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Netflix’s Leadership Shake Up…Explained
(Welcome to the “Most Important Story of the Week”, my bi-weekly strategy column analyzing the most important (but often not buzziest) news story of the last two weeks. I’m the Entertainment Strategy Guy, a former streaming executive who now analyzes business strategy in the entertainment industry. Please subscribe.) Well, I had a simple article planned for this week. Called “Whoa, I Missed It!”, I’d take a gander at a few important-but-under-the-radar stories I didn’t cover while I wrote about all things “Skydance. (Formerly known as “the saga of Netflix trying to buy Warner Bros., but not Discovery, then Paramount-Skydance bought all of Warner Bros. Discovery”.) Alas, that article will have to wait. Netflix made news. Ironically, my “Whoa, I Missed It!” article would have mostly been about “content” strategy decisions, which is also what today’s article is about. But instead of the entire industry, this article will only cover Netflix’s decision to upend their film and TV content teams. Just that! So that’s the full topic of the day. I’m going to tackle the issue in the opposite direction of the way “stuff” flows: uphill. We’ll start at film, then move onto TV, and then onto the CEOs themselves, and the strategy questions that still remain. But we start with the numbers driving this. Let’s dive in. Subscribe Most Important Story of the Week - Netflix Upends Their Corporate Hierarchy I’ve got a lot of thoughts, but we’ll start with the most common response to yesterday’s article. Let’s Talk Stock Price More than one person, responding to what I published two days ago, pointed out that, well, actually, the thing driving Netflix’s actions is this: In short, stock price! Even if Netflix isn’t obsessed with their own share price—they probably are, but, for the record, my strategic advice to every CEO is to absolutely ignore stock prices, which will, ironically, probably help the stock price long-term—most everyone thinks they are. By the way, I prefer market capitalization to stock prices, because it’s a more apples-to-apples way to compare companies: But there’s an even better way to look at it, and it kinda casts some doubt on the entire push here: price-to-earnings. I have a long list of articles that I wish I had written, and chief among them is an article titled, “Am I Still a Netflix ‘Bear’?” meaning someone who thinks Netflix’s stock is overvalued. As of last summer, Netflix had solved their biggest problem—which for me (circa 2019) was the lack of free cash flow—but their stock was CRAZY overvalued. That’s this chart here: Why did Netflix’s stock price increase to a price-to-earnings ratio of 50 last summer? What financial metric changed so quickly? Nothing. Given that, historically, mature entertainment companies average 10 to 20, with 16 being the average, that increase made little sense. Netflix’s stock swoon these last eight or so months wasn’t irrational; the stock price rise last year was. So if you want a really hot Netflix take, here it is: Netflix’s stock price has been going down because the financial industry recovered its senses, not because of any strategic mistake. Yes, that would imply that cleaning house may have been a mistake. That’s why the charts yesterday are so important, because they show that Netflix did have a strategic problem (a lack of hits) and that’s what they moved to address. (One could also argue the industry drastically overrated Netflix’s growth prospects, but that’s a financial industry problem, not a Netflix strategy problem per se. Some growth estimates are just crazy. *cough* AI *cough*) Now, the last time Netflix’s stock price crashed—circa 2022—it gave them an opening. I’d argue Netflix insiders knew they needed to expand post-COVID-19 crisis, adding advertising, cracking down on password sharing, and dabbling in sports. But if they had done that when their stock price was high, it would give folks a reason to second guess their strategy. (Arguably, last year, when Netflix pursued the Warner Bros. merger, it gave the industry a chance to review their business.) Instead, after the 2022 fall, they had the opening to make strategic changes. We may see Netflix pivot again following this latest slide. For example, the “binge versus weekly” conversation is alive and well again. Same for expanding into theaters even more. And adding both linear channels and streaming bundles. And maybe more either social, user-generated, vertical, or creator content. But the first shift came with who is making the content calls. A Message from Our Sponsor Last winter Pulp Fiction was on Netflix. For those same 90 days, it was also free, with ads, on Pluto TV and the Roku Channel. That is not a glitch, and it is not rare. The title has run on 20 different US streaming services since 2019, across 80 separate windows, and for more than 600 of those days it sat on a paid subscription service and a free ad-supported one at the same time. Almost nobody can see this, because when a title leaves a service, the record that it was ever there tends to leave with it. Reelgood keeps that record, dated to the day rather than the month: 4MM+ movie, show and episode titles across 300+ services globally, with timestamped arrivals, departures and moves across