00:00The former head of NBC Universal CISO streaming service, a former president over at IFC TV
00:05and the Sundance channel, and currently a wonderful fashionista. Evan, great to have
00:10you here on the program. I've been following you for a while. You've been charting, of course,
00:13the, I guess we'll say the changes going on through broadcast media and the media landscape
00:18overall. You made a very present call, what was it, last year in 2025 about Netflix having won
00:24the streaming wars, something I don't think anyone doubts. But I guess the question is,
00:28has the kind of streaming wars evolved into something else where Netflix might need to be
00:33a little bit more dependent on live programming and other forms of engagement?
00:38Yes. I mean, the point I was making when I said that Netflix won the streaming wars was that the
00:43streaming wars were over and now Netflix faced a whole new challenge, frankly, from YouTube.
00:48The streaming wars were about subscriptions and now we're in a new free TV economy. When you look at,
00:54you were talking with Michael about the share of television viewing happening in the United States,
01:00and Netflix has actually been flat for two years. Their engagement has either been flat or down over
01:07the last couple of years. You also talked about that with Michael. Meanwhile, YouTube has grown their
01:11share and the free platforms like Tubi and Roku channel, which will now be one thing,
01:17have overtaken Netflix on TV. So the point was that part of the streaming economy was over
01:23and we were in a new era where Netflix was going to have to pivot. And what's happened is they've
01:29turned basically into TV. They're no longer a disruptive platform. They've sunk into basically
01:36becoming a digital version of CBS.
01:38Okay. I am curious, though, about this idea of them doing, it's kind of similar to what you have
01:44on Amazon Prime, similar to even what you have with some of the other platforms, Roku and elsewhere,
01:49where you have a sort of multiple channels that you can choose from rather than just
01:54the one proprietary channel in Netflix. Would that actually help them if they moved in that direction?
02:00It's interesting. They're doing something a little bit similar to that in France. So they made a major
02:04deal with TF1 in France to basically take the entire TF1 feed and put it up on Netflix.
02:11For a very specific reason, they are losing the daily touchpoint attention war. In fact,
02:17I issued a report called the Cross-Screen Attention Index, which you can see at index.eshapp.tv.
02:24And you can see that in many countries, here in the U.S. in particular, for consumers under the age
02:30of 55, Netflix is actually losing the daily attention war to TikTok, not only YouTube. And so
02:37they are now getting into aggregation in a lot of other territories. In particular,
02:43the France example, I think, is something that's going to wind up turning into a worldwide strategy
02:48for them, which is interesting because they're really just aggregating out someone else's platform.
02:53And so, Evan, I mean, it's interesting you make the point. It's not just YouTube. It's TikTok. I mean,
02:58what does a Netflix do? You make the point that they're falling into the trap of traditional TV.
03:03And I wonder, I mean, how do you turn that around if you think about where the eyeballs are going?
03:09Because it's not necessarily like they can go out and buy a TikTok, for example.
03:14No, but they did just launch a vertical feed. And I think that is step one towards where they are
03:19ultimately going to go, which is verticalizing their entire library and trying to start to get
03:24the attention that they're losing when people are outside the home. Remember,
03:29most video is consumed on a phone, not on a television set. We actually just issued a report
03:34on my Substack newsletter, Media War and Peace, that showed that upwards of 60 percent of total
03:40attention for video happens on the telephone, not on the TV screen. And when you think about where you
03:47watch the majority of your video, it's not necessarily in the living room. It's on the bus.
03:52It's in the waiting room. It's on the toilet. And they are losing that attention war more and more
03:58every day. TikTok is actually winning that attention war. So they're losing the free television
04:03war on TV to YouTube. They're losing the attention war to TikTok on the phone. I believe their vertical
04:08feed will be one of the ways that they try to tackle that. Imagine taking all their true crime
04:14and turning it into serialized vertical TV that you can watch four or five minute increments on the
04:20bus or in the waiting room. I personally would be a huge fan of that. I watch and consume a
04:25lot of
04:26true crime content, but I digress here. More so than Green Lantern, I guess? A little bit more. I'm glad
04:31to
04:31hear that you were watching our previous segment. But I do also want to get your perspective on the
04:36advertising business, because reading through your notes, it sounds like you're not necessarily
04:41impressed here. The analyst call has started, but in their statement that they put out, they talked about
04:46how building out the ads business continues to be a top priority, that they're on track for
04:51approximately $3 billion in ads revenue in 2026. I mean, again, you just think about the fundamentals
04:58of the company. What do you make of that figure?
05:02Hulu will do more this year than Netflix and advertising. And Hulu has a fraction of the subscribers,
05:09and they're only in America. So that's a really bad number for them. They are terrible at ad sales.
05:16They got into it by accident because Reed Hastings announced it on an earnings call without telling
05:21anybody else. And they have failed to really transition into an ad business since then.
05:26And the main reason for that is that the culture inside Netflix hates advertising. They really do
05:32not like it. And the product is not good. And they are not embracing it in the way that they
05:37need to
05:37to grow their revenue. When you look at these numbers, it's important to zoom out. When you look at the
05:41first half of 2026, and you look at net income, and you take out that termination fee that they got
05:48from Warner Brothers Discovery, or as I call them, Disco Bros, they are only grew net revenue 6% in
05:54the
05:54first half of 2026. And that is why their stock is falling.
05:58Well, I'm curious, though, on the ad thing, too, in the comparison with Hulu, though, because I mean,
06:02I feel like also the content is very different. It seems like a lot of the programs that you see
06:06on Hulu are almost, they're almost like on a traditional TV. So they're almost like tailor
06:10made, at least in my opinion, for that type of ads. While a lot of the stuff that you have
06:14on
06:15Netflix, it's the ads aren't always natural, or they don't feel as natural. And of course,
06:19there were a lot of jokes made about the bombardment of ads that they made during the
06:23Major League Baseball home run derby. But I am curious, do you think that the content they have
06:27there is conducive to actually more ad placement on Netflix?
06:33Absolutely. When you look at the vast majority of the usage on Netflix, it comes from the library
06:37content that Michael was talking about earlier. It's not from the originals. So put the originals
06:42aside for a second, like Gilmore Girls suits, these were originally on commercially supported
06:48television. They just do a shit. They do a terrible job of selling the inventory that they have on their
06:55platform, because they don't really understand the ad business very well. They've been through how
07:00many heads of ad sales since they started. They're changing their ad stack again. This is not a good
07:06ad product, and they're not great at selling it either. They don't do a lot of branded content.
07:11And then you look at the home run derby and the NFL, they're increasing their spend on live content,
07:19on licensed content, on sports. These things are getting more expensive for them quarter after
07:25quarter, which is why their net income is actually plateauing. There's the Phillies.
07:30And so they can buy all the live sports as they can. But as Seinfeld would say, can you hold
07:39on to
07:39the advertising? It's a really hard business to compete in, and they're not very good at it.
07:44And that's, you know, yes, they talked about $3 billion in revenue, but it's still not material
07:49enough for them to report it as an earnings category. So if it's not material, then it's not
07:55important. And that's a real problem for them.
