219: Swimming Upstream—A Tale of Two Platform Pivots

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What's next? This is a question we're all having to ask and answer more frequently. I'm Jenny Blake, your host of the Pivot Podcast and author of Pivot. The only move that matters is your next one.

For show notes from this episode, visit pivotmethod.com podcast if Change is the only constant, then let's get better at it. Here we go.

Hello friends. Welcome back. Before we jump into today's episode, which will be zooming out a bit to look at big Behemoth, even company Pivots, I want to say thank you so much to those of you who have submitted the Pivot Listener Survey. Every day when one or two come in, it's like Christmas in my inbox. I look forward to seeing a new notification and I'm always very grateful to read your responses. So if you haven't taken it yet, it's pretty quick. I think it will take you less than 5 minutes. Just go to pivotmethod.com survey and please know how much I appreciate it. Every time I see one, it's like goody goody yay. I can hear a little more of what's on your mind and what your favorite types of episodes are, what you'd love to see more of. It's really helpful, so keep them coming. Pivotmethod.com survey I've been very interested in following the progress of streaming and streaming services as well as subscription services. All the way back last summer I did an episode 142, creative economy lessons from the Great Race to Rule Streaming tv. It was this really interesting New York Magazine article that broke down all the different streaming services. There are strategies. One of them, I forget if it was Netflix or Hulu said we're not competing with each other, we're competing with sleep. How crazy is that? And of course we could see that during the coronavirus pandemic, streaming has been succeeding. It's been one of the go to things that people are doing from home. In the last week I saw a tale of two platforms and a tale of two different Pivots that's what I want to dive into here today. I'm not trying to throw anybody under the bus or. I mean, I am going to give some unsolicited feedback that these companies and leaders did not necessarily ask for. Because I think it's really interesting to see how. How different companies and their representatives talk about pivoting, even talk about the pandemic, and to watch their strategies unfold for how they're trying to redirect their attention and their revenue and even their customers during this time.

Let's start with Quibi. That stands for Quick bites. It's a $1.8 billion funded startup that Jeffrey Katzenberg and Meg Whitman have launched. It launched on April 6. Raise your hand if you downloaded Quibi.

Raise your hand if you watched a Quibi show all the way through. Raise your hand if you actively watch Quibi.

Raise your hand if you signed up for a paying subscription. Okay. Raise your hand if you told a friend about an episode or show that you saw on Quibi. The reason I'm asking you all those questions is that I've been following this streaming service for a while, had my eye on it. I'm looking at, what's $1.8 billion gonna do? And the day it launched, I downloaded it. Couldn't even get through a single show. They have so much star power on that platform. All the celebrities you could imagine, all the funding you could imagine. In some cases, some of the shows cost up to a hundred thousand dollars a minute to produce. But I signed up and every series starts with an ad. I don't even know how long the ad was. 10 seconds. I'm not used to watching ads. I upgrade my Hulu account. I am not a cable subscriber. I'm not used to watching ads. And I really didn't like the experience. And I thought to myself, I you're launching during a pandemic. So they made the call on March 1, and they were already saying that Quibi was meant to be Quick bites. While you're on the go, waiting in line, you just have five or ten minutes at a time. As they thought whether they should launch during the pandemic, where everyone's sheltering at home, they figured, well, people still have their phones around. They're still going to pick it up in between transitions. One thing they did do to adapt is that they gave new enrollees a three month trial period instead of one month. So I signed up for that and I thought, great, I'll give it three months to see what's going on here. But those ads at the beginning of every episode was a real turn off. And for a 10 minute show, what proportion of the show is that ad taking up? Even if it's 15 seconds, it was 15 seconds of put a bad taste in my mouth as the very first thing that I would see every time I logged onto the platform. And there didn't seem to be a way around it that already is this example of your trying to monetize it so early or in such a way that it's getting in the way of delivering the value that you want to deliver so that people want to pay you, they want to stick around, they want to have a premium subscription. As you can imagine, the total number of users is nowhere near their projections. Quibi projected 7 million users and at the moment they have about 1.3 million active users. Less than half of those who've downloaded the service are active on the platform.

When Jeffrey Katzenberg was interviewed this past weekend or this past week in the New York Times, and by the way, Jeffrey Katzenberg is the one time head of Disney Studios, he said, and I quote, I attribute everything that has gone wrong to Coronavirus. Everything, but we own it.

