Tech “Death Stars” and “Horsemen of the Streaming Apocalypse”: Evan Shapiro Says Media Giants Can Not Just Survive But Thrive — If They Change

Evan Shapiro entertained, shocked and awed an industry crowd in Madrid this week. The former top executive at the likes of Comcast’s NBCUniversal and Participant Media, as well as producer (Portlandia, Brick City), now calls himself a “media universe cartographer” and shares graphics, charts and unconventional thoughts on such platforms as his Substack newsletter “Media War & Peace: Reports from the War for Our Attention.”

And he reflected on the current — and future — state of media and the key role of Ibero-American markets during a keynote appearance at Iberseries & Platino Industria in Madrid, following a keynote appearance from Spanish actress and director Paz Vega.

Among the themes he touched on was the financial and market power of the six technology “Death Stars,” as he calls them, that are each worth more than $1 trillion in market value — namely Amazon, Alphabet, Apple, Meta, Microsoft and Nvidia — and why streaming has remained a difficult business.

When Disney decided to push into streaming, “in pursuit of Netflix and its flawed ad-free business model, we left behind the era where media was in control and moved into the user-centric era,” he told Iberseries. The rest of Hollywood giants chased behind. “All the horsemen of the streaming apocalypse followed without really analyzing what would happen by pursuing the direct-to-consumer model,” Shapiro argued.

His conclusion for this new age? “Content is still king. But data is the bloodline,” according to Shapiro, who urged media and entertainment executives to challenge business models and come up with new solutions for the disruption and challenges that have impacted Hollywood and beyond.

In a conversation with The Hollywood Reporter after his appearance at the growing Madrid industry event, Shapiro explained why streaming is a “shitty” business, shared his doubts about Netflix’s advertising business and discussed why Hollywood must band together to ensure it can not only survive but thrive.

You use very strong words when you explain industry dynamics. For example, you talk about Death Stars and the “horsemen, of the streaming apocalypse.” Why do you use that kind of provocative language?

I consider myself part of the creator economy. I write this newsletter and these posts on social media, mostly LinkedIn. And first of all, it’s what I sound like, so I have a voice. But secondarily, I have found that if you can grab somebody’s attention by using provocative language, they listen to what comes next. The problem with a lot of analysts and a lot of people who do reporting on the media ecosystem, is that first of all, a lot of them don’t read the actual data, so they don’t necessarily know what they’re talking about. Then secondarily, the more important thing, it’s just so dry and so boring that people truly just ignore it.

That’s a part of the reason we find ourselves in such a dire set of circumstances — the information they most need no one really wants to read or look at because it’s [dry and technical]. It’s the same reason I do charts in such big, bold colors with weird images, because a lot of people are visual learners. And so when you say “the horsemen of the streaming apocalypse,” or you say “big tech Death Stars,” or you say “fear of finding out,” or “fear of fucking up,” people jolt out of their seats, half of them.

I think there are people out there that I lose because I use such provocative language but those are not necessarily people that need to listen to me. People I think I grab by the lapels and shake, they respond to a good “fuck you.”

Since we are talking about language, it seems the industry goes through periods when certain buzz words are everywhere. From “synergy” and “tipping point” to, more recently, everybody expressing the need to “pivot” — even though they sometimes don’t fully detail what that means or entails…

These idioms are interesting. “Pivoting” was a word that I started using a number of years ago about my own career, and now a lot of people use it. These idioms become so universally used that they lose their meaning. And so I strive on a weekly basis to reinvigorate the language that I use so that people continue to pay attention to what it is that I’m trying to tell them. One, because it’s my living, and two, because it is important.

I was just talking to someone whose job is to help producers in Latin America and Spain collect the fees that they’re due from the distribution of their content. But if the platforms that they’re distributing on die, what do you do? So when you grab someone like that by the lapel and convince them that the change is not just happening, but it’s happened already, it is important. He said I made him reexamine what this organization is going to do next. That’s not an easy thing to do. It’s very difficult to shake somebody loose from their own preconceived notions, and sometimes you have to be, and I mean this metaphorically, violent. That’s why I use the language I do.

That’s also why I use the imagery that I do. I call Warner Bros. Discovery Disco Bros. because humor plays a large part in why people listen to me, or people enjoy my presentations. And when you’re laughing, you’re learning. If you’re not entertained in some way or fashion, chances are you’re not learning as much as you should be.

Entertainment industry CEOs haven’t always had a reputation for being the biggest entertainers among corporate leaders. Any thoughts?

The mentality that people at the top of organizations have is also [important]. Not that you have to feel bad for the CEOs of big media. They’re all making tens of millions of dollars a year, but they’re getting yelled at, and it’s harder and harder to do the job that they did just five years ago when it was super easy.

The reason why they find themselves facing such dire straits for their companies is because A, they don’t pay attention to things that they need to pay attention to; B, they refuse to let anybody else do it for them, including and especially younger generations; and C, they’re just not listening to their own audiences anymore. The audience that they listen to are their shareholders, not their viewers, not their users, and that’s how they’ve driven themselves into a dead-end stream.

You are saying that content is still king but there’s also data. Can you explain that a little?

If you think about the era that we’re in, which I call the user centric era, the user’s voice is paramount. The user’s voice is the data. They’re telling us what they want. They’re telling us how they behave.

The reason why I ask people in the room to answer questions throughout my presentations is that I want to make sure that my thesis is correct. So when I say, “Who here has signed up for something, binged the heck out of something and then canceled?,” and most of the room raises their hand. I know I’m right, and I can proceed. That’s data in real time. “Who here has just logged on to a service, couldn’t find something to watch, logged on to another service, couldn’t find something to watch, logged on to a third service, gave up and just took a drink and watched Friends?” And most of the room raises their hand and they laugh in recognition.

