Netflix and the Fall of Television | The Game Changer | 1
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Wondery Plus subscribers can binge all episodes of Business Wars Netflix in the fall of television early and ad-free right now. Join Wondery Plus in the Wondery app or on Apple Podcasts. It's fall 2016. Netflix chief content officer Ted Sarandos sits at a back table at Republique, a casual restaurant in the heart of Los Angeles. Sarandos nods hello to producers, agents, and actors as they pass by.

Place is known as a hotspot for entertainment power brokers to make deals over avocado toasts and oat milk lattes. Sarandos spies a reporter from an industry trade magazine sitting in the corner and kicks himself for not picking a more discreet place to go. If this meeting does go the way Sarandos hopes it will, he's going to poach one of the most successful television producers working today. From the network she's called home for over a decade,

But the producer still has over a year left on her current contract, and if word of this meeting leaks, well, it could scuttle the whole deal before Sarandos can even make an offer. The door swings open, and a short, elegantly dressed woman walks in, her eyes flitting around the room. Sarandos stands up and greets her. Shonda Rimes. It's a pleasure. The pleasure is mine. Rimes shakes Sarandos' hand and takes a seat.

Rhymes rocketed to fame after creating the medical drama Grey's Anatomy in 2005. ABC has built its entire Thursday night lineup around her shows, which bring in an estimated $2 billion. And now, Sarandos wants her to jump ship from ABC, which is owned by Disney, one of the most storied entertainment companies in the world, to join a tech company that has a very short track record producing its own content.

Although Netflix is credited with upending the movie rental business almost two decades ago, it has so far only made a handful of original shows. It's built its business on licensing content made by other studios. Sarandos was surprised when Rimes' reps requested a meeting. He's not sure entirely what to expect, but he's going to shoot his shot. A waiter approaches and Rimes orders a coffee before turning to Sarandos.

She's not wasting any time with any small talk. One thing you need to know up front is that wherever I sign my next deal, I'm not making another Grey's Anatomy. I'm not making Grey's Anatomy in a cornfield. I'm not making Grey's Anatomy in an airport. I'm not making Grey's Anatomy on a baseball field. Good, because I'm not interested in you making a second Grey's Anatomy. Rimes looks up at him in surprise, and Sarandos suppresses a grin.

He's heard rumors that Rhymes is getting restless. Creative freedom is at the heart of his pitch to try to lure Rhymes to Netflix. Rhymes stirs some cream into her coffee. Okay. Well, two other things. One, I have every intention of keeping Grey's running as long as ABC wants it on the air. Understood.

Two, you may think you know what a Shonda Rhimes show is, but you only know what a Shonda Rhimes show made for ABC is. And that's what's exciting to us. Look, we put a lot of thought into who we would want to dive into our first overall deal with, and I strongly believe you're the perfect partner. You're prolific, you make shows that run for a long time and have global appeal. Sarandos leans forward.

And quite frankly, in my opinion, you know how to craft stories and characters better than anyone else working right now. I want to see what you can do without the restrictions of network television. No rules on language, the ability to dive into more adult themes, flexible run times. You know what I mean? Rhymes looks around. You're certainly saying all the right things. We're also prepared to offer you a lot of money.

Rhymes nods, impressed. I think this might be the start of a beautiful relationship. Sarandos grins. One year later, Netflix signs Rhymes to a multi-year overall deal where she will exclusively develop new shows for the streamer for a reported $150 million plus bonuses. It's one of the largest overall deals in Hollywood history.

And it sends shockwaves around the town announcing Netflix as a major player looking to rival the legacy studios. The deal also kicks off the streaming wars forever changing the entertainment industry. When you're with Amex Business Platinum, going the extra mile for your business pays off.

