May 22, 2023 • 45 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 iHeartRadio. And how the tech
are you So? Back in two thousand and seven, a
rent by mail video business made a move that would
(00:27):
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 from
(00:47):
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 if you can believe it, you can
actually connect to a media player through the Internet and
watch movies and television shows by streaming them to your device.
(01:11):
The upstart company was, of course Netflix. It 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,
(01:32):
Netflix would 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,
(01:55):
and studios hate when leverage is given to anyone else
see also the Guild of America strike. Lots of other
streaming services would uppear 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 Hulu later on
in the episode. Some streaming services launched as an extension
(02:19):
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. There are
(02:40):
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 we're going,
(03:01):
pretty soon every movie is going to be a Disney
movie because the mouse House 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
(03:23):
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
(03:44):
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 any 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.
(04:06):
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.
(04:27):
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.
(04:49):
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
(05:11):
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
(05:35):
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
(05:57):
to both attract and keep custom 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.
The hope is that you scale up to a point
(06:19):
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, and in
(06:41):
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,
(07:03):
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 it's the
kind of stuff that really blogs in a different kind
(07:24):
of podcast. 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
(07:47):
produced version of 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
(08:09):
the logic behind the 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
(08:32):
of audience. Katzenberg 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
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Katzenberg and Whitman very quickly were making the rounds to
various studios 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
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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,
(09:41):
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
(10:01):
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,
(10:27):
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,
(10:50):
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
(11:12):
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
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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 Quibi in when they were no
longer in those use cases it just didn't really catch. Now.
(11:55):
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 that those download numbers dropped drastically. Signing up
would give you access to Quibe 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
(12:17):
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.
(12:39):
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
(13:03):
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.
(13:25):
There were some major players in entertainment 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
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in the subscription based video on demand 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 owned comedy. So the question was could
Yuck Yucks bring in the buck bucks? The service would
(14:07):
be called SISO, and it launched to a 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
(14:29):
in the Hall. That Saturday Night Live library was part
of it. Remember this was an extension of NBC Universal.
He also initially had eyes on making SISO the exclusive
platform to stream episodes of the Office and Parks and
rec Those plans would ultimately fall through, not Shapiro's fault, really,
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but it was a part of his plan where he thought,
if we can do this, then that's going to attract
a huge base of users. He made licensing deals left, right,
now 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
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was kind of using CISO as a sort of experimental platform,
the idea of being that if a comedy centric video
on demand service and over the top streaming service, if
that could work well, then INBC. Universal might launch other
genre or interest specific streaming platforms in the future, like
(15:31):
maybe one based around horror. Universal famously has a really
deep horror library that they 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 Sisow subscription was just
(15:56):
three dollars ninety nine cents per month when it launched.
Victual 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 Monty Python's Flying Circus, But there
(16:18):
are a lot of 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
(16:39):
my favorites was that 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
(17:02):
long term goal, to make its own content that would
build its own following, much like Netflix had done with
things like Orange as the New Black and A House
of Cards and Stranger Things, And now every streaming services
is following that same kind of philosophy. So you use
the library to first attract your ground base of subscribers,
(17:23):
and then you create original content to 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.
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As I mentioned earlier, so Netflix was 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 INBC Universal executives
an offer they couldn't refuse, and they agreed to let
(18:05):
Netflix get access to those programs, which meant CISO would
not have that exclusivity. And even if CISO 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
(18:28):
a larger base of subscribers fell through. 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
(18:49):
to highlight the service across the company's various networks, But
that really didn't manifest and CISO received relatively little marketing support,
which not surprise, 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
(19:09):
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 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
(19:31):
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. 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
(19:54):
broad a and this is kind of a pun a
spectrum as what Netflix was. Take now, CISO did end
up joining Amazon's streaming Partners program in 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
(20:18):
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 My Brother, My
Brother and Me launched a television show on the network
in twenty seventeen. They often joke about how the SISO
platform subsequently died on their podcast a lot, but while
(20:40):
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 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 CISO
(21:00):
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 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,
(21:23):
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 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,
(21:45):
a lesson 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 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
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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 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
(22:29):
big risk considering how much it costs, and maybe the
wise move would have been 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
(22:51):
would end up going to other platforms, including another one
then no longer exists, VRV or verve. 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
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when VERV launched, and it was sort of a sister
service to the anime focused streaming platform called crunchy Roll.
