Opinion | Movie Theaters Are Dying. Did Jason Kilar Deal the Final Blow?
Depending on who you ask, Jason Kilar is either the most hated or most beloved man in Hollywood right now. That’s because last week, the new CEO of Warner Media made an announcement that could finally change the movie economy forever. In 2021, all Warner Brothers movies will be released in theaters and stream on HBO Max simultaneously. Kilar had already tipped his hand by announcing earlier that “Wonder Woman 1984” would be the first to take the leap on the streaming service. The news has hit Hollywood like the perfect storm, and I’m not talking about the Warner Brothers backed George Clooney blockbuster from 2000. But Kilar doesn’t seem daunted by the giant wave of criticism because he isn’t a movie mogul at all. He’s actually a tech guy who joined Amazon in the 1990s. Then he was hired by the big media companies behind Hulu to figure out streaming for them. But Jason wanted to shake up the TV and film industry a little too much for his boss’s liking, and he left after years of clashing with them. Now, he is the head of one of the biggest entertainment companies, Kilar finally has the power to disrupt Hollywood’s old model. It was a bold move. But as someone who has known him for close to 20 years, I’m not at all surprised.
For as long as I’ve known you and certainly when you were the CEO of Hulu, you’ve been complaining about windowing, which was the old school model where content goes to movie theaters first for other platforms, essentially. I think you’ve wanted to do this forever. Does that feel good?
It does feel good. And it feels good for a number of reasons. The most important thing is it feels good from a fan perspective, from a customer perspective. But it also feels good through a number of other lenses, which is we’re in the middle of a pandemic, and many, many businesses are suffering, and clearly, the exhibition industry is suffering. But what we’re doing here is giving fans choice, which they haven’t had, and I think that’s a really powerful thing. And the other thing we’re doing is guaranteeing a steady supply of big-budget great movies to movie theaters in the middle of a pandemic. And we feel really good about that too because the alternative is not to have any movies in exhibition in a movie theater.
Well, I understand the feeling good about giving things to movie theaters, but it’s already been a business that was troubled with the windowing platform, which is something you’ve complained to me about. So walk me through this decision. How did it originate, and who did you talk to along the way?
So I wouldn’t say there was any magic moment per se. I’d say that over the course of this year, we’ve been obviously thinking a lot about our business, and part of it is pandemic-related. And I’d like to think about five and 10-year increments in terms of where storytelling is going to go, where technology is going to go, and what’s possible. And as the year went on and despite all of our desires of the pandemic going away, we increasingly had a conversation about the 2021 slate, and specifically, we started by talking about “Wonder Woman 84.” And that’s where a small group of us inside Warner Media talked about any number of scenarios. And the one that we relatively quickly circled on was a hybrid strategy of delivering movies to theaters for those that want to go to theaters but yet at the same day, give people the option to be able to watch them through HBO Max in the US market. So that was something that was always on our minds, I’d say, in terms of thinking about the business.
But in that room, come on, you’re talking about something that’s been the third rail of Hollywood. Windowing is how Hollywood built its business, and very few people have been willing to touch that rail. And whether you are giving options to movie theaters, you’re taking something away, which is exclusivity. So, is that model over?
I don’t think so, Kara, and I say that because I know that there’s a lot of different companies that think differently. So it’s possible that some people might follow where we’re going, but I wouldn’t bet on it. I think there’s going to be a lot of people taking different paths here. And ultimately, it’s the customer that is going to tell us which way this should go.
This has been something that customers asked for. The same thing happened in the music industry, where they kept churning out albums when customers wanted individual songs. And then they didn’t want to own the songs. They wanted to rent them, I guess, or stream them in some way. What prevents everyone from following you?
Oh, God, that’s a deep question. So I think that a lot of things could cause them to not follow us. One would be fear or concern or a whole host of things. It could be maybe just a fundamental belief in a different approach. And by the way, we’re OK with that. We have no problem going where others have not gone before. This is not for the faint of heart, and the good news is we’re crazy enough or unusual enough to feel good about what we’re doing even if we’re the first one that’s putting our foot out in this direction.
When that decision was made, who did you call saying I’m going to do this?
Well, the first — I don’t know if it’s a phone call or an email or what it was, but it was between John Stankey and myself. John Stankey is the CEO of AT&T. And I sent him a note, and I said, hey, there’s something fun that I’d like to show you— and some others, and some others on the team, some other at Warner Media folks.
And what was the reaction? When you say I’m breaking windows, I’m sure John Stankey said, where’s my baby gun? Great.