SVOD, AVOD, TVOD and vMVPD. Licensing teams price against every prior window. Rights teams check what a licensee actually delivered, and when. Pick a title you think you know: data.reelgood.com/title-availability Film - Dan Lin Want to know why I don’t opine on individual film or TV executives, especially new hires? Dan Lin. As I always caution, it’s really, really, really tough to predict which executives will succeed in new roles and which won’t. The successful head of co-production/finance partner, Rideback, Lin was considered for the head of DC Studios job before taking the job as the head of Netflix. By all accounts at the time, this was a smart hire. (That’s my read of the news coverage anyways.) But now that Netflix has fired Dan Lin, we got a slew of news stories about how he was doing a terrible job. In sports media, Bryan Curtis, new Substack writer/podcaster from The Ringer, calls this the “now you tell us” story, when you only hear the bad news after a star athlete leaves a sports team. In this case, now they tell us that Dan Lin was bad with talent after he got kicked out the door. So was Dan Lin a flop? It’s actually tough to say. While film moves faster than TV, even two years isn’t really enough time to evaluate a person’s output. The new head hasn’t really taken control. As Emily Horgan noted, it takes much longer than two years to produce animated films, so yeah, it’s definitely too early to judge in that domain. As for live-action films, I just published an article by Brandon Katz called “Netflix’s Summer of Bummer”, but I’d point out Netflix had a bad summer two years ago too. Arguably, their best summer came from KPop Demon Hunters last year and Happy Gilmore 2, the latter of which I saw credited to Lin. Then, the stories came out that Dan Lin clashed with talent, both Ben Affleck and Greta Gerwig, classic “now they tell us” factoids to explain his firing. This may have been true, but also should have been expected given that he was given the mandate to bring budgets back in check, especially after Rebel Moon. So if he made folks upset, well, that’s what he was hired to do! But also, he was described as “well-liked” at his hiring! In that case, I’m a bit sympathetic to Lin, since he may have been undercut by senior leadership, as often happens. Basically, a CEO hires a subordinate to be their “bad cop” and keep budgets in check, but then when talent complains, the CEO ends up undercutting them. That’s how I think you end up with a Narnia movie as expensive as any of the other flops, along with a film executive the town no longer likes. As a result, I think that Netflix is now executing a classic “hire the opposite” move by hiring Peter Rice. This phrase comes from my experience following football and basketball coaching decisions, where teams generally hire the opposite of who they just had. If you have an offense-minded head coach, hire the defensive guy. Or in college football, if you have a strong recruiter, then you pivot to an “X’s and Os” type of guy. Or in pro basketball, if you have a very analytically minded coach, you hire the player-friendly guy. I see that here. After dropping Scott Stuber—arguably a talent-friendly executive with lax budget control—Netflix hired the business guy to keep costs in check. Now Netflix is pivoting back to Peter Rice and presumably a more talent-friendly regime. (Disney, by the way, has done this twice: hiring business guys to succeed talent-friendly Bob Iger. It didn’t work out last time.) When it comes to Peter Rice…we’ll see! Maybe he works out, but maybe he doesn’t. I’d actually say the biggest problem is that Netflix still hasn’t solved its “IP Problem”, in that they don’t own much IP, so they just have a lower hit rate. The new executive won’t solve that. (Though buying Lionsgate would help.) Share “Content” - Bela Bajaria I almost published yesterday’s article after this column, but ended up flipping the order, because it told the story so well. So if you want the data for why Netflix is looking at TV to fix their problems, it’s in that article, this graph in particular: I know I just wrote that it’s often hard to judge executives, but Bajaria ran TV for six years and film for three and a half more. That’s more than enough to judge hit rates, and Netflix needs more hits. That’s the story. Since 2023, Netflix hasn’t had as many hit shows as it used to, and many of its previous power house TV shows have ended their runs (Stranger Things most of all). Also, many shows from 2020 to 2022 probably pre-dated Bajaria’s tenure. (That said, one thing may have been outside of Bajaria’s control, which I explain below.) Let’s lump some content strategy thoughts about Netflix and TV into one place: We’re just getting started with this issue, but the rest is for paid subscribers of the Entertainment Strategy Guy, so if you’d like to find out… Why I partially blame Squid Game for Netflix’s latest troubles… What is “the football trap”... Why it might not be the TV shows or films’ fault at all… What change I don’t think Netflix will make... How Bela Bajaria evolved Netflix’s TV strategy in smart ways… Whose departure likely submarined Bajaria’s final few years… One sneaky explanation for Netflix’s content struggles... And a whole lot more... ...please subscribe! We can only keep doing this great work with your support.