Crunchy Role still exists. VERV was kind of a similar
streaming service, but crunchy Role focused on anime. Vervewould end
up getting lots of different content from all sorts of companies.
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They included companies like Geek and Sundry, which was really
a YouTube studios channel. Rooster Teeth was another company that
provided content to VERV, and other partners included College Humor,
which would subsequently develop its own subscription streaming service called
Dropout TV Mashinima dot Com, which we will talk about
(23:55):
more in a second. So there's a spoiler. We know
Mainama is not gonna last forever. They were also a
partner with VERV. Shutter provided content to Verver for a while.
Shutter is a horror based company Riff Tracks, which is
made up of people who used to be part of
Mystery Science Theater three thousand. They partnered with Verve for
a while, and like crunchy Roll, verv wasn't over the
(24:17):
top streaming service. It contained multiple channels of content ranging
from animation to geeky lifestyle programming 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.
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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, 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
(25:00):
others would join the service, so there was this fluctuating
list of content that was available throughout its short history.
Makes it a little difficult to talk about verv because
it's not like there was a central identity you could
easily point at, because it was serving as a distribution
platform for lots of different partners, and those partners kept changing.
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By early twenty twenty two, all those partners were pretty
much gone. They had left after the terms of their
licensing contracts expired, 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.
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So even the backup plan needed a backup plan, and
this 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 verv
doesn't exist anymore, some of a lot of the partners
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that worked with Verve, they do still exist in one
form or another. So, for example, rooster Teeth, which initially
launched 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,
(26:26):
but also through Amazon Video. So there are different places
you 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
(26:47):
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
that runs this thing, or am I going to have
to subscribe to something else. All Right, we're gonna take
another quick break. When we come back, I've got some
more failed streaming platforms to talk about. We're back, And
(27:18):
as I said, I had mentioned Machinima earlier. By that,
I mean mashinima 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
gonna give a very brief one. I could do a
full episode about machinima dot com because holy cow, there's
(27:39):
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 Mainama is a portmanteau of machine and cinema,
(28:04):
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
video game you're using. So in the old days, folks
(28:27):
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,
(28:48):
which I mentioned earlier in this episode had a monumentally
successful show in this genre called Red Versus Blue. They
use the Xbox game Halo as the foundation for that show. Anyway,
a machinima creator named Hugh Hancock registered mainema dot com
in two thousand. The site would serve as a place
(29:09):
for creators to store and make available their videos. So
remember 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
(29:31):
not really a thing yet. So the website let creators
tap into a growing audience for the medium. So there
became like this kind of clearinghouse for machinima 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,
(29:53):
that kind of thing. But hosting media files is expensive, right,
especially 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 itself. And Hancock was pretty much responsible for running
(30:17):
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 had the
(30:40):
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.
Mishinima grew rapidly. It hit one billion monthly video views
(31:00):
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 mahinema and stay there for more
than an hour, But the company was also spending money
(31:23):
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
(31:44):
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
in our article that said when Creators were signed on
with Mashinema, they were agreeing to a lifelong contract that
(32:07):
everything they 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
(32:28):
with iHeart, I would not 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 Masinima's agreements sounded like something out
of a fairy tale, like you belong to me forever.
(32:49):
Like Ursula was in charge 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. Mashama 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
(33:11):
other deals that have ultimately tempted Warner Brothers even more.
And in twenty sixteen, Mashinama accepted a buyout offer for
one hundred million smackaroos. So Gutstein joins in twenty fourteen.
In twenty sixteen, he says, my job here is done
and he leaves because he was essentially leading the company
(33:33):
toward this acquisition, and Russell Aerins, 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
(33:53):
AT and T bought Warner Brothers, 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 Mashinema under a division called Otter Media.
(34:16):
This was in December twenty eighteen. 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
(34:39):
or at least removed from public view. Then, at the
beginning of February twenty nineteen, word got out that Otter
Media had laid off every single Mashinema 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 was to consolidate digital
(35:01):
media offerings in Warner Media, so the company owned a
whole bunch of different digital media production companies and channels
like a bunch, including Brewster Teeth, a full screen Crunchy Role.