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Hi, I'm Lindsey Graham, the host of Wondery's American History Tellers. In our latest series, at the turn of the 20th century, rapid industrialization, urbanization, and political corruption were ravaging America. But soon, President Theodore Roosevelt and a diverse group of reformers known as progressives would fight back. Listen to American History Tellers on the Wondery app or wherever you get your podcasts. From Wondery, I'm David Brown, and this is Business Wars. Business Wars

Now, you may remember from our very first series, Netflix vs. Blockbuster, that when Netflix was founded in 1997, it was a DVD-by-mail service. And while it disrupted the movie rental industry for sure, Hollywood at first saw the new company as an ally. It was another place to sell their content, right?

Well, this attitude continued through 2007 when Netflix started streaming movies online, not just mailing DVDs. In fact, streaming turned Netflix into one of Hollywood's biggest customers. In 2010, Netflix paid the studios Paramount, MGM, and Lionsgate nearly $1 billion combined to stream their movies for five years. But Netflix co-founder Reed Hastings had bigger ambitions than just licensing other studios' content.

For years, Netflix had been collecting massive amounts of data on viewer habits. The company knew which genres, stars, and directors kept audiences hooked to the screen. And in 2013, they used that data to produce their first in-house production that streamed exclusively on Netflix. You may remember the political drama House of Cards starring Kevin Spacey as a murderous congressman. But even after House of Cards proved a hit,

Studios still saw Netflix as a minor player, not a major threat. Linear television and movie theaters remained their core business, with streaming as just another outlet. But by the time Shonda Rhimes signed her unprecedented deal in 2017, the studios realized that Netflix was a significant competitor, one that could use its deep pockets to upend the way the entertainment business had operated for decades.

To stay relevant, the studios would have to change how they did business too. Within three years, the major studios had all launched their own apps. Well, in our new three-part series, we take a look at three of the biggest streaming services, Netflix, Disney, and HBO Max, and how they're battling to lure subscribers and turn a profit, and upending an entire industry, for better or worse. This is Episode 1, The Game Changer.

It's April 2020 in Santa Cruz, California. Netflix CEO Reed Hastings logs into Zoom. A member of the company's communications staff is already logged in. It's the end of the first quarter of 2020, which means Hastings has to send a report on Netflix's earnings to shareholders. But this quarter, that's a taller order than usual. A little over a month ago, the spread of COVID-19 forced people around the world into lockdown.

Millions of folks have been infected and nearly 200,000 people have died from the virus. People have lost their jobs and are isolated from friends and family. It's a scary and tragic time for the world. But amidst this chaos, Netflix has had a banner first quarter.

As lockdowns rolled out around the world, people couldn't go into stores or eat in restaurants, attend concerts, sail on cruise ships, but they could watch TV and movies on their couches. Hours and hours of them. And Netflix, with its large library of content, is the perfect distraction. Shows like Tiger King and Love is Blind have gone viral, becoming global phenomenons.

In the first three months of 2020, nearly 16 million people signed up for the service, a record number of new subscribers. With over 182 million subscribers overall, Netflix is now one of the biggest entertainment services in the world. Hastings discusses the tone he wants to hit with his letter.

He wants to acknowledge the success the company has had, but not come across as a heartless monster gloating over profiting off a global crisis. Together, he and the staffer craft a statement that is both direct and empathetic. Hastings also makes clear that Netflix knows this growth is short-term, that it will slow down once the lockdowns ease. And it's not just lip service to uncertainty. Netflix does expect its subscriber growth to slow in the near future.

But there's a different kind of trouble on the horizon for the streamer, and not just the inevitable end of lockdowns. For years, Netflix was the only major streaming service in town. But the legacy studios are entering the fray, drastically increasing competition. In late 2019, Disney launched Disney+, and WarnerMedia has announced that HBO Max will debut in May 2020, while Comcast's Peacock service is set to go live later in the summer.

The problem is not just that there will be more services competing for eyeballs. Netflix will also be losing some of its most popular content to these competitors. Even though Netflix has aggressively moved into producing its own movies and TV shows over the past few years, its library is still predominantly made up of products the company has licensed from other studios.

And what's more, the most popular content on the site tends to be shows that aired on traditional TV, including sitcoms like Friends and The Office. But now the studios that produce those shows want them for their own streaming services. And they're refusing to relicense the shows to Netflix. As a result, Netflix is facing an impending content cliff as these beloved shows leave their service.