But when you zoom out, you get pools of data that are exceptionally large. Instead of surveys of 2,000 or 3,000 people, look at the data Antenna, Kantar and others have. Look at actual user data out there in the marketplace. That’s the user’s voice. And in the user centric era, if you’re not listening to your user’s voice, you know nothing.

His Master’s Voice defined the last era. This era is being defined by your audience’s voice, and the data is their voice.

I have seen reports from Wall Street analysts at MoffatNathanson and some others saying that streaming is not a great business. You are less nice in your analysis, right?

I say it’s a shitty business.

Why?

Well, it’s the difference between wholesale and retail. Retail is a very difficult business. Facing the consumer on a daily basis is really hard, because people are complicated. They’re not all the same. They have problems. Your customer support is the most thorny part of the business for a reason, because you can’t treat every consumer the same, and you can’t treat every audience the same. You can’t treat every demographic or age or generation the same. And so the reason why streaming is a shitty business is because it’s a retail business.

When we were selling to just three or four [pay-TV] providers in a marketplace, it went like this: You take them out for cocktails, fly them to Cannes to entertain them, and you made a deal. And most of them, let’s be honest, we went to school with. They were fraternity brothers and sisters. We’ve known each other and grew up in the business together, so we all just kind of shook hands and made a deal. That’s a different business than selling to each individual consumer.

And then within a home, you may have four different consumers. That’s a very complicated, thorny business with lots of pitfalls. People are complicated. And when you talk about tens of millions or billions of them at the same time, all using your service all over planet Earth, my goodness, it’s like dropping a jigsaw puzzle, losing all the edges and trying to put the jigsaw puzzle together.

I see your point. I like arthouse films and jazz and experimental music, and I have gone to music events where only 50 people show up, and paid for them, but then I also like professional wrestling…

I like tiny little niche things but I also love Marvel movies. I love Taylor Swift, but I also like various little bespoke things. I like books that are about weird things. I like articles that are about weird things. People are complicated, and that’s what makes the customer service business such a complicated business, and that’s what streaming is.

When you’re YouTube and you’re agnostic to the content, and all you are is a tech platform, that’s a much easier business, because all you have to do — it just sounds easy, but I can’t do it — is invent an algorithm. But once the algorithm is invented, you’ve got a flywheel in motion. Amazon collects more data on its consumers than people have ever had or generated data in history, and so that data is Amazon’s flying wheel and is so powerful because they listen to this Tower of Babel on a daily basis. It’s hundreds of millions of people doing hundreds of millions of different things, but they’ve built a machine that knows how to react to that and supply what the consumer wants, which is why everybody is an Amazon Prime member, and no one will ever cancel, because it knows who I am. It knows what I want, and it gives it to me every time I log in — as much as I don’t want to be with it — It knows me. It has all my albums. It has all my stuff. And that’s the game that we’re in. Big media, traditional media doesn’t understand that game.

There’s been much talk about the rise of advertising-supported streaming and Netflix and other have been talking about that growth business a lot. But I think you have raised some doubts about ad-supported streaming. What’s your worry?

In my presentation here, I asked people “who has Netflix with ads?” and nobody, not one person in that whole room, put up their hand. Why do you think that is? There are a number of different reasons. I think, first of all, they transitioned to advertising in a very bad way. If you look at how Amazon transitioned to their ads [offering], it was much better. They didn’t say, “Hey, here’s a new tier — sign up for it.” They said, “We’re going to charge you more if you don’t want ads. And 70 percent of their audience said, “I’m fine with ads. I’ll pay what I’m paying.” So they converted 70 percent of their users to the ad tier overnight. For everybody else, they raised their prices, and the average revenue per user went up overnight.

So thing number one, Netflix launched it badly. Thing number two is just pure hubris. They went out with their ad tier to the advertisers with a price that was not commensurate with their platform, and they found themselves surprised when advertisers didn’t want to sign up for it. And then lastly, there is a complication with their ad tier, which is they don’t have the rights to insert advertising in all of their content, and so a lot of their good content isn’t necessarily on the on the ad tier of their platform, or if it is, you can’t insert ads in it, so it’s not generating the income that they need to make it worth the while. So it’s a series of bad decisions.

We’ll see if they succeed long term but their ad business is broken. It is not in good shape. The rest of their business is in decent shape. But for how long?

I heard you say that YouTube is now, in the U.S., the number one TV channel. Plus, you have six deep-pocketed tech giants, which you call Death Stars. You have new gatekeepers to the home, such as Roku and Amazon/Fire. What do big media and entertainment companies do? What can Hollywood giants do?

If big media gets together — and in that I include Netflix, I include the BBC, and more — and collaborates around their data, suddenly they have a data pool that’s not as big, but approaches, the size of a Google or a Meta. But more importantly, that data is of a premium consumer base that is not on YouTube, that is not on Meta, or if they are, they’re not spending the same amount of time there. So [we need] a radical collaboration and the smooth transition between platforms for the user via the creation of an interface and a user experience that’s substantially better than what it is today.

Today’s user interface, when you turn on the television, people are canceling. They’re frustrated. They can’t find the stuff that they want to watch. It’s not personalized in the way that we promised them.

If we do that, it means taking down the walls around your gardens and competing as a group with Google, competing as a group with Meta, competing as a group with Amazon. If not, good luck! They will beat you.