Showrunner, an AI startup, lets users create and star in their own shows using deepfakes and AI-generated content. The company sees an opening in streaming's bloated economics: Netflix and rivals spend billions on content but lose subscribers anyway, just like Blockbuster once seemed unbeatable before streaming arrived.
Questions this video answers
$6 billion a year (with $800 million from late fees).
$40 (for Apollo 13 late fee).
$50 million.
250 million subscribers.
Over $100 billion a year.
Chapters
AI could replace Netflix the same way Netflix replaced video rentals. Here's how it works.
While that's generating, let's break down the last time Hollywood ignored a game changing technology like this. When Netflix launched, Hollywood was really fat and happy. We were nothing to them. It's a cleanest example of the innovator's dilemma when big companies go for short term profits over long term shifts, a concept explained perfectly in this clip. Great innovation occurs when you get to the next curve, when you go from telephone to Internet. Not to stay on the same stupid curve that you're on. Not to try to do things 10% better. It's 1998. Friday nights had a ritual. You drive to the Blockbuster store, walk those blue and yellow aisles lined with videotapes, maybe grab some overpriced candy and rent a movie for the weekend. At its peak, blockbuster was making $6 billion a year, with 800 million of that coming from late fees. That's how much money they made off people forgetting to return Shrek.
Oh, you were expecting Prince Charles.
Blockbuster looked invincible. It was drunk on its own Dominan, fat on profits and blind to change. Until one scrappy startup deleted their entire business model. All because of a single late fee. In 1998, Reed Hastings got hit with a $40 charge for Apollo 13. Houston, we have a problem. I owe you $40.
You invested the time and money to kidnap me and explain that I owe you $40?
He was pissed. But it gave him an idea. What if you could rent DVDs by mail with no late fees at all? He called it Netflix. At the time, fewer than 10% of American households owned a DVD player. But Reed bet on adoption. By 2004, nearly 70% of homes had one. Netflix was thriving. Then in 2007, he pivoted. Internet speeds were getting faster. He said, forget discs. We're going all in on streaming. We knew it was just a matter of time before Amazon sold DVDs. And then Walmart would sell DVDs. Then your local gas station would sell DVDs. The first version was scrappy, a tiny catalog that only worked on Internet Explorer. But streaming caught fire fast. I can watch all the TV shows and movies that I want. By the time Blockbuster launched their own service, it was too late. Within three years, Netflix had 20 million subscribers, and Blockbuster was bankrupt. But here's the irony. In 2000, Reid flew to Blockbuster's HQ and offered to sell Netflix to them for $50 million. Executives laughed him out of the room. They found that so ridiculous. That's the innovator's dilemma in action. Blockbuster was so focused on running physical stores and making money from late rentals, they couldn't imagine a world without them. What if I told you that today Netflix is the new Blockbuster and we're going to see history repeat itself? Netflix. Netflix. Netflix.
Netflix. Stock is sliding, as you can see, after its CEO pointed to tough competition in the streaming space.
Despite being profitable with 250 million subscribers worldwide, Netflix is locked in a spend to win arms race with Disney, Amazon and Apple. The industry now burns over $100 billion a year on content to win the streaming wars. This spend is colliding with a clear signal. Churn is climbing. In the U.S. nearly 40% of people cancel at least one service every six months. Some are calling it streaming fatigue. Almost half of consumers say they overpay. They're frustrated. Too many subscriptions, weaker content, and more ads. The gold rush is over. Investors reward short term subscriber growth, not risky innovation. But just like in Blockbuster's day, the disruption won't come from another giant. It'll come from a scrappy outsider. Because what if people don't just want to watch shows, they want to make them instead? That's the bet behind showrunner A.I. now, you might be thinking this is just A.I. slop. It can't replace an actual TV show. But what if I told you it actually had? In 2023, showrunner's early model produced nine South park episodes. These were unauthorized. The original creators had nothing to do with them. Here's an example. Clip.
