Who’s Going to Win the Media Entertainment Wars?

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A handful of companies with expertise in storytelling will win the media entertainment wars and land a market cap of $500 billion, forecasts Jason Kilar, CEO, WarnerMedia.

https://amplify.nabshow.com/articles/whos-going-to-win-the-media-entertainment-wars/

It won’t be a surprise to learn that Kilar thinks one of them will be WarnerMedia.

“I wouldn’t be surprised if you see a relatively small number of storytelling-centric companies that are worth $400, $500 billion each because the internet allows for a scale that heretofore was never possible,” he said in a recent interview.  “I’m not just talking about streaming business models, which of course will be very important to our future, I’m talking about things like video games and interactivity and NFTs, and a whole host of other things that have yet to be invented.”

In the whole 50-minute interview for the VC firm Greylock Partners (it invested in AirBnB) shared on a podcast and transcribed to over 10,000 words there is not a single mention of the $43 billion gorilla in the room: Discovery.

Interviewer David Sze is either too polite to ask or the interview has been given under strict instruction that this is a no-go area.

The nearest Kilar comes is when he talks about why he thinks WarnerMedia will be a good position to succeed.

“What you’re likely to see is a relatively small number of services that have achieved global scale, and are able to thrive by confidently, and with conviction, investing in ambitious storytelling. By that I mean scripted, unscripted documentaries, and perhaps sports for some of those players.”

Unscripted and sports. Yup that’ll be Discovery.

Kilar is best known as the founding CEO of Hulu. He served on the boards of DreamWorks Animation and Univision, and co-founded video service Vessel, which was sold to Verizon in 2016. He joined Warner in 2020.

The Greylock article begins by declaring that Kilar has “an instinct for disruption” – although not by all accounts an inkling of the mega-move to merge WarnerMedia with Discovery that happened right under his nose. By all accounts AT&T boss John Stankey went above Kilar’s head to strike the deal with Discovery chief David Zaslav, making Kilar’s position untenable.

Disappointingly Greylock’s interview is more concerned with blowing smoke than taking the opportunity to ask Kilar some taxing questions: Kilar’s thoughts on the merger and his own (believed to be short term) future are off limits.

Likewise, there is no challenge to WarnerMedia’s highly contentious decision to release its theatrical slate day and date with streaming on HBO Max. Filmmakers like Denis Villeneuve remember are still angry about a decision that seemed to show no respect for art.

Here’s how Sze wafts a vague question at him: [WarnerMedia’s decision] marked a major milestone for the industry that had been talked about for decades, but no one had had the bravery or the moment in time to take that move, and Jason really spearheaded that.”

“It reflects what I’ve seen,” Sze goes on, “which is Jason’s constant thirst for innovation — his willingness to make bold moves and take big risks when he knows it’s the right thing to do, even if it’s not always the most popular thing to do.”

To which Kilar responds, vaguely: “My opinion is that with the proliferation of screens, and having access be as easy as it ever has been in the history of media — that’s a good thing for a storytelling company, because it means that if you lean into those screens, you can be far more accessed than you were before.

Not only that, you’re able to do it in a way where you can have a direct relationship with the customer. Historically, we haven’t had that opportunity. So those are two things I’m particularly excited about.”

Expertise in story worlds

The ability to spin content and story worlds across media will stand WarnerMedia and its 98-year history in good stead, Kilar believes.

“If you just take a step back, and say: ‘What are the different ways that you can move people through story?’ It turns out that a seven-second video that users generate has a tremendous potential to move people through story. That’s the reason, when I look at WarnerMedia and think about our gaming and interactive business and the intellectual property that we’re sitting on, I get so excited about the ways that we’re able to move through the world through story in new ways, in addition to and alongside motion pictures and documentaries and television series.”

While subscription funded content will remain the main model for WarnerMedia, the CEO nods toward the need to have very diverse business models. He sees free ad-supported content as trainer wheels for paid services.

“It doesn’t mean we’re not going to participate in ad-supported environments that have great reach, because I think there are a lot of kids under the age of 10 who are falling in love with Batman, Superman, Aquaman, Game of Thrones, and all these other things because of TikTok.

That’s a great entree into those characters and worlds, where then they can get, obviously, a lot more by going to HBO Max or playing a game that’s set in Westeros with interactive and gaming.”

Kilar also pointed to 2022 and what he called ‘the elevation of HBO Max, the premium DTC service CNN+ and the elevation of games and interactivity, “which I think is going to be absolutely a hallmark of WarnerMedia for the next five decades.”

Before Amazon was Amazon

The most interesting part of the interview arises when Kilar discusses Amazon, a company he joined in 1997 after leaving Harvard Business School, when there were just a handful of employees and where he stayed for a decade.

He suggests that Jeff Bezos “the entrepreneur was heavily inspired by Walt Disney the entrepreneur. It was just a tiny little bookstore at the time, and not a lot of revenue, and certainly not a lot of people. But there was a lot of conviction that there could be a better way when it came to selling books to people.”

He explains how Amazon was built by trial and error. “What we learned at Amazon is that it’s one thing to say you want a marketplace and then another if you have a right to actually build a winning marketplace.”

It launched an auction site called zShops, and then a general auction marketplace to compete with eBay which failed “big time”. He explains, “We did the thing that was ultimately a mistake, which was going to create a ‘me too’ product. The reason why it failed is that we didn’t have anything really to offer the suppliers of that marketplace. They gave us the benefit of the doubt for a couple of months, but then they were like, ‘I’m not getting enough business here. I’m going to go back to eBay.’

“The big insight for the birth of Amazon’s marketplace was: ‘Don’t get distracted by what eBay is doing.’ Instead, ask yourself, ‘What can you do for suppliers that you uniquely have a strength in?’ And what we had a strength in was book buyers. That was the connection, the insight that led to a successful marketplace.

“It was a tiny marketplace at the start — new books and used books — but it then expanded very aggressively into music and video and kitchen products and consumer electronics. It took decades, but it was the right road for us, because we failed miserably with a general auction approach and strategy — which was just trying to be eBay, which we were never going to be successful at.”