That had me scratching my head. Go back to those questions I asked you. Did you download Quibi? Did you watch an episode all the way through? Did you share it with a friend? Not one person in my life said to me in the last two months, oh, you have to check out this show on Quibi. And here you have Katzenberg saying, I attribute everything that has gone wrong to coronavirus. Everything, but we own it. So in a way he's trying to own it, but at the same time he's blaming everything that has gone wrong on Coronavirus, when in fact the content itself, I'll speak for myself personally, was not near sticky enough to get me to even open the app a third time. Maybe I opened it twice and I definitely didn't share any of that content with a friend.

Now compare the Quibi path during this pandemic. And by the way, I talk a lot on this show about agile development, agile launching. There was nothing agile about this launch. 1.8 billion billion spent before you even launch the app. And I understand that they're trying to compete with the big guns. They're trying to come out swinging. They're trying to have this super premium celebrity based content. They're trying to make it so that it's versatile, you can watch it vertically or horizontally at any given moment. But they were also stubborn about not allowing you to stream it to your tv. So not only were they not quite agile, let's not even say quite, they were not agile in developing the product. Then they had their own limitations and restrictions on how you could view it and where. And the net result is that the amount of daily active users is far lower than they were anticipating. And they're saying it's all Coronavirus's fault. Now let's shift our attention over to Disney. Disney is getting absolutely slammed during this time as well. We know that their theme parks have. It's been so rough, they've had to shut them all down. Disney owns espn. No sports are happening. They're doing replays on the networks. The they can't show their movies in theaters. Production on a lot of movies has stopped. There's a lot going on for Disney as well. And by the way, their CEO, who's now the chief executive, Executive chairman. Sorry, not the chief. Bob Iger. He had stepped down at the very beginning of the year and now came back in a little bit to help out during the Coronavirus pandemic. What prompted some of this thinking was from my friend Aishae, who asked me to think about one incredible constraint that can lead to an opportunity to make our society in this time of crisis. So as I looked at the Quibi conversation and the Quibi launch and unfolding and then in the same week, covered in the media was a big decision that Disney made. So Broadway in New York, all the Broadway theaters closed on March 12. Disney then made the choice to launch Hamilton via movie theaters in October of 2021. So the musical, they filmed the Hamilton musical in 2016 with the original cast. February. On February 3rd, they announced that it was going to be released to theaters in October 2021. How exciting, right? So there's one pivot already. They're saying we have this flagship play, Hamilton, that at its peak, premium tickets reached sometimes a thousand dollars, all the way up to three, then five, then $10,000 as the original cast announced that they were going to be moving on. Shout out to my friend Alyssa, who I know saw Hamilton in New York at least eight times, which is so incredible.

Then once theaters, it was clear that we didn't know when theaters were going to come back on, and we didn't even know. October 2021 seems very far away. Disney's getting crushed in so many of the aspects of their business. Most this past week they announced that in light of the extraordinary challenges facing our world, this story about leadership, tenacity, hope, love, and the power of people to unite against the forces of adversity is both relevant and and impactful. And they said they're going to release Hamilton streaming to Disney on July 3rd, the eve of Independence Day in the U.S. now look at the accessibility and reach. Now Hamilton can reach countless families who wouldn't have been able to afford to buy tickets in the theater, let alone travel to get to a city where Hamilton would be showing, let alone watch the original cast. So instead of complaining that Disney being hit so hard that everything's the pandemic's fault, they have made a decision to add this crown jewel of their portfolio, something that so many people have loved and it has such incredible word of mouth. And they're putting it out on Disney streaming as of July 3rd. That will give, of course, Disney a big boost. I'm sure they're hoping that even if people subscribe the $6 to join Disney, that they'll renew. Maybe some will subscribe and then cancel right away. But it's an example of them looking at every step and saying, yes, we're not going to bring Frozen back on Broadway. We don't know what Broadway is going to look like. We don't know what movie theaters are going to look like. But here we go. We're going to try this out. We're going to release this incredible play to the streaming service and offer you this value in exchange for your subscription, which is very different than the Quibi strategy of the whole platform is star studded. We're sure you'll find something you like and if you don't, it's the pandemic's fault. Another interesting piece of this conversation is to look at the data. So movie theaters are also acting a little. I mean, I don't know, maybe I would think differently. Of course, if I were running a movie theater, I would be doing everything I can to stay alive. But even when there were Academy Award consideration films like Roma and the Irishman, it was in the news all the time that these major theater chains were refusing to exhibit any films from Netflix. There was a boycott that the New York Times says seems to have had a negligible impact on the streaming service. So the movie theaters are kind of digging in their heels. It reminds me of how the music industry treated streaming services like Napster until they all got on board with itunes and figured it out. But they're digging their heels in in a way that is not serving them.

