November 15, 2024 • 46 mins
While the streaming media landscape is crowded, it could be worse. In this episode, we look at some streaming services that didn't stand the test of time. From platforms that were a bad idea from the start to ones that were victims of corporate mergers, we find out what went wrong.
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Episode Transcript
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Speaker 1 (00:04):
Welcome to tech Stuff, a production from iHeartRadio. Hey there,
and welcome to tech Stuff. I'm your host, Jonathan Strickland.
I'm an executive producer with iHeart Podcasts and how the
tech are you. I am wrapping up my vacation as
you listen to this. I am sadly bidding a fond
(00:27):
farewell to the Caribbean, unless, of course, hurricanes ruined my trip,
which is entirely possible. I'm watching every day as storm
systems form out there, so we'll see. But anyway, I
am incapable of recording a new episode today. So this
episode originally published on May twenty second, twenty twenty three.
(00:48):
It is titled Streaming Services that sunk Golly, I'm on
a boat and I've decided to run an episode with
the words sunk in it. Y'all, just don't be me.
Hope you enjoy. So. Back in two thousand and seven,
(01:09):
a rent by mail video business made a move that
would be a true disruption. We talk about disruptive companies,
this was definitely one of them. It had already shaken
things up by taking aim at a huge company that
had dominated the home video rental market for decades through
offering customers the chance to access a huge media library
(01:33):
from the comfort of their own homes, albeit they had
to wait for titles to make their way through the
postal system before they could enjoy them. But now, this
upstart company in two thousand and seven had set up
a service where, if you can believe it, you could
actually connect to a media player through the Internet and
watch movies and television shows by streaming them to your device.
(01:57):
The upstart company was, of course, Netflix had battled with Blockbuster,
which actually had the opportunity to buy Netflix at one point,
but walked away from that deal, and Netflix quickly became
a big concern for the major studios, which understandably and
arguably correctly worried that unless someone took action, Netflix would
(02:18):
become a powerful monopoly for prestige media streaming services. I'm
not talking about the user generated stuff which you would
find on platforms like YouTube, but rather studio produced stuff. Now,
at that point, Netflix would have a lot more leverage
when negotiating with studios if it was the one and
only place where customers could go to watch stuff online,
(02:41):
and studios hate when leverage is given to anyone else.
See also the Writer's Guild of America Strike. Lots of
other streaming services would upear over the next decade and
a half. Some of them were the product of collaboration.
Hulu initially was I'll talk a little bit about who
later on in the episode. Some streaming services launched as
(03:04):
an extension of a television or cable channel, so eventually
you would get things like Peacock or HBO Max or
Disney Plus or Paramount Plus, which draws heavily from CBS,
and lots more, including ones that aren't extension of media companies,
like things like Amazon Prime Video and Apple TV Plus.
(03:25):
There are so many streaming services now that if you
subscribed to all of them, you would be probably paying
more per month than you would if you went with
one of those gargantuan cable TV packages. The landscape is
crowded and it's complicated. I mean, sure, if all you
consume are Disney films, and let's be honest, the way
(03:47):
we're going, pretty soon every movie is going to be
a Disney movie because the Mousehouse just gobbles up everything. Well,
if that's all you do, then Disney Plus might be
all you need. But most of us are likely to
find ourselves subscribing to, or at least wanting to subscribe
to a few different services to get access to all
the stuff we like, and even then we're probably giving
(04:09):
up on a couple of things. For example, I think
at this point, I have Netflix, I have Amazon Prime,
I have Apple TV Plus, I have Disney Plus, I
have HBO Max. That might be at oh, I've got Peacock.
So like, that's ridiculous, right, I Mean there are ties
where I sit there and think, do I really need
(04:30):
all these answers? No, I don't need them all, but
there are programs that I can only watch through one
of those services, and there's not really other alternative. So
there I go. Now, the last couple of years have
shown us that on the business side, if we go
to the other side, yeah, things kind of stink if
you're a consumer because they're all these different competing services.
(04:52):
But on the other side, things aren't that rosy either.
While the consumer struggles with which services they're gonna subscribe
to or pass up, the media companies behind the services
are trying to carve out a profitable path while also
competing with one another. Now, maybe that involves producing new
films and shows that are exclusively for the streaming service.
(05:13):
Maybe it involves securing licensing for old favorites before a
rival can do it, though a lot of that stuff
ends up getting sewn up in existing libraries. Maybe it
means taking some stuff off the service so that you
know you're not paying people who made it over and
over the residuals. Cough. David Zaslov does this a lot, cough.
(05:35):
The point is, the streaming service business is really, really tough.
I mean it's great when you're on a meteoric rise.
You know, you launch, people find you, they talk you up.
Your subscription rates soar. You're just doing gangbusters. It's growth
all the way, baby. But eventually you start to hit
(05:57):
a plateau and fewer people are signing up this quarter
compared to last quarter, or worse, you might hit a
point where you actually see subscriber numbers go down, and
that's super bad. Now, maybe you supplement your revenue by
showing ads against content. Maybe it's not just subscriptions. Maybe
advertisers offer some stuff for you as well. Maybe you
(06:21):
give customers options. Maybe they can subscribe it a higher
tier and they can get an ad free experience. That's
pretty common these days and then if they subscribe it
a lower tier, they're spending less per month, but they're
also having to sit through ads to watch the content
they want. You still have to balance costs with revenue,
and if you have to keep producing high quality content
(06:43):
to both attract and keep customers, you might find that
your profit margins are so thin they only have one side,
or maybe even that you're losing money. And if you're
seriously unlucky, you might find that you're on borrowed time,
that you're losing money, and there's no pathway out of that.
You know, the hope is that you scale up to
(07:04):
a point where you ultimately are making more money than
you're spending, but depending on how the landscape is, that
might not even be a possibility. So we're going to
take a look at some failed streaming services, ones that
made an effort to hang with the cool kids, but
ultimately flopped or faded away, as the case may be,
(07:26):
and in one case, stopped a month after it had started. Now,
I think I'm gonna start with a fairly recent example,
one that I talked about a lot as the service launched, faltered,
and then flopped. And that's quibi do you remember Quibi.
In case you don't, here's the deal. So Jeffrey Katzenberg,
(07:49):
who famously founded DreamWorks Animation after he left Walt Disney Studios.
That story is a crazy one, by the way, full
of like corporate drama, a lot of like like executives
being really bitter about each other. Unfortunately, it's the kind
of stuff that really blogs in a different kind of podcast.
(08:11):
So as much as I would love to gush about it,
I'm just gonna leave it here. Anyway, he decided he
wanted to create a short form, highly produced video delivery
platform aimed at the smartphone market. So you know, like
TikTok is a user generated platform, right, But what Katzenberg
wanted to do was make a studio produced version of
(08:35):
short form video platforms. So instead of it being you know,
some kid hitting on a really cool dance or something
and then getting virally famous, it would be studios making
content and then using this platform to distribute that content.
And you could sort of see the logic behind the
(08:57):
decision because people are on their phones a lot. They
are using their phones more and more to access entertainment,
and short form content works well in situations where you
might not have the time or desire to sit down
to an hour or more of video, so why not
create a platform specifically for that kind of audience. Katzenberg
(09:20):
founded QUIBI, which kind of stands for quick Bites. He
founded it in the summer of twenty eighteen. Originally it
had the name new TV, but it would change to
QUIBBI a little bit later. In twenty eighteen, he hired
Meg Whitman, who was the former CEO of Hewlett Packard,
and she became the CEO of Quibi, and Katzenberg and
(09:41):
Whitmen very quickly were making the rounds to various studios
in an effort to drive up investments for Quibi, and
they did. They raised like a billion dollars in the process.
So the plan was to get production ramped up in
twenty nineteen in preparation for a launch of the actual
platform in the spring of twenty twenty. The hope was
(10:04):
to create all sorts of different kinds of content across
all genres reality, television, comedy, action, everything, and that they
would take the form of stuff like short form television episodes,
so things that lasted like ten minutes, to films that
could be divided into ten minute long chapters, again, all
designed to be watched on your mobile device. In fact,
(10:27):
they even had this weird morphing technology where you could
watch content either in portrait or landscape mode, and your
experience of watching that program would depend upon what mode
you were using, because you would get different views. Like
it was shot with this in mind. It was kind
(10:47):
of it was really ambitious, but also kind of odd
to make that choice. It almost meant like you had
to make two versions of your movie in order to
do it so that way, like, if you're watching it
in portrait mode, you're not missing some pivotal piece of
information way off to the side in the frame, because
it wouldn't show up due to the fact that your
screen is vertical rather than horizontal. Anyway, they really pushed this,
(11:13):
and producing stuff takes a lot of money, right You
mentioned that earlier, like it is expensive to make studio
level content, highly produced content. Even if you're cutting corners,
it's still expensive. And meanwhile, the launch date was getting closer.