Exactly, Stan. And that's where my business idea comes in. I'm glad you asked, Kenny. It's called Queepy. A deep fake streaming service. Cartman, that's illegal and unethical. No, no, no, it's genius. We take existing shows and movies and just replace the actors with deep fake versions of other famous people.
Reactions were mixed. Some were impressed by how good they were, endlessly fascinated by what they're up to. The future of entertainment. Others thought they were soulless. Wow.
I'm embarrassed by this is people watched. They racked up over 80 million views online. No studio, no budget, no permission. Just AI what's cool about Showrunner now is you can actually make your own shows. And in a few seconds, I'll show you how in 2024, they launched an original called Exit Valley. It's a satire of Silicon Valley, featuring AI versions of Sam Altman and Elon Musk. Here's how it works. You write a short prompt, cast the characters, pick a scene, and generate the episode. Let's check in on our prompt from earlier. I'm building the future while you're busy playing corporate lapdog. Building the future? You mean your dystopian playground of overpriced flamethrowers and half baked rockets? At least they're not a f ing sellout. Sam, you've turned OpenAI into a goddamn puppet show for investors. I thought that was pretty good. And other clips from Exit Valley have also gone viral. Thanks for the question. Yes, I will be unbanning TikTok. There's already 100,000 people on the wait list for for Showrunner's official platform launch. They're also working on several more original shows, but what's more interesting is user behavior. In early testing, one thing stood out. People didn't just want to spin up new storylines, they wanted to create a character and cast themselves in the show. Not just watching starring fans can come in. They can add themselves into shows. It's a completely different consumer behavior than what Netflix was built for. Showrunners founder Edward Saatchi believes the tech is going to improve quickly. And yes, he's the son of the advertising legend behind Sachi and Saatchi. He's also an Emmy winning storyteller who worked on VR at Oculus. His vision is for a future where TV is playable. People create original shows, cast their entire friend group and remix the IP they already love. Imagine opening Disney and clicking Remix Star Wars. You could rewrite canon or explore thousands of fan made storylines after the controversial Disney takeover. You can bet fans would jump on that. Bryce Skywalker.
Imagine never having to argue over how a story should have ended. You could just settle the debate in cinematic quality. Think of Game of Thrones. Nearly 2 million fans signed a petition demanding a remake of the final season. Showrunner's vision is why Amazon has already invested and Disney is in licensing talks. Not because they believe in it, but because it's too dangerous to ignore. Maybe even as a hedge against streaming itself. One important Showrunner has some limitations. Episodes are animated shorts, one off stories, and the comedy often falls flat. It's scrappy, but remember, so was Netflix's first streaming service. At this point you're probably wondering, couldn't Netflix just build this in house? In theory, yes. But here's the innovator's dilemma in action. Netflix is tied to billion dollar productions and studio deals. It's the same way Blockbuster was tied to retail leases. That makes pivoting much harder. Instead, Netflix is using AI for visuals, dubbing and feed recommendations. Useful, but not transformative. Netflix is handcuffed. It's focused on safe bets that increase its stock price. Apple, Amazon, and Disney are breathing down its neck, taking their eye off the ball to build new tech could cost them market share. But if Showrunner takes off, Netflix might find themselves in the same situation they put Blockbuster in. One where a new technology unlocks an entirely new way to consume and interact with content. That's the impossible choice. Protect profits today, or build the tech that disrupts you tomorrow. The future might look like this. It's Friday night. Instead of scrolling Netflix for 20 minutes, you can describe the exact show you want. And it's made on the spot. Don't like the ending? Remake it. Want 10 more episodes? Get them instantly. Or better yet, your group chat lights up. Check out this Game of Thrones episode I made, where Jon Snow becomes king. Suddenly, your couch is a studio and your group chat is the TV network. Blockbuster laughed at Netflix, then vanished. Streamers now risk laughing at AI generated content. It won't be Netflix or Disney that decides the future. It'll be people like you. That's how AI could replace Netflix. Not with one hit show, but with millions of stories all at once. And just like Blockbuster, by the time they see the threat, it could already be too late.
