now all of a sudden I'm getting Netflix through the Verizon app, I've, they've now acquired me as a customer and getting that second, the second or third purchase, when I decided to go buy Paramount, maybe instead of going to paramount.com. My natural inclination, at least my on the margin, I'm more likely to go buy that through the Verizon app now as well.
Peter: That's the bet they're placing. It'll be interesting to see if people feel any kind of loyalty to one Gateway or another. And what would drive that? Is it the brand? Is it the the interface that lets you access it? It's funny that we always talk about content being king, but now it's at least the presumption is that being the gateway to content might be the king. Not a lot of evidence for.
Edward: It feels like in the real world, we see this all the time, clearly, like I don't buy my tide from Proctor and Gamble. P and g might have a direct to consumer tide business, but it would never occur to me to go to p and g or tide.com to go buy Tide. Instead, I either buy it through Amazon or I. Go to my local grocery store, my local Walmart, and pick up the tide. And it feels like in the digital world, the competition is like a drive away versus in the digital world, competition is a click away and it seems a lot easier switch from one storefront to another.
Peter: Exactly. And what's interesting about it I don't know about you, but I have zero loyalty to any of them. I don't look at any of the, these interfaces and say, that's a good one. If anything, especially when you're doing it through the television, you're trying to spell out names of programs by using arrow buttons. Just horrible. So it's I don't think they've done a good job of, the customer experience of being content retailers in that regard.
Edward: But I think there's something to be... there is a friction for leaving somewhere. So if you are on your Amazon Prime TV or on your Roku tv and you decide, I wanna watch deadwood on hbo. One way you could do it is go to your phone or your computer, sign up for hbo and then go and link it to your Amazon Fire television. Or the other way is you go on Amazon Fire Television and say, hbo, click here, sign up. I'll bet there's a lot of people who do that ladder rather than the former.
Peter: And in the case of Verizon is that a presumption that people would be consuming the content on their mobile device because it's not clear that the Verizon gateway would help you with your home television?
Edward: No. I'm a bit of a loss for the Verizon model, although, yeah if the Verizon, if presumably Verizon has, I didn't even know Verizon had a store, but they had a store and you could buy other things through that store. You could imagine a lot of these guys have these discount stores. You can imagine that you go on Verizon and buy your, I dunno, your AirPods through Apple at a $10 discount if you buy it through the Verizon store. And so if you get, if you start getting used to doing that, the reason to go, the reason to buy through the Amazon Fire television is because it's convenient and it's right in front of you and you're already using it. The reason to buy through the Verizon store is there has to be something else. There has to be the convenience is not there, so they better compete on price or something else.
Peter: I think it's Apple envy I think that folks just have this feeling if we build it, they will come. That we can build the same kind of walled garden that Apple has. If they could do it, why can't we? And just makes you wonder a, is it is it that easy to do? And b well, you look at what some of the pressures apple's facing, is that even the right way to go? If you can.
Edward: That's the other big news we've had this week is that, the EU is now gonna force Apple to have competing app stores. So up until now they've had a monopoly. If you wanna buy something through your phone, you have to buy it through. Apple. Now there's gonna be an, in theory, there can be other stores, but again, we're gonna have that same problem of why would you, as a consumer, why would you go to one of these other stores? Unless they're competing on price or they're not gonna, it's unlikely this other stores gonna have as better a better experience than Apple. So they better just offer things at lower prices.
Peter: It's another example where regulators are stepping in trying to do things that, in theory is in the consumer's best interest. But you go back to G D P R, the whole data protection thing. There, it's, great idea in theory, but now every time you're dealing with the European firm, just all the accept this, click on that. It's, it ends up being a worse experience. You know what just take my data, but leave me. And I think it's the same thing here that they'll have a million stores. You won't know which one is which, and in the end, you're just gonna end up just choosing to go to the regular Apple one and, and paying more and getting less. But it's the one you know and you're comfortable with.
Edward: The one thing the law is doing so I think that this, again, I'm with you, especially eu, they've made so many poor choices and there's some pretty terrible stuff in this recent law. But one thing that I think it's doing right is it's. Companies to basically circumvent Apple payment rules. So right now, like I can't buy a book through my Kindle app because Apple is gonna require 30% payment from Amazon. Amazon's not making 30% margin when they sell the book. And so the result is it's just lock out completely and I need to go. Into my browser, go into app Amazon, buy the book, and then push it to Kindle. And not only can I not buy through the Kindle app, Amazon can't even tell me in the Kindle app how to buy a book and use this new law is going to fix that. It's going to allow people to go and make in-app pur purchases by clicking off their app. They can tell people that they can go to their website to buy. They, it's still not gonna be a seamless solution, but at least the customer communication's gonna be a lot.
Peter: Here's one thing I'm curious to get your take on it. Where I think where the EU stepping in is gonna be a tremendous benefit for consumers, and that's the cables connections to your Apple devices. Pushing people to, u s, BBC or some kind of standard instead of having their own proprietary thing. I don't see any downsides to that. Curious to get your take.
Edward: Oh, really? So I think this is a huge mistake. We've come to, we've come to our point of disagreement. So USB cables have improved dramatically over the last 20 years. What EU is going to do is say, Hey, going forward, you have to use this technology this way. They're basically saying that we have now mastered the USB cable and there's no further technological advancements possible until we as bureaucrats decide to change the law.
Peter: Oh, I wasn't aware of that. I was just thinking of them telling Apple that they gotta get in line with everyone else, but they're telling everyone, everybody has to get in line.
Edward: This is the new, this is the new standard, and the new standard for USB cables is this, and it's not changing.
Peter: Oh, ah yeah. Okay. Yeah, that's that's thrown out the baby with the bathwater. That's a shame. . Yeah, because you can imagine if governments had stepped in, just how bad the technology would be today. If technology didn't decide that in a market-based way. Wow. Yeah.
Edward: All right. Hey. I think we've been all over the map today. I think just I think to wrap it up, to talk a little bit about traditional retail and how, if not just these, all these streaming stores, but actual physical retailer, they've always been in this place. The stores are selling Tide, whereas, HBO is selling movies. But you also have private label stuff that you're selling on your own. And so you are in constant competition with the person supplying all of your product. 90% of your products are being supplied somewhere and you're competing with all of them while you're selling them at the same time. And I think what we're seeing. The streaming world is as it's getting more developed, it's becoming more and more similar. To what we've seen in retail for the last a hundred years.
Peter: And it's great. It's great as long as we can let you know, market forces determine winners and losers. And you we're seeing quite a bit of that happening in the streaming space. It'll look different a year from now, but hopefully better both from a consumer standpoint and from a ability to make money standpoint.