Well, I’ve been a big believer in this. I think you fairly summarized how I think about what we’re doing, but it was really great to see John take it in, and I think it moved him as a consumer more than anything. And that’s really where this has to start.
So is this a pandemic plan, or is it permanent?
Well, we announced it for the next 13 months.
Yeah, you used a lot of words like hybrid model and one-year — I don’t know. I don’t believe you.
Well, thank you, Kara. I appreciate that. But I will reiterate what I said, which is we’re making this announcement for the next 13 months. We’re not making a grand proclamation for what happens at the end of 2021. I will completely commit to you that I’ll go on this podcast in 12 months or 11 months and be able to share with you what the world looks like then and what we decide to do for 22. But this decision is for the film set for ‘21.
I have said movie theaters are dead men walking largely because their terrible customer service organizations. Their bad popcorn, their idea of innovation is a comfy seat, and I think people — this is just accelerating a trend that’s already been happening. Do you think they’re dead men walking?
I don’t. I believe — I don’t know if you’ve ever gone to Alamo Drafthouse —
Yes, I love it. That’s different.
Well, wait a minute. Hold on there. So you just got excited. Your voice got elevated because, as a customer experience, you really enjoy that. And I would make the argument that over the next five, 10, 20 years, the world is going to go from an exhibition standpoint more towards Alamo Drafthouse, which is a differentiated, fantastic customer experience with great food, great architecture, great sound systems. It’s just a lovely evening out. And I believe that they have raised the game for the industry. And when you see something that’s resonating with customers, that company is going to double down on it, and I think others are going to be inspired by them, or at least they should be inspired by them. And so I do believe that that model could apply to every movie theater in the world.
Would it be disastrous? Like, AMC is talking about bankruptcy, looking for more funding to your business if that happens, if these go down quicker because, again, the pandemic has accelerated what was already a trend.
Well, I think that as with all things, and you’ve got an incredible view on this over the last two decades, probably more than anyone I talked to, what’s happening here is just a very natural thing in business, which is those that are nailing it for the customer and doing a really good job, and on this one, I’m just talking about physical exhibition, they’re going to continue to do well, and they’re going to continue to invest in new theaters. Those who are not, won’t. And so is the footprint of theater is going to look different a year from now? It absolutely will. There is no — you can’t go through a pandemic like this and have things go back to the way they were in 2019. I think the footprint in the short-term is going to be smaller. I think it’s going to clearly advantage the best outlets and the best kind of theaters. But then I also think that the savvy entrepreneurs are going to say, wow, this type of a theater construct is working really well here in St. Louis. I think we should do this over here in Spokane, and I think we should do this in Boston, and they will expand as well. And I say that all over the world, not just the US market. So I am a believer that there will be an exhibition business for decades. However, it’s going to look different. And it’s going to have to be differentiated.
Would you consider buying AMC or another movie chain? And if not, who should? Anyone?
It’s not something that’s on our radar, mainly because where I’d like to allocate the most capital right now is into creating stories. I think that’s something that we’re really, really good at, and we have an advantage, given all the things we’ve done in the last 97 years. So that’s where I would prefer to allocate capital for the foreseeable future as opposed to allocating it towards physical distribution.
And let’s talk about reaction. The reaction of the movie chains was not good. I think the guy from AMC seemed to be losing his mind. What kind of call did you get from Adam Aron? Did you not call him? Because that quote seem to indicate that he needed urgent discussions with you.
Well, I think, again, I read the comment as well, or I should say the public statement. To me, I didn’t interpret that as a suggestion that he hadn’t had a conversation. But again —
Well, how are those urgent discussions going then now?
Well, it’s been busy, as you can imagine, And we certainly anticipated that it would be. And we knew that, by the way, in the period prior to our announcement because, obviously, with the conversations that we were having, people wanted to have more conversations. And so it’s not just a, hey, let’s chat for two minutes, and then we’ll be done. It’s, hey, this is the first of what will be several conversations. And so it’s exactly what you would expect here, which is on one side, there’s a tremendous amount of, this is great for customers. This is strategic. This is visionary. This is thoughtful. And yet, there’s also people who would prefer things to go back to the way they were in 2016. And I get that. Change is hard, and change is not easy, but we are in the middle of a pandemic, and we need to adjust the way that we do business because of this pandemic.
But, you know, Jason, a lot of people are pissed off. Christopher Nolan, who is one of the most famous directors in Hollywood, came out guns blazing. He told the Hollywood Reporter that filmmakers, quote, “Woke up to find out they were working for the worst streaming service.” That’s pretty harsh. How do you respond to this, and how are you going to get people like Nolan to think this is a good thing?