It's likely they'll lose even more subscribers as viewers cancel Netflix to watch their favorite shows on the new streaming services. The pandemic was a blessing for Netflix as much as they would never admit it. A way to stall or soften the impending crisis provoked by the slew of new streamers entering the competition.

Meanwhile, the global lockdown creates a major crisis for traditional television stations. Both network TV and many cable stations rely heavily on live sports to drive viewership. Now, all of the major sports leagues have shut down, depriving networks of some of their most watched programming. But Netflix has never had live sports, so they're not so much affected by these shutdowns.

And the legacy movie studios? They have a business model that relies on releasing their major feature films into theaters before making them available to be viewed at home. And although Netflix has released some of its films into cinemas, most of their films are released straight onto the streaming platform. Theatrical ticket sales have never been significant to their bottom line. Furthermore, the company operates on a subscription model and doesn't have ads.

So when companies slashed their advertising spending as the world shut down, eating into traditional TV revenue, Netflix was largely unaffected. In short, the pandemic didn't upend Netflix's core business model. It actually helped it.

Netflix manages to keep its momentum going through 2021, continuing to add subscribers. It creates buzzy hits to draw in viewers like the Regency romance Bridgerton, the first scripted show created by Shonda Rhimes for the service, and the Korean nail-biter Squid Game. But as the vaccine rolls out and the world opens up, that growth starts to flatten.

In the fourth quarter of 2021, the service adds 8.3 million new subscribers. That's slightly lower than their forecast. But more worryingly, they anticipate a dramatic drop-off in the first quarter of 2022. So, to compensate for that crash, Netflix announces that it's going to raise its prices in early 2022. Their most popular plan will jump from $13.99 a month to $15.49 a month.

It's the first time Netflix has raised its prices since 2020. Netflix trusts that the service has become entrenched enough in people's lives that subscribers will stick by them. And Wall Street seems to agree. The company's stock price rises as analysts project increased revenue. But customers are less committed to Netflix than executives believed. And in April 2022...

the unthinkable happens netflix reported losing subscribers for the first time in over a decade on tuesday netflix blaming more competition illegal password sharing and russia's invasion of ukraine streaming giant netflix suffered its biggest stock loss in nearly two decades losing more than 50 billion dollars in market value suddenly the streaming behemoth is looking vulnerable

And with rival streaming services circling, Netflix co-CEOs Reed Hastings and Ted Sarandos are forced to consider some drastic changes.

In 1930s Germany, engineer Ferdinand Porsche wanted to redefine the European auto industry with a mass market car that anyone could afford. But Ferdinand could only find one man who shared his vision, Adolf Hitler. Hi, I'm Lindsey Graham, host of Wondery Show Business Movers. We tell the true stories of business leaders who risked it all, the critical moments that define their journey, and the ideas that transform the way we live our lives.

In our latest series, Ferdinand Porsche's car design firm is left in ruins after World War II. And with Ferdinand facing the prospect of life in jail for war crimes, it's left to his son to rebuild the company from the ground up. But as West Germany rises from the ashes, Ferry Porsche reinvents the family business as a high-performance sports car manufacturer. And with Ferry in the driver's seat, Porsche becomes one of the world's most coveted brands. Follow Business Movers wherever you get your podcasts.

This is Nick. And this is Jack. We're best friends, ex-finance guys, and resident 90s experts. And every week on our podcast, The Best Idea Yet, we're bringing you the untold stories behind your favorite products.

For instance, can you guess which billion-dollar fashion company went viral thanks to a rhinestone-covered tracksuit? Or which cartoon turned four turtles into a global toy empire by accident? It started as a joke. Last one. Which cold beverage was so hated by Starbucks

they actually ended up acquiring it. Spoiler, the Frappuccino. Howard Schultz apparently thought cold coffee was super lame, and then he bought it. From Teenage Mutant Ninja Turtles to Juicy Couture to the Orange Mocha Frappuccino. Join us every week to learn how your favorite things got made. Follow The Best Idea Yet on the Wondery app or wherever you get your podcasts. And you can listen early and ad-free right now by joining Wondery Plus. And if this podcast lasts longer than 45 minutes, call your doctor. Ha ha ha ha ha!