Xbox Reportedly Bungled $500 Million Netflix Deal
According to industry insiders, newly appointed Xbox CEO Asha Sharma overplayed cross-media potential with recent Netflix exec Peter Rice to the tune of $800 million
Here's who Netflix just brought in to run content — and what it means for the streamer
Peter Rice brings a wealth of experience in TV and film, including scripted and unscripted shows, live sports, prestige television and theatrical distribution.
Whoa, I Missed It! Disney Starts Licensing the Household Silver, When IP Backfires, and More Big Content Moves
(Welcome to the “Most Important Story of the Week”, my bi-weekly strategy column analyzing the most important (but often not buzziest) news story of the last two weeks. I’m the Entertainment Strategy Guy, a former streaming executive who now analyzes business strategy in the entertainment industry. Please subscribe.) Over these last few months, the entertainment business story landscape revolved around Skydance (and their merger) and Netflix (and their leadership shakeup). I don’t even want to scan my archives to see how many times I wrote about just those two companies over the last six months or so, let alone how many times they demanded their own article. Oh, how I long for June, when I could avoid them and write about other mergers and acquisitions (Comcast and NBCUniversal; Fox buying Roku). Well, not really, but you know what I mean. That focus on just two companies meant I ignored a lot of fun and, more importantly, important stories. So, it’s also time for another “Whoa, I Missed It” article. These are stories I wish I had written about, but aren’t exactly current events anymore. And there are a lot of them! Fifteen stories in all, including a very important merger that I didn’t write about, my word of warning about the IP deluge, how “genre” TV is making a big comeback, Netflix’s latest smart acquisition (and a licensing divorce), Disney and HBO’s recent TV show buys (and what they say about reboots on TV), a big cable merger, Amazon’s new bundle, social media censorship, and a lot more. Subscribe Most Important Story of the Week - Buy, Sell or Hold the Latest Content Development and Licensing in 2026!!! Content is king. I’ve written that before, and I believe in it now more than ever. If I had to quantify it, and I have, I put it at about 50% of the fate of any given media company, be they streamer, network, bundler, studio or social platform. This is a hits-driven business, and, as I like to do about every so often, it’s time to check in on the latest content moves. These content shifts on their own aren’t usually enough to be the “most important story” of a week, but if you add them up, you can see the content landscape shifting. The stories also fell into two natural buckets: licensing deals and IP moves. Plus, I’ll offer my “buy, sell or hold” rating for whether I think the deal is smart for a given side. Let’s dive right in. Disney Starts Licensing the Household Silver Disney is starting to license their core brands to Netflix. Quietly, over the last couple of years, Disney had rented some 20th Century [Fox] shows and films to Netflix, but until now, the core brands had escaped that fate. Now? At least some Pixar films will make it to Disney (including Elio) and some Disney+ Originals (like Percy Jackson and the Olympians). Here’s my rating for each company: Disney: Sell. One is tempted to say Disney has started licensing the “crown jewels”, but I don’t think we see that yet. I’d call this the “family silver” instead, which isn’t quite as valuable. That said, Disney’s new CEO clearly is focused on shoring up the company’s profitability, and that means licensing deals, even at the expense of Disney+ exclusivity. This could also help bring eyeballs to Percy Jackson for the upcoming season, a similar benefit to “dual casting” this show, which I also think Disney should do. Still, in the long run, I’d protect the core brands more. Netflix: Buy. This is a smart move, assuming the price is right, and I’d bet it is. (Netflix’s content licensing teams are some of the best in the industry.) Of course, this is another data point that Netflix is moving away from making their own films and relying on licensing instead. That has downsides—they’ll always end up renting—but if you’re buying Disney content, that’s a good move. Prime Video Buys More Live Events Amazon’s Prime Video/MGM Studios keeps purchasing live events, including the Emmys (which I wrote about here) and some regional sporting rights. These bolster their NFL, NBA and Academy of Country Music Awards licensing deals. My theory here is that Prime Video knows that they can sell the advertising for more on live events than on their massive acquired/original inventory