So the first one is — I’ll just echo what I just said, which is change is hard. But there’s other points to answer to the topic about Christopher Nolan, which is we’re doing the best we can, and we can do better. And so whether that means the 700 conversations that we need to have. And this isn’t necessarily about approvals. It really is about buy-in, which is even more important, which is to share context and to stay on the phone with everybody that we work with, whether it’s a director or producer or an actor. And what we’re finding is that the longer that we’re on the phone with all of those partners, the more there is understanding and then, ultimately, buy-in.
But how do you deal with this romanticized version of, I want to see it on the big screen. There is that gang that is like that. And I think that if you’re a big Hollywood director or producer, you want to make money, but you also want to be on in those theaters. What is your argument to go to Warner or HBO if that’s the case?
I have a lot of respect that there are directors, there are producers or actors that want the experience to be a silver screen one. I get that. But it’s the fan that gets to make the decision. Do I want to go and do that? And if so, fantastic. Or would I prefer in the US market to be able to stream it on the same day? I think that’s a very sensible approach, and at the end of the day, the fans that want that experience — And, by the way, I’m one of them. I love to go out to a movie theater and see a great big spectacle on a screen in an environment that’s not so familiar to me. I love that. But I think it’s important to recognize that we’re not taking the theatrical experience away.
Well, you’re taking advantage, which is the exclusive.
That is fair. That is absolutely true. And I think that if you were a movie theater owner, of course, you would prefer an advantage. Why wouldn’t you? Anything you can do to be advantage your business, you would want. And yet, I do think that we ultimately are in this situation of a pandemic needing to do things that are different. And in that context, we want to obviously think about it through the lens of the fan first.
Yeah, that’s fair. Now the launch of HBO Max had not been super smooth. I’m not blaming you. You got there in May. This was long-planned out. And there’s been a bunch of reporting about that it’s been strategic confusion culture clashes. It’s been a little lamp, the sign-ups, compared to other services. Why is that, and what is your outlook for it?
So I’m smiling because I take offense with the premise of the question, Kara.
OK, OK, you can take offense.
So you and I have known each other for so —
Disney, seven million. OK.
Wow. Now I get that it took Netflix for four years to get to one million, four years to get to one million. It took Hulu a year to get to one million, and we got there in a matter of days. And so, I say that is context because it is important to know that our journey at HBO Max absolutely is and should be different than, say, Disney Plus, and let me explain why. So Disney Plus, to their credit, is a surgically-precise brand for people with kids under the age of 10. It has been a carefully crafted brand to be all about that type of entertainment, and they’ve worked on it for near 100 years. And so as you would expect, when they go to market with a very low price service, they’ve had success and kudos to them. And obviously, they’ve done a great job. Ours is a very different journey, which is we’re going after actually a much bigger market, which is people of all ages, both kids and adults and all the sensibilities they’re in. We do not have a surgically-precise brand carefully cultivated over the last 97 years like Disney does, which means it’s going to be harder for us. And that’s OK. We’re totally fine with that.
People know HBO, though.
They know HBO, but they know it for a certain thing. So HBO is prestige programming nuanced dramas, very high-end production values. That’s how a lot of people think about HBO. And it’s amazing. It’s one of the most amazing brands in media and storytelling. However, it’s not nearly as broad as HBO Max is. And so we’re birthing a new brand. And HBO Max is not just about HBO. It’s about DC. It’s about Warner Brothers. It’s about a lot of different things. And so that takes time to be able to kind of put that out in the market. And, by the way, it’s not unlike the journey with Hulu, which is Hulu is a new brand, so is Netflix. And so, again, if you take a look at our momentum in the first 180 days versus the momentum of Hulu, which I obviously am intimately familiar with, and Netflix, which I’m very familiar with, we’re growing so much faster than either of those with new brands ever did in the market. And so that’s why I joked with you that I take offense to the premise of the question.
But would you rename it? Do you think HBO Max is the correct name? Is that the one you’re sticking with? There were rumors that you might change it to Warner Max or whatever.
It is absolutely the name that we’re sticking with. And you’re talking to the guy that chose the name Hulu, which what’s the Hulu, for God’s sakes? Nobody knew what Hulu was.
What is the Hulu, for God’s sakes, Jason. Answer this now.
It’s “The holder of precious things.” It’s from a Mandarin proverb. And believe it or not —
How don’t I know this?
You never knew this, Kara?