It's June 2022 in Cannes, France. Netflix co-CEO Ted Sarandos sits at a table at a restaurant overlooking the Riviera. His next meeting should be arriving in a few minutes, and his voice is raspy from taking meeting after meeting. Outside, celebrities bask in the sun and hit up night spots. But in this restaurant, Sarandos is the bell of the ball. After Netflix's poor first quarter, the company made a surprising announcement.

They were going to start showing ads. For years, Netflix founder Reed Hastings insisted that commercials had no place on Netflix. But the general consensus is that to regain subscribers, Netflix has to lower the cost of membership. And the only way to make that work for the company is to use ads on a cheaper subscription plan to boost revenues. Now, there's a big lesson here, and not just for Netflix.

If your business is established, the temptation is to panic. But actually, you have a choice. Lots of them. Think of this as an invitation to pivot. Notice here. In certain ways, Netflix isn't thinking about doubling down on what's worked in the past. They're doing things once considered forbidden. Adding advertising, cracking down on password sharing, eventually entering into live sports coverage. Sound like a streamer?

Or more like, I don't know, a cable TV network? As we've learned several times in previous Business Wars series, the companies that survive downturns are the ones already preparing for the next chapter, before the numbers dip. And if they do dip, don't panic. Pivot.

Netflix wants to launch this new ad tier by late 2022 or early 2023, so they have to work fast. Hastings, Sarandos, and other executives have gone all in on this endeavor. They've been meeting with experts to get advice on how many ads should run per episode or movie and what those ads should look like. They've held meetings with engineers to make sure the technology's in place. And they're searching for the right executive to run this new ad division. But one thing that has become clear...

is that if Netflix wants to get this ad tier up and running in under a year, then they have to partner with a company that already has the technology and workforce to take over ad sales. And there are many companies who want Netflix's business. So while in Cannes, Sarandos has been meeting with representatives working to hammer out a deal. The leading contenders right now are Google and Comcast. But he has one more meeting to go with a representative from Microsoft.

Sarandos checks his watch. Microsoft has a much smaller ad business than either Google or Comcast. As far as Sarandos is concerned, they're unlikely to land the deal. He's taking the meeting out of due diligence, but he hopes he can wrap it up quickly. A waiter escorts a middle-aged man with glasses to Sarandos' table. The man sticks out his hand and introduces himself as an executive from Microsoft. Thanks for taking the time to meet. Of course. Please have a seat.

The executive sits and orders a coffee in perfect French, then turns back to Sarandos. Look, I just want to start by saying I know that the other companies you're talking to are bigger, and I know that you have ambitious plans for ad sales. Sarandos nods. Hastings has said that they eventually want to get to a place where Netflix can charge advertisers $80 per thousand views. This would be one of the most expensive rates in the business, on par with the most watched NFL games.

So I know you're probably leaning more toward the big boys, but I would suggest that going with a smaller but no less competent company has distinct advantages. All right, lay them out for me. So the biggest thing is that unlike Google and Comcast, we don't have our own streaming service. Sarandos nods. It's a good point. Google owns YouTube and Comcast owns Peacock. So there's no conflict of interest in us helping you sell the most ads. I take that point.

And it's not nothing, but as you noted, we have very ambitious goals. Totally, totally, but two things. We've been in the advertising business since 2009 when we launched the search browser Bing, so we're not newcomers to this. And recently we bought a major digital ad sales platform off of AT&T. In short, I'm telling you, we have the skills and the tools to take this on. Sarandos leans forward in his seat. This is all very interesting, but...

"'There's one thing that's been a stumbling block with some of the other companies, and that's that we want a sizable minimum guarantee. We want to know that we'll get a certain amount of ad revenue to offset the financial risks we're taking.' "'That's something we're willing to discuss,' Sarandos nods. "'Well, he has to give Microsoft credit. They may have just turned themselves into a dark horse in this race.'