Now It is impossible for us to say if Quibi
would have survived if things had been a little different. Personally,
(11:36):
I think Quibi was doomed to fail no matter what,
But the decline may have taken a lot longer if
things had been very different in twenty twenty, because it
seems to me like the mobile focused approach really limited
Quibi's usefulness. But maybe it would have held on, and
maybe it would have even been a success. I'll never
be able to tell, but you know, something major happened
(11:58):
in twenty twenty. We had the COVID nineteen pandemic hit
and nearly everyone was stuck at home for a long time,
so the use case for Quibi was reduced significantly. I mean,
here was a product that was intended to go to
folks who were looking for some sort of entertainment while
they were like on a bus or on a subway
(12:18):
or standing in line, you know, doing all the things
that they could not do because they were stuck at home.
And at home they had access to tons of other
entertainment services that were designed to work with their lifestyles.
So trying to fit Quibbi in when they were no
longer in those use cases it just didn't really catch. Now.
(12:41):
At launch, Quibi did see quite a few downloads. I
think it hit like number three on the most popular
apps for the week that it debuted, but then the
following week, those download numbers dropped drastically. Signing up would
give you access to Quibi for three months for free,
and after that you were supposed to pay for a subscription.
So about three quarters of Quibi's users just opted to
(13:03):
bounce off the service rather than convert to a paid
subscription once their free trial was up. So the company
attempted to bail water out of the sinking boat, but
six months after going live, the writing was on the wall,
so in mid October twenty twenty, the Wall Street Journal
reported that Quibi was on the way out, and by
December of twenty twenty, the lights had gone off in Quibi.
(13:25):
Roku ended up purchasing Quibi's library, and thankfully creators retained
the rights to their intellectual property, which gave them the
chance to find some other platform to host their work.
We're going to talk about a different company later here,
where it's like the opposite of that to an extreme.
But yeah, Quibi came and went so fast it didn't
even say goodbye. Now there's a lot more we're going
(13:49):
to talk about today with various failed streaming services, But
before we get into all of that, so that we
don't fail. Let's take a quick break to thank our sponsors.
So yeah, Quibi. There were some major players in entertainment
(14:13):
behind the scenes, both directly working for Quibi and also
investing into the company. But our next example was an
actual extension of a truly massive media conglomerate. So NBC Universal,
which itself is a branch of Comcast, decided to dip
its corporate tow in the subscription based video on demand
(14:34):
service back in twenty fifteen. So a media executive named
Evan Shapiro led the charge, and the goal was to
create a video service centered around comedy. So the question
was could yuck yucks bring in the buck bucks. The
service would be called CISO, and it launched to a
(14:56):
small beta test in December twenty fifteen, but the actual
service went live in early twenty sixteen. Shapiro spared no
expense when it came to curating content for the service.
He wanted all things comedy, including older material like episodes
of Monty Python's Flying Circus or the Great Sketch show
The Kids in the Hall. That Saturday Night Live library
(15:18):
was part of it. Remember this was an extension of
NBC Universal. He also initially had eyes on making CISO
the exclusive platform to stream episodes of the Office and
Parks in rec Those plans would ultimately fall through, not
Shapiro's fault, really, but it was a part of his
plan where he thought, if we can do this, then
(15:40):
that's going to attract a huge base of users. He
made licensing deals left, right and center. He brought in
a ton of popular comedy under one roof, and he
also empowered his staff to produce original content for the
platform as well. NBC Universal was kind of using CISO
as a sort of experiment mental platform, the idea of
(16:01):
being that if a comedy centric video on demand service
and over the top streaming service, if that could work well,
then NBC Universal might launch other genre or interest specific
streaming platforms in the future, like maybe one based around horror.
Universal famously has a really deep horror library that they
(16:23):
keep trying to exploit in the modern era and often
failed to do so, or maybe like a streaming service
that's really focused on things like reality television programming, which
arguably can be scarier and more disturbing than horror is.
The cisow subscription was just three dollars ninety nine cents
(16:43):
per month, when it launched. The initial catalog was heavy
on stuff that comedy fans were likely to gravitate toward,
including a sizable library of British comedy that could actually
be a little tricky to access here in the United
States outside of some notable exceptions like everyone's heard of
Bonty Python's Flying Circus. But there are a lot of
(17:04):
other British comedies that the average American may not be
familiar with. Some of them are really famous. I mean,
like some you might have encountered on other channels like
Adult Swim showed The Mighty Boosh for a while, which
is a bizarre, absurd comedy series. And then there were
some sketch comedies, like one of my favorites was that
(17:26):
Mitchell and Weblook, which Netflix carried briefly and then it
became unaccessible to an American public. I finally ended up
breaking down and buying the British DVDs and a region
free DVD player so I could find I could watch
them again. But anyway, the goal of CISO was to
create original content. That was the long term goal, to
(17:49):
make its own content that would build its own following,
much like Netflix had done with things like Orangees of
the New Black and A House of Cards and Stranger Things.
Now every streaming services is following that same kind of philosophy.
So you use the library to first attract your ground
base of subscribers, and then you create original content to
(18:11):
attract new ones and to keep everybody there. Now, one
early mistake that the executives made over at SISO, though
according to Shapiro, was actually folks higher up at NBC
Universal that made this mistake, was to flinch at a
deal that would have made CISO the exclusive streaming home
for the Office. As I mentioned earlier, so Netflix was
(18:33):
really interested in having access to the Office. They really,
really really wanted it, and the plan was originally that
CISO was going to get the exclusive deal. But Netflix
made NBC Universal executives an offer they couldn't refuse, and
they agreed to let Netflix get access to those programs,
(18:54):
which meant SISO would not have that exclusivity. And even
if SISO were to show episodes of the Office, the
fact that you could already get it on Netflix and
a lot of people were already Netflix subscribers meant you
weren't going to lure Netflix users to SISO, just based
on the office, so one of the things that possibly
could have brought over a larger base of subscribers fell through.
(19:18):
On the flip side, it also meant that Ciso had
some budget freed up for making original content. Now apparently,
Shapiro initially was told that NBC Universal was going to
have this enormous marketing campaign to promote Ciso, like a
ten million dollar effort to highlight the service across the
company's various networks, But that really didn't manifest and Ciso
(19:41):
received relatively little marketing support, which not surprisingly meant that
subscription numbers were lackluster. I mean, it's hard to get
excited about subscribing to a service if you've never heard
of it, or if the promotion you see doesn't really
talk it up enough. Making matters worse is that Ciso
had its own video player that occasionally had technical issues
(20:04):
and wasn't compatible with some of the hardware consumers used
to access streaming content. So again, let's contrast this with Netflix.
Netflix had made a decision a long time ago to
pretty much make sure it was anywhere where there's a screen.
Netflix worked to create apps that were compatible with video
game consoles with streaming boxes connected to televisions to smart TVs.
(20:29):
In fact, like if you have a fridge that has
a video screen incorporated in it, there's a chance that
there's a Netflix app native for that particular device. But
Comcast's approach wasn't as broad a and this is kind
of a pun a spectrum as what Netflix was taking now.
CISO did end up joining Amazon's streaming partners program in
(20:50):
mid twenty sixteen. That helped a little. By the end
of twenty sixteen, it was finally compatible with Apple TV.
But you know, this was like a full year in
operation when these things started to click into place. While
CISO failed to take off to the moon, it did
grow in its second year, so in twenty seventeen it
began an upward trajectory for subscriber growth. The famous podcast
(21:13):
My Brother, My Brother, and Me launched a television show
on the network in twenty seventeen. They often joke about
how the CISO platform subsequently died on their podcast a lot,
But while they make jokes about it, their show was
not likely to have been a contributing factor to ciso's demise.
The service was spending a lot more money than it
(21:35):
was bringing in and Arguably this was necessary in order
to scale to a level that could compete with bigger,
more established services like Netflix, But a prestige show on
cso called There's Johnny About Johnny Carson may have been
the straw that broke NBC Universal's back. It was an
expensive show to produce and with the numbers headed in
(21:58):
the wrong direction, At least for the higher ups at
NBC Universal. It meant Evan Shapiro got his walk in
papers in May twenty seventeen. CISO kept on going for
a little bit, but it didn't last long. A couple
of months after Shapiro had left, SISO announced it would
be shutting down by the end of the year, and
it didn't even make it that far. It actually went
(22:18):
dark in mid November twenty seventeen. Ciso's failure is complicated.
It probably relates to a lot of different factors. One
is that it didn't get the marketing push it needed
from its parent company, a less an NBC Universal appears
to have learned because you can't turn around without running
into a promo for Peacock these days, so they've definitely
(22:39):
changed their tune on that. But for another SISO failed
to explore ad supported options, which potentially could have brought
in revenue to help offset the costs. Third, some of
the moves to produce original content might have been a
bit too ambitious so early on, Like it's really good
to have the goal to create prestige content, but it's
(23:00):
possible that the service needed the ground to be a
touch more firm before trying to create something like There's Johnny.
