🎧 If you haven’t gotten a chance to check it out yet, I added a transcript to the podcast interview with Ed Zwick. I’m starting to think about my next guest. If you have any ideas on who I should talk to, let me know!
Highlights in this issue:
Summer US election update
Deep dive into the next phase of Netflix
Mexico’s new president
Good reading,
—TK
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Here’s a link to my 2024 News Journal where I'm collecting the headlines that catch my interest each day so that when we look back at that at the end of the year, we'll see when things happened, what kind of patterns emerged, without the problem of hindsight bias.
🇺🇸🗳 Summer Election Update
Donald Trump is leading in 5 key swing states
Robert Kennedy Jr. is polling at 10% across these states, drawing equally from both parties
70% say that “the country’s political and economic systems need major changes or even to be torn down entirely” but only 13% of Biden supporters “believe that the president would bring major changes in his second term, while even many of those who dislike Mr. Trump grudgingly acknowledge that he would shake up an unsatisfying status quo.” This is the big meta framing of this election, our Milei milieu.
Trump and Biden are “essentially tied among 18-to-29-year-olds and Hispanic voters, even though each group gave Mr. Biden more than 60 percent of their vote in 2020.”
Trump is also polling at 20% with black voters, “the highest level of black support for any Republican presidential candidate since the enactment of the Civil Rights Act of 1964.”
Abortion is a weak spot for Trump. “64 percent of voters in battleground states said that abortion should be always or mostly legal, including 44 percent of Mr. Trump’s own supporters.”
But inflation seems to be the main issue for most voters. “40 percent of Mr. Trump’s supporters said that the economy or the cost of living was the most important issue in the election”
I was pretty surprised that the 18-29 vote is split so evenly and then I read this article. Imagine being a voter too young to remember Trump as president:
Still, those margins aren’t close to what they were in 2020. Biden is polling worst with 18-to-22-year-olds, most of whom were children when Trump was president. In polls and focus groups, this cohort demonstrated little awareness of the major controversies of Trump’s term. “They didn’t fully know who Donald Trump was,” Cristina Tzintzún Ramirez, NextGen America’s president, told me. “Some of them were 10 years old when he was first elected.
Meanwhile, Dems are leading in the Senate races in Nevada, Arizona, Wisconsin, and Pennsylvania, outperforming Biden.
NYT had a good short piece interviewing some of the swing state voters who voted for Biden in 2020 but don’t plan to in 2024:
“Everything is just about the economy,” said Mr. Westbrook, who has started driving for Lyft to support himself on a fixed income in retirement. “I don’t really trust Donald Trump at all. I just think housing, food, my car, my insurance, every single piece of living has gone up.”
Ezra Klein has some theories on why Biden is losing and what he should do about it:
Among voters who rely on social media, Trump led by four points. Among voters who rely on cable news, Trump led by eight. Voters who get their news from YouTube and Google favor Trump by 16 points. And voters who don’t follow political news at all favor Trump by 26 points.
He makes a good point about the difference between how Democrats perceive Trump vs. the best way to attack him. While I personally find the threat to democracy angle the most compelling, I can see why that might not land with the target voters.
There are other ways to run against Trump: He cut taxes for rich people and tried to cut Medicaid for poor people. He cut funding for the police before a crime wave and got rid of the National Security Council’s pandemic preparedness group before the coronavirus hit.
Bottom-line, the picture looks like Biden needs to do a much better job communicating his own record and comparing it to Trump’s and reaching low-information voters who may not tune in until closer to the election anyway.
🏛 There’s also of course, the big news of the week. Now the first former president ever convicted of a crime, Donald Trump was found guilty of 34 felony counts for falsifying records to cover up hush money paid to a porn star. Trump will face sentencing on July 11, 4 days before the RNC convention. As a first-time offender, it’s still unclear if Trump will actually face prison time for the low-level felonies.