Strategic partnerships aren't always about size. They're about alignment. Microsoft's lack of a competing service? That right there is a trust play. One month later, in July 2022, Netflix officially announces Microsoft as its ad sales partner. The new plan debuts in early November, costing consumers $6.99 per month. But it's not a home run. The number of signups is sluggish.

Reportedly, only 9% of signups in the US are for the ad-supported tier that month. And what's more troubling for Netflix, estimates say that nearly half of the people who signed up for the ad tier were not new subscribers. They were current subscribers downgrading from pricier plans. One industry analyst declares the new ad tier a failure, saying it didn't move the needle in terms of boosting revenue for the streamer.

But Netflix executives are a bit more sanguine. Sarandos assures investors that this is just the beginning. Netflix's plan with ads is first to crawl, then to walk, and then to run. And right now, they're crawling. But with a little patience, they'll be running soon enough. Now, here's a hard truth. Cheaper doesn't always mean growth. A discount plan that cannibalizes existing revenue? That's not a win. It's a rebalancing act.

Plus, Netflix has a plan to drive more sign-ups. For years, Netflix founder Reed Hastings encouraged Netflix subscribers to share their passwords with friends or family members, essentially giving them free memberships. In 2016, he even went as far as to say that he considered it a positive thing, arguing that many of the people who initially shared a password ultimately signed up for their own account. And in 2017, the official Netflix Twitter account posted, "'Love is sharing a password.'"

Well, now Netflix is changing its tune. In May 2023, the company sends out a letter to its U.S. subscribers, alerting them that accounts are only to be shared among people living within the same household. If they want to share their account with someone living in another household, they need to pay an additional $7.99 per person, notably at a higher rate than if that person signed up for Netflix's new ad tier and created their own account.

Although customers voiced frustration with the new policy on social media, the crackdown works. Immediately following the announcement, Netflix reportedly has its best days of new U.S. user signups in over four years. And that user growth continues for several months and into early 2024. Netflix's revenue soars and its stock price rebounds.

I want to note here that sometimes growth comes not from new customers, but from finally monetizing freeloaders. It's a hard reminder about something many businesses would rather not deal with, value leakage. It's real. If you can stop it and capitalize on it, you can gain some advantage with ripple effects. But, and there's always a but, is a short-term solution.

It's not creating long-term growth. They need to continue to entice people who have never subscribed to sign up or lure subscribers who canceled to come back. And to do that, they need to have content that will draw people in. But two of Netflix's biggest shows, the British royal drama The Crown and the crime thriller Ozark, either ended in 2022 or will end in 2023 after long runs.

Compounding Netflix's problem, in mid-2023, Hollywood screenwriters and actors unions go on strike within months of each other. The guilds and studios are at an impasse over how artists should be paid for streaming content and how to regulate the use of artificial intelligence. The work stoppage delays the return of several of Netflix's hits, including lighthearted Emily in Paris and 1980s-inspired sci-fi drama Stranger Things.

Furthermore, Netflix hasn't created many new hits in several years. Despite all the money they've poured into content creation, it's the shows they license from other studios that remain Netflix's most watched fare, based on viewing hours.

In fact, reportedly the number one streamed show in 2023 is a show no one would have predicted at the start of the year. A long canceled show called Suits. Unfortunately, we only hire from Harvard and you haven't even gone to any law school. What if I told you that I consume knowledge like no one you've ever met and I've actually passed the bar? I'd say you're full of crap.

Originally airing on the USA Network from 2011 to 2019, Suits is a fast-paced legal drama that centers on the unexpected alliance between a cutthroat corporate attorney and a college dropout with a photographic memory. It also stars Meghan Markle in her only lead role before she retired from acting to marry Prince Harry and become the Duchess of Sussex. When the show first aired, it had a dedicated following that kept it going for eight years. But it wasn't really a ratings powerhouse.