This is no shade on There's Johnny. I'm not saying
that that was a bad series by far, just that
it was. It was a big risk considering how much
it costs, and maybe the wise move would have been
(23:20):
to hold off just a bit longer to try and
establish a standing before going into it. It's hard to say,
like these things in hindsight, it's really easy to say
one way or the other. But at the time, I'm
sure these decisions were not easy ones. Some of the
content that was on CISO would end up going to
other platforms, including another one then no longer exists VRV
(23:44):
or VERVE. So the history of VRV or I'm just
gonna call it VERV why not. The history of VERV
is also pretty short. So for one thing, it launched
in late twenty sixteen, so CISO was wrapping up its
first year in twenty sixteen. That's when Verve launched, and
it was sort of a sister service to the anime
focused streaming platform called crunchy Roll. Crunchy Role still exists.
(24:09):
Verv was kind of a similar streaming service, but Crunchy
Role focused on anime. Verve would end up getting lots
of different content from all sorts of companies. They included
companies like Geek and Sundry, which was really a YouTube
studios channel. Rooster Teeth was another company that provided content
(24:29):
to VERV, and other partners included College Humor, which would
subsequently develop its own subscription streaming service called Dropout TV
Machinima dot Com, which we will talk about more in
a second. So there's a spoiler. We know Maine is
not gonna last forever. They were also a partner with VERV.
Shutter provided content to verv for a while. Shutter is
(24:50):
a horror based company Rifftracks, which is made up of
people who used to be part of Mystery Science Theater
three thousand. They partnered with VERV while and like crunchy Roll,
Verve wasn't over the top streaming service. It contained multiple
channels of content, ranging from animation to geeky lifestyle programming
(25:11):
to horror. So you could log into the little service,
you know, you subscribe to Verve and you could access
all this different stuff. So partners joined and dropped out
of Verve over the years, so it's actually really hard
to talk about what was on Verve because it all
depended upon what year it was. So, like I said,
(25:31):
at one point you had Shutter as part of Verve,
and then Shutter would leave Verve in twenty nineteen. That
same year, Nerdiced left Verve, Curiosity, Stream, Geek, and Sundry
they all left Verve in twenty nineteen, but others would
join the service. So there was this fluctuating list of
content that was available throughout its short history. Makes it
(25:54):
a little difficult to talk about Verve because it's not
like there was a central identity you could easily point out,
because it was serving as a distribution platform for lots
of different partners, and those partners kept changing. By early
twenty twenty two, all those partners were pretty much gone.
They had left after the terms of their licensing contracts expired,
(26:15):
and in March twenty twenty two, word got out that
verv was going to cease to exist to be its
own thing, it would merge with crunchy Roll. The Verve
app went dark just a couple of weeks before I
recorded this episode on May eighth, twenty twenty three. So
even the backup plan needed a backup plan, And this
(26:36):
really shows how challenging it could be to run a
streaming service successfully. Now, a lot of partners I mentioned
they still have their own platforms. Many of them are
part of much larger companies. So even though Verve doesn't
exist anymore, some of a lot of the partners that
worked with verv, they do still exist in one form
or another. So, for example, rooster Teeth, which initially launched
(26:58):
as a sort of independent content company, is today part
of Warner Brothers Discovery Shutter, the horror themed over the
top streaming services owned by ABC Networks, and it can
also be accessed not just through its own app, but
also through Amazon Video. So there are different places you
(27:21):
can find this content. You just can't go to one
central location and find it all there anymore, which is
part of the problem. Right. It's a big challenge we
consumers face is that we might hear about something we're
interested in. Just figuring out where the heck you can
get hold of that content can be a huge headache.
Figuring out, Hey, do I actually subscribe to the service
(27:43):
that runs this thing or am I going to have
to subscribe to something else? All Right, we're going to
take another quick break. When we come back, I've got
some more failed streaming platforms to talk about. We're back,
(28:04):
And as I said, I had mentioned Machinema earlier. By that,
I mean machinima dot com. It has also ceased to
be It operated for about twenty years before it went away,
and it's a fascinating story all by itself. And I'm
going to give a very brief one. I could do
a full episode about Machinima dot com because holy cow,
(28:25):
there's a lot to talk about, both from a tech
side and from a business side, and really a talent
side as well. Uh. It launched a ton of different shows,
including one that I still followed today, though you could
argue that the show I followed today is very different
from the show as it originated back in the Maschionama days.
But but Machinima is a portmanteau of machine and cinema,
(28:50):
or sometimes machine and anime. It typically refers to a
type of entertainment where you use computer generated characters, often
video game characters, and you use them like digital puppets,
and you tell a story, and that includes stories that
have nothing to do with the platform you're using, the
(29:10):
video game you're using. So in the old days, folks
did this just for the fun of it. They used
in game tools to cobble together and record short sketches
or stories. So typically your camera was provided by someone
who is recording their point of view as the story
played out, or maybe they were using in game tools
to position a virtual camera somewhere in an environment. Rooster Teeth,
(29:34):
which I mentioned earlier in this episode, had a monumentally
successful show in this genre called Red Versus Blue. They
used the Xbox game Halo as the foundation for that show. Anyway,
a mashinima creator named Hugh Hancock registered mashinema dot com
in two thousand. The site would serve as a place
(29:55):
for creators to store and make available their videos two thousand.
This was before YouTube. If you created digital video, you
had to host that somewhere online. Typically you would host
it on a server, and then people would have to
navigate to a web page and download the video in
order to watch it, because streaming was not really a
(30:17):
thing yet. So the website let creators tap into a
growing audience for the medium. So there became like this
kind of clearing house for machinema based entertainment, so people
knew where to go to get it, and then creators
had a place to put it so that they didn't
have to try and do everything themselves, you know, host
the material, market it, get people aware of it, that
(30:40):
kind of thing. But hosting media files is expensive, right,
especially if people are downloading them. That's a lot of
bills you have to pay. So Mashinima was making revenue
through an online store, so they would sell various types
of merchandise to fans, and they also sold ad space
on the site. And Hancock was pretty much responsible for
(31:03):
running the whole darn thing for about six years, and
in two thousand and six he decided that he needed
a rest. That he had been running it and did
about as much as he could as a single person,
so he sold it to the former operators of a
company called Creative Planet. Now not long after that you
(31:25):
had the impact of YouTube, And in two thousand and seven,
Mashinima established a YouTube channel and began to upload videos
to YouTube itself. The company became rather dependent on YouTube actually,
both as a place to store videos and to monetize them.
Mashinima grew rapidly. It hit one billion monthly video views
(31:46):
on YouTube in November twenty eleven. That is an incredible statistic.
Mashinima was one of the largest most successful channels on YouTube.
I think the only one that was ahead of it
was Vivo, the music video channel. It had incredible engagement.
People would go to Mashinema and stay there for more
than an hour. But the company was also spending money
(32:09):
very quickly, and in twenty twelve that caught up with
them and they had to make some cutbacks because they
were running out of cash. So they laid off more
than twenty employees, which doesn't sound like a lot of people,
but Mashinima was a lean operation that was like ten
percent of all staff at the time. Then there was
this expose and this is where I was really talking
(32:30):
about how Mashinima was different from Quibi. You know, like
Quibi creators, they retained intellectual property rights for their stuff.
That wasn't how it was a Machinema. So this expose
showed how predatory Mashinima could be. The Dallas Observer published
an article that said when creators were signed on with Mashinema,
they were agreeing to a lifelong contract that everything they
(32:54):
made from that point forward would essentially belong to Mashinema forever.
Even if they left the company, Mashinima would retain rights
to that and to all the stuff they made afterward. That, y'all,
is a bad deal. I mean pulling back the curtain.
iHeart owns the rights to text stuff, so if I
were ever to part ways with iHeart, I would not
(33:16):
be able to take tech stuff with me. It does
not belong to me. It belongs to iHeart. However, I
could still create my own shows later on, and those
would belong to me, because that's reasonable, right. But Mashinima's
agreements sounded like something out of a fairy tale, like
you belong to me forever. Like Ursula was in charge
(33:36):
of the contracts department at Mashinema. The company was growing
but also operating at a loss. In twenty fourteen, Warner
Brothers invested around fourteen million dollars in the company. Masha
got a new CEO in the form of Chad Gutstein,
He reorganized the company, He landed some licensing deals with
Warner Brothers, and he managed some other deals that have
(33:58):
ultimately tempted Warner brook There's even more, and in twenty sixteen,
Mashinima accepted a buyout offer for one hundred million smackaroos.
So Gutstein joins in twenty fourteen and twenty sixteen, he says,
my job here is done, and he leaves because he
was essentially leading the company toward this acquisition, and Russell Aerins,
(34:22):
who was a Warner Brothers executive, became the new head
of Mashinema. By the way, this is also around the
same time when AT and T acquired Warner Brothers and
formed Warner Media. It is weird to think that it
hasn't been that long since AT and T bought Warner Brothers,
(34:42):
much less than divested itself of Warner Brothers, where Warner
Brothers then merged with Discovery. It's crazy how much has
changed in just in less than a decade. It's it's bonkers,
all right. So anyway, WarnerMedia reorganized and put Mashinima under
a division call Otter Media. This was in December twenty eighteen.