Warner would later sell Crunchy Role to Sony in twenty twenty,
and they just wanted to kind of streamline things. They
(35:22):
felt like there was too much overlap. It probably ended
up being for the best because, as 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.
(35:45):
On a similar note, here in Atlanta, we had a
company called film Struck. Technically this was a division under
Warner Brothers and Turner Classic Movies. The service launched in
twenty sixteen with two tiers, so for six ninety nine
cents a month, you would have access to a basic
digital library of various movies, mostly film classics. But if
(36:08):
you coughed up ten dollars ninety nine cents a month,
you would also have access to 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
(36:31):
can't find on most streaming platforms. They said, well, 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
(36:51):
that process involved slimming down and streamlining things. And Film
Struck was struck because it was seen as having a
limited 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,
(37:12):
if the corporate maneuvers had not been a thing. If
giant companies weren't trying to figure out what can we
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 going
to know. Also, we had another streaming service launched out
(37:37):
of Atlanta that lasted a whole month and then it
was a shock 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
(37:58):
much more depth than would be a lot of original programming.
The division 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
(38:20):
crush it. It's not like they suddenly were overwhelmed by subscribers,
but you know, 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,
(38:43):
and Zaslov needed 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
(39:05):
operated to a 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
(39:27):
pouring in throughout the year. 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
(39:51):
was 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
(40:11):
channel was 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,
(40:35):
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
(40:57):
for it to reach a point where it might be offitable,
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 hadn't exactly gone gaga over it. Plus,
both Warner Brothers and Discovery also already had their own
(41:19):
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,
(41:40):
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,
(42:03):
a lot of these existing streaming services are headed toward consolidation, right,
Like we know that Discovery and HBO Max are becoming Max,
so 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
(42:24):
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,
(42:47):
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 clear people want them, but It's also
(43:10):
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
(43:33):
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
(43:54):
we're still seeing that shakeout, which is kind of funny because,
like I said, Netflix launched their 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 make money at a level
where we're gonna get that prestige content, it's really interesting.
(44:19):
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. All right, that's
(44:40):
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 folks above
(45:01):
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 iHeartRadio production.
(45:27):
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 iHeartRadio. And how the tech
are you So? Back in two thousand and seven, a
rent by mail video business made a move that would
(00:27):
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 from
(00:47):
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 if you can believe it, you can
actually connect to a media player through the Internet and
watch movies and television shows by streaming them to your device.
(01:11):
The upstart company was, of course Netflix. It 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,
(01:32):
Netflix would 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,
(01:55):
and studios hate when leverage is given to anyone else
see also the Guild of America strike. Lots of other
streaming services would uppear 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 Hulu later on
in the episode. Some streaming services launched as an extension
(02:19):
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. There are
(02:40):
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 we're going,
(03:01):
pretty soon every movie is going to be a Disney
movie because the mouse House 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
(03:23):
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
(03:44):
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 any 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.
(04:06):
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.
(04:27):
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.
(04:49):
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
(05:11):
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
(05:35):
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
(05:57):
to both attract and keep custom 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.
The hope is that you scale up to a point
(06:19):
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, and in
(06:41):
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,
(07:03):
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 it's the
kind of stuff that really blogs in a different kind
(07:24):
of podcast. 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
(07:47):
produced version of 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
(08:09):
the logic behind the 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
(08:32):
of audience. Katzenberg 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
(08:54):
Katzenberg and Whitman very quickly were making the rounds to
various studios 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
(09:18):
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,
(09:41):
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
(10:01):
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,
(10:27):
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,
(10:50):
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
(11:12):
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
(11:32):
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 Quibi in when they were no
longer in those use cases it just didn't really catch. Now.
(11:55):
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 that those download numbers dropped drastically. Signing up
would give you access to Quibe 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
(12:17):
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.
(12:39):
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
(13:03):
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.
(13:25):
There were some major players in entertainment 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
(13:46):
in the subscription based video on demand 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 owned comedy. So the question was could
Yuck Yucks bring in the buck bucks? The service would
(14:07):
be called SISO, and it launched to a 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
(14:29):
in the Hall. That Saturday Night Live library was part
of it. Remember this was an extension of NBC Universal.