But when it hits streaming in 2023, the show takes off. It's made available both on Netflix as well as on Peacock. Between the two, it logs 12.8 billion minutes watched in the U.S. in just over four weeks. Now, no one's quite sure why Suits hits the zeitgeist so hard. Maybe it's possible that curiosity to see Meghan Markle's driving some of that.

But other analysts speculate that it's a backlash to the rise of prestige television. Suits doesn't require the careful viewing or take you on the emotional rollercoaster of shows like Succession or White Lotus. It's more like a comfort show, a program that people put on to hang out with characters who feel a bit like friends and while checking their phones.

It also helps that Suits ran for over 130 episodes, making it easier for it to reach 58 billion minutes watched than shows with shorter runs. Now, listeners, this is a reminder that distribution can be just as powerful as content. Netflix's algorithm, combined with its subscriber base, can resurrect forgotten hits and turn them into front-page culture.

While critics may not know exactly why Suits is so popular, Ted Sarandos has a theory. He calls it the Netflix effect. In an October 2023 earnings call, Sarandos tells investors that it's Netflix's broad base of subscribers and its powerful recommendation algorithm that popped a modest cable hit into the center of the culture. And it's not just a boast to impress investors either. There's truth in what Sarandos is saying.

While The Office was routinely one of the most streamed shows in the world when it was on Netflix, it has yet to enter the Nielsen Streaming Top 10 since moving exclusively to NBC's streaming app Peacock in 2021. It turns out it's hard to compete with Netflix's massive subscriber base and well-tuned recommendation algorithm. Soon after that call...

Disney reverses its ban on licensing content to Netflix. Deciding the income from licensing the shows to Netflix is more valuable than the subscribers they draw into their own service. In December, the House of Mouse licenses 14 shows to Netflix, including some of its biggest hits, like Lost and Grey's Anatomy, giving Netflix some valuable content. You know, once upon a time, the split between Disney and Netflix seemed permanent.

Yet again.

But Netflix knows it's likely to hit diminishing returns with those strategies. For long-term growth, Netflix is going to need to pivot once again and take another page from the world of traditional television, adding live sports. But it's an expensive and risky move, and there's certainly no guarantee of a payoff.

You know those creepy stories that give you goosebumps? The ones that make you really question what's real? Well, what if I told you that some of the strangest, darkest, and most mysterious stories are not found in haunted houses or abandoned forests, but instead,

in hospital rooms and doctor's offices. Hi, I'm Mr. Ballin, the host of Mr. Ballin's Medical Mysteries. And each week on my podcast, you can expect to hear stories about bizarre illnesses no one can explain, miraculous recoveries that shouldn't have happened, and cases so baffling they stumped even the best doctors.

So if you crave totally true and thoroughly twisted horror stories and mysteries, Mr. Ballin's Medical Mysteries should be your new go-to weekly show. Listen to Mr. Ballin's Medical Mysteries on the Wondery app or wherever you get your podcasts. You can listen early and ad-free right now by joining Wondery Plus in the Wondery app or on Spotify or Apple Podcasts.

Hey, I'm Mike Corey, the host of Wondery's podcast, Against the Odds. In each episode, we take you to the edge of some of the most incredible adventure and survival stories in history. In our next season, it's 1980, and in the Pacific Northwest, the long, dormant volcano Mount St. Helens is showing signs of life. Scientists warn that a big eruption is coming, but a restricted zone around the mountain is limited by politics.

On May 18th, hikers, loggers, reporters, and researchers are caught in the blast zone as the volcano erupts. They find themselves pummeled by a deadly combination of scorching heat, smothering ash, and massive mudslides. The survivors have to find their way to safety before they succumb to their injuries.

It's late 2023 in Los Angeles, California. Brandon Riege, Netflix VP of nonfiction series and sports, sits in a conference room at company headquarters. Across from him is social media star Jake Paul,

The 26-year-old influencer talks passionately, running his hand through his curly blonde hair as he rattles off the names of various professional boxers. He lists their bout history and fan base. Reig nods, occasionally taking some notes. Along with his older brother Logan, Paul became famous by posting prank videos online. He's consistently listed by Forbes as one of the highest-paid YouTube stars in the world. And five years ago, Paul began seriously pursuing boxing.