(35:04):
Another company that was under Otter Media Rooster Teeth. Well.
Then just a few weeks later, on January nineteenth, twenty nineteen,
Otter Media wiped all of Mashinima's YouTube videos off the
face of the earth, like the whole channel was nuked
from orbit. It's the only way to be sure. Every
single video was deleted or at least removed from public view. Then,
(35:27):
at the beginning of February twenty nineteen, word got out
that Otter Media had laid off every single Machinema employee.
All eighty plus of them were fired or moved to
a different division within Otter Media. So what gets Why
was Machinima wiped out like that? Well, the idea was
to consolidate digital media offerings in WarnerMedia, so the company
(35:51):
owned a whole bunch of different digital media production companies
and channels like a bunch, including Rooster Teeth, Full Screen,
crunchy Roll. Warner would later sell Crunchy Role to Sony
in twenty twenty, and they just wanted to kind of
streamline things they felt like there was too much overlap.
It probably ended up being for the best, because, as
(36:13):
we all know, Discovery would acquire Warner Brothers after AT
and T decided that its earlier decision to buy the
company was a booboo, and knowing how David zaslovorx I imagined,
Mishinima would have been an early candidate for the chopping
block in an effort to reduce costs if it had
still been a thing. On a similar note, here in Atlanta,
we had a company called film Struck. Technically this was
(36:37):
a division under Warner Brothers and Turner Classic Movies. The
service launched in twenty sixteen with two tiers, so for
six dollars ninety nine cents a month, you would have
access to a basic digital library of various movies, mostly
film classics. But if you coughed up ten dollars ninety
nine cents a month, you would also have access to
(36:58):
the criterion collection libraries. There's lots of different, highly regarded movies,
so the whole concept behind this particular streaming platform was
to attract movie lovers who wanted to be able to
watch classics and foreign films and independent films the stuff
that you often can't find on most streaming platforms. They said, well,
(37:20):
here's the solution. We're going to make this platform and
you'll be able to access those titles here. The service
lasted two whole years and then shut down in twenty eighteen.
So why did it shut down? Well, remember how I
said AT and T merged with WarnerMedia. Well, part of
that process involved slimming down and streamlining things, and film
(37:41):
Struck was struck because it was seen as having a
limited appeal. It was a niche product, so it didn't
last at all due to corporate maneuvers. I mean that
was the reason why it died. So if that hadn't happened,
if the corporate manu had not been a thing, if
giant companies weren't trying to figure out what can we
(38:04):
strike from our record books to make this deal look better,
then would Film Struck have been a big success. Probably not,
but it might have done just fine, especially being supported
by a community of film lovers. But we're never gonna know. Also,
we had another streaming service launched out of Atlanta that
lasted a whole month and then it was a shock
(38:27):
when it got shut down. So in this case, and
it relates back to Warner again. I'm talking about CNN Plus,
the subscription based streaming service related to CNN, but it
was going to carry things like documentaries, TV specials, that
kind of thing, stuff that goes into much more depth
than would be a lot of original programming. The division
(38:48):
spit something like three hundred million dollars in building up
to the launch, because, as I mentioned, this sort of
production ain't cheap. Throughout twenty twenty one, it was gearing
up for this event. It actually launched on March twenty ninth,
twenty twenty two, and it didn't immediately crush it. It's
not like they suddenly were overwhelmed by subscribers, but you know,
(39:10):
they had just gotten started. But by the following month
it got shut down. So again this would be because
of David the Grim Reaper Zaslov because CNN was part
of Warner Brothers. Discovery merged with Warner Brothers after AT
and T bounced off of that partnership, and Zaslov needed
(39:31):
to take a serious swing at cutting costs because both
Discovery and Warner Brothers were in some fairly tough times.
So once upon a time, this show tech stuff was
actually part of Discovery Communications, and David Zaslov was CEO
of Discovery and now he's CEO of Warner Brothers Discovery.
So I got to see how things operated to a
(39:53):
certain extent. It's not like I was in the room
where it happens to quote Hamilton, but you know, I
was in the company, so I could kind of see
what was going on. And the cable business is really tough,
similar to streaming. You know, things are great when you're
pouring on subscribers. It's a money train at that point, baby,
All those monthly fees are pouring in throughout the year,
(40:15):
those big carriage deals with cable companies, they're huge and
they bring in billions of dollars. However, eventually you hit
saturation and it gets a lot harder to grow as
a company, and growth is what investors want. So yeah,
you could still be making huge amounts of money, but
if you're not growing, that's a problem. So Discovery was
(40:37):
kind of running up against that. Back when I was there.
The company was focusing a lot on establishing a presence
in countries where it previously didn't have service, like Central
America or South America, and it was because that represented
a place where it could actually grow. You couldn't really
grow in the United States because the Discovery channel was
(40:57):
already on pretty much all the different cable packages it
could be on in the US, so you're not really
growing there. Once you established your presence in a part
of the world that dried up so that you had
to go into different It almost becomes like colonization, but
through cable channels again, kind of similar to streaming, right, Like,
(41:21):
once you reach a saturation point where the people who
are likely to subscribe are already subscribed, you don't really
grow after that. That's a problem. So anyway, Zasov took
a look at CNN Plus's business plan and its performance figures,
and he said, well, there's no reason to keep this around.
It's super expensive, it's going to take forever for it
(41:43):
to reach a point where it might be profitable, and
in the meantime, we need to cut billions of dollars
off of our costs. So he shut it down after
it had been open for a month. Now, there's no
denying the service was costing Warner Brothers a lot of money,
and that subscribers have exactly gone gaga over it. Plus
both Warner Brothers and Discovery also already had their own
(42:05):
streaming services, which of course raises the possibility that it
could end up competing against itself in the market. You know,
maybe one streaming service is a little more expensive than
the others, but it doesn't have the number of subscribers
that it should because you've kind of already convinced people
to go to this other subscription service for less, even
though it's a different offering. That's a real issue, right,
(42:26):
So the plug got pulled. Now, there are lots of
other streaming services that didn't stick around. Like I didn't
even touch on Vine, which is another user generated one.
We've talked about that one in the past and how
Vine was kind of a precursor to Mega hit like TikTok.
But yeah, there are other examples, not just the highly
produced stuff that I focused on in this episode. Also,
(42:49):
a lot of these existing streaming services are headed toward consolidation, right,
Like we know that Discovery and HBO Max are becoming Max.
That Max is going to be this combination of material.
Although from why I understand, Discovery is still going to
continue to operate its own independent streaming service because there's
(43:10):
a fear that by combining, some of those subscribers will
just jump ship because they don't want the max stuff,
they don't want to spend more money on content, so
they might leave. So I think that both of those
are going to continue to exist. We found out not
long ago that Disney is merging Hulu and Disney Plus
into a single service by the end of this year,
(43:33):
and that the Disney Plus subscription, at least for the
ad free experience, will also be going up. So yeah,
we're still seeing stuff consolidate. We're seeing streaming services merge
together because I think all of them have come to
the same conclusion that it's clear there's a demand for
these services. It's clearer people want them, but it's also
(43:56):
clear that there are real challenges to making it a profitable,
scalable business while also producing you know, the content that's
going to keep people there, because that content is so
expensive and it's not like you know, serving ads against stuff.
I mean, even though some of these streaming services do
serve ads or have opportunities for people to subscribe it
(44:19):
an ad supported tier, but there's no like Box Office
for these streaming you know, pieces of content. So it's
it's harder to get it to monetize properly. You know.
It's the old models don't work on the streaming approach,
so new models need to be formed. And I think
(44:40):
we're still seeing that shake out, which is kind of
funny because, like I said, Netflix launched theirs way back
in two thousand and seven, not long after YouTube had
become a thing. So the fact that we've been around
this long with these streaming services and we're still trying
to figure out a way of making them, you know,
make money at a level where we're gonna get that
(45:02):
prestige content, it's really interesting. I don't think it's gonna change.
I don't think we're gonna lose these streaming services. We
might lose some of them when companies just can't afford
to continue the business. But I think that's still like
the future of entertainment for at least the near term.
But yeah, a lot of stuff's going to have to
shake out for it to be sustainable and to be profitable.
(45:26):
All Right, that's it for this episode. Like I said,
there were a ton of other streaming services, some of
which were more about audio streaming rather than video, but
there's a lot of others that we could talk about.
Maybe I will in future episodes, but I really wanted
to focus on these and kind of explore what went wrong.
A lot of times it wasn't the fault of the
people who were running the program. It was literally because
(45:46):
folks above them had to make some tough decisions while
there were all these mergers and acquisitions going on. So yeah,
tough story, but one that I think is worth examining.