It’s unclear to me if this really helps or hurts Trump that much. Here’s some of the polling:
A Morning Consult poll on Saturday found that 54 per cent of those surveyed approved of the jury’s decision, while 34 per cent disapproved. At the same time, it found no overall decline in Trump’s popularity and noted that few supported sending the former president to jail. (FT)
It looks like the verdict has juiced his fundraising though:
Donald Trump’s campaign said it had shattered its own fundraising record after his conviction on Thursday, raising $52.8mn online in the 24 hours since he became the first ex-president to be found a felon.
A partner at Sequoia donated $300k after the verdict and laid out his reasoning on Twitter. It’s not a terrible case but at the end he makes a false equivalency between election-denying speech and Trump’s actual actions attempting to stop the constitutional transfer of power.
📺🏈 I wrote last issue about Amazon Prime Video getting into the new NBA rights deal and now Netflix (NFLX 0.00%↑) is going to stream NFL games on Christmas Day.
‘Sunday Night Football’ started out as one-offs that eventually evolved into a full slate of top games on NBC several decades later, so what’s a one-off today can often become the distribution strategy of the future, and of course, that means subscribers could be looking at increased fees in the future
I did a short stint at Netflix three years ago and left just before the “Great Netflix Correction” when its subscriber numbers started slowing and investors started to demand profits over growth from all the streamers in general. Pretty ironic given Netflix was long considered a cash incinerating growth machine. Since then, not only did it usher in the end of that period, closing the window on its competitors before they got to grow to scale, Netflix is now the only one generating significant cash flow. The company is on track to generate $10 billion in profit in 2024.
I’ve been following the company closely the past few years as its reluctantly given up on some of its orthodoxies one by one (rightly in my opinion): no ads, no live content, no live sports, full season drops. As much as those things were part of the DNA, Netflix’s guiding principle is profits. Netflix is obsessed with engagement and customer satisfaction and I’ve always admired its ruthlessly practical culture centered around getting results to that end.
My impression from the inside was that Netflix is a super well-run organization. It’s got top-level engineering talent and a long head start in foreign markets. By virtue of being the first, it’s also become synonymous with streaming in a way that just isn’t true for newcomers like Peacock or Apple TV+.1
Here’s a bit from Matt Belloni of Puck writing about Netflix being miles ahead of its competitors:
When I open up the Hulu app and click on, say, Dune: Part One, a slick-looking content page with Timothée Chalamet’s pretty face appears. What doesn’t appear immediately is a trailer, or a curated video clip, or anything vibrant or dynamic that might suck me in… Same is true for Dune on Max… Even the Max page specifically set up to show the trailer for Dune: Prophecy, an upcoming TV show, doesn’t automatically play that trailer. You need to click again.
Now flash back to a couple months ago, when Dune was available on Netflix in the run-up to Dune: Part Two hitting theaters. There, I was greeted automatically with a video preview. It was fast and urgent—and, yes, slightly annoying—but it was curated and had been A/B tested to ensure it was very good at convincing me to watch. That’s what leads to maximum engagement.
It’s been a historic missed opportunity that such a high-powered stack was behind such an anemic creative product. Netflix owns the most valuable real estate in this business alongside the YouTube homepage (and TikTok, Instagram, etc.) But there was always a sense internally that a movie was a success because it got so many views, which is kind of like thinking the Olive Garden in Times Square is serving great Italian food. Maybe that’s a relief for their competitors: imagine if on top of all that the movies were actually good?
Now all of that might be in the past with some leadership change ups. Big producer Dan Lin is coming in to replace longtime head of film, Scott Stuber, and supposedly bringing a fewer-but-better, quality over quantity mandate. That’s easier said than done but I’m taking the new hire to mean Netflix is serious about it this time.
Scott Stuber, the outgoing film chief, made something like 80 movies last year, and many of them weren’t cheap… Zack Snyder’s Rebel Moon, which reportedly cost $166 million, was a flop. Others, like 2021’s Don’t Look Up, have been critical and commercial hits. But Don’t Look Up feels like the exception that proves the rule: As much as Netflix films are watched, few are loved let alone remembered.