No, I don’t.
So Hulu came from a Chinese proverb, which described it as “The holder of precious things.” It’s a gourd. It’s literally a gourd. Hulu is Mandarin for gourd. And so when we are launching Hulu, we thought, what a great name that is. And it had this great sort of symbolism of the holder of precious things, which is the holder of premium content. So that’s why we named it Hulu.
And until Rupert Murdoch kept putting his dirty hands in and out taking things out —
— like dropping shit in and pulling it out.
Will I let you go public? Will I not let you go public?
Oh my God. They abused that gourd quite a bit —
— back in the day. But speaking of your current gourd, HBO Max, will you be windowing within it? What, you’re talking about precious things. You have Warner content, like compared to — like Disney, you have a lot of great brands that people like. Disney did “Mulan,” not a very good movie for the money I paid, but nonetheless, it was fine. I just paid for “Ammonite,” but, you know, lesbian drama by the sea. I have to pay for that.
So will you be windowing things in HBO Max? Consumers paying more to get earlier access.
No, we won’t. And the reason is very simple, which is I’m a big believer in simplicity. And so if we can do a great job bringing together all the storytelling that we have here and make it available for one simple price and not have any other complication beyond that, and you can consume as much as you want whenever you want on any device you want, then that means we’ve done the job we need to do for customers.
So that’s why you decided with “Wonder Woman” not to do that. I expected a price for that. That’s right. It’s just the subscripts. You’re trying to sell these subscriptions to people.
Yeah. I think that, again, life is hard enough. Why don’t we make things as simple as possible for customers? And so I think that I’ve been well-served by that philosophy all my life, and I think it’s important that we adhere to that philosophy going forward.
And do you expect Wonder Woman to really boost subscriptions? It’s that it’s gotten amazing reviews so far — people have seen it.
It’s a really great movie. We’ll see, Kara. Nobody can predict the future, especially in moviegoing and what movies do. But I sure feel pretty good about it. I feel very good about it based on the movie itself. It delivers. There are lots of movies that look great in a trailer, but they don’t deliver. This is a movie that clearly looks great in a trailer, and boy, does it deliver.
So you started your current role as CEO of Warner Media about seven months ago in May and beat out a lot of veteran execs for the position, including internal candidates. Of course, you have experienced as CEO of Hulu and Vessel, but those companies are tiny compared to Warner Media. Why did AT&T want you? Do you think because you’re a Hollywood outsider and willing to do these important changes?
Well, you should definitely ask them because, at this point, I’m just prognosticating. But I believe what drove a lot of their thinking was distilling things down to the very essence of what they thought was going to change or be the important element in the future of Warner Media. I think that they felt very strongly that the future of Warner Media was probably going to be more about the changes as opposed to carrying on the history of the company in a very literal way. And so I suspect it came down to that because Lord knows they could have found people with obviously direct operating experience that looked exactly like being the CEO of a big media company. And clearly, that wasn’t my background. I had obviously technology background, media technology hybrid background, and as you said, they weren’t at the scale of a 25,000 person organization.
I think it’s because AT&T wanted to have someone, a business person who had technical experience to clean out a lot of who didn’t mind doing things like this. But that’s just my take. But interestingly, Netflix made kind of the opposite move. They’ve been outsiders for a long time. They elevated an insider co-CEO, Ted Sarandos, who is a creative guy. What do you think of where they’re going right now? Because they’ve got hit after hit after hit, everything from “Cobra Kai” to “Queen’s Gambit” to the reality programming, and now Shonda Rhimes has one that looks fantastic, “Bridgerton.” What do you think of what they’re doing, and how they’ve handled the moves from — and also ran into a real creative powerhouse?
Well, the headline statement is that holy cow, it’s to be admired. To look at where Reed and Ted and the rest of that amazing organization has gone is remarkable by any definition. It’s absolutely remarkable to be able to make the pivot from being a DVD buyer to then being a licensor of digital content to then dipping their toe in the water by cofinancing a project like “Lilyhammer,” and then eventually writing a check to an outside producer for “House of Cards” and other things to now doing what you just described. It’s remarkable by absolutely any definition of the word. And so I think that they’ve done exactly what they needed to do in order to get to where they are right now.
What is their weakness from your perspective? Do they have a weakness that you have a strength?