I hope you are all doing well, and I will
talk to you again really soon. Tech Stuff is an
(46:12):
iHeartRadio production. For more podcasts from iHeartRadio, visit the iHeartRadio app,
Apple Podcasts, or wherever you listen to your favorite shows.
Welcome to tech Stuff, a production from iHeartRadio. Hey there,
and welcome to tech Stuff. I'm your host, Jonathan Strickland.
I'm an executive producer with iHeart Podcasts and how the
tech are you. I am wrapping up my vacation as
you listen to this. I am sadly bidding a fond
(00:27):
farewell to the Caribbean, unless, of course, hurricanes ruined my trip,
which is entirely possible. I'm watching every day as storm
systems form out there, so we'll see. But anyway, I
am incapable of recording a new episode today. So this
episode originally published on May twenty second, twenty twenty three.
(00:48):
It is titled Streaming Services that sunk Golly, I'm on
a boat and I've decided to run an episode with
the words sunk in it. Y'all, just don't be me.
Hope you enjoy. So. Back in two thousand and seven,
(01:09):
a rent by mail video business made a move that
would be a true disruption. We talk about disruptive companies,
this was definitely one of them. It had already shaken
things up by taking aim at a huge company that
had dominated the home video rental market for decades through
offering customers the chance to access a huge media library
(01:33):
from the comfort of their own homes, albeit they had
to wait for titles to make their way through the
postal system before they could enjoy them. But now, this
upstart company in two thousand and seven had set up
a service where, if you can believe it, you could
actually connect to a media player through the Internet and
watch movies and television shows by streaming them to your device.
(01:57):
The upstart company was, of course, Netflix had battled with Blockbuster,
which actually had the opportunity to buy Netflix at one point,
but walked away from that deal, and Netflix quickly became
a big concern for the major studios, which understandably and
arguably correctly worried that unless someone took action, Netflix would
(02:18):
become a powerful monopoly for prestige media streaming services. I'm
not talking about the user generated stuff which you would
find on platforms like YouTube, but rather studio produced stuff. Now,
at that point, Netflix would have a lot more leverage
when negotiating with studios if it was the one and
only place where customers could go to watch stuff online,
(02:41):
and studios hate when leverage is given to anyone else.
See also the Writer's Guild of America Strike. Lots of
other streaming services would upear over the next decade and
a half. Some of them were the product of collaboration.
Hulu initially was I'll talk a little bit about who
later on in the episode. Some streaming services launched as
(03:04):
an extension of a television or cable channel, so eventually
you would get things like Peacock or HBO Max or
Disney Plus or Paramount Plus, which draws heavily from CBS,
and lots more, including ones that aren't extension of media companies,
like things like Amazon Prime Video and Apple TV Plus.
(03:25):
There are so many streaming services now that if you
subscribed to all of them, you would be probably paying
more per month than you would if you went with
one of those gargantuan cable TV packages. The landscape is
crowded and it's complicated. I mean, sure, if all you
consume are Disney films, and let's be honest, the way
(03:47):
we're going, pretty soon every movie is going to be
a Disney movie because the Mousehouse just gobbles up everything. Well,
if that's all you do, then Disney Plus might be
all you need. But most of us are likely to
find ourselves subscribing to, or at least wanting to subscribe
to a few different services to get access to all
the stuff we like, and even then we're probably giving
(04:09):
up on a couple of things. For example, I think
at this point, I have Netflix, I have Amazon Prime,
I have Apple TV Plus, I have Disney Plus, I
have HBO Max. That might be at oh, I've got Peacock.
So like, that's ridiculous, right, I Mean there are ties
where I sit there and think, do I really need
(04:30):
all these answers? No, I don't need them all, but
there are programs that I can only watch through one
of those services, and there's not really other alternative. So
there I go. Now, the last couple of years have
shown us that on the business side, if we go
to the other side, yeah, things kind of stink if
you're a consumer because they're all these different competing services.
(04:52):
But on the other side, things aren't that rosy either.
While the consumer struggles with which services they're gonna subscribe
to or pass up, the media companies behind the services
are trying to carve out a profitable path while also
competing with one another. Now, maybe that involves producing new
films and shows that are exclusively for the streaming service.
(05:13):
Maybe it involves securing licensing for old favorites before a
rival can do it, though a lot of that stuff
ends up getting sewn up in existing libraries. Maybe it
means taking some stuff off the service so that you
know you're not paying people who made it over and
over the residuals. Cough. David Zaslov does this a lot, cough.
(05:35):
The point is, the streaming service business is really, really tough.
I mean it's great when you're on a meteoric rise.
You know, you launch, people find you, they talk you up.
Your subscription rates soar. You're just doing gangbusters. It's growth
all the way, baby. But eventually you start to hit
(05:57):
a plateau and fewer people are signing up this quarter
compared to last quarter, or worse, you might hit a
point where you actually see subscriber numbers go down, and
that's super bad. Now, maybe you supplement your revenue by
showing ads against content. Maybe it's not just subscriptions. Maybe
advertisers offer some stuff for you as well. Maybe you
(06:21):
give customers options. Maybe they can subscribe it a higher
tier and they can get an ad free experience. That's
pretty common these days and then if they subscribe it
a lower tier, they're spending less per month, but they're
also having to sit through ads to watch the content
they want. You still have to balance costs with revenue,
and if you have to keep producing high quality content
(06:43):
to both attract and keep customers, you might find that
your profit margins are so thin they only have one side,
or maybe even that you're losing money. And if you're
seriously unlucky, you might find that you're on borrowed time,
that you're losing money, and there's no pathway out of that.
You know, the hope is that you scale up to
(07:04):
a point where you ultimately are making more money than
you're spending, but depending on how the landscape is, that
might not even be a possibility. So we're going to
take a look at some failed streaming services, ones that
made an effort to hang with the cool kids, but
ultimately flopped or faded away, as the case may be,
(07:26):
and in one case, stopped a month after it had started. Now,
I think I'm gonna start with a fairly recent example,
one that I talked about a lot as the service launched, faltered,
and then flopped. And that's quibi do you remember Quibi.
In case you don't, here's the deal. So Jeffrey Katzenberg,
(07:49):
who famously founded DreamWorks Animation after he left Walt Disney Studios.
That story is a crazy one, by the way, full
of like corporate drama, a lot of like like executives
being really bitter about each other. Unfortunately, it's the kind
of stuff that really blogs in a different kind of podcast.
(08:11):
So as much as I would love to gush about it,
I'm just gonna leave it here. Anyway, he decided he
wanted to create a short form, highly produced video delivery
platform aimed at the smartphone market. So you know, like
TikTok is a user generated platform, right, But what Katzenberg
wanted to do was make a studio produced version of
(08:35):
short form video platforms. So instead of it being you know,
some kid hitting on a really cool dance or something
and then getting virally famous, it would be studios making
content and then using this platform to distribute that content.
And you could sort of see the logic behind the
(08:57):
decision because people are on their phones a lot. They
are using their phones more and more to access entertainment,
and short form content works well in situations where you
might not have the time or desire to sit down
to an hour or more of video, so why not
create a platform specifically for that kind of audience. Katzenberg
(09:20):
founded QUIBI, which kind of stands for quick Bites. He
founded it in the summer of twenty eighteen. Originally it
had the name new TV, but it would change to
QUIBBI a little bit later. In twenty eighteen, he hired
Meg Whitman, who was the former CEO of Hewlett Packard,
and she became the CEO of Quibi, and Katzenberg and
(09:41):
Whitmen very quickly were making the rounds to various studios
in an effort to drive up investments for Quibi, and
they did. They raised like a billion dollars in the process.
So the plan was to get production ramped up in
twenty nineteen in preparation for a launch of the actual
platform in the spring of twenty twenty. The hope was
(10:04):
to create all sorts of different kinds of content across
all genres reality, television, comedy, action, everything, and that they
would take the form of stuff like short form television episodes,
so things that lasted like ten minutes, to films that
could be divided into ten minute long chapters, again, all
designed to be watched on your mobile device. In fact,
(10:27):
they even had this weird morphing technology where you could
watch content either in portrait or landscape mode, and your
experience of watching that program would depend upon what mode
you were using, because you would get different views. Like
it was shot with this in mind. It was kind
(10:47):
of it was really ambitious, but also kind of odd
to make that choice. It almost meant like you had
to make two versions of your movie in order to
do it so that way, like, if you're watching it
in portrait mode, you're not missing some pivotal piece of
information way off to the side in the frame, because
it wouldn't show up due to the fact that your
screen is vertical rather than horizontal. Anyway, they really pushed this,
(11:13):
and producing stuff takes a lot of money, right You
mentioned that earlier, like it is expensive to make studio
level content, highly produced content. Even if you're cutting corners,
it's still expensive. And meanwhile, the launch date was getting closer.