He also initially had eyes on making SISO the exclusive
platform to stream episodes of the Office and Parks and
rec Those plans would ultimately fall through, not Shapiro's fault, really,
(14:50):
but it was a part of his plan where he thought,
if we can do this, then that's going to attract
a huge base of users. He made licensing deals left, right,
now 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
(15:10):
was kind of using CISO as a sort of experimental platform,
the idea of being that if a comedy centric video
on demand service and over the top streaming service, if
that could work well, then INBC. Universal might launch other
genre or interest specific streaming platforms in the future, like
(15:31):
maybe one based around horror. Universal famously has a really
deep horror library that they 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 Sisow subscription was just
(15:56):
three dollars ninety nine cents per month when it launched.
Victual 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 Monty Python's Flying Circus, But there
(16:18):
are a lot of 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
(16:39):
my favorites was that 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
(17:02):
long term goal, to make its own content that would
build its own following, much like Netflix had done with
things like Orange as the New Black and A House
of Cards and Stranger Things, And now every streaming services
is following that same kind of philosophy. So you use
the library to first attract your ground base of subscribers,
(17:23):
and then you create original content to 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.
(17:44):
As I mentioned earlier, so Netflix was 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 INBC Universal executives
an offer they couldn't refuse, and they agreed to let
(18:05):
Netflix get access to those programs, which meant CISO would
not have that exclusivity. And even if CISO 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
(18:28):
a larger base of subscribers fell through. 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
(18:49):
to highlight the service across the company's various networks, But
that really didn't manifest and CISO received relatively little marketing support,
which not surprise, 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
(19:09):
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 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
(19:31):
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. 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
(19:54):
broad a and this is kind of a pun a
spectrum as what Netflix was. Take now, CISO did end
up joining Amazon's streaming Partners program in 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
(20:18):
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 My Brother, My
Brother and Me launched a television show on the network
in twenty seventeen. They often joke about how the SISO
platform subsequently died on their podcast a lot, but while
(20:40):
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 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 CISO
(21:00):
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 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,
(21:23):
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 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,
(21:45):
a lesson 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 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
(22:06):
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 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
(22:29):
big risk considering how much it costs, and maybe the
wise move would have been 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
(22:51):
would end up going to other platforms, including another one
then no longer exists, VRV or verve. 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
(23:12):
when VERV launched, and it was sort of a sister
service to the anime focused streaming platform called crunchy Roll.
Crunchy Role still exists. VERV was kind of a similar
streaming service, but crunchy Role focused on anime. Vervewould end
up getting lots of different content from all sorts of companies.
(23:33):
They included companies like Geek and Sundry, which was really
a YouTube studios channel. Rooster Teeth was another company that
provided content to VERV, and other partners included College Humor,
which would subsequently develop its own subscription streaming service called
Dropout TV Mashinima dot Com, which we will talk about
(23:55):
more in a second. So there's a spoiler. We know
Mainama is not gonna last forever. They were also a
partner with VERV. Shutter provided content to Verver for a while.
Shutter is a horror based company Riff Tracks, which is
made up of people who used to be part of
Mystery Science Theater three thousand. They partnered with Verve for
a while, and like crunchy Roll, verv wasn't over the
(24:17):
top streaming service. It contained multiple channels of content ranging
from animation to geeky lifestyle programming 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.
(24:38):
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, 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
(25:00):
others would join the service, so there was this fluctuating
list of content that was available throughout its short history.
Makes it a little difficult to talk about verv because
it's not like there was a central identity you could
easily point at, because it was serving as a distribution
platform for lots of different partners, and those partners kept changing.
(25:21):
By early twenty twenty two, all those partners were pretty
much gone. They had left after the terms of their
licensing contracts expired, 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.