Well, I think that if you take a look at what differentiates Warner Media from Netflix, I think there’s obviously — you already alluded to the very long history of HBO and the brand of HBO and the quality storytelling. We have franchises that really created worlds in this company’s history, and it wasn’t me that did it. It’s incredible people prior to me and people that are on the team today. When you look at Gotham City and Metropolis and the world of DC, when you look at “Game of Thrones” and the ambition of what’s to come with “Game of Thrones,” “Looney Tunes,” and the animated franchises that we have, I mean, there is so much, I use a wonky term, intellectual property, that Netflix does not have. And I’m sure if you asked Reed, he would kill to have intellectual property that Warner Media has that goes back 97 years. And so those are just obviously some of the things that I get so incredibly excited about, which is we’re absolutely leaning into that intellectual property. We’ve produced more young adult great television series than anyone else in the industry. And historically, a lot of it was licensed to Netflix. And so a lot of the things that people know Netflix for in terms of young adult dramas actually are produced by Warner Brothers television. And so these are things that I get very excited about and I’m very proud of, which is our storytelling capabilities and our intellectual property that no one else has.
So you’re talking about taking intellectual property, like, What Disney has done with “Mandalorian?” They had a Star Wars franchise. They created a whole new franchise out of it. You’re doing it with a new Gossip Girl coming out. You’re doing a “Game of Thrones” thing. What’s it called, “The Dragons?”
“House of the Dragon,” it’s everything you love about “Game of Thrones” but amped up. And so we have, thankfully, an incredibly deep library of worlds and characters and stories, and you’re absolutely right that we’re going to dive into them. Like, “Crazy Rich Asians,” for example, is I think one of the — it was an instant classic when it came out. And it’s a three-book series, and so there’s an opportunity to obviously revisit that story as well. And so we, of course, do brand new intellectual property as well, and so you should expect to see a ton of that, obviously, coming forward. The “Flight Attendant” is a great example where that’s new intellectual property that has never been made into a television series or film. And so that’s brand new.
But when HBO Max debuted, there was a lot of sort of dreck that was shoved in there, albeit I think most people felt like. It took some, I think, Scott Galloway called it a piece of lovely, expensive luggage, like a Fendi bag that was shove full of marshmallows and things like that. The current lack of standout original content was notable, I think.
Well, that’s a heck of a tee-up to me. But let me —
Yes, that was meant to do that.
Because we’re professionals.
So that’s OK. I’ll just mention the two things in the last week that I’ve been watching, which is “The Flight Attendant,” which I already mentioned in the undoing. And so when you take a look at the Emmys that were just given a couple of months ago, and we had, I think, 40% more Emmys than the next closest storytelling company. We haven’t had a “Mandalorian”-size iconic series that has defined the service. I think that’s very fair to say. That’s why when I talk about “House of the Dragon” and “Gossip Girl” and these other series that are in the midst of being produced right now, I think you will see service-defining series absolutely being delivered from Warner Media because we’re capable of it. And we’ve done it before.
And willing to pay the money, that you get John Stanley to fork over the dough to do it?
Absolutely. There could be many things that you might bring your hands about. That’s not one of them. We have a very large pot of money to invest in stories and characters and franchises and how we choose to allocate it. Well, that’s really important discussions that we have.
Well, speaking of pots of money — Amazon, Apple TV — how do you assess their efforts? I think Amazon’s just selling more toilet paper. That’s why they’re doing it. And so Hollywood becomes a feature of what they’re doing. It’s not about the Hollywood. It’s about, you’re all features to them, perhaps you don’t see it that way.
I think that it’s very fair to say that for them, it’s not existential to be great at storytelling. It’s absolutely not existential. Make no mistake. Like, nobody’s staying up late at night worrying what happens if their pipeline of movies and television series doesn’t resonate. Same thing with Apple, by the way. But I can guarantee you, at Warner Media, it is existential for us that the pipeline of stories that we have in the hopper resonate for customers and kill it in terms of people talking about them, same thing for Netflix.
All right. So existentially speaking, they still have pots of money that they —
— can spend like drunken sailors, so constantly. Is that a work — do you think they are still going to do that?
Well, so you’re absolutely right. They can spend a lot, and they certainly have the capacity based on their balance sheets to spend a lot more going forward. We don’t lose out based on budgets. We don’t lose out based on salaries. Like, we’re very competitive as is Disney and Netflix, I’m sure. And so I don’t worry about that because we’re — now, all of us are at a size where we will not be outspent in terms of a director, an actor or an actress and what have you. But there’s probably another layer that at least I see a fair bit, which is great directors and great screenwriters and great showrunners, great actors, they tend to respond to Warner Brothers and HBO and Warner Media. I think because they can sense that we care so deeply about this.