Now It is impossible for us to say if Quibi
would have survived if things had been a little different. Personally,
(11:36):
I think Quibi was doomed to fail no matter what,
But the decline may have taken a lot longer if
things had been very different in twenty twenty, because it
seems to me like the mobile focused approach really limited
Quibi's usefulness. But maybe it would have held on, and
maybe it would have even been a success. I'll never
be able to tell, but you know, something major happened
(11:58):
in twenty twenty. We had the COVID nineteen pandemic hit
and nearly everyone was stuck at home for a long time,
so the use case for Quibi was reduced significantly. I mean,
here was a product that was intended to go to
folks who were looking for some sort of entertainment while
they were like on a bus or on a subway
(12:18):
or standing in line, you know, doing all the things
that they could not do because they were stuck at home.
And at home they had access to tons of other
entertainment services that were designed to work with their lifestyles.
So trying to fit Quibbi in when they were no
longer in those use cases it just didn't really catch. Now.
(12:41):
At launch, Quibi did see quite a few downloads. I
think it hit like number three on the most popular
apps for the week that it debuted, but then the
following week, those download numbers dropped drastically. Signing up would
give you access to Quibi for three months for free,
and after that you were supposed to pay for a subscription.
So about three quarters of Quibi's users just opted to
(13:03):
bounce off the service rather than convert to a paid
subscription once their free trial was up. So the company
attempted to bail water out of the sinking boat, but
six months after going live, the writing was on the wall,
so in mid October twenty twenty, the Wall Street Journal
reported that Quibi was on the way out, and by
December of twenty twenty, the lights had gone off in Quibi.
(13:25):
Roku ended up purchasing Quibi's library, and thankfully creators retained
the rights to their intellectual property, which gave them the
chance to find some other platform to host their work.
We're going to talk about a different company later here,
where it's like the opposite of that to an extreme.
But yeah, Quibi came and went so fast it didn't
even say goodbye. Now there's a lot more we're going
(13:49):
to talk about today with various failed streaming services, But
before we get into all of that, so that we
don't fail. Let's take a quick break to thank our sponsors.
So yeah, Quibi. There were some major players in entertainment
(14:13):
behind the scenes, both directly working for Quibi and also
investing into the company. But our next example was an
actual extension of a truly massive media conglomerate. So NBC Universal,
which itself is a branch of Comcast, decided to dip
its corporate tow in the subscription based video on demand
(14:34):
service back in twenty fifteen. So a media executive named
Evan Shapiro led the charge, and the goal was to
create a video service centered around comedy. So the question
was could yuck yucks bring in the buck bucks. The
service would be called CISO, and it launched to a
(14:56):
small beta test in December twenty fifteen, but the actual
service went live in early twenty sixteen. Shapiro spared no
expense when it came to curating content for the service.
He wanted all things comedy, including older material like episodes
of Monty Python's Flying Circus or the Great Sketch show
The Kids in the Hall. That Saturday Night Live library
(15:18):
was part of it. Remember this was an extension of
NBC Universal. He also initially had eyes on making CISO
the exclusive platform to stream episodes of the Office and
Parks in rec Those plans would ultimately fall through, not
Shapiro's fault, really, but it was a part of his
plan where he thought, if we can do this, then
(15:40):
that's going to attract a huge base of users. He
made licensing deals left, right and center. He brought in
a ton of popular comedy under one roof, and he
also empowered his staff to produce original content for the
platform as well. NBC Universal was kind of using CISO
as a sort of experiment mental platform, the idea of
(16:01):
being that if a comedy centric video on demand service
and over the top streaming service, if that could work well,
then NBC Universal might launch other genre or interest specific
streaming platforms in the future, like maybe one based around horror.
Universal famously has a really deep horror library that they
(16:23):
keep trying to exploit in the modern era and often
failed to do so, or maybe like a streaming service
that's really focused on things like reality television programming, which
arguably can be scarier and more disturbing than horror is.
The cisow subscription was just three dollars ninety nine cents
(16:43):
per month, when it launched. The initial catalog was heavy
on stuff that comedy fans were likely to gravitate toward,
including a sizable library of British comedy that could actually
be a little tricky to access here in the United
States outside of some notable exceptions like everyone's heard of
Bonty Python's Flying Circus. But there are a lot of
(17:04):
other British comedies that the average American may not be
familiar with. Some of them are really famous. I mean,
like some you might have encountered on other channels like
Adult Swim showed The Mighty Boosh for a while, which
is a bizarre, absurd comedy series. And then there were
some sketch comedies, like one of my favorites was that
(17:26):
Mitchell and Weblook, which Netflix carried briefly and then it
became unaccessible to an American public. I finally ended up
breaking down and buying the British DVDs and a region
free DVD player so I could find I could watch
them again. But anyway, the goal of CISO was to
create original content. That was the long term goal, to
(17:49):
make its own content that would build its own following,
much like Netflix had done with things like Orangees of
the New Black and A House of Cards and Stranger Things.
Now every streaming services is following that same kind of philosophy.
So you use the library to first attract your ground
base of subscribers, and then you create original content to
(18:11):
attract new ones and to keep everybody there. Now, one
early mistake that the executives made over at SISO, though
according to Shapiro, was actually folks higher up at NBC
Universal that made this mistake, was to flinch at a
deal that would have made CISO the exclusive streaming home
for the Office. As I mentioned earlier, so Netflix was
(18:33):
really interested in having access to the Office. They really,
really really wanted it, and the plan was originally that
CISO was going to get the exclusive deal. But Netflix
made NBC Universal executives an offer they couldn't refuse, and
they agreed to let Netflix get access to those programs,
(18:54):
which meant SISO would not have that exclusivity. And even
if SISO were to show episodes of the Office, the
fact that you could already get it on Netflix and
a lot of people were already Netflix subscribers meant you
weren't going to lure Netflix users to SISO, just based
on the office, so one of the things that possibly
could have brought over a larger base of subscribers fell through.
(19:18):
On the flip side, it also meant that Ciso had
some budget freed up for making original content. Now apparently,
Shapiro initially was told that NBC Universal was going to
have this enormous marketing campaign to promote Ciso, like a
ten million dollar effort to highlight the service across the
company's various networks, But that really didn't manifest and Ciso
(19:41):
received relatively little marketing support, which not surprisingly meant that
subscription numbers were lackluster. I mean, it's hard to get
excited about subscribing to a service if you've never heard
of it, or if the promotion you see doesn't really
talk it up enough. Making matters worse is that Ciso
had its own video player that occasionally had technical issues
(20:04):
and wasn't compatible with some of the hardware consumers used
to access streaming content. So again, let's contrast this with Netflix.
Netflix had made a decision a long time ago to
pretty much make sure it was anywhere where there's a screen.
Netflix worked to create apps that were compatible with video
game consoles with streaming boxes connected to televisions to smart TVs.
(20:29):
In fact, like if you have a fridge that has
a video screen incorporated in it, there's a chance that
there's a Netflix app native for that particular device. But
Comcast's approach wasn't as broad a and this is kind
of a pun a spectrum as what Netflix was taking now.
CISO did end up joining Amazon's streaming partners program in
(20:50):
mid twenty sixteen. That helped a little. By the end
of twenty sixteen, it was finally compatible with Apple TV.
But you know, this was like a full year in
operation when these things started to click into place. While
CISO failed to take off to the moon, it did
grow in its second year, so in twenty seventeen it
began an upward trajectory for subscriber growth. The famous podcast
(21:13):
My Brother, My Brother, and Me launched a television show
on the network in twenty seventeen. They often joke about
how the CISO platform subsequently died on their podcast a lot,
But while they make jokes about it, their show was
not likely to have been a contributing factor to ciso's demise.
The service was spending a lot more money than it
(21:35):
was bringing in and Arguably this was necessary in order
to scale to a level that could compete with bigger,
more established services like Netflix, But a prestige show on
cso called There's Johnny About Johnny Carson may have been
the straw that broke NBC Universal's back. It was an
expensive show to produce and with the numbers headed in
(21:58):
the wrong direction, At least for the higher ups at
NBC Universal. It meant Evan Shapiro got his walk in
papers in May twenty seventeen. CISO kept on going for
a little bit, but it didn't last long. A couple
of months after Shapiro had left, SISO announced it would
be shutting down by the end of the year, and
it didn't even make it that far. It actually went
(22:18):
dark in mid November twenty seventeen. Ciso's failure is complicated.
It probably relates to a lot of different factors. One
is that it didn't get the marketing push it needed
from its parent company, a less an NBC Universal appears
to have learned because you can't turn around without running
into a promo for Peacock these days, so they've definitely
(22:39):
changed their tune on that. But for another SISO failed
to explore ad supported options, which potentially could have brought
in revenue to help offset the costs. Third, some of
the moves to produce original content might have been a
bit too ambitious so early on, Like it's really good
to have the goal to create prestige content, but it's
(23:00):
possible that the service needed the ground to be a
touch more firm before trying to create something like There's Johnny.