of shows and films. (As I’ve been showing with Reelgood’s data, they have a LOT more shows and films than other streamers.) Advertisers want live, engaged viewers, since they’re a lot more likely to be real. Prime Video: Hold. I like Amazon’s focus on live events, but it remains tough to evaluate this company, er, business unit, since we don’t know anything about their financials. Yes, Amazon’s CEO recently released a very carefully worded statement about Prime Video, claiming profitability, but we don’t know by how much by when. (It’s also not audited by third parties, so we have to take it with another grain of salt.) Plus, given that Amazon increased the price of the Emmys by about a third, they also likely overpaid. (Maybe that’s why they’re barely profitable, allegedly.) But also, I think they know they need to dominate live TV, and that’s a smart strategy! So I’m torn, but lean towards calling this a smart move. The Emmys: Definitely sell! I mentioned this in my “Streaming Bonus Content” article, but I really, really, really, really do NOT like this move for the Emmys. Chasing short term dollars over long term awareness is not a smart move. To reach the widest audience, the “dual-cast” format—meaning broadcast and streaming—just reaches more people. Skydance Takes Its Animation Back This is the story that made me want to write a “let’s catch up on content” column in the first place. Specifically, Skydance and Netflix have ended their animated film output deal. It’s not huge, since really, what film has Skydance Animation made that’s broken out? But strategically, it shows you how Skydance is positioning their company. Skydance Animation: Hold. Again, I still need to see Skydance Animation put out a hit or two before I can judge this as a smart move. The other worry for Skydance is they have a lot of overlapping animation houses now, and that’s going to end at some point. Still, if John Lasseter can regain his animation mojo—and his track record has been mixed at Skydance, ignoring his other issues—this could be a powerful point for Paramount. Netflix: Hold (put your films in theaters). Right now, with the Dan Lin upheaval and Peter Rice coming in, we don’t really know what Netflix’s plans for theaters versus straight-to-streaming films are. So I need to see what new films (if any) they buy/rent/produce to replace the Skydance flicks, but it will probably be a smarter investment of capital, since the straight-to-streaming films have just failed to break out, outside of one major example. Theaters: Buy! They do look like they’re gonna end up with more inventory based on the Skydance move, and now Netflix putting four to five films in theaters per year. For example, Netflix confirmed that KPop Demon Hunters 2 will come to theaters, and that’s going to be a smash. Disney+’s Reboot Future So those were the major licensing news stories, and now we get to the IP-related updates. Obviously, I’m generally pro-IP in content development. But that’s not some iron law; not all IP hits equally. Get ready for Entertainment Nuance Guy. And let’s start with a big worry. Scanning the news stories, Disney has three reboots on their lineup between ABC, Hulu and Disney+: Coach (on ABC), The X-Files and Glee. So are reboots as immune to failure as IP? We’re just getting started with this issue, but the rest is for paid subscribers of the Entertainment Strategy Guy, so if you’d like to find out about… Why I’m skeptical about some upcoming genre and IP plays… How Skydance’s merger closing unlocked Paramount and HBO… The focus on “genre” across the streamers and studios… Some big creators leave Netflix… Netflix’s horror TV show licensing play (and what they should have done instead)… A huge merger that I didn’t write about... Whether or not we’ll see a major film tax credit… Amazon’s new megabundle of streamers… And (somehow) more… ...please subscribe! We can only keep doing this great work with your support.
A day after Netflix's major layoffs, Chief Content Officer Bela Bajaria leaves
Netflix on Thursday said its Chief Content Officer Bela Bajaria is leaving the company and named former Disney executive Peter Rice as her replacement.
Netflix reportedly offered Microsoft $500 million to license Xbox games for adaptations.
Xbox CEO Asha Sharma and team countered by asking for $800 million, and Netflix has pulled its offer, Puck reports in an article discussing the new leadership at Netflix. Xbox launched an “XP” division this month that will work on adaptations of its games, and Xbox is already working with Netflix on a Diablo animated series. [Link: The Peter Rice Playbook & Elon's Skydance Motive | https://puck.news/newsletter_content/what-im-hearing-the-peter-rice-playbook-elons-skydance-motive/ | Puck]