For Warner Media being owned by a phone company, you talked about it being existential, your existence compared. But you’re owned by a bigger phone company where 5G is really what they need to focus on. Like, John Stankey is great, but 5G should be his focus right now. Is that a distraction for them because their business is 5G, their business is connectivity, their business is phones?
So if we do our job right, and by our job, I’m referring to the Warner Media team, myself included, I don’t think it’s a distraction at all, and I actually think it’s helpful. We’re putting a lot of effort into CNN. We’re putting a lot of effort into interactivity. These are things that, thankfully, consumers are responding very well to, and our folks just on HBO Max because that’s the furthest along. It turns out that’s very helpful to the mobility and broadband side of AT&T. For folks that are getting broadband from AT&T, they’re getting HBO Max. They’re using HBO Max daily. So when you decide to use AT&T, and you get a certain level of plan, you get HBO Max. You start to use HBO Max. Suddenly, the churn rates go down. And so I think that to your question, “is it a distraction?” Absolutely not if the Warner Media team is doing their job, which is to deliver a great service that consumers eventually all over the planet adore. Because if I’m sitting and running the mobility company like Jeff McElfresh is, I’m pretty darn excited that I’ve got this thing in my back pocket.
You’re a churn rate stopper. You’re a stopper of churn rate.
I don’t know if I would trademark that, Kara.
That’s what I’m going to call you. I’m calling you a stopper of churn rate. All right. All right. You answered that well enough. OK, so are you planning to spin off any of these businesses? It sounds like there’s been rumors of HBO with CNN. And now, there’s more stories about CNN doing its own streaming service, which I think is actually brilliant, because I think cable is really going to be over at some point. And a lot of it is worthless. So when you think about —
Tell me how you really feel?
Well, it’s just like — it’s just shitty stuff, people and pundits that have no information. Don’t get me started on this issue. But I think they’re not good products. That’s all. So are you thinking of spinning off CNN — selling it?
No. CNN is the biggest news franchise on the planet. It is remarkable the level of journalism that goes on there each and every day. And I believe that the internet provides an opportunity that is unlike anything else in our lifetimes to be able to take something that we’re really good at, which is journalism, and bring truth and insight and information and analysis to a lot more people through the convenience of the internet.
There’s rumors that Jeff Zucker, who has been overseeing it for seven years is on his way out. I’m assuming Jeff Zucker is leaking this. So is he leaving?
So you should obviously have to ask Jeff.
You’re his boss. So I’m asking you.
So I will make a statement, Kara, that I hope is helpful, which is, I think the two best things that ever happened to CNN were Ted Turner and Jeff Zucker, and two very different roles, obviously. Ted is the one that got it started. He had the courage and conviction to do something when everybody thought he was nuts. And it turned out he was right and everybody else was wrong. And Jeff walked into a situation at CNN seven years ago with a very different CNN. And he came in here with a strong point of view. And he had a tremendous impact. And that impact is only growing. And here we are 40 years after the launch of CNN, we all know that the pay TV ecosystem in the US is declining. It is down kind of 7%, 8% depending on who you talk to. And in the last 12 months and the year before, it was down a little bit as well. So think of that environment getting smaller. CNN, despite that, had its biggest audience in November in its 40-year history. It’s almost mathematically impossible to describe that as being the case. But it is the case. And I give Jeff and his amazing team all the credit in the world for that. And so I hope that answers your question, at least directionally.
So OK, he’s a nice man. I mean, that feels very Hollywood to me what you just said. So does that mean we wish him well? Or we want to keep him? I’m not sure what you just said.
I think it would be great for Jeff to be here for the next 50 years. I’m sure he will not be here for the next —
That’s a long time, except for Jeff Zucker, but OK.
And I’m sure he won’t be here for the next 50 years. And so you’re going to have to ask Jeff these kind of questions.
OK, I shall. [MUSIC PLAYING]
We’ll be back in a minute. [MUSIC PLAYING]
There’s part of Jason Kilar’s resume that sometimes gets glossed over. Vessel — Vessel was a short-form subscription video service that Kilar founded in 2015. He raised $130 million, got big names like Ellen DeGeneres and YouTube star Connor Franta to sign up. And less than two years later, Vessel flamed out.
What did you get wrong there?
We were too early. I believe in the thesis of Vessel. But unfortunately, we were too early. And you could also argue we probably should have adjusted our strategy here and there and such that we got to eventually be either Cameo or OnlyFans or Patreon.
Well, but Quibi — that was just this year. Similar dive, huge amounts of funding — why didn’t it work?