This is no shade on There's Johnny. I'm not saying
that that was a bad series by far, just that
it was. It was a big risk considering how much
it costs, and maybe the wise move would have been
(23:20):
to hold off just a bit longer to try and
establish a standing before going into it. It's hard to say,
like these things in hindsight, it's really easy to say
one way or the other. But at the time, I'm
sure these decisions were not easy ones. Some of the
content that was on CISO would end up going to
other platforms, including another one then no longer exists VRV
(23:44):
or VERVE. So the history of VRV or I'm just
gonna call it VERV why not. The history of VERV
is also pretty short. So for one thing, it launched
in late twenty sixteen, so CISO was wrapping up its
first year in twenty sixteen. That's when Verve launched, and
it was sort of a sister service to the anime
focused streaming platform called crunchy Roll. Crunchy Role still exists.
(24:09):
Verv was kind of a similar streaming service, but Crunchy
Role focused on anime. Verve would end up getting lots
of different content from all sorts of companies. They included
companies like Geek and Sundry, which was really a YouTube
studios channel. Rooster Teeth was another company that provided content
(24:29):
to VERV, and other partners included College Humor, which would
subsequently develop its own subscription streaming service called Dropout TV
Machinima dot Com, which we will talk about more in
a second. So there's a spoiler. We know Maine is
not gonna last forever. They were also a partner with VERV.
Shutter provided content to verv for a while. Shutter is
(24:50):
a horror based company Rifftracks, which is made up of
people who used to be part of Mystery Science Theater
three thousand. They partnered with VERV while and like crunchy Roll,
Verve wasn't over the top streaming service. It contained multiple
channels of content, ranging from animation to geeky lifestyle programming
(25:11):
to horror. So you could log into the little service,
you know, you subscribe to Verve and you could access
all this different stuff. So partners joined and dropped out
of Verve over the years, so it's actually really hard
to talk about what was on Verve because it all
depended upon what year it was. So, like I said,
(25:31):
at one point you had Shutter as part of Verve,
and then Shutter would leave Verve in twenty nineteen. That
same year, Nerdiced left Verve, Curiosity, Stream, Geek, and Sundry
they all left Verve in twenty nineteen, but others would
join the service. So there was this fluctuating list of
content that was available throughout its short history. Makes it
(25:54):
a little difficult to talk about Verve because it's not
like there was a central identity you could easily point out,
because it was serving as a distribution platform for lots
of different partners, and those partners kept changing. By early
twenty twenty two, all those partners were pretty much gone.
They had left after the terms of their licensing contracts expired,
(26:15):
and in March twenty twenty two, word got out that
verv was going to cease to exist to be its
own thing, it would merge with crunchy Roll. The Verve
app went dark just a couple of weeks before I
recorded this episode on May eighth, twenty twenty three. So
even the backup plan needed a backup plan, And this
(26:36):
really shows how challenging it could be to run a
streaming service successfully. Now, a lot of partners I mentioned
they still have their own platforms. Many of them are
part of much larger companies. So even though Verve doesn't
exist anymore, some of a lot of the partners that
worked with verv, they do still exist in one form
or another. So, for example, rooster Teeth, which initially launched
(26:58):
as a sort of independent content company, is today part
of Warner Brothers Discovery Shutter, the horror themed over the
top streaming services owned by ABC Networks, and it can
also be accessed not just through its own app, but
also through Amazon Video. So there are different places you
(27:21):
can find this content. You just can't go to one
central location and find it all there anymore, which is
part of the problem. Right. It's a big challenge we
consumers face is that we might hear about something we're
interested in. Just figuring out where the heck you can
get hold of that content can be a huge headache.
Figuring out, Hey, do I actually subscribe to the service
(27:43):
that runs this thing or am I going to have
to subscribe to something else? All Right, we're going to
take another quick break. When we come back, I've got
some more failed streaming platforms to talk about. We're back,
(28:04):
And as I said, I had mentioned Machinema earlier. By that,
I mean machinima dot com. It has also ceased to
be It operated for about twenty years before it went away,
and it's a fascinating story all by itself. And I'm
going to give a very brief one. I could do
a full episode about Machinima dot com because holy cow,
(28:25):
there's a lot to talk about, both from a tech
side and from a business side, and really a talent
side as well. Uh. It launched a ton of different shows,
including one that I still followed today, though you could
argue that the show I followed today is very different
from the show as it originated back in the Maschionama days.
But but Machinima is a portmanteau of machine and cinema,
(28:50):
or sometimes machine and anime. It typically refers to a
type of entertainment where you use computer generated characters, often
video game characters, and you use them like digital puppets,
and you tell a story, and that includes stories that
have nothing to do with the platform you're using, the
(29:10):
video game you're using. So in the old days, folks
did this just for the fun of it. They used
in game tools to cobble together and record short sketches
or stories. So typically your camera was provided by someone
who is recording their point of view as the story
played out, or maybe they were using in game tools
to position a virtual camera somewhere in an environment. Rooster Teeth,
(29:34):
which I mentioned earlier in this episode, had a monumentally
successful show in this genre called Red Versus Blue. They
used the Xbox game Halo as the foundation for that show. Anyway,
a mashinima creator named Hugh Hancock registered mashinema dot com
in two thousand. The site would serve as a place
(29:55):
for creators to store and make available their videos two thousand.
This was before YouTube. If you created digital video, you
had to host that somewhere online. Typically you would host
it on a server, and then people would have to
navigate to a web page and download the video in
order to watch it, because streaming was not really a
(30:17):
thing yet. So the website let creators tap into a
growing audience for the medium. So there became like this
kind of clearing house for machinema based entertainment, so people
knew where to go to get it, and then creators
had a place to put it so that they didn't
have to try and do everything themselves, you know, host
the material, market it, get people aware of it, that
(30:40):
kind of thing. But hosting media files is expensive, right,
especially if people are downloading them. That's a lot of
bills you have to pay. So Mashinima was making revenue
through an online store, so they would sell various types
of merchandise to fans, and they also sold ad space
on the site. And Hancock was pretty much responsible for
(31:03):
running the whole darn thing for about six years, and
in two thousand and six he decided that he needed
a rest. That he had been running it and did
about as much as he could as a single person,
so he sold it to the former operators of a
company called Creative Planet. Now not long after that you
(31:25):
had the impact of YouTube, And in two thousand and seven,
Mashinima established a YouTube channel and began to upload videos
to YouTube itself. The company became rather dependent on YouTube actually,
both as a place to store videos and to monetize them.
Mashinima grew rapidly. It hit one billion monthly video views
(31:46):
on YouTube in November twenty eleven. That is an incredible statistic.
Mashinima was one of the largest most successful channels on YouTube.
I think the only one that was ahead of it
was Vivo, the music video channel. It had incredible engagement.
People would go to Mashinema and stay there for more
than an hour. But the company was also spending money
(32:09):
very quickly, and in twenty twelve that caught up with
them and they had to make some cutbacks because they
were running out of cash. So they laid off more
than twenty employees, which doesn't sound like a lot of people,
but Mashinima was a lean operation that was like ten
percent of all staff at the time. Then there was
this expose and this is where I was really talking
(32:30):
about how Mashinima was different from Quibi. You know, like
Quibi creators, they retained intellectual property rights for their stuff.
That wasn't how it was a Machinema. So this expose
showed how predatory Mashinima could be. The Dallas Observer published
an article that said when creators were signed on with Mashinema,
they were agreeing to a lifelong contract that everything they
(32:54):
made from that point forward would essentially belong to Mashinema forever.
Even if they left the company, Mashinima would retain rights
to that and to all the stuff they made afterward. That, y'all,
is a bad deal. I mean pulling back the curtain.
iHeart owns the rights to text stuff, so if I
were ever to part ways with iHeart, I would not
(33:16):
be able to take tech stuff with me. It does
not belong to me. It belongs to iHeart. However, I
could still create my own shows later on, and those
would belong to me, because that's reasonable, right. But Mashinima's
agreements sounded like something out of a fairy tale, like
you belong to me forever. Like Ursula was in charge
(33:36):
of the contracts department at Mashinema. The company was growing
but also operating at a loss. In twenty fourteen, Warner
Brothers invested around fourteen million dollars in the company. Masha
got a new CEO in the form of Chad Gutstein,
He reorganized the company, He landed some licensing deals with
Warner Brothers, and he managed some other deals that have
(33:58):
ultimately tempted Warner brook There's even more, and in twenty sixteen,
Mashinima accepted a buyout offer for one hundred million smackaroos.
So Gutstein joins in twenty fourteen and twenty sixteen, he says,
my job here is done, and he leaves because he
was essentially leading the company toward this acquisition, and Russell Aerins,
(34:22):
who was a Warner Brothers executive, became the new head
of Mashinema. By the way, this is also around the
same time when AT and T acquired Warner Brothers and
formed Warner Media. It is weird to think that it
hasn't been that long since AT and T bought Warner Brothers,
(34:42):
much less than divested itself of Warner Brothers, where Warner
Brothers then merged with Discovery. It's crazy how much has
changed in just in less than a decade. It's it's bonkers,
all right. So anyway, WarnerMedia reorganized and put Mashinima under
a division call Otter Media. This was in December twenty eighteen.