The headline of that article that I just quoted is movie Theaters face ruin. Blame trolls. Because what's also happening right now is that Trolls World Tour, the second Trolls movie, was released direct to streaming during the pandemic and it brought in over $100 million in a month. And none of that has to be shared with theater operators, which according to the article, typically take half the box office when they show a film. About 20% does get shared with whatever streaming service customers rent it from. The original Trolls, for comparison, overall grossed about $154 million. So imagine half of that went to theaters and now they've piloted releasing a movie like Trolls direct to streaming that is so much more accessible for families. No matter where you stand on movie theaters being an important part of our culture, and I would agree, of course there's something about gathering and being in person with a group of strangers, and that's something that many of us probably miss to an extent, large or small. And it will be interesting to see when we can go back and do things like that. I'm more interested here in the mindset. I'm interested in the mindset of piloting moves like releasing something direct to streaming. Being willing to disrupt these typical almost top down arrangements where the movie theaters control what movies can be shown. And then look at what happened to the movies that were shown in theaters. They started to, for decades now, go only toward the lowest common denominator or the, let's call it the greatest common denominator. It was all these action movies, big adventure movies. It was so rare to see a foreign film or an indie film actually go to theaters because it just wasn't what would be these big blockbuster hits. So at the same time that companies are experimenting with going direct to streaming as a result of this pandemic, you see the theater chains digging in their heels a bit, and then you see an app like Quibi digging in their heels a little bit. My question to you is where might you be digging in your heels and refusing to change or refusing to look outside the box? I highly encourage you to go back and listen to episode 215 with Steven Shapiro for how to think differently about difficult problems and how to even spend so much more of your time framing the challenge itself rather than trying to brainstorm ideas. He has a lot of thoughts on why brainstorming is so ineffective. Where might you be digging in your heels and where do you have a chance to disrupt yourself? What assumptions are you making about how things need to get done? How could you instead envision the results, envision what success looks like and work backward?

How could you lead with adding value.

If movie theaters are going to dig in their heels and just say, fold their arms and say, humph. We refuse to show Netflix. It's just not really keeping up with the reality of our time, which is that Netflix is a major producer of content now, as are some of these other streaming platforms. Bezos and Amazon were even in talks to buy AMC Theaters, the chain. So we're going to see a lot of shakeups in this industry.

Where might you be digging in your heels? Where are you still blaming it's all the pandemic's fault? Yes, we know there's a lot of stuff that went down for all of us, some so much worse than others around this pandemic. I've been so impressed by David Chang on his podcast, he's almost providing therapy to fellow chefs and restaurateurs. Every episode. He's interviewing for a series called Too Small to Fail. And you hear him say to these chefs who've poured so much work into opening these restaurants, I'm so sorry, man. You know, he says, I'm so sorry this happened. It's really not fair. We're going to do whatever we can. I wish I knew what to say. I just don't have the words. But what he's not doing week after week. And nor are the chefs saying, it's all the pandemic's fault. We blame it all on the pandemic. Of course it is. But that's not going to help them solve the problems that they need to solve to reopen, to shift in this new direction. And of course many are going to close well. But I encourage you to look at what area you might still be a little stuck on leaving it. Putting a period at the end of the sentence. It's all the pandemic's fault. What if you change that period, as my friend Neil Pasricha says in his book Everything is Awesome. What if you change that period into a.

It's all the pandemic's fault that I lost Fill in the blank.

And yet, comma, fill in the blank.

I'd love to hear how this exercise goes for you. Thank you all so much for being here. Listening to another riff. You can always share your thoughts@pivotmethod.com ask and again, take the listener survey@pivotmethod.com survey. Have a beautiful day everybody.

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Remember, build first, then your courage will follow. Hasn't it always.