I think it —
And you can’t blame the pandemic. You can’t. I’m not letting you.
No, that’s OK. I won’t go to the pandemic. I know that a lot’s been said about the pandemic and Quibi already. I think it really just comes down to the moment of truth. And a moment of truth happens every second of every day, which a consumer opens a device, and they make the decision, who do I want to spend time with? And that decision is influenced by many different things. It can be influenced by who else is in this environment that I might run into in terms of a friend or someone who has a similar point of view as me. And I want to see what they have to say. And that’s Twitter, for example. That’s one good example. In other cases, it’s the content. I make the decision in this moment of truth, because I know there’s going to be amazing content that I’m going to laugh or cry or be moved in ways that were not possible if not for that content. And I think what happened in the Quibi situation is that those moments of truth unfortunately, didn’t go Quibi’s way. I don’t think the content unfortunately, was loud enough, noisy enough, compelling enough to shake people out of their inertia to go to TikTok and to go to Twitter and to go to Instagram and to go to “Fortnite” —
And take that away from them?
Exactly, away from them. Because that’s inertia.
I think TikTok is a good example of it works, because it’s delightful. It’s just delightful, and it’s addictive. And it’s a different thing.
But do you think short-form content will forever be free in ad support or will people pay for it?
I think that anything’s possible is the short answer, Kara. Just when you think something’s impossible, somebody shows up and proves you wrong. So is it possible that there could be a pay model for largely short-form content? Yeah, sure. You could argue that Cameo is a short-form content play. And it’s paid. And it’s not free. And so I think that you’re starting to see little elements of this. But it’s going to come up and surprise us. It’s not going to come at us from the windshield. It’s going to come up from the tailpipe, or it’s going to come from the side window. It will surprise us when it’s upon us. And so the short answer to your question is that I think for the most part, short-form content is going to be free for the next several years. But I absolutely expect that you’re going to see more experimentation and more examples of pay short-form business models that actually work, like Cameo.
Will you be trying it to bring short-form videos to your bundle at Warner Media?
Around the edges — and by that I mean, I think there’s a lot of fun deleted scenes and little vignettes and trailers of course, and things like that. So there’s a lot of fun stuff that I think should be available in HBO Max. When you’re using HBO Max on your mobile device, specifically your phone, I think there’s a great opportunity for short form. I mean, we’ve got some of the most iconic comedic moments in the history of Hollywood, and I think there’s a lot of people that would love to spend a little bit of time on a short-form basis doing that. But I think it’s fair to say that the majority of the customer experience is going to be long form for us.
What will TV look like in 10 years? I remember you called me once and you’re like, the screen on the thing should be empty. And it shouldn’t be a TV. It should just have stuff coming through it. And I sort of hung up on you. But you did that. I remember that. What will TV be like? Will it be that empty screen where anything can go to?
I think the definition of TV is going to change a lot. I think ultimately, what television is, is internet protocol. I think the internet will be delivering the vast majority of quote, “television” in the not-too-distant future, certainly within — call it 10 years. I think it’ll be very clearly the dominant distribution for TV will be over-internet protocol. And I get so excited about that. Because as that happens, people who want to move people through stories suddenly have this like super power, which is to do things in a personalized way, to do things in an interactive way. I’ll just give you one small example that I’m particularly excited about, which is, can you imagine what a sports customer experience is going to be like when it’s on internet protocol?
Yeah, like 5G. Yes.
Well, it’s just —
Yes, I can. We get it.
I can’t wait. And I don’t mean just the traditional sports broadcast that we’re all used to — let’s just say an NBA game, where you have two announcers talking about something, and you have the score on the screen while people are dribbling the ball. I get so excited about the polling that can happen, the betting that can happen, the social commentary that can happen, the different alternative voice-over talent that can happen. I just think our kids and grandkids are going to laugh at how pedestrian —
Laugh at us.
— a sports broadcast experience was in 2020.
Right, and what about movies? The same thing?
So a couple of things with movies — I think the budget of a blockbuster movie in our future is going to be over a billion dollars. I absolutely think that —
— you know, that’s where we’re heading. And the reason why, Kara, is that because we have the economic model to be able to support it. I’m not saying today. But if you play this out when a typical leading subscription service of general entertainment has say, 600 million paying global subscribers, at those levels, you can responsibly invest a billion dollars in a movie and have confidence that it’s going to be a very good economic endeavor.
How much better can it be for a billion? I’m just curious. What is it — is it going to come and hug me from the screen or something? [LAUGHTER] Yeah, right?
Bigger, more, better.
