Matt Britton argues that TV is becoming a computing platform where controlling hardware and consumer ecosystems matters more than content. He predicts Disney's move to block Netflix ads signals early fragmentation in streaming that will eventually consolidate around big tech and media players.
Disney will not accept any more ads from Netflix across its entertainment networks as the competition between streamers continues to grow more fierce, with Disney launching its own Disney plus service in the US in just one month. Joining us to discuss is Matt Britton. He's the CEO of Suzy, a consumer intelligence company. Thanks for being here.
Thanks for having me.
Surprised by this move or no, we should have expected it.
Yeah, I mean, the consolidation is really crazy right now. I mean, the TV and the computer are truly about to become one. The TV is about to become a giant iPad hanging on your wall. You see kids walk in the Best Buy and try to swipe a television. So it just shows you kind of where we're headed right now. And it's going to be interesting to see how all these players coexist together, how, you know, they become enemies, frenemies, etc.
What are the, what are the streamers, so to speak, do to fight back? If anything? It's not like Netflix has ads.
So yeah, I mean, I mean it could hurt Netflix in some ways like the Oscar awards where they can't run ads. But besides that, it doesn't really hurt them. There's plenty of other places for them to be able to capture customers, get, you know, people's attention, etc.
Charlie Bernstein, who was here earlier, said there's one rule in investing, don't bet against Reed Hastings. He tends to think that Netflix is, is going to be okay through all of this. Will it emerge a winner?
I think Netflix has its challenges ahead of it. I mean, it, the thing that Netflix has going for it is it has great content, but it just has that through writing checks. And companies like Apple and Amazon have deeper checkbooks than them and they have a thriving direct to consumer base. So that's what they're hanging on to. But there's nothing to say that, that that base won't churn over time.
Apple doesn't have that much content though when it's going to launch. Right. It just has a handful of original programs.
Right. So Apple has what Disney doesn't. Right. So they have a tremendous kind of direct to consumer base and they have an ecosystem. You know, they have the Apple TV and iTunes platform in the home, which I think is incredibly powerful. I think one largely missed element of all this is the television itself. If I were a large company like Netflix or you know, know, even Apple, I would buy a company that makes TV consoles and would give them to high income consumers for free because hardware is sort of the last mile for content. We see that with the iPhone. And I think whoever controls that last mile of distribution is going to win. So I'm surprised that, you know, a defunct or about to go out of business company that makes TV consoles hasn't been approached by one of these content companies.
That's part of the story I guess with Roku, where it's a piece of hardware, it's also been integrated into some actual television. Yes, this idea that it's just going to be the vehicle through which you can re bundle everything.
But I think you kind of need, you know, the whole stack, so to speak. You don't just need sort of an app that's on a traditional TV which most consumers don't even know how to locate. You know, you need the consumer base, you need that ecosystem. When you look at a company like Amazon, they have Amazon prime, right? So that's a tremendous ecosystem. So they have deep pockets for consumers. You get free shipping on your Amazon products and you can pay for the subscription where Netflix, you just kind of get the content itself. So that's why it's really hard for them to compete, I think because they were first to market. But I think as these competitors come in, it's going to be really hard for them to hold their ground.
How nasty do you think this sort of thing gets right? It, it started the evolution is you quit the competitors board, now you ban the ads. What's next?
I mean I think that it's going to be a brutal fight and I think that there's going to be a lot of fragmentation at the beginning and I think there's going to be a lot of consolidation two to three years from now. And I think that Apple, Amazon, no surprise, probably Microsoft, you know, they have that direct to consumer base. They have the Xbox registry. Streaming plat gaming is becoming huge in the living room. So I think those are companies that are going to merge over time. I think Disney, I think Disney could be more of a kind of horizontal platform instead of going vertical. I'm surprised they haven't tried to power other platforms because they've tried in the past they've tried to kind of create technology platforms, whether it be through ABC Go and things of that nature hasn't been so successful.