In 2020, he made his professional debut, and now he's pitching a live boxing match to stream on Netflix. Recently, Netflix worked with Paul on a documentary about his life that spent a few weeks as one of the top 10 most-watched movies on the site in 20 countries. But none of the potential opponents Paul has suggested have caught Riege's attention. This wouldn't be the first time that Netflix has aired live sports.

The conventional wisdom is that sports is what keeps millions of people tied to traditional television. Getting into sports is the most natural evolution for Netflix. But the rights to air the major sports leagues are massively expensive. So before they invest in streaming extremely popular sports like basketball, baseball, football, they're testing the waters a bit with more niche sports.

Just a month earlier, they aired the Netflix Cup. That was a professional amateur golf tournament featuring golfers who had appeared on the Netflix show Full Swing with race car drivers from the streamer's Formula One show, Drive to Survive. That experiment wasn't exactly a rousing success. Only 700,000 viewers watched the tournament the first six weeks it was on the site.

Netflix is trying again in early 2024 with an exhibition tennis match between aging legend Rafael Nadal and rising star Carlos Alcaraz. With two big-name players, Rigg hopes that this will draw more eyeballs. And they've signed a deal with WWE to stream wrestling matches starting in 2025. So Rigg isn't opposed to testing out a boxing match, but he does want to make sure the names involved are a draw.

Paul will bring in some fans, but without a big-name opponent, Riege isn't convinced that there's enough interest to justify the money or trouble required to pull this off. And so far, Paul hasn't suggested anyone that Riege feels fits the bill. But then, Paul throws out another name, Mike Tyson. Paul says it casually, like he's just tossing it out there, but Riege sits straight up in his seat.

Tyson was the undisputed heavyweight champion from 1987 to 1990 and remains one of the most famous athletes in the world. Now he's a name who could really bring in viewers, including people who don't consider themselves boxing fans, and announce Netflix as a player in the world of sports. Not only that, but it would also disrupt the way boxing is usually aired, fitting with Netflix's ethos.

Most boxing matches air on pay-per-view, requiring viewers to pay an additional fee over their cable subscription fees. But Riege would make sure this fight would be available to all Netflix subscribers at no added cost. He asks Paul if he thinks Tyson would really do it. The boxer's 57. He hasn't fought professionally for close to 20 years. And by all accounts, he's doing fine financially and doesn't really need the money.

Paul nods. He says Tyson loves the spotlight. He thinks it's entirely possible that Tyson would be happy to do this. Reig tells Paul if he can get Tyson, then they have a deal. As soon as the fight is announced in early 2024, it generates loads of media attention. Everyone is curious how a young up-and-comer will fare against an aging legend.

Some speculate that Paul will get murdered in the ring, while others say it's Tyson who should watch out. Finally, after a delay due to Tyson's help, Paul and Tyson fight on November 15th, 2024. Although the fight itself is considered a bit underwhelming, with Tyson's age showing,

Netflix touts it as a smashing success. At one point, 65 million accounts concurrently streamed the fight, far exceeding Netflix's expectations for viewership. But it isn't a full success. Netflix's technology buckles under the surge in interest. Many viewers experience long buffering times. Others are kicked off the stream entirely. Customers angrily voice their frustration on social media. One man even threatens to sue the company.

This is a problem that Netflix needs to solve, and quickly. Because the company has just signed a deal with the National Football League to stream two games on Christmas Day, just over a month away. It's a big step in Netflix's venture into live sports. Over half the country identifies as a football fan, and the league has incredibly high standards for its broadcast partners. Nothing can jeopardize the NFL's brand.