Haptic — haptic technology by Jason Kilar. Haptic is when you feel it push back at you, for those non-techies. So what would they spend a billion dollar on? what?
Well, I think you’ll probably see — and again, I think — I don’t want to — it’s not hyperbolic to say that the billion dollar thing is just a matter of time. But I don’t want you to think that will be every movie. I think what the internet and the business model that you’re seeing with HBO Max is something that is incredibly scalable that allows us to do a lot of things that we couldn’t do today. And what I mean by that is we can do these niche romantic comedies and be able to have them be economically sustainable, which right now, those are a very challenging genre in theatrical exhibition, if it’s just purely theatrical exhibition. And so I get excited, because we have this business model that is so scalable in partnership with both theaters and also the internet that it’s going to allow us to do a lot more diversity in terms of storytelling and movies, but also the budgets, of course. The high end are only going to get bigger. And so I think that what makes for an epic movie in 10 years, 20 years, is going to be very different than what makes for an epic movie in 2020.
Does that include other forms of entertainment like Oculus, which are still experimenting? It still sucks. I don’t know how else to put it — all the equipment. I was just talking to someone, and they’re like, you don’t have to wear the backpacks anymore. I’m like, it still sucks. [LAUGHTER] OK. Why not?
My experience with these things is that they suck until they don’t suck. And so I think these things will get better. They’ll be miniaturization of the technology. And so does that become the dominant means of storytelling 10, 15, 20 years from now? It’s possible. You know, it’s possible.
You don’t seem enthused. You’re not sending your money over there it sounds like.
Mainly, because it’s not nearly as convenient as it needs to be yet. And so, which again, it’ll suck until it doesn’t suck. But when it becomes something that is easy and simple and convenient, well, then you’re cooking with gas. Then there’s something interesting to talk about.
But no need for Warner to get out front of that particular?
All right, Jason, this has been great. What a great discussion. I like how you’ve given it back to me now. You’ve gotten kind of sassy —
(LAUGHING) Oh, come on, Kara. It’s nothing but love.
(LAUGHING) — in your old age. Whatever — anyway, I appreciate it. I’m very excited. I was very excited by the announcement, because it’s something I’ve been talking about for a long time. And I literally got a dozen Hollywood people yammering at me. And I was like, it’s over. You got to renegotiate all your contracts, boys. So — and they were all boys, by the way. Everyone’s got to get on board on what’s about to happen. So —
If everybody just takes a breath and thinks about the customer, it’s not so complicated. It really isn’t. If we can just let everything else fall to the wayside, focus on the customer, we’re going to be sitting on a very big future.
Well, that’s a nice way of saying, lie down, you’re dead. That’s what I do. That’s why you should never hire Kara Swisher, because I put me on the phone with the theater guy I’d be like, lie down, you’re dead.
I did not say that, Kara.
You didn’t say that. All right, but let me just say I wanted to get you to that — do you remember the movie — I don’t know if it’s a Warner movie. I think it was — I forget. With Jack Nicholson and Tom Cruise, “A Few Good Men” —
— where he says, I know you wanted to — did you pull the code red? And I wanted you to go, yes, I called a code red. [LAUGHTER] Yes, I wanted to. Yes, I did. You’re dead, Jason.
I’d be sweating.
I want the truth, Jason. Just say, I called the code red, just for me. Come on.
It was a Sony movie. That’s all I’ll leave you with.
It was a Sony movie.
OK, but did you call the code red? I want the truth.
I am not — Kara, you are not going to corner me in this way. You will not!
All right. Thanks, Jack Nicholson. I appreciate it. Jason, thank you so much.
Thanks so much, Kara. See ya. [MUSIC PLAYING]
“Sway” is a production of New York Times Opinion. It’s produced by Nayeema Raza, Heba Elorbany, Matt Kwong, and Vishakha Darbha, edited by Paula Szuchman, with music and sound design by Isaac Jones. Fact checking by Kate Sinclair. Special Thanks to Renan Borrelli, Liriel Higa, and Kathy Tu. If you’re in a podcast app already, you know how to subscribe to a podcast. So subscribe to this one. If you’re listening on The Times website and want to get each new episode of “Sway” delivered you, download a podcast app like Stitcher or Google Podcast and search for “Sway” and hit Subscribe. You’ll be able to catch up on “Sway” episodes you may have missed, like my conversation with Cameo CEO, Steven Galanis, and you’ll get episodes every Monday and Thursday. Thanks for listening.
By the way, Jeff Zucker, I’m coming for you next.