(35:04):
Another company that was under Otter Media Rooster Teeth. Well.
Then just a few weeks later, on January nineteenth, twenty nineteen,
Otter Media wiped all of Mashinima's YouTube videos off the
face of the earth, like the whole channel was nuked
from orbit. It's the only way to be sure. Every
single video was deleted or at least removed from public view. Then,
(35:27):
at the beginning of February twenty nineteen, word got out
that Otter Media had laid off every single Machinema employee.
All eighty plus of them were fired or moved to
a different division within Otter Media. So what gets Why
was Machinima wiped out like that? Well, the idea was
to consolidate digital media offerings in WarnerMedia, so the company
(35:51):
owned a whole bunch of different digital media production companies
and channels like a bunch, including Rooster Teeth, Full Screen,
crunchy Roll. Warner would later sell Crunchy Role to Sony
in twenty twenty, and they just wanted to kind of
streamline things they felt like there was too much overlap.
It probably ended up being for the best, because, as
(36:13):
we all know, Discovery would acquire Warner Brothers after AT
and T decided that its earlier decision to buy the
company was a booboo, and knowing how David zaslovorx I imagined,
Mishinima would have been an early candidate for the chopping
block in an effort to reduce costs if it had
still been a thing. On a similar note, here in Atlanta,
we had a company called film Struck. Technically this was
(36:37):
a division under Warner Brothers and Turner Classic Movies. The
service launched in twenty sixteen with two tiers, so for
six dollars ninety nine cents a month, you would have
access to a basic digital library of various movies, mostly
film classics. But if you coughed up ten dollars ninety
nine cents a month, you would also have access to
(36:58):
the criterion collection libraries. There's lots of different, highly regarded movies,
so the whole concept behind this particular streaming platform was
to attract movie lovers who wanted to be able to
watch classics and foreign films and independent films the stuff
that you often can't find on most streaming platforms. They said, well,
(37:20):
here's the solution. We're going to make this platform and
you'll be able to access those titles here. The service
lasted two whole years and then shut down in twenty eighteen.
So why did it shut down? Well, remember how I
said AT and T merged with WarnerMedia. Well, part of
that process involved slimming down and streamlining things, and film
(37:41):
Struck was struck because it was seen as having a
limited appeal. It was a niche product, so it didn't
last at all due to corporate maneuvers. I mean that
was the reason why it died. So if that hadn't happened,
if the corporate manu had not been a thing, if
giant companies weren't trying to figure out what can we
(38:04):
strike from our record books to make this deal look better,
then would Film Struck have been a big success. Probably not,
but it might have done just fine, especially being supported
by a community of film lovers. But we're never gonna know. Also,
we had another streaming service launched out of Atlanta that
lasted a whole month and then it was a shock
(38:27):
when it got shut down. So in this case, and
it relates back to Warner again. I'm talking about CNN Plus,
the subscription based streaming service related to CNN, but it
was going to carry things like documentaries, TV specials, that
kind of thing, stuff that goes into much more depth
than would be a lot of original programming. The division
(38:48):
spit something like three hundred million dollars in building up
to the launch, because, as I mentioned, this sort of
production ain't cheap. Throughout twenty twenty one, it was gearing
up for this event. It actually launched on March twenty ninth,
twenty twenty two, and it didn't immediately crush it. It's
not like they suddenly were overwhelmed by subscribers, but you know,
(39:10):
they had just gotten started. But by the following month
it got shut down. So again this would be because
of David the Grim Reaper Zaslov because CNN was part
of Warner Brothers. Discovery merged with Warner Brothers after AT
and T bounced off of that partnership, and Zaslov needed
(39:31):
to take a serious swing at cutting costs because both
Discovery and Warner Brothers were in some fairly tough times.
So once upon a time, this show tech stuff was
actually part of Discovery Communications, and David Zaslov was CEO
of Discovery and now he's CEO of Warner Brothers Discovery.
So I got to see how things operated to a
(39:53):
certain extent. It's not like I was in the room
where it happens to quote Hamilton, but you know, I
was in the company, so I could kind of see
what was going on. And the cable business is really tough,
similar to streaming. You know, things are great when you're
pouring on subscribers. It's a money train at that point, baby,
All those monthly fees are pouring in throughout the year,
(40:15):
those big carriage deals with cable companies, they're huge and
they bring in billions of dollars. However, eventually you hit
saturation and it gets a lot harder to grow as
a company, and growth is what investors want. So yeah,
you could still be making huge amounts of money, but
if you're not growing, that's a problem. So Discovery was
(40:37):
kind of running up against that. Back when I was there.
The company was focusing a lot on establishing a presence
in countries where it previously didn't have service, like Central
America or South America, and it was because that represented
a place where it could actually grow. You couldn't really
grow in the United States because the Discovery channel was
(40:57):
already on pretty much all the different cable packages it
could be on in the US, so you're not really
growing there. Once you established your presence in a part
of the world that dried up so that you had
to go into different It almost becomes like colonization, but
through cable channels again, kind of similar to streaming, right, Like,
(41:21):
once you reach a saturation point where the people who
are likely to subscribe are already subscribed, you don't really
grow after that. That's a problem. So anyway, Zasov took
a look at CNN Plus's business plan and its performance figures,
and he said, well, there's no reason to keep this around.
It's super expensive, it's going to take forever for it
(41:43):
to reach a point where it might be profitable, and
in the meantime, we need to cut billions of dollars
off of our costs. So he shut it down after
it had been open for a month. Now, there's no
denying the service was costing Warner Brothers a lot of money,
and that subscribers have exactly gone gaga over it. Plus
both Warner Brothers and Discovery also already had their own
(42:05):
streaming services, which of course raises the possibility that it
could end up competing against itself in the market. You know,
maybe one streaming service is a little more expensive than
the others, but it doesn't have the number of subscribers
that it should because you've kind of already convinced people
to go to this other subscription service for less, even
though it's a different offering. That's a real issue, right,
(42:26):
So the plug got pulled. Now, there are lots of
other streaming services that didn't stick around. Like I didn't
even touch on Vine, which is another user generated one.
We've talked about that one in the past and how
Vine was kind of a precursor to Mega hit like TikTok.
But yeah, there are other examples, not just the highly
produced stuff that I focused on in this episode. Also,
(42:49):
a lot of these existing streaming services are headed toward consolidation, right,
Like we know that Discovery and HBO Max are becoming Max.
That Max is going to be this combination of material.
Although from why I understand, Discovery is still going to
continue to operate its own independent streaming service because there's
(43:10):
a fear that by combining, some of those subscribers will
just jump ship because they don't want the max stuff,
they don't want to spend more money on content, so
they might leave. So I think that both of those
are going to continue to exist. We found out not
long ago that Disney is merging Hulu and Disney Plus
into a single service by the end of this year,
(43:33):
and that the Disney Plus subscription, at least for the
ad free experience, will also be going up. So yeah,
we're still seeing stuff consolidate. We're seeing streaming services merge
together because I think all of them have come to
the same conclusion that it's clear there's a demand for
these services. It's clearer people want them, but it's also
(43:56):
clear that there are real challenges to making it a profitable,
scalable business while also producing you know, the content that's
going to keep people there, because that content is so
expensive and it's not like you know, serving ads against stuff.
I mean, even though some of these streaming services do
serve ads or have opportunities for people to subscribe it
(44:19):
an ad supported tier, but there's no like Box Office
for these streaming you know, pieces of content. So it's
it's harder to get it to monetize properly. You know.
It's the old models don't work on the streaming approach,
so new models need to be formed. And I think
(44:40):
we're still seeing that shake out, which is kind of
funny because, like I said, Netflix launched theirs way back
in two thousand and seven, not long after YouTube had
become a thing. So the fact that we've been around
this long with these streaming services and we're still trying
to figure out a way of making them, you know,
make money at a level where we're gonna get that
(45:02):
prestige content, it's really interesting. I don't think it's gonna change.
I don't think we're gonna lose these streaming services. We
might lose some of them when companies just can't afford
to continue the business. But I think that's still like
the future of entertainment for at least the near term.
But yeah, a lot of stuff's going to have to
shake out for it to be sustainable and to be profitable.
(45:26):
All Right, that's it for this episode. Like I said,
there were a ton of other streaming services, some of
which were more about audio streaming rather than video, but
there's a lot of others that we could talk about.
Maybe I will in future episodes, but I really wanted
to focus on these and kind of explore what went wrong.
A lot of times it wasn't the fault of the
people who were running the program. It was literally because
(45:46):
folks above them had to make some tough decisions while
there were all these mergers and acquisitions going on. So yeah,
tough story, but one that I think is worth examining.
I hope you are all doing well, and I will
talk to you again really soon. Tech Stuff is an
(46:12):
iHeartRadio production. For more podcasts from iHeartRadio, visit the iHeartRadio app,
Apple Podcasts, or wherever you listen to your favorite shows.
TechStuff News
Host
Jonathan Strickland
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