Now, pay close attention here. When working with prestige partners like the NFL, execution is everything. Tech fails aren't just glitches, they're trust breakers. In fall 2024, Riege strides into a conference room at Netflix headquarters. Every seat around the table is full. Riege sits at the head of the table. "Okay, let's get started. First of all, I want to remind everyone of our number one mandate for these NFL games:

He holds out his hands, gesturing for everyone around the table to respond. Don't mess up! Yeah, exactly. Don't mess up. That means many things. This technology has to work perfectly. And when people watch the games, it should feel like the same product fans have been watching since August. But we should do something different. There should be some sort of Netflix sheen on this. A reason for people to want to watch sports on Netflix going forward.

A man to Reeg's left raises his hand. You know, one idea might be just to use more cameras. Cover all the standard angles people expect, but then also have a bunch of shots they never see. Reeg nods. Yeah, I like that. And if we're gonna add more, well, let's add more. Maybe use as many as twice the cameras typically used. How about that?

A woman at the other end of the table pipes up. We could also use cameras typically used to shoot feature films, not sports. That could give it a more cinematic feel. That's good. Good. I like both of these ideas. We just need to make sure we don't veer too far. I don't want to Spielberg up the NFL. You know what I mean? It should still feel like the NFL. Riggs scans the table, his eyes landing on a representative from the engineering department.

I know I ask you in every meeting, but the stream is going to hold up, right? I mean, even if demand is something like two, three times what we expect? Yes, absolutely. We're definitely ready. Okay, but that's what you said before the Paul Tyson fight. We all know what happened there. Well, we actually learned a lot from that experience, and I assure you, there will be no issues. Riege nods. He hopes the engineer's right.

The NFL has a lot riding on this event. It's one of the first times they're broadcasting to a truly global audience. If Netflix drops the ball, this could be the end of a truly lucrative alliance. Riege ends the meeting and heads back to his office. He's doing everything he can to make sure this live stream goes smoothly. All he can do now is wait and see. What a day for some football, baby! Woo! Yeah!

When Christmas rolls around, the games go off without a hitch, without any of the technical problems that marred the Paul Tyson fight. It's a triumphant moment for Riege and the entire Netflix operation. And the gamble pays off in subscribers, too. Netflix gains 19 million subscribers in the fourth quarter of 2024, bringing their total number of subscribers over 300 million.

I've said it before, but we're seeing it here again. Growth often follows risk. Netflix's leap into live sports wasn't just about viewers. It was about redefining relevance. And while Netflix faces some bumps in the road, they head into 2025 strong. But their chief competitors, Disney and Warner Brothers Discovery, they're taking notes and they're making plays to continue to cut into Netflix's market share.

Netflix will have to keep innovating if it wants to remain the leader of the pack. On our next episode, Disney takes on Netflix using its powerful brand identity and deep library of beloved content to lure subscribers. But the economics of streaming aren't quite as straightforward as executives thought they would be.

From Wondery, this is episode one of Netflix and the fall of television for business wars. Now, a quick note about recreations you've been hearing. In most cases, we can't know exactly what was said at the time. Those scenes are dramatizations, but they are based on historical research.

I'm your host, David Brown. Austin Rackless wrote this story. Sound design by Kyle Randall. Voice acting by Cat Peoples. Back checking by Gabrielle Drolet. Our producers are Tristan Donovan of Yellow Ant and Kate Young. Our managing producer is Desi Blaylock. Our senior managing producer is Callum Plews. Our senior producers are Emily Frost and Dave Schilling. Karen Lowe is our producer emeritus. Our executive producers are Jenny Lauer Beckman and Marshall Louis for Wondery.

Lamont Jones' world is shattered when his cousin dies in custody just weeks after entering prison. The official report says natural causes, but bruises and missing teeth tell a different story. From Wondery comes Death County, PA, a chilling true story of corruption and cover-ups that begins as one man's search for answers, but soon reveals a disturbing pattern.

Lamont's cousin's death is just one of many, and powerful forces are working to keep the truth buried. With never-before-heard interviews and shocking revelations, Death County PA pulls back the curtain on one of America's darkest institutional secrets. This isn't just another true crime story. It's happening right now. Follow Death County PA on the Wondery app or wherever you get your podcasts. You can binge all episodes of Death County PA early and ad-free right now by joining Wondery+.