(25:44):
So even the backup plan needed a backup plan, and
this 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 verv
doesn't exist anymore, some of a lot of the partners
(26:06):
that worked with Verve, they do still exist in one
form or another. So, for example, rooster Teeth, which initially
launched 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,
(26:26):
but also through Amazon Video. So there are different places
you 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
(26:47):
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
that runs this thing, or am I going to have
to subscribe to something else. All Right, we're gonna take
another quick break. When we come back, I've got some
more failed streaming platforms to talk about. We're back, And
(27:18):
as I said, I had mentioned Machinima earlier. By that,
I mean mashinima 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
gonna give a very brief one. I could do a
full episode about machinima dot com because holy cow, there's
(27:39):
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 Mainama is a portmanteau of machine and cinema,
(28:04):
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
video game you're using. So in the old days, folks
(28:27):
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,
(28:48):
which I mentioned earlier in this episode had a monumentally
successful show in this genre called Red Versus Blue. They
use the Xbox game Halo as the foundation for that show. Anyway,
a machinima creator named Hugh Hancock registered mainema dot com
in two thousand. The site would serve as a place
(29:09):
for creators to store and make available their videos. So
remember 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
(29:31):
not really a thing yet. So the website let creators
tap into a growing audience for the medium. So there
became like this kind of clearinghouse for machinima 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,
(29:53):
that kind of thing. But hosting media files is expensive, right,
especially 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 itself. And Hancock was pretty much responsible for running
(30:17):
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 had the
(30:40):
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.
Mishinima grew rapidly. It hit one billion monthly video views
(31:00):
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 mahinema and stay there for more
than an hour, But the company was also spending money
(31:23):
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
(31:44):
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
in our article that said when Creators were signed on
with Mashinema, they were agreeing to a lifelong contract that
(32:07):
everything they 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
(32:28):
with iHeart, I would not 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 Masinima's agreements sounded like something out
of a fairy tale, like you belong to me forever.
(32:49):
Like Ursula was in charge 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. Mashama 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
(33:11):
other deals that have ultimately tempted Warner Brothers even more.
And in twenty sixteen, Mashinama accepted a buyout offer for
one hundred million smackaroos. So Gutstein joins in twenty fourteen.
In twenty sixteen, he says, my job here is done
and he leaves because he was essentially leading the company
(33:33):
toward this acquisition, and Russell Aerins, 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
(33:53):
AT and T bought Warner Brothers, 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 Mashinema under a division called Otter Media.
(34:16):
This was in December twenty eighteen. 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
(34:39):
or at least removed from public view. Then, at the
beginning of February twenty nineteen, word got out that Otter
Media had laid off every single Mashinema 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 was to consolidate digital
(35:01):
media offerings in Warner Media, so the company owned a
whole bunch of different digital media production companies and channels
like a bunch, including Brewster Teeth, a full screen Crunchy Role.
Warner would later sell Crunchy Role to Sony in twenty twenty,
and they just wanted to kind of streamline things. They
(35:22):
felt like there was too much overlap. It probably ended
up being for the best because, as 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.
(35:45):
On a similar note, here in Atlanta, we had a
company called film Struck. Technically this was a division under
Warner Brothers and Turner Classic Movies. The service launched in
twenty sixteen with two tiers, so for six ninety nine
cents a month, you would have access to a basic
digital library of various movies, mostly film classics. But if
(36:08):
you coughed up ten dollars ninety nine cents a month,
you would also have access to 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
(36:31):
can't find on most streaming platforms. They said, well, 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
(36:51):
that process involved slimming down and streamlining things. And Film
Struck was struck because it was seen as having a
limited 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,
(37:12):
if the corporate maneuvers had not been a thing. If
giant companies weren't trying to figure out what can we
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 going
to know. Also, we had another streaming service launched out
(37:37):
of Atlanta that lasted a whole month and then it
was a shock 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
(37:58):
much more depth than would be a lot of original programming.
The division 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
(38:20):
crush it. It's not like they suddenly were overwhelmed by subscribers,
but you know, 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,
(38:43):
and Zaslov needed 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
(39:05):
operated to a 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
(39:27):
pouring in throughout the year. 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
(39:51):
was 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
(40:11):
channel was 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,
(40:35):
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
(40:57):
for it to reach a point where it might be offitable,
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 hadn't exactly gone gaga over it. Plus,
both Warner Brothers and Discovery also already had their own
(41:19):
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,
(41:40):
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,
(42:03):
a lot of these existing streaming services are headed toward consolidation, right,
Like we know that Discovery and HBO Max are becoming Max,
so 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
(42:24):
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,
(42:47):
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 clear people want them, but It's also
(43:10):
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
(43:33):
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
(43:54):
we're still seeing that shakeout, which is kind of funny because,
like I said, Netflix launched their 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 make money at a level
where we're gonna get that prestige content, it's really interesting.
(44:19):
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. All right, that's
(44:40):
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 folks above
(45:01):
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 iHeartRadio production.
(45:27):
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