On the latest episode of Recode Media, former Amazon and Hulu employee Eugene Wei explains why Netflix and its competitors aren’t playing the same game.
Netflix is spending billions every year to produce new movies and TV shows for its subscribers. So it follows that AT&T-owned HBO can compete by spending just as much, right? Not exactly, says Remains of the Day writer Eugene Wei.
”They [Netflix] got the high ground [online], and it’s very rare in history to see any company successfully take on a company with a scale advantage by actually just copying what they do,” Wei said on the latest episode of Recode Media with Peter Kafka. “The fact is the whole definition of scale advantage is that Netflix has 100 and whatever, 50 million subscribers and you don’t. If they want to spend $10 billion on content, and you say, ‘I’m going to spend $10 billion on content,’ they’re spreading that cost across a lot more people.”
Boiled down: If you want to really compete with Netflix, you’re going to need to outspend them, by a lot.
Seemingly every major media company is launching its own fragmented wannabe-Netflix killer, but Wei said only one company has a chance, and it’s not really playing that game: Apple. Although the tech giant has announced a slate of (expensive) original programming from creators like Oprah Winfrey and Steven Spielberg, it’s seemingly not racing to burn through its cash pile and overtake Netflix’s years-long lead.
“The current Apple offering, as I saw it from their keynote, looks a little bit like kind of like, ‘Me too, we have a service,’” Wei said. “‘We have a lot of phones and things in people’s hands, and so if we tack this on, it’s probably going to do pretty well.’ Kind of like Apple Music did pretty well, right, just through the distribution. It’s not going to be a service predicated on being revolutionary and dominating the video streaming industry.”
You can listen to Recode Media wherever you get your podcasts — including Apple Podcasts, Spotify, Google Podcasts, Pocket Casts, and Overcast.
Below, we’ve shared a lightly edited full transcript of Peter’s conversation with Eugene.
Peter Kafka: This is Recode Media with Peter Kafka, that is me, I’m part of the Vox Media Podcast Network here at Vox Media Headquarters in New York City. It’s a gray, gloomy kind of cold day, but I’m warm on the inside because Eugene Wei is here, a Recode Media all-time favorite guest. Welcome back, Eugene.
Eugene Wei: Thank you, thanks for having me.
I’m loading you up with pressure here because you were great last year.
I appreciate it.
I called you a thinkfluencer, and I think you said you’d not heard of that term, I hope that’s now on your Linkedin.
I should add that.
We had you on and you talked about everything under the sun, sort of riffing off some of these great blog posts you do, we’ll do some of that today, …read more