…Netflix is switching gears for a number of strategic reasons, including consumption data that indicates, unsurprisingly, that series are more valuable than films (more hours, more easily bingeable units, etcetera). Matt also expects Lin will be making about 20-30 movies a year for Netflix, or less than half the annual Stuber output. Most importantly, however, the company aims to become more discriminating
The Netflix PR team seems to be doing a press push to present the new face of the company, starting with its co-CEOs. Ted Sarandos did this interview in The New York Times where he argues that Barbie and Oppenheimer would have been just as big on Netflix and that his son watched Lawrence of Arabia on his phone. And my friend sent me this one in Bloomberg on the newer co-CEO, Greg Peters.
he initially wanted to be an astronaut. He got an ROTC scholarship to attend Yale University, where he double-majored in astronomy and physics; for his thesis, he wrote a software program that modeled the inner workings of stars to explain how they function. After graduation, he joined the US Air Force and was stationed in LA with the idea that his training would eventually prepare him to go to outer space
It’s interesting to take a step back here and compare former CEO Reed Hasting’s succession planning for Netflix compared to Bob Iger’s mess of it at Disney.
Netflix is going through big changes. Its push into video games hasn’t really gone anywhere but it’s continuing to expand rapidly not only into sports but into sports-adjacent content and quasi-live unscripted shows. On the film side, it’s also shifting the way it’s traditionally compensated talent, going for a more pay-for-performance structure with less upfront. The compensation change is something to keep an eye on because a lot of people have identified that as one of the root causes for the surplus of mediocre content on streamers. That’s a longer post in itself but the change is something a lot of people in the industry have advocated for a while now. Highly recommend reading Jason Blum writing about it in 2022, where he basically suggests a lot of the changes that Netflix has started to make since.
Bottom-line, don’t be surprised if the movies you see on Netflix next year are noticeably better.
P.S. Check out this really great Deadline interview with Tom Rothman, chairman of Sony Pictures which has positioned itself very differently in the streaming age. It’s a wide-ranging discussion going back deep into the history of the movie business, where it is now, and what needs to change going forward. Thanks to Arthur for sending me that one.
🇲🇽 Mexico elected a new president, scientist Claudia Sheinbaum, who is both the country’s first Jewish and woman leader. The election was widely seen as a referendum on her predecessor’s policies including welfare programs, controversial constitutional reforms, and lax treatment of the cartels.
Morena and its allies also appeared headed for a two-thirds majority in Congress needed to make constitutional changes without opposition support… it also marks the first time a Mexican leader will have such a large congressional majority since the early 1990s.
The constitutional changes could have far-reaching consequences for Mexico’s democracy. They would replace the autonomous election agency; overhaul the judicial branch by allowing a popular vote for judges, including those for the Supreme Court; eliminate autonomous regulators for certain industries such as telecommunications and transfer their functions to government ministries; and undo the changes in the electricity industry that promoted private power generation, giving the state utility a bigger role. It would also reduce the number of members in Mexico’s lower and upper houses and cut funding of political parties
On the rising violence that worsened during the election:
Security was top of mind for most Mexican voters. The growing power of Mexico’s criminal gangs is blamed for making this election the most violent in the country’s modern history. More than 200 candidates, public officers and politicians have been killed since the start of the electoral process in September. (WSJ)
🇸🇦💼 The consulting market in Saudi Arabia grew 18% last year, “against 13 per cent growth in the Gulf region overall and just 3.5 per cent globally.”
…the kingdom’s consultancy market [swelled] to a record $3bn last year…
Many Saudis privately grumble about the spending on foreign consultants, complaining that ministries and authorities are now simply “RFP machines”, a reference to the requests for proposals sent to consulting firms, which then bid for the work. Reliance on the firms has meant many government bodies established since the economic reform plan was launched in 2016 were designed to function with consultants in mind.
I thought this was an interesting take on the Saudi consulting market:
You’ve made it all the way to the end! Thanks for reading fD. You can support my work by upgrading to premium or sharing the newsletter with a friend. —TK
Although if I could only have 1 streaming service it’d be Max, or maybe Prime Video with the Max add-on
📈